The Honorable Sandra Day O’Connor, Associate Justice Retired of Supreme Court of… v. Abnos UNITED STATES COURT OF APPEALS 1 FOR THE SECOND CIRCUIT 2 3 August Term 2006 4…

* The Honorable Sandra Day O’Connor, Associate Justice (Retired)
of Supreme Court of the United States, sitting by designation.
-1-
05-6622-bk
Adelphia Bus. Solutions, Inc. v. Abnos
UNITED STATES COURT OF APPEALS 1
FOR THE SECOND CIRCUIT 2
3
August Term 2006 4
(Argued: October 11, 2006 Decided: April 13, 2007) 5
Docket No. 05-6622-bk 6
-------------------------------------------------------x 7
ADELPHIA BUSINESS SOLUTIONS, INC., 8
Debtor-Appellee, 9
-- v. -- 10
NICHOLAS ABNOS, 11
Appellant. 12
-------------------------------------------------------x 13
B e f o r e : JACOBS, Chief Judge, WALKER, Circuit Judge, and 14
O’CONNOR,* Associate Justice Retired. 15
16
Appeal from a judgment of the United States District Court 17
for the Southern District of New York (Alvin K. Hellerstein, 18
Judge), affirming the bankruptcy court’s retroactive approval of 19
the decision of debtor-appellee Adelphia Business Solutions, Inc. 20
to reject under 11 U.S.C. § 365(a) an unexpired, nonresidential 21
lease with lessor Nicholas Abnos. On appeal, Abnos argues that 22

-- 1 of 18 --

-2-
the bankruptcy court lacked equitable authority to make its 1
rejection order retroactive or, should we find that it had that 2
power, abused its discretion in doing so. 3
AFFIRMED. 4
MICHAEL P. RICHMAN, Foley & Lardner 5
LLP, New York, New York, for 6
Appellant. 7
JUDY G.Z. LIU, Weil, Gotshal & 8
Manges LLP, New York, New York, for 9
Debtor-Appellee. 10
JOHN M. WALKER, JR., Circuit Judge: 11
In this appeal from a November 15, 2005 judgment of the 12
United States District Court for the Southern District of New 13
York (Alvin K. Hellerstein, Judge), a bankruptcy court granted a 14
debtor’s motion to reject an unexpired commercial lease pursuant 15
to 11 U.S.C. § 365(a) nunc pro tunc to a date nearly three years 16
earlier when it first told the parties of its intention to make 17
the order retroactive. Under the circumstances of this case, we 18
hold that the bankruptcy court acted within its discretion. 19
BACKGROUND 20
Nicholas Abnos owns the “Historic Firestone Building,” 21
located in Kansas City, Missouri. On September 18, 2001, 22
Adelphia Business Solutions, Inc. (“Adelphia”) entered into two 23
companion leases for the Firestone Building. One lease pertained 24
to two floors of the Firestone Building (the “Building Lease”); 25
the other, to an annex of the same property (the “Annex Lease”). 26
On March 27, 2002, Adelphia commenced voluntary proceedings under 27

-- 2 of 18 --

-3-
Chapter 11 of the Bankruptcy Code. On May 15, 2002, Adelphia 1
filed two motions: one seeking authorization to reject certain 2
unexpired leases of nonresidential real property pursuant to 11 3
U.S.C. § 365(a), and the other seeking an extension of the 4
deadline for assuming or rejecting other unexpired leases of 5
nonresidential real property pursuant to 11 U.S.C. § 365(d)(4). 6
In the motions, Adelphia only identified the address of the 7
Firestone Building, leaving unclear whether it was referring to 8
the Building Lease or Annex Lease. 9
On May 29, 2002, a hearing was held before the bankruptcy 10
court (Robert E. Gerber, Bankruptcy Judge). At around the same 11
time, Adelphia vacated the premises covered by the Building 12
Lease. At the hearing, Adelphia explained that it sought (1) to 13
reject the Building Lease and (2) extend the time for rejection 14
or assumption of the Annex Lease. Abnos objected, arguing that 15
the Building Lease and Annex Lease were actually a single lease 16
that had to be treated as a whole. The bankruptcy court, 17
declining to authorize the rejection of the Building Lease at 18
that time, decided to review the lease agreements and pleadings 19
to determine whether it could rule on the issue of whether the 20
two leases had to be treated as one for rejection purposes 21
without a further evidentiary hearing. The bankruptcy court 22
authorized the rejection of all the other leases listed in the 23
motion. 24

