Operating leases in a bankruptcy scenario
Analysis of Bankruptcy Code Section 502(b)(6) as amended in 2005

New rules: Debtor has 120 days to assume or reject leases. For those leases rejected by the debtor, the landlord/lessor is eligible to submit a claim. The claim assumes the lease was rejected just before the CH11 petition was filed, and is therefore a pre-petition liability. The lessor's claim is general unsecured and is limited to the greater of:

1) 1 year of "rent reserved" which is minimum rent, property tax, insurance, common area mntc and annual capital improvement fees, or

2) 15% of the remaining rental payments over the term of the lease but this amount is NOT to exceed 3 YEARS of rent reserved

SO THE MAXIMUM LANDLORD/LESSOR CLAIM IS 3X RENT

Note that rent reserved does not include utilities, mntc and repair, remodeling and construction costs, and interest.

The math works such that leases with less than 6.66 years remaining will have a claim equal to one year of rent. Leases with over 20 years remaining will be capped at the 3x level.

Below is a quick but good tool to estimate the suitable lease multiple to use in calculating the potential claim from lessor's. It is highly dependent on the range of lease terms that a company has remaining on it's balance sheet. If a weighted average term is known, then
might be a better input.

The randomized sample below shows that the multiple is probably closer to 2.0x-2.3x for rent ranges of 1 to 30 years

https://docs.google.com/fileview?id=0BxN5HJBKNNCnNzY5OWE0ZDItZjM4Mi00N2RjLThkNWMtNDk2MjI2MTMwYmRm&hl=en