BLABLMBTQ, LLC

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IN THE UNITED STATES BANKRUPTCY COURT
FOR THE WESTERN DISTRICT OF TEXAS
AUSTIN DIVISION
In re:
BLABLMBTQ, LLC,
Debtor.
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Case No. 25-10545-cgb
Chapter 11
ORDER AND MEMORANDUM OPINION
DENYING MOTION FOR ALLOWANCE AND
PAYMENT OF ADMINISTRATIVE EXPENSE CLAIM
Introduction
In this case, a landlord asks for an administrative expense claim for the period
between the petition date and the date the lease was rejected. The Court holds that
the landlord is not entitled to an administrative expense claim because (1) no rent
payments came due after the petition date and before move out; (2) the debtor was
ready, willing, and able to move out of the leased premises the day before it filed
bankruptcy but was locked out and unable to move its inventory; and (3) the debtor’s
postpetition use of the property was involuntary and unnecessary.
Dated: February 10, 2026.
__________________________________
CHRISTOPHER G. BRADLEY
UNITED STATES BANKRUPTCY JUDGE
________________________________________________________________
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Background
On April 18, 2025, BLABLMBTQ, LLC (the “Debtor”) filed this chapter 11
case and also filed its Motion to Reject Unexpired Lease of Real Property Nunc Pro
Tunc (the “Motion to Reject”).1 The Motion to Reject sought rejection of a lease
regarding property located at 2150 Chisholm Trail in Round Rock, Texas (the
“Leased Premises”).2 The Court held a hearing on the Motion to Reject and entered
an order that provided that the lease would be rejected “effective on the date
immediately following the date by which the Debtor removes all of the Debtor’s
personal property from the Leased Premises and has unequivocally surrendered
possession of the Leased Premises to Landlord.”3 The Debtor moved out of the
Leased Premises on April 28, 2025, thus the lease was rejected effective April 29,
2025.4
About five months later, the Debtor successfully obtained confirmation of its
chapter 11 plan.5 About two months after that, the Debtor’s former landlord, Exeter
2150 Chisholm Trail, LP (“Exeter”), filed Exeter 2150 Chisholm Trail LP’s Motion
for Allowance and Payment of Administrative Expense Claim (the “Motion for
Admin Claim,” arguing that it should be allowed an administrative expense claim
totaling $25,488.92 for rent accrued during the twelve days between the petition date
and the date the Debtor rejected the lease.6 The Debtor timely filed a response,
arguing that the motion should be denied because Exeter had locked the Debtor out
of the premises pre-petition and it had been unable to remove its personal
possessions prior to filing bankruptcy.7 The Court then set the Motion for Admin
Claim for hearing.8
During the hearing, Daniel Davila, the property manager for the Leased
Premises, and Katlyn Maupin, the Debtor’s owner, testified.9 Mr. Davila confirmed
that the Debtor was locked out of the premises as of April 17, 2025 because of
1 Pet., ECF No. 1; Mtn to Reject, ECF No. 6. The facts stated herein appear to be uncontested.
Insofar as they are contested, the Court finds these facts to be true based on the record before
it.