-- 3 of 18 --

-4-
During the hearing, the bankruptcy judge made oral 1
statements indicating that if he approved the rejection of the 2
Building Lease, his approval would be effective as of that 3
hearing date. The bankruptcy judge said, “If [Adelphia is] right 4
. . . justice would say that their clock should stop today 5
because they at least tried to reject today.” The judge also 6
said: 7
What I am of a mind to do is to deal with this as 8
quickly as I can . . . and if the Debtor is right, I 9
will tell you now I will stop their postpetition clock 10
today, and if they’re wrong, then you can collect from 11
them for the postpetition rent until we can get this 12
thing sorted out . . . . That’s what I’m inclined to 13
do to balance your needs for procedural due process and 14
to give [Adelphia] what it tried to achieve, which is 15
that if [Adelphia] is right . . . to stop their 16
postpetition rent clock on the [Building Lease] 17
starting today. 18
19
The bankruptcy court relieved Adelphia from its rent 20
obligation on the Building Lease pending its decision. The 21
bankruptcy judge also said, “I will try to give you folks a 22
decision as quickly as possible.” When Adelphia’s counsel asked 23
if it should keep the Building Lease rent in escrow, the judge 24
responded, “[I]f I get you the answer in a couple of weeks or 25
less, you don’t need that in escrow, do you?” 26
Regrettably, the pending motion to reject languished for the 27
next two years. On November 26, 2003, Abnos filed a claim with 28
Adelphia for administrative expenses for postpetition rent but 29
did not notify the bankruptcy court. Neither party took any 30

-- 4 of 18 --

-5-
action on the pending rejection motion until June 2004, when 1
Abnos raised its status with the bankruptcy court. On July 1, 2
2004, the bankruptcy court requested, and one month later 3
received, supplemental memoranda on the issue of whether the 4
Building Lease and Annex Lease constituted a single lease. In 5
January 2005, Abnos again asked the bankruptcy court about the 6
status of the motion. 7
Finally, on March 10, 2005 - more than thirty-three months 8
after the May 29, 2002 hearing - the bankruptcy court entered an 9
order that found that the Building Lease and Annex Lease were 10
separate contracts and authorized Adelphia to reject the former 11
and assume the latter. The order did not specify whether it had 12
retroactive effect. 13
On April 11, 2005, after the time for appeal of the order 14
had elapsed, Abnos moved for an order directing Adelphia to pay 15
$676,918.16 in administrative expenses under § 365(d)(3), 16
consisting of the unpaid rent under the Building Lease up to the 17
bankruptcy court’s approval of rejection on March 10, 2005. The 18
bankruptcy court noted that Abnos had been justified in filing 19
the objection to the rejection motion because whether the two 20
leases constituted a single lease was “fairly debatable.” On May 21
29, 2005, however, the bankruptcy court ruled that its March 10, 22
2005 decision to grant the motion to reject was retroactive to 23
May 29, 2002. The bankruptcy judge acknowledged that the 24

