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creditors committee for reimbursement of their counselfees as allowed by provision of confirmed Chapter 11 reorganization plan, arguing that plan could not be used to avoid limitations imposed by the Bankruptcy Code's administrative expense provisions.
Holdings: (1) the administrative expenses section of the Bankruptcy Code excludes paying professional fee expenses on the basis of committee membership and, thus, individual members here could not have their professional fee expenses paid as administrative expenses solely on the basis of their committee membership;
(2) the plan, which called for payment of individual members' professional fee expenses as administrative expenses solely on the basis of official committee membership, was inconsistent with the Code and therefore impermissible;
(3) even if the payments to members' professionals were characterized as "permissive plan payments," and not as administrative expenses, the Code did not authorize their payment; and
(4) alternatively, if they made the requisite showing, individual members could be reimbursed their professional fee expenses on the ground that they made a "substantial contribution" to the case.
iii. In re Oreck Corp.,506 B.R. 500 (Bankr. M.D.Tenn. 2014).
Issue: Commercial lessor moved for allowance of its stub rent claim, under commercial lease that required Chapter 11 debtor to pay rent on the first of each month, on priority basis, either pursuant to bankruptcy statute requiring trustee or debtor-in-possession to timely perform all lease obligations "arising from and after the order for relief" or pursuant to general administrative expense provision.
Holding: The Bankruptcy Court held that debtor's obligation to pay rent for the month in which it filed for bankruptcy relief, including not only debtor's obligation for rent relating to the first six days of month that it occupied premises as prepetition debtor, but for the last 25 days of month when it occupied premises as debtor-in-possession, arose on first of the month, and was not entitled to priority under either provision.
iv. In re Lyondell Chemical Co., 2013 WL 5733196 (2nd Cir. Oct. 23, 2013)(not for publication)
Issue: Claimant to which Chapter 11 debtor had sold contaminated property moved for specific enforcement of prepetition contract between parties apportioning responsibility for remediation work and, in alternative, sought to recover its cleanup costs as administrative expense. The Bankruptcy Court, Robert E. Gerber, J., denied motion for specific performance, denied administrative expense status, and to extent of future cleanup costs not yet incurred, disallowed claim for reimbursement even as general unsecured claim, and claimant appealed. The United States District Court for the Southern District of New York, Paul A. Engelmayer, J., 486 B.R. 75, affirmed.
©2014 William L. Norton III
