Glossary of Bankruptcy Terms Used in this Guide

• Jurisdiction: United States

Administrative Expense

Typically, obligations or expenses of the debtor-in-possession that arise after the filing of the bankruptcy petition and that include the actual and necessary costs of preserving the estate. Such expenses have priority over general unsecured claims and are set forth in § 502 of the Code.

Assignment

After assumption, a debtor may generally transfer an unexpired lease of nonres-idential real property to a third party, irrespective of provisions prohibiting such transfer.

Assumption

The decision by a debtor, which must then be affirmed by the bankruptcy court, after notice and hearing, that the debtor-in-possession will be fully liable for the obligations under the lease. Typically requires the curing of most monetary defaults. A debtor must assume the executory contract in its entirety. Upon assumption, the bankruptcy estate becomes bound by the contract, and all amounts thereafter owed by the debtor under the contract will constitute administrative expense claims, subject to § 503(b)(7) of the Code, which are generally entitled to be paid in full. If an executory contract is in default at the time the debtor seeks to assume the contract, assumption will not be permitted unless all monetary defaults are promptly cured, and adequate assurance of future performance of the debtor's obligations under the contract is provided.

Attornment

A tenant's formal agreement to be a tenant of a new...