Heller Ehrman LLP

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re 	) Bankruptcy Case
) No. 08-32514DM
HELLER EHRMAN LLP, fka HELLER, 	)
EHRMAN, WHITE & McAULIFFE, LLP, 	) Chapter 11
)
Debtor. 	)
___________________________________)
MEMORANDUM DECISION ON MOTION FOR
ALLOWANCE OF ADMINISTRATIVE CLAIM
The court has considered the motion of AboveNet
Communications, Inc. (“AboveNet”) for administrative priority in
the sum of $162,394.07; the opposition of debtor, Heller Ehrman
LLP (“Debtor”); AboveNet’s reply; and the arguments of counsel at
a hearing on February 26, 2010.
After a review of the applicable documents and 	consideration
of the undisputed facts set forth in the papers, the court will
deny the motion except to the extent of a monthly lease charge for
dark fiber optical strands from the petition date (December 28,
2008) to the effective date of Debtor’s rejection of all contracts
between it and AboveNet (June 22, 2009).
Despite the terminology used by counsel for AboveNet in the
motion, only the provision of dark fiber is governed by a lease as
contemplated in Bankruptcy Code section 365(d)(5). 	Thus it is
entitled to be paid in accordance with the controlling Leased
Signed and Filed: March 01, 2010
________________________________________
DENNIS MONTALI
U.S. Bankruptcy Judge
________________________________________
Entered on Docket
March 02, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 08-32514 Doc# 962 Filed: 03/01/10 Entered: 03/02/10 16:16:01 Page 1 of 3

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Fiber Supplement to the Master Products and Services Agreement.
The remaining portion of AboveNet’s claim arises from the
provision of services (generally wide area network and internet
access and services), not entitled to the protections accorded by
section 365(d)(5) to the lease of personal property. 	Under
controlling authority cited by Debtor, the amount of AboveNet’s
administrative claim is to be measured by the reasonable value of
the services realized by Debtor.
The evidence is undisputed that Debtor did not avail itself
of those services post-petition. 	Accordingly it realized no value
from them.
AboveNet’s reliance on In re Native American Systems, Inc.,
351 B.R. 135 (BAP 10th Cir. 2006) does not help it. 	In that case
the debtor maintained technical service contracts with two
customers; the administrative claimant actually was contractually
obligated to provide the services to those customers. 	Because
the debtor retained the contracts with the customers in
anticipation of its reorganization, it was necessary to have the
claimant’s performance available when needed. 	Without that
availability, debtor may have breached its contracts with the
customers. 	On those facts the Bankruptcy Appellate Panel
concluded that the continued availability of the claimant’s
services was beneficial to the debtor because it needed the
claimant to provide, or at least be available to provide, service
to its customers. 	351 B.R. at 142.
Here Debtor shut down most of its AboveNet-related operations
pre-petition; never after the petition date did it actually use,
or need to have available, AboveNet’s services. 	Accordingly, the
Case: 08-32514 Doc# 962 Filed: 03/01/10 Entered: 03/02/10 16:16:01 Page 2 of 3

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estate received no benefit and thus has no administrative priority
liability in respect of those potential services.
Because the lease of dark fiber was neither terminated in
accordance with applicable contractual terms, and was only
rejected as of June 22, 2009, AboveNet is entitled to be paid
forthwith the post-petition lease payments coming due between
December 28, 2008, and June 22, 2009 in accordance with section
365(d)(5). 	The court understands that total to be approximately
$18,000.
Counsel should meet and confer to determine the exact amount
due pursuant to the above paragraph, and then counsel for Debtor
should serve and upload an order granting in part and denying in
part AboveNet’s motion for the reasons stated in this Memorandum
Decision, and directing Debtor to pay promptly the proper amount
due under the lease of dark fiber.
* * * 	END OF MEMORANDUM DECISION * * *
Case: 08-32514 Doc# 962 Filed: 03/01/10 Entered: 03/02/10 16:16:01 Page 3 of 3