6525 Belcrest Road, LLC v. Dewey, L.C.

This Court held that state law creates and defines property interests in bankruptcy, so that no party receives "a windfall merely by reason of the happenstance of bankruptcy." Butner v. United States, 440 U.S. 48, 55 (1979). A creditor's claim must also reflect its right to payment under nonbankruptcy law. Travelers Cas. & Sur. Co. of Am. v. Pac. Gas & Elec. Co., 549 U.S. 443, 450 (2007). Only the holder of a right to payment may assert it, and the claimant bears the burden of proof. Raleigh v. Ill. Dep't of Revenue, 530 U.S. 15, 20 (2000). Prepetition, a creditor assigned "all right, title and interest" in a ground lease to a third party, keeping only a right to rent through a date certain. Yet, the creditor filed a proof of claim as "lessor" for rejection damages measured by the remaining 24-year term. The courts below allowed the full § 502(b)(6) cap, holding that 11 U.S.C. § 101(5) accelerated all future rents, including rents that, under the assignment and state law, belonged to the transferee. That holding conflicts with Butner and Travelers and departs from Fourth and Sixth Circuit precedent measuring a lessor's claim under state law before applying the cap. The question presented is: Whether 11 U.S.C. § 101(5) determines whether an assignor or assignee of a commercial real-property lease has standing to assert a claim for lease rejection damages, and in what amount under § 502(b)(6), or whether those questions must be determined by state law and the parties' assignment pursuant to § 502(b)(1), Butner, and Travelers.