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socrateaser, Attorney
Category: Bankruptcy Law
Satisfied Customers: 39187
Experience:  Attorney and Real Estate Broker -- Retired (mostly)
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Assume a Texas LP went Chapter 11 on October 29, 2009 The

Customer Question

Assume a Texas LP went Chapter 11 on October 29, 2009

The Texas LP will energe from Chapter 11 on December 31, 2009

On November 20 the Texas LP broke a contract with a customer after October 29 and the customer is seeking damages

What is the definition of "allowed" administrative claims and will the customer receive it damages thru the Bankruptcy judge??
Submitted: 7 years ago.
Category: Bankruptcy Law
Expert:  socrateaser replied 7 years ago.

If the debtor defaults in its performance obligations under the plan, creditors have two options.


First, because the plan is a contract between the debtor and its creditors, a creditor can sue the debtor for breach of contract in state court if the debtor defaults, unless the plan terms provide otherwise. The U.S. Trustee's office often requires, including creditor remedies in the plan that are triggered if the debtor defaults in performance.


Second, a creditor can seek relief in the bankruptcy court, which may include conversion of the Chapter 11 case to a Chapter 7 case. See 11 USC §1112(b).


Re allowable Administrative claims, they are found in 11 USC §503(b). This is a fairly expansive and fact dependent area of bankruptcy law. There is no succinct "definition," because case law precedent plays a significant part in determining whether an administrative claim is "allowable."


Hope this helps.


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