Administrative Expenses in a Bankruptcy

This essay is published for informational purposes only.  It is not legal advice, nor is it intended as a substitute for the advice of your attorney.

The Bankruptcy Code establishes a priority in which claims must be paid to both pre-petition and post-petition creditors. Administrative expenses are the actual and necessary costs and expenses involved in preserving the value of a bankrupt estate, including wages, salaries, or commissions for services rendered which receive a high priority for payment.

Other administrative expenses that receive priority under the Bankruptcy Code include professional fees such as trustees, attorneys', and/or accountants' fees.   If approved by the Court, certain reasonable expenses incurred by the Official Unsecured Creditors' Committee may also be considered Administrative expenses.

The cost associated with the sale of assets of the debtor are also considered an Administrative expense under the U.S. Bankruptcy Code along with liabilities stemming from torts committed by the trustee, the debtor in possession, or their agents during the course of operating the business post petition, or resulting from administering the estate post petition.

Edited by Michael C. Dennis.  Mr. Dennis is a business consultant.