InWM Inland Adjacent LLC v. Mervyn’s LLC , Adv. Pro. No. 09-50920 (KG) (Del. Bankr. Jan. 8, 2013), the U.S. Bankruptcy Court for the District of Delaware faced a question of first impression: whether a claim arising from an indemnification provision in a nonresidential commercial lease with the debtor, which the debtor rejected post-petition, was entitled to administrative priority under §365(d)(3), or was a pre-petition, general unsecured claim under §502(g).
The facts of the case, as related by the court, were straightforward and not disputed. In January 2008, the debtors executed a lease on a commercial property owned by WM Inland. The lease included a construction agreement related to prospective property improvements. Together, the lease and construction agreement required the debtor to indemnify Inland for various liabilities prior to, during and after the term of the lease, including a duty to keep the premises free of mechanic’s liens and to pay Inland as additional rent all amounts and charges due under the lease, including attorney fees. The lease provided that the debtor would be liable to Inland for any lien or claim that may be alleged to have arisen out of work performed by the debtor.
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