-- 5 of 18 --

-6-
rejection motion “fell off [his] radar screen, as it apparently 1
fell off the radar screens of the two sides in this dispute as 2
well.” He concluded, however, that he had issued a “final 3
determination” on May 29, 2002 that if he ruled in Adelphia’s 4
favor, the Building Lease rejection would be retroactive to that 5
date and that nothing had transpired since then to justify its 6
alteration. The bankruptcy court reached this decision based on 7
several undisputed facts: It notified the parties on May 29, 2002 8
of its “final determination” on retroactivity; Abnos did not 9
object to that ruling; Adelphia surrendered the premises on or 10
about the date of the hearing; while neither party acted on the 11
pending motion, Abnos made no effort to alert the bankruptcy 12
court of the pendency of the rejection motion until June 2004 or 13
raise concerns about the timing of the approval until April 2005; 14
and, finally, Abnos did not attempt to relet the vacant premises 15
despite “little risk that [Adelphia] would have objected,” 16
“little chance” that Abnos would have thereby waived his 17
objection to rejection, and “no chance whatever” of any 18
forfeiture of rights “if he had explained his needs and concerns 19
to the Court.” 20
On November 8, 2005, the District Court for the Southern 21
District of New York found no abuse of discretion and affirmed 22
the bankruptcy court’s decision. The district court found 23
neither party at fault for the delay. Implicitly rejecting the 24
bankruptcy court’s view that the May 29, 2002 retroactivity 25

-- 6 of 18 --

-7-
pronouncement was a “final determination,” the district court 1
nonetheless held that those statements put Abnos on “clear notice 2
that the bankruptcy judge, if he decided against Abnos, would 3
more likely than not, and maybe certainly, use the May 29 day for 4
stopping the clock.” With that in mind and noting that the 5
“debtor had quit the premises,” the district court concluded that 6
the risk should fall on the landlord because it was “more 7
incumbent on the landlord to seek out a new tenant or to obtain 8
permission to rent to a new tenant.” 9
Abnos timely appealed. 10
DISCUSSION 11
Abnos advances two principal arguments. First, he argues 12
that a bankruptcy court lacks equitable authority to make 13
retroactive its order approving a debtor’s rejection of an 14
unexpired nonresidential lease. Second, he contends that, even 15
if the bankruptcy court has this power, its exercise was an abuse 16
of discretion in this case. After initially reviewing the 17
mechanics behind lease rejection under 11 U.S.C. § 365, we will 18
address each argument in turn. 19
I. Rejection of Leases Under § 365 of the Bankruptcy Code 20
During a Chapter 11 reorganization, 11 U.S.C. § 365(a) 21
provides that “the trustee, subject to the court’s approval, may 22
assume or reject any executory contract or unexpired lease of the 23
debtor.” As a debtor in possession, Adelphia has essentially the 24

-- 7 of 18 --

-8-
same rights, powers, and duties as a trustee. See 11 U.S.C. §§ 1
1107(a), 1108; see also Smart World Techs., LLC v. Juno Online 2
Servs., Inc. (In re Smart World Techs., LLC), 423 F.3d 166, 174 3
n.10 (2d Cir. 2005). 4
Before rejection or assumption, the debtor in possession has 5
certain obligations. Section 365(d)(3) states: 6
The trustee shall timely perform all the obligations of 7
the debtor, except those specified in section 8
365(b)(2), arising from and after the order for relief 9
under any unexpired lease of nonresidential real 10
property, until such lease is assumed or rejected, 11
notwithstanding section 503(b)(1) of this title. 12
13
11 U.S.C. § 365(d)(3) (emphasis added). This subsection 14
therefore requires continued performance under a lease until it 15
is assumed or rejected. Liona Corp. v. PCH Assocs. (In re PCH 16
Assocs.), 804 F.2d 193, 199 (2d Cir. 1986); Authentic Hansom 17
Cabs, Ltd. v. Nisselson (In re Fayolle), 300 B.R. 843, 849 n.4 18
(Bankr. S.D.N.Y. 2003). 19
The Bankruptcy Code imposes a time limit on the debtor in 20
possession’s ability to assume an unexpired lease. Section 21
365(d)(4)(A) states: 22
Subject to subparagraph (B), an unexpired lease of 23
nonresidential real property under which the debtor is 24
the lessee shall be deemed rejected, and the trustee 25
shall immediately surrender that nonresidential real 26
property to the lessor, if the trustee does not assume 27
or reject the unexpired lease by the earlier of-- 28
(i) the date that is 120 days after the date of 29
the order for relief; or 30
(ii) the date of the entry of an order confirming 31
a plan. 32
33

