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Administrative Expenses in a Bankruptcy The Bankruptcy Code establishes a priority in which claims are to be paid. The first priority is to pay the cost of administering the bankruptcy case. These administrative expenses include the costs and expenses of preserving the debtor's estate or business after the Bankruptcy case is filed, as well as professional fees such as trustees, attorneys', and/or accountants' fees. If approved by the Court, reasonable expenses incurred by the Official Unsecured Creditors' Committee may also be considered administrative expenses. Committee members may request that their out of pocket costs be reimbursed by the debtor in possession on a quarterly basis. The cost of sale or liquidation of property or other assets of the debtor, and related expenses are also considered administrative expenses under the Code. So are 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 Dennis, author of "Credit and Collection Handbook" available at the NACM Bookstore. |
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