July 08, 2021

Administrative Claimant Does Not Have to Prove Services Increased Debtor Business

Faegre Drinker co-chair Andrew Kassner and counsel Joseph Argentina coauthored an article for The Legal Intelligencer, titled “Administrative Claimant Does Not Have to Prove Services Increased Debtor Business.”

Kassner and Argentina discuss a case from the U.S. Bankruptcy Court for the District of Delaware where the judge recently considered the contours of the “benefit to the estate” rule in In re MTE Holdings. The authors explain the case and outline how it illustrates that when a Chapter 11 case is filed by a customer, a supplier of goods or services has decisions to make regarding ensuring how and when it will be paid for post-petition services and goods.

The article also highlights that for small business suppliers, the expense of hiring counsel and the burden of potentially having to wait until the court approves a plan at the end of the case may outweigh the benefit of continuing to do business with the debtor without receiving adequate assurance of payment at the outset of the case.

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