Ok so current rent as well as utilities are not subject to recovery since they are not antecedent. But past due late rent/utilitie bills are...and the trustee gets to determine how late the rent can be before it is recoverable antecedent debt?
This is an interesting question so let’s look at the issues - mind you I have not researched this so my comments are from my understanding of the Code.
Scenario 1:
1. You are 3 payments behind in rent and owe the landlord $1,500.00;
2. Landlord likes you and does not want to evict so landlord has not terminated the lease;
3. One month before you file you get a tax refund and now have the ability to pay the landlord the full $1,500.00 plus the current rent of $500.00. You do that and are now current under the terms of the lease.
Can a trustee recover the $1,500.00? I do not think so since the lease was never terminated. All you did was bring payments current on an unexpired lease. The landlord did not receive more than he would have received if the case had already been filed and the transfer had not been made. Since this is a lease, the lease can be assumed or rejected under 11 USC 365. The Trustee cannot assume the lease until the default is cured or adequate assurances of future performance are given. While a Trustee is unlikely to assume a residential lease as the lessor, the fact that he could tells me that the payments are not recoverable.
Now, look at a different scenario:
1. You are 3 payments behind in rent and owe the landlord $1,500.00;
2. Landlord wants you out, terminates the lease and begins the process of eviction;
3. You are evicted;
4. You receive a tax refund and now can pay the landlord;
5. You cut a deal with the landlord that he will allow you to enter into a new lease if you pay him “damages” for the breach of the old lease. You pay him $1,500.00;
6. A month later you file bk.
I think the Trustee can recover the $$ since the lease had been terminated. At that point the rent owed was an antecedent debt. Now, if the landlord reinstated the old lease - maybe we would be back to the first scenario.
This would be a similar issue with back utilities. If the service had been terminated the payment would be for an antecedent debt. If the service was not terminated then I believe it would not. Further, utilities have special protection under the Code. While they cannot demand payment for past due amounts once the case is filed they can demand adequate assurance for future performance and such assurance must be made by the trustee or the debtor within 20 days of filing.
Again, just my spin on this. Hope it made sense.
Des.
