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Holding: The bankruptcy court held that electricity was more in the nature of a service than a good, and the claim was not entitled to be an administrative expense under 11 U.S.C. § 503(b) (9). The court used a totality of the circumstances standard. The electric company in this case had a monopoly and was a government agency. The court relied on these factors in concluding the provider was a utility, which by its ordinary meaning is a service.
x. In re Wezbra Dairy, LLC, 493 B.R. 768 (Bankr. N.D. Ind. 2013)
Issue: Whether corn, the title of which switched from the corn farmers to the debtor upon the feeding of the corn to the debtor's livestock, was "received" by the debtor for purposes of 11 U.S.C. § 503(b)(9) when it was actually fed to the debtor's livestock or when it was first stored on the debtor's land pursuant to a contract and license with the corn farmers?
Holding: The bankruptcy court held that the corn was "received" by the debtor of 11 U.S.C. § 503(b)(9) purposes when the corn actually arrived on the debtor's property for storage until used for feeding. The corn farmers sought an allowance of an administrative expense claim for the value of corn fed to the debtor's livestock within twenty days of the debtor's bankruptcy petition. Another creditor objected to the allowance of an administrative expense claim by arguing the debtor received the corn prior to the twenty-day period preceding the petition. The court looked to the Uniform Commercial Code in determining that the debtor "received" the goods when it had possession, whether actual or constructive, and not when the debtor obtained title to the goods.
xi. In re Jeans.com, 491 B.R. 16 (Bankr. D.P.R. 2013)
Issue: Whether there had to be a preexisting written lease for the owner of commercial property, which the debtor had been using post-petition to operate its business, to assert an administrative expense claim.
Holding: The court held that a preexisting written lease was not required for the owner of the property, which the debtor was using post-petition, to assert an administrative expense claim. The court used a two-prong test for determining whether a claim is an administrative expense: "1) whether the transaction between the debtor and the creditor arose post-petition, and 2) whether the consideration for the claim "benefitted the estate in some demonstrable way." The debtor used the claimant's commercial property post-petition to sell its merchandise, thereby benefitting the estate. The debtor argued that it was not a party to the pre-petition lease contracts with the claimant. The court found that the two-prong test was sufficient for determining an administrative expense claim, meaning that a preexisting written contract was not a requirement.
©2014 William L. Norton III
