In Re Bce West, L.P., Debtor, Einstein/noah Bagel Corp. v. Gerald K. Smith

This is an appeal from the Bankruptcy Court and the Bankruptcy Appellate Panel (“BAP”) involving the interpretation of the administrative priority given to an obligation under a sublease of commercial property. Appellant, Einstein/Noah Bagel Corporation (“ENBC”) argues that it is entitled to administrative priority for its claims against trustee Gerald K. Smith under 11 U.S.C. §§ 365 (d)(3) and 503(b)(1)(A). We hold that ENBC is not entitled to priority because section 365(d)(3) is not applicable to debtors who are lessors. We also hold that ENBC is not entitled to priority under section 503(b)(1)(A) because its administrative claim did not arise from a post-petition transaction and conferred no benefit on Boston Chicken Ine.’s (“Boston Chicken”) estate.

I

ENBC is a stock retailer of bagels and associated foods, and Appellee Boston Chicken is a purveyor of home-style meals. Boston Chicken owned half of ENBC’s outstanding shares. In 1996, the two companies entered into various agreements relating to the operations of ENBC. One of these agreements was a five-year lease under which ENBC subleased from Boston Chicken space in the office building where Boston Chicken…