The Bankruptcy Code encourages service and good suppliers to continue to do business with a company in Chapter 11 by providing that amounts owed for post-petition services and deliveries are eligible to receive administrative claim status if they provide a benefit to the estate, meaning that their claims are paid in full before pre-petition unsecured claims. But how is administrative claim status obtained in a bankruptcy case, and what risks does a service or goods supplier take by continuing to do business with the debtor after commencement of the bankruptcy case?

Judge Craig Goldblatt of the U.S. Bankruptcy Court for the District of Delaware recently considered the contours of the “benefit to the estate” rule in In re MTE Holdings, (Case No. 19-12269 (CTG)). In an opinion dated June 2, 2021, Goldblatt granted administrative claim status to a consulting service provider and ruled a noninsider third party that provides goods or services to a debtor-in-possession on ordinary commercial terms does not have to prove that receipt of those goods or services led to success of the venture or increased profits for the debtor.

This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.

To view this content, please continue to their sites.

Not a Lexis Subscriber?
Subscribe Now

Not a Bloomberg Law Subscriber?
Subscribe Now

Why am I seeing this?

LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.

For questions call 1-877-256-2472 or contact us at [email protected]