2 Mtn to Reject, ECF No. 6; Exeter Ex. A (Proof of Claim referencing property address).
3 Order Granting in Part and Denying in Part Mtn to Reject, ECF No. 27.
4 Mtn for Admin. Claim., ECF No. 115.
5 Order Confirming Plan, ECF No. 100.
6 Mtn for Admin. Claim., ECF No. 115; Resp., ECF No. 116.
7 Resp., ECF No. 116.
8 Hr’g Notice, ECF No. 118.
9 Audio of 12/16/25 Hr’g.
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monetary defaults under the lease.10 He further testified that he learned of the
bankruptcy filing at the end of the day on Monday, April 21st.11 Mr. Davila then
texted Ms. Maupin to say that he had approval to let her back into the space and
provided her the code to a lockbox with a key to the premises.12 Per Mr. Davila’s
testimony, Ms. Maupin texted back that night and confirmed that she had access to
the property.13 Mr. Davila and Ms. Maupin coordinated a move out date, and the
Debtor emptied the premises by the end of the day on April 28th.14
Ms. Maupin credibly testified that the Debtor was prepared to move out of the
leased premises on April 17th and had scheduled a mover for 7:00 a.m. that day to
relocate the Debtor’s inventory to a new space, but that Mr. Davila refused to let
them enter the Leased Premises.15 On cross-examination, Mr. Davila admitted that
he had been contacted by the Debtor’s counsel about accessing the property before
the petition was filed, and he had refused to grant access unless the Debtor paid
$202,663.07.16 Ms. Maupin testified that the Debtor then filed bankruptcy the next
day after a failed attempt to negotiate a resolution with Exeter.17
Mr. Davila texted Ms. Maupin on the evening on April 21st to let her know
that she could access the Leased Premises.18 She credibly testified that moving out
that night was not possible because there was a large amount of inventory and she
needed to hire movers.19 Due to availability, the movers were not able to start the
move until the afternoon of Friday, April 25th, and did not complete the move until
mid-day the next Monday, April 28th.20 Ms. Maupin also testified that the Debtor
could not conduct business during the time the inventory was locked in the Leased
Premises because it would not be able to fulfill orders without access to the
inventory.21
10 Audio of 12/16/25 Hr’g.
11 Audio of 12/16/25 Hr’g.
12 Audio of 12/16/25 Hr’g.
13 Audio of 12/16/25 Hr’g.
14 Audio of 12/16/25 Hr’g.
15 Audio of 12/16/25 Hr’g.
16 Audio of 12/16/25 Hr’g; Debtor Ex. 3 (Email from Davila to Sather on April 17, 2025).
17 Audio of 12/16/25 Hr’g.
18 Audio of 12/16/25 Hr’g.
19 Audio of 12/16/25 Hr’g.
20 Audio of 12/16/25 Hr’g.
21 Audio of 12/16/25 Hr’g.
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Analysis
When debtors file bankruptcy, the costs of administering and preserving the
bankruptcy estate are typically treated as administrative expenses and paid before
most other types of claims so that the debtors can either continue to operate or
liquidate their assets for the benefit of their creditors. Specifically, section 503(b)
provides that “there shall be allowed administrative expenses . . . including (1)(A)
the actual, necessary costs and expenses of preserving the estate.” 22 Section
507(a)(2) grants these administrative claims priority over almost all other types of
claims.23
In addition, when a debtor is party to an unexpired leased of nonresidential
real property on the petition date, section 365(d)(3) of the Bankruptcy Code offers
protection to the debtor’s landlord—who is often unwillingly thrust into the
bankruptcy system—by providing that the debtor (or trustee) “shall timely perform
all the obligations of the debtor . . . arising from and after the order for relief under
any unexpired lease of nonresidential real property, until such lease is assumed or
rejected, notwithstanding section 503(b)(1) of this title.”24
1. Section 365(d)(3) does not apply to the Exeter’s claim because the
obligation to pay rent arose pre-petition and no new obligation arose
post-petition.
Courts are split on how to apply section 365(d)(3)’s requirement that the
debtor “timely perform all obligations” arising under the lease during a period of
time after the petition is filed but before the decision to assume or reject has been
taken.25 As explained in its Steepologie opinion, this Court takes the view that under
section 365(d)(3), a landlord with an unexpired lease of nonresidential real property
has an automatic administrative claim for rent— “automatic” in the sense that there
is no need to prove that the rent was an “actual or necessary” expense as required by
section 503(b)(1).26 Thus, if section 365(d)(3) were to apply to Exeter’s claim in this
case, Exeter would not need to meet the requirements of section 503(b)(1) to obtain
an administrative expense claim.
22 11 U.S.C. § 503(b).
23 11 U.S.C. § 507(a)(2).
24 11 U.S.C. § 365(d)(3).
25 See In re Steepologie, LLC, 673 B.R. 630, 635-39 (Bankr. W.D. Tex. 2024) (analyzing the
three approaches courts have taken in applying section 365(d)(3)).
