Bankruptcy Court Looks to "Totality of the Circumstances" Regarding Payment of Post-Petition Rent

In Erie Acquisition, LLC v. Guardian Elder Care at Johnstown, LLC (In re Guardian Elder Care at Johnstown, LLC), No. 24-70299-JAD, 2024 WL 4799907, _ B.R. _ (Bankr. W.D. Pa. Nov. 14, 2015), the Pennsylvania bankruptcy court applied a newly stated "totality of the circumstances" test in considering whether a property constitutes "nonresidential real property" for purposes of Section 365(d)(3) of the Bankruptcy Code.

The distinction is important because Section 365(d)(3) requires the immediate payment of post-petition rent and expenses for “nonresidential real property” but not “residential real property.” 

In this Reuters article, Loeb Restructuring & Bankruptcy partner Bethany Simmons and associate Noah Weingarten discuss the Pennsylvania bankruptcy court’s use of a “totality of the circumstances” test to determine whether a property is classified as “nonresidential real property” under Section 365(d)(3) of the Bankruptcy Code, highlighting implications for immediate post-petition rent payments in mixed-use cases.