-- 8 of 18 --

-9-
11 U.S.C. § 365(d)(4)(A). The bankruptcy court may extend the 1
time limit under certain conditions. See 11 U.S.C. § 2
365(d)(4)(B). 3
Assumption of an unexpired lease by a debtor entitles the 4
lessor to assert its claims on a priority basis. Frito-Lay, Inc. 5
v. LTV Steel Co. (In re Chateaugay Corp.), 10 F.3d 944, 955 (2d 6
Cir. 1993). Rejection of an unexpired lease, on the other hand, 7
is treated as a breach of the lease, see § 365(g)(1); Stoltz v. 8
Brattleboro Hous. Auth. (In re Stoltz), 315 F.3d 80, 86 (2d Cir. 9
2002); Med. Malpractice Ins. Ass’n v. Hirsch (In re Lavigne), 114 10
F.3d 379, 387 (2d Cir. 1997), allowing the lessor to seek damages 11
as a pre-petition claim. Lavigne, 114 F.3d at 387. In such a 12
case, the lessor may seek allowance of its claim under 11 U.S.C. 13
§ 502(g) with the same priority as a general unsecured creditor. 14
See 11 U.S.C. §§ 365(g), 502(g); N.L.R.B. v. Bildisco & Bildisco, 15
465 U.S. 513, 531 (1984) (“Damages on the contract that result 16
from the rejection of an executory contract . . . must be 17
administered through bankruptcy and receive the priority provided 18
general unsecured creditors.”). 19
From the foregoing, the importance of the lease rejection’s 20
effective date to the parties is obvious. Prior to that date, 21
Abnos is entitled to full administrative rent on a priority 22
basis; after that date, Abnos can only seek rent as an unsecured 23
creditor through a subordinated claim for damages, with the 24

-- 9 of 18 --

-10-
attendant risk that he will receive only a fraction of the rent 1
due under the lease. 2
II. The Bankruptcy Court’s Equitable Authority 3
Abnos contends that the bankruptcy court lacked equitable 4
authority to make retroactive its approval of rejection under 11 5
U.S.C. § 365(a). Abnos first argues that such equitable 6
authority would contravene Congress’s intent behind § 365(d)(3): 7
to assure landlords of post-petition, pre-rejection rent until 8
court-approved rejection. He further argues that this sort of 9
equitable power has no statutory authorization and is not within 10
the equitable authority conferred on the courts by the Judiciary 11
Act of 1789, 1 Stat. 73 (1789). For the latter point, Abnos 12
relies upon Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond 13
Fund, Inc., 527 U.S. 308 (1999), in which the Supreme Court held 14
that a preliminary injunction issued under Fed. R. Civ. P. 65 had 15
to be within the district court’s equitable authority under the 16
Judiciary Act of 1789, which conveyed only “an authority to 17
administer in equity suits the principles of the system of 18
judicial remedies which had been devised and was being 19
administered by the English Court of Chancery at the time of 20
separation of the two countries.” Id. at 318-19 (internal 21
quotation marks omitted). 22
We have not ruled on the existence or scope of a bankruptcy 23
court’s equitable authority to order retroactive approval of 24
rejection under § 365, and there is no need for us to do so here. 25

