## Facts

- Nicholas and Andrea Enderle filed a Chapter 13 bankruptcy petition in April 2005.
- The bankruptcy court confirmed the Enderles’ Chapter 13 plan.
- The confirmed plan provided that the Enderles would assume a prepetition vehicle lease with Ford Motor Credit Company for a 2003 Ford Ranger.
- After confirmation, the Enderles fell behind on lease payments.
- In December 2005, Ford Motor Credit moved for relief from the automatic stay based on the payment default.
- The bankruptcy court granted stay relief, and the vehicle was repossessed and sold at auction.
- After applying the auction proceeds, a lease deficiency balance of $852.32 remained.
- Ford Motor Credit filed a motion seeking allowance of an administrative-expense claim under 11 U.S.C. § 503(b)(1)(A) for $1,477.32, consisting of the $852.32 deficiency plus $625 in attorney’s fees.
- The Enderles objected to administrative-expense treatment.
- After a hearing, the bankruptcy court orally allowed an administrative-expense claim for the $852.32 deficiency and later issued a written opinion explaining that ruling.

## Issues

1. Whether the post-sale deficiency that remained after repossession of a vehicle leased under an agreement assumed through a confirmed Chapter 13 plan constitutes an administrative expense under 11 U.S.C. § 503(b)(1)(A).
2. Whether the lessor’s attorney’s fees incurred in connection with stay-relief proceedings and pursuing the administrative-expense request qualify for administrative-expense allowance under § 503(b)(1)(A).

## Decision

- The court allowed Ford Motor Credit an administrative-expense claim in the amount of $852.32 for the lease deficiency.
- The court denied administrative-expense allowance for the requested $625 in attorney’s fees.
- The motion was granted in part and denied in part.

## Legal Principles

- Administrative expenses under 11 U.S.C. § 503(b)(1)(A) are limited to “actual, necessary costs and expenses of preserving the estate,” and the claimant bears the burden of proof.
- When a debtor assumes an executory contract or unexpired lease, the assumption is an act of estate administration that makes the assumed obligations postpetition obligations of the estate, distinct from the prepetition obligations that existed before assumption.
- Under 11 U.S.C. § 365(g)(2), breach of an assumed executory contract or lease is treated as occurring at the time of the breach (post-assumption), which supports treating resulting damages as postpetition liabilities rather than prepetition claims.
- Damages that flow from a post-assumption default on an assumed vehicle lease—including a deficiency remaining after repossession and sale—may qualify as an administrative expense because they arise from the estate’s post-assumption obligation undertaken as part of the Chapter 13 reorganization effort.
- Contract-based attorney’s fees are not automatically entitled to administrative-expense status; the fees must separately satisfy § 503(b)(1)(A) as actual and necessary expenses of preserving the estate, not merely expenses incurred to enforce a creditor’s rights.

## Conclusion

The bankruptcy court held that because the Enderles assumed the vehicle lease through their confirmed Chapter 13 plan, the resulting post-default deficiency after repossession and auction sale was a post-assumption obligation allowable as an administrative expense under § 503(b)(1)(A), but Ford Motor Credit’s attorney’s fees did not independently qualify for administrative-expense treatment and were disallowed.


In re Enderle, 352 B.R. 444 (2006)