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2007 NORTON BANKRUPTCY LAW SEMINAR MATERIALS

CHAPTER 11 OPERATIONS

By Hon. Randolph J. Haines

 

for relief, reasoning that the corpus of the trust was not property of the estate. A successful PACA claimant may also be able to recover interest on the trust funds and/or attorneys' fees.


V. UTILITIES

Section 366 governs the rights of utilities to discontinue service. Under § 366(a), a utility may not alter, refuse or discontinue service to or discriminate against the debtor solely on the basis of the commencement of a bankruptcy or that a debt owed by the debtor before the order for relief was not timely paid. However, § 366(b) allows the utility to alter, refuse or discontinue service if the debtor does not, within 20 after the date of the order for relief, furnish adequate assurance of payment through a deposit or other security after such date. The court may order reasonable modification of the deposit amount or other security upon request of interested party. If there was a prepetition deposit and a prepetition default, there is authority that the utility may recoup its prepetition claim against the deposit without obtaining stay relief. The legislative history to § 366 indicates the burden is on the debtor to offer to furnish the adequate assurance before the expiration of the twenty-day period and then seek court determination of what constitutes adequate assurance.

Section 366 was significantly amended by BAPCPA's addition of § 366(c) to specify what may and what may not constitute adequate "assurance of payment." "Assurance of payment" is defined by § 366(c)(1)to mean a cash deposit, letter of credit,

 

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