-- 10 of 18 --

1 We note that two of our sister circuits have held that the
bankruptcy courts have this equitable authority, though without
considering Grupo Mexicano, see Pacific Shores Dev., LLC v. At
Home Corp. (In re At Home Corp.), 392 F.3d 1064, 1071 (9th Cir.
2004); Thinking Machs. Corp. v. Mellon Fin. Servs. Corp. (In re
Thinking Machs. Corp.), 67 F.3d 1021, 1028 (1st Cir. 1995), and
another has suggested that bankruptcy courts have this power, see
EOP-Colonnade of Dallas Ltd. P’ship v. Faulkner (In re
Stronebridge Techs., Inc.), 430 F.3d 260, 273 (5th Cir. 2005).
The Southern District of New York has held that a bankruptcy
-11-
The parties litigated this case in the district court on the 1
assumption that such authority existed: Abnos did not raise this 2
issue below in his brief and conceded at oral argument before the 3
district court that the bankruptcy court possessed the relevant 4
equitable power. In general, a federal appellate court refrains 5
from passing on issues not raised below. See Pease v. Hartford 6
Life Accident Ins. Co., 449 F.3d 435, 446 (2d Cir. 2006). We are 7
more likely to exercise our discretion to consider such issues 8
when, as here, they are purely legal and require no additional 9
fact finding. See Official Comm. of the Unsecured Creditors of 10
Color Tile, Inc. v. Coopers & Lybrand, LLP, 322 F.3d 147, 159 (2d 11
Cir. 2003); Baker v. Dorfman, 239 F.3d 415, 420 (2d Cir. 2000). 12
However, we decline to exercise our discretion; Abnos 13
affirmatively conceded the issue in the district court, and his 14
failure to raise the issue in the bankruptcy court deprived that 15
court of the opportunity to fashion relief such that no court 16
would have to decide the question in this dispute. Therefore, we 17
will assume, without deciding, that the bankruptcy court had 18
equitable authority to make its order retroactive.1
19

-- 11 of 18 --

court may give retroactive effect to its approval of rejection
under § 365 at least where there is “unnecessary delay caused by
the creditor.” See Constant Ltd. P’ship v. Jamesway Corp. (In re
Jamesway Corp.), 179 B.R. 33, 39 (S.D.N.Y. 1995).
-12-
III. Whether the Bankruptcy Court Abused Its Discretion 1
In an appeal from a district court’s review of a bankruptcy 2
court’s decision, we review the decision of the bankruptcy court 3
independently, accepting its factual findings unless they are 4
clearly erroneous and reviewing its conclusions of law de novo. 5
See Ball v. A.O. Smith Corp., 451 F.3d 66, 69 (2d Cir. 2006). 6
Assuming that the bankruptcy court had equitable authority to 7
make its approval of rejection retroactive, we review the 8
exercise of that equitable authority only for abuse of 9
discretion. See Abrahamson v. Bd. of Educ., 374 F.3d 66, 76 (2d 10
Cir. 2004) (“We review a district court’s fashioning of equitable 11
relief for abuse of discretion.”); cf. Cushman & Wakefield of 12
Conn., Inc. v. Keren Ltd. P’ship (In re Keren Ltd. P’ship), 189 13
F.3d 86, 87-88 (2d Cir. 1999) (per curiam) (reviewing nunc pro 14
tunc approval of professionals seeking to render services to a 15
bankruptcy estate under 11 U.S.C. § 327(a) for abuse of 16
discretion). We thus follow our sister circuits, which also 17
review these retroactivity decisions for abuse of discretion. 18
See At Home, 392 F.3d at 1072; Thinking Machs., 67 F.3d at 1028. 19
The procedural posture of this case presents us with an 20
unusual situation: While we do not decide whether the bankruptcy 21
court has equitable authority to make its approval of the lease 22

-- 12 of 18 --

2 Chief Judge Jacobs deems that the grounds discussed in Section
III.A are sufficient for affirmance and does not subscribe to
Section III.B.
-13-
rejection retroactive, we still must determine if the bankruptcy 1
court abused its discretion in exercising a power that may not 2
exist. We hesitate to fashion general rules guiding the exercise 3
of a power that may be unfounded. Nonetheless, to provide 4
guidance in future decisions, we explore the contours of this 5
purported power based upon the decisions of other courts that 6
have found it to exist or assumed its existence. 7
A2
8
The fault for the 33-month delay in deciding the rejection 9
motion principally rested with the bankruptcy court (as it 10
candidly conceded). However, the parties were not blameless: 11
They remained quiescent even though they knew that the premises 12
were vacant and the losses were accruing for someone. In 13
assigning the risk of loss as an equitable matter, the bankruptcy 14
court properly considered how the parties conducted themselves in 15
the circumstances of this case. While neither party was more at 16
fault than the other for the delay in deciding the rejection 17
motion, we do not believe that the bankruptcy court abused its 18
discretion in finding that the equities tipped in favor of the 19
May 29, 2002 effective date. 20
Under the assumption that it could make its order 21
retroactive, the bankruptcy court’s pronouncement at the May 29, 22

