Rent Obligation Arises on First Day of Month, Even if Sunday

April 30, 2005

A lease said the tenant's rent was due on the first of every month. The tenant filed a petition for bankruptcy on Feb. 2 (a Monday) and didn't pay its February rent. The center asked the bankruptcy court to rule that the tenant's February rent was a pre-petition lease obligation that it must pay. The tenant argued that, because Feb. 1 was a Sunday, its obligation to pay that month's rent arose on Monday—when the tenant filed for bankruptcy—and was thus a post-petition obligation.

A lease said the tenant's rent was due on the first of every month. The tenant filed a petition for bankruptcy on Feb. 2 (a Monday) and didn't pay its February rent. The center asked the bankruptcy court to rule that the tenant's February rent was a pre-petition lease obligation that it must pay. The tenant argued that, because Feb. 1 was a Sunday, its obligation to pay that month's rent arose on Monday—when the tenant filed for bankruptcy—and was thus a post-petition obligation.

A bankruptcy court in Delaware ordered the tenant to pay the February rent. According to the lease, the tenant's obligation to pay rent arises on the first day of the month—even if it's a Sunday. Although the general rule is that if a tenant's rent is due on Sunday, it can pay on Monday, this rule doesn't shift the obligation to pay the rent to the next business day, the court noted. It only allows the tenant to fulfill that obligation on the next business day. Since the tenant's February rent was due before it had filed for bankruptcy, it's a pre-petition obligation that the tenant must fulfill [In re: Garden Ridge Corp.].

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