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J.A. Jones, Inc., 492 F. 3d 242 (4th Cir. 2007) may have expanded that notion. There, the court held that the estate of a motorist killed in a well-publicized accident in a construction zone was a known creditor entitled to actual notice of the bar date even though the debtor hadn't been notified that the estate intended to assert a claim and the debtor might have believed it was not at fault. The court noted that the debtor should have been aware of a high probability of a claim and did give notice to its liability insurer. See also Pacificorp v. W.R. Grace, 2006 WL 2375371 (D. Del. 2007) (notice by publication ok for environmental creditors where debtors had no relationship with claimants even though it may have known current and prior property owners faced liability).
Creditors must watch time limits on rejection of equipment leases. Thus, in In re Federal-Mogul Global Inc., 222 Fed. Appx. 196 (3d Cir. 2007), the Court held that where equipment lease payments were due on the first of the month and the leases were rejected in mid-month, the entire rent is due as an administrative claim, and there is no proration of the rent to the date of rejection because the leases didn't provide for proration and the debtor never sought to modify the leases under section 365(d)(5). The rule is the same for real property leases.
In re Bethlehem Steel Corp., 479 F.3d 167 (2d Cir. 2007) (lump sum retirement benefits for employee terminated during chapter 11 case not entitled to administrative priority; payment was earned over the course of employment and debtor did not receive consideration; may undermine existing Second Circuit authority on this issue).
Section 506(c) permits the trustee to recover expenses incurred by the estate for the benefit of a secured creditor. But, who gets the money--the creditor providing the benefit or the estate for distribution pro rata to administrative creditors? See In re Resource Technology Corp., 365 B.R. 435 (Bk. N.D. Ill. 2006) (proceeds go to estate for distribution to creditors in accordance with distribution rules). See also In re Global Home Products, LLC, 369 B.R. 778 (Bk D. Del. 2007) (management and sales bonus plans were incentive and not retention plans, and were subject to review under business judgment rule; here, plans were consistent with industry standards and past practice).
There have been a steady stream of cases where parties seek administrative expense claims for a "substantial contribution." See In re General Electrodynamics Corp., 368 B.R. 543 (Bk. N.D. Tex. 2007) (fees paid to creditor who played a substantial role in convincing debtor's principal to contribute funds so debtor could propose 100% plan); In re Northwestern Corp., 365 B.R. 453 (D. Del. 2007) (denying indenture trustee's claim for substantial contribution in filing numerous plan objections and two adversary proceedings; court says trustee disrupted administration of the estate); In re Villa Luisa, L.L.C., 2006 WL 2959523 (Bk. S.D.N.Y. 2006) (payments to extend purchase option were for the benefit of the creditor); In re Henricks Commerce Park, LLC, 46 BCD P192 (BAP-6th Cir. 2006) (debtor's choice of counsel rejected because of conflicts; counsel then represented equity holder and made claim for substantial contribution; court denied as being an end run around the court ruling).