26 Id. at 635.
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But courts also disagree on when exactly a debtor’s obligation to pay rent
“arises,” which causes disparate interpretations of section 365(d)(3)’s directive to
pay rent that “arises from and after the order for relief.”27 In his Simbaki decision,
Judge Isgur laid out the question in this way:
Section § 365(d)(3) requires rent to be paid that “aris[es] from and
after the order for relief.” Traditionally, commercial leases require rent
to be paid on the first of the month. Consider a scenario where the
debtor's rent is due on January 1, but has not been paid. The debtor then
files a voluntary petition on January 15.3 Can the landlord require the
debtor to pay rent as an administrative expense for January 15–31
(commonly known as the stub rent period) under § 365(d)(3)?28
The main approaches to answering this question concerning the stub rent
period are the “Proration Theory” and the “Billing Theory.”29 Under the Proration
Theory, a debtor’s obligation to pay rent “arises” daily and so the landlord is entitled
to an administrative claim for each day of the debtor’s use of the leased premises
during the stub rent period on a daily basis.30
By contrast, under the “Billing Theory,” the obligation arises at the time
dictated by the lease.31 Thus, if (as here) rent becomes due on the first of the month
and the debtor files bankruptcy before the first of the next month, the landlord’s
claim for the stub rent period is not entitled to an automatic administrative claim
under section 365(d)(3) because the obligation to pay rent during such period did not
arise from or after the order for relief.
Although the Fifth Circuit has yet to weigh in on whether the Proration Theory
or the Billing Theory should prevail, bankruptcy courts in the Fifth Circuit have
generally applied the Billing Theory and found that rent owed for the stub rent period
is not entitled to an administrative claim under section 365(d)(3) and that landlords
27 11 U.S.C. § 365(d)(3).
28 In re Simbaki, Ltd, No. 13-36878, 2015 WL 1593888 at *4 (Bankr. S.D. Tex. Apr. 3, 2015).
29 In re Imperial Beverage Group, LLC, 457 B.R. 490, 501 (Bankr. N.D. Tex 2011); Simbaki,
2015 WL 1593888 at *4-5.
30 Imperial, 457 B.R. at 501 (citing In re Stone Barn Manhattan, LLC, 398 B.R. 359, 365 (Bankr.
S.D. N.Y. 2008)).
31 Imperial, 457 B.R. at 501; Simbaki, 2015 WL 1593888 at *5.
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must instead seek allowance of stub rent claims under section 503(b)(1) (meaning
they must show that the claim is for an “actual and necessary cost” of the estate).32
These courts reason that under the plain language of the statute, the debtor
must pay obligations “arising from and after the order for relief under any unexpired
lease of nonresidential real property.”33 In other words, the statute teaches that it is
the lease that determines when the payment obligation arises. Thus, “[i]f the
obligation to pay rent comes due under the terms of the lease before the order for
relief, then under the billing theory it cannot be recovered under § 365(d)(3).”34 This
approach best squares with the statutory text and is not absurd. The Court will follow
it. Thus, Exeter is not entitled to an automatic administrative claim under section
365(d)(3) and must instead seek allowance under section 503(b)(1).
2. Exeter’s stub rent claim should not be awarded administrative status
because the Debtor’s post-petition use of its space was not necessary.
As discussed, to qualify as an administrative expense under section 503(b)(1),
an “actual and necessary cost” must arise “post-petition and as a result of actions
taken by the [debtor in possession] that benefitted the estate.”35 This expense fails
that test. The Debtor was ready, willing, and able to vacate the premises pre-petition
and was unable to do so, solely because of Exeter’s refusal to allow entry. Exeter is
not entitled to an administrative claim under section 503(b)(1).
Conclusion
Thus, the Motion for Allowance of and Payment of Administrative Expense
Claim should be denied because the Debtor’s post-petition use of the Leased
Premises would have been unnecessary if Exeter had not barred the Debtor from
removing its personal property pre-petition.
32 See, e.g., Imperial, 457 B.R. at 501; Simbaki, 2015 WL 1593888 at *5. See also In re Bella
Logistics LLC, 583 B.R. 674 (Bankr. W.D. Tex. 2018) (applying the “Billing Theory”
approach when determining how a claim should be classified upon conversion of the case from
chapter 11 to chapter 7); In re TRP Brands LLC, No. 24 B 1529, 2026 WL 190452 (Bankr.
N.D. Ill. Jan. 23, 2026) (recent opinion applying the Billing Theory approach).
33 11 U.S.C. § 365(d)(3) (emphasis added); Imperial, 457 B.R. at 501; Simbaki, 2015 WL
1593888 at *5.
34 Imperial, 457 B.R. at 501.
35 Nabers Offshore Corp. v. Whistler Energy II, LLC (In re Whistler Energy II, LLC), 931 F.3d
432, 441 (5th Cir. 2019) (quoting Jack/Wade Drilling, Inc., 258 F.3d 385, 387 (5th Cir. 2001)).
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ACCORDINGLY, IT IS ORDERED that the Motion for Allowance of and
Payment of Administrative Expense Claim is denied.
# # #
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