-- 13 of 18 --

3 We also note that if the bankruptcy court has equitable
authority to make its approval of rejection retroactive, the
landlord’s opportunity to relet arguably furthers § 365(d)’s goal
of, inter alia, preventing needless vacancies of real property.
The duties imposed by § 365(d)(3) (requiring the debtor to
perform his contractual obligations until rejection) and §
365(d)(4) (setting time limits on the debtor’s ability to assume
or reject) arose from the “Shopping Center Bankruptcy Amendments”
of the Bankruptcy Amendments and Federal Judgeship Act of 1984,
Pub. L. No. 98-353, 98 Stat. 333 (1984). Through these
amendments, Congress sought to “remedy the long-term vacancy or
partial operation of space by a bankrupt tenant.” At Home, 392
F.3d at 1068 (citing 130 Cong. Rec. S8891 (1984) (statement of
Sen. Hatch), reprinted in 1984 U.S.C.C.A.N. at 598). Congress
wanted to mitigate the problems faced by landlords and other
tenants in debtors’ buildings under the prior scheme: Landlords
lost money because they could not evict the debtors but had to
provide them with the properties and related services, and
debtors’ co-tenants lost money through decreased traffic and were
required to subsidize the debtors’ shares of common area charges.
Id. (citing 130 Cong. Rec. S8891 (1984) (statement of Sen.
Hatch), reprinted in 1984 U.S.C.C.A.N. 590, 598-99). The
-14-
2002 hearing put Abnos on clear notice of the possibility that an 1
order approving rejection would be retroactive to the hearing 2
date. We need not resolve the parties’ dispute over whether the 3
May 29, 2002 pronouncement somehow bound Abnos; at the very 4
least, it notified Abnos of the proposed effective date and of 5
the consequent risk to him – a risk that increased as time passed 6
without any decision on the rejection motion. 7
B 8
The bankruptcy court also properly considered that Adelphia 9
had vacated the premises and thereby provided Abnos with the 10
opportunity to lease the premises to another tenant, which he did 11
not try to do. By reletting, Abnos could have mitigated the risk 12
of which he was on notice.3 This factor weighs in favor of 13

-- 14 of 18 --

amendments required that the debtor promptly determine what to do
with the unexpired lease. Id. at 1069. A bankruptcy court might
further § 365’s legislative purpose by using the spur of
retroactivity to motivate landlords to relet.
-15-
granting retroactive relief here. See At Home, 392 F.3d at 1074 1
(holding that a bankruptcy court did not abuse its discretion in 2
considering that the tenant vacated the leased premises). 3
Compare In re Fleming Cos., 304 B.R. 85, 96 (Bankr. D. Del. 2003) 4
(permitting retroactivity where premises were surrendered), and 5
In re Amber’s Stores, 193 B.R. 819, 827 (Bankr. N.D. Tex. 1996) 6
(same), with In re Chi-Chi’s, Inc., 305 B.R. 396, 399 (Bankr. D. 7
Del. 2004) (declining to order retroactivity when the premises 8
were not surrendered), and In re Cafeteria Operators, L.P., 299 9
B.R. 384, 394 (Bankr. N.D. Tex. 2003) (ordering retroactive 10
rejection of leases of vacated premises but not for occupied 11
premises). 12
Abnos argues that he could not control when the bankruptcy 13
court would issue its ruling and that he was barred from 14
unilaterally reletting the premises because 11 U.S.C. § 362(a)(3) 15
provides an automatic stay of “any act to obtain possession of 16
the property of the estate or of property from the estate.” See 17
also Smart World Techs., 423 F.3d at 174; Roslyn Savings Bank v. 18
Comcoach Corp. (In re Comcoach Corp.), 698 F.2d 571, 573 (2d Cir. 19
1983). However, Abnos very likely could have relet by requesting 20
court-ordered relief from the stay. See 3 Collier on Bankruptcy 21

-- 15 of 18 --

-16-
¶ 365.09[4] (proposing that bankruptcy courts grant relief from 1
the automatic stay to allow a landlord to proceed in state court 2
to regain possession of the premises); cf. In re Ames Dep’t 3
Stores, Inc., 306 B.R. 43, 52-53 (Bankr. S.D.N.Y. 2004) (stating 4
in dicta that if a debtor continued occupancy after rejection, 5
the landlord might be entitled to relief from the stay to 6
complete eviction). 7
Abnos also argues that reletting would have been 8
inconsistent with his opposition to the rejection motion. But 9
Abnos never presented this dilemma (if it is a dilemma) to the 10
bankruptcy court, which could have fashioned relief pending the 11
delay or issued its ruling more promptly. 12
We reject Abnos’ argument that the debtor must bear the risk 13
of delay in prosecuting its motion for approval of rejection 14
unless the landlord was at fault for the delay or acted in bad 15
faith. A bankruptcy judge “must not be shackled with 16
unnecessarily rigid rules when exercising the undoubtedly broad 17
administrative power granted him under the Code,” but rather 18
“must have substantial freedom to tailor his orders to meet 19
differing circumstances.” Comm. of Equity Sec. Holders v. Lionel 20
Corp. (In re Lionel Corp.), 722 F.2d 1063, 1069 (2d Cir. 1983); 21
see also At Home, 392 F.3d at 1075 (“We likewise eschew any 22
attempt to limit the factors a bankruptcy court may consider when 23
balancing the equities in a particular case.”). Section 105(a) 24
grants broad equitable power to the bankruptcy courts to carry 25

-- 16 of 18 --

-17-
out the provisions of the Bankruptcy Code so long as that power 1
is exercised within the confines of the Bankruptcy Code. See 11 2
U.S.C. § 105(a); Smart World Techs., 423 F.3d at 183-84. 3
Assuming that the bankruptcy courts have the authority to issue 4
orders like the one at issue, we must give them generous latitude 5
to shape equitable relief under § 365, and see no reason to make 6
landlord culpability a requirement for retroactivity. We note 7
that numerous lower court decisions have made orders retroactive 8
without considering whether the landlord acted in bad faith. 9
See, e.g., Stonebriar Mall Ltd. P’ship v. CCI Wireless, LLC (In 10
re CCI Wireless, LLC), 297 B.R. 133, 140 (D. Colo. 2003) (holding 11
that although the lessor did not cause delay, the bankruptcy 12
court did not abuse its discretion in ordering retroactive relief 13
where the debtor had not been in possession of leased premises 14
since before filing for Chapter 11 protection); Amber’s Stores, 15
193 B.R. at 827. 16
We are also unpersuaded by the proposition that because 17
Abnos had no duty to mitigate his losses from breach of the lease 18
under Missouri law, see JCBC, LLC v. Rollstock, Inc., 22 S.W.3d 19
197, 200-01 (Mo. Ct. App. 2000) – which we assume governs the 20
lease – the bankruptcy court should not have considered whether 21
he could relet. Abnos was certainly free not to mitigate his 22
damages, and under Missouri law he may be entitled to damages 23
from the breach occasioned by the rejection without any penalty 24
for not mitigating his losses. This rule of contract law, 25

-- 17 of 18 --

-18-
however, is beside the point; it does not affect the bankruptcy 1
court’s equitable consideration of the practical effect of Abnos’ 2
ability to protect himself by reletting the premises. See At 3
Home, 392 F.3d at 1074 (“Nothing in the statute, in the 4
precedents, or in logic precludes the bankruptcy court from 5
considering the practical effects of a tenant’s lack of occupancy 6
when balancing the equities in the context of § 365(d)(3).”). 7
CONCLUSION 8
For the foregoing reasons, the judgment of the district 9
court is AFFIRMED. 10

-- 18 of 18 --