Source: https://lundinonchapter13.com/Content/Section/136.15
Timestamp: 2019-12-13 12:45:18
Document Index: 74770180

Matched Legal Cases: ['§ 136', '§ 136', '§ 503', '§ 507', '§ 1322', '§ 503', '§ 503', '§ 503', '§ 503', '§ 365', '§ 503', '§ 502', '§ 503', '§ 503', '§ 503', '§ 503', '§ 1304', '§ 503', '§ 1304', '§ 503', '§ 513', '§ 136', '§ 503', '§ 513', '§ 136', '§ 503', '§ 513', '§ 136', '§ 495', '§ 102', '§ 503', '§ 1304', '§ 57', '§ 52', '§ 52', '§ 503', '§ 503', '§ 330', '§ 503', '§ 503', '§ 503', '§ 503', '§ 503', '§ 503', '§ 503', '§ 503', '§ 503', '§ 327', '§ 330', '§ 503', '§ 507', '§ 326', '§ 503', '§ 1305', '§ 1930', '§ 503', '§ 330', '§ 1930', '§ 1305', '§ 503', '§ 1305', '§ 1930', '§ 503', '§ 330', '§ 1930', '§ 1305', '§ 503', '§ 330', '§ 503', '§ 543', '§ 503', '§ 707', '§ 503', '§ 503', '§ 503', '§ 1305']

§ 136.15 Miscellaneous Administrative Expenses and Priority Claims after BAPCPA
Cite as: Keith M. Lundin, Lundin On Chapter 13, § 136.15, at ¶ ____, LundinOnChapter13.com (last visited __________).
BAPCPA made changes to the rules for allowance of administrative expenses under § 503 that may affect debtors in Chapter 13 cases.
Section 503(b)(1)(B) was amended by BAPCPA to allow as an administrative expense any tax incurred by a bankruptcy estate “whether secured or unsecured, including property taxes for which liability is in rem, in personam, or both.”1 More than half of Chapter 13 estates include real property. When the debtor retains real property through the plan, it is likely that property taxes will be incurred during the Chapter 13 case. After BAPCPA, without regard to whether property taxes are personal to the debtor or only in rem liability, property taxes incurred by a Chapter 13 estate are administrative expenses entitled to second priority under § 507(a)(2) and to payment in full under § 1322(a)(2).
BAPCPA relieved governmental units of the ordinary predicate to allowance of an administrative expense that the holder must “timely file a request for payment . . . or may tardily file such request if permitted by the court for cause.”2 As amended by BAPCPA, § 503(b)(1)(D) provides that a governmental unit “shall not be required to file a request for the payment of an expense described in [§ 503(b)(1)(B)] as a condition of its being an allowed administrative expense.”3
Absolving governmental units of the need to file a request for payment of an administrative expense makes little sense even for the governmental unit. Without the filing of a request for payment, it is not likely that the Chapter 13 trustee will know that there is an unpaid tax incurred by the estate. Until a request is filed and allowed, the trustee is not going to pay a tax incurred by the estate whether it is an “allowed” administrative expense or not. Without the filing of a request for payment, no party in interest will know of the existence or amount of the administrative tax expense for purposes of filing objections.
The statutory requirement to file a timely (or tardy) request for payment of an administrative expense benefits everyone in a bankruptcy case including the unpaid governmental unit under § 503(b)(1)(B). Without the signal to all involved that a tax has been incurred by the estate and that a governmental unit wants payment on a priority basis, the orderly management of the tax debt is disabled.
BAPCPA amended § 503(b)(7) to define and limit the administrative expense that can result when a lease of nonresidential real property is first assumed under § 365 and then rejected during a Chapter 13 case.4 As amended, § 503(b)(7) limits the administrative expense upon rejection after assumption to monetary obligations due for a period of two years—net only of sums actually received from an entity other than the debtor that then leases the property. The remaining claim for any balance due through the term of the lease becomes an ordinary lease rejection claim under § 502(b)(6).
Chapter 13 debtors sometimes are party to leases of nonresidential real property. New § 503(b)(7) will limit the administrative expense claim that would otherwise result from an improvident assumption during the Chapter 13 case.
BAPCPA created a new administrative expense in § 503(b)(9) for “the value of any goods received by the debtor within 20 days before the date of commencement of a case . . . in which the goods have been sold to the debtor in the ordinary course of such debtor’s business.”5 Although obviously of greater impact in Chapter 11 cases, the unwary Chapter 13 business debtor will be trapped by new § 503(b)(9) by filing the Chapter 13 case too soon after purchasing goods in the ordinary course of business. What would have been an ordinary prepetition unsecured claim becomes an administrative expense entitled to payment in full when the Chapter 13 case is filed within 20 days of the purchase of goods in the ordinary course of the debtor’s business.
Notice that new § 503(b)(9) does not use the term of art “debtor engaged in business.” As used in § 1304, a Chapter 13 debtor that is “self-employed and incurs trade credit in the production of income from such employment is engaged in business.”6 Read strictly, § 503(b)(9) generates an administrative expense when goods are sold to a Chapter 13 debtor within 20 days of the petition in the ordinary course of the debtor’s business without regard to whether the debtor is engaged in business for purposes of § 1304. This raises the possibility that a Chapter 13 debtor with a part-time business—even casual buying and selling to supplement income—could incur administrative expenses by buying goods within 20 days of the petition. This becomes a timing issue for debtor’s counsel when preparing the case for filing.
1 11 U.S.C. § 503(b)(1)(B)(i), discussed in § 513.1 [ Taxes ] § 136.3 Taxes after BAPCPA.
2 11 U.S.C. § 503(a), discussed in § 513.1 [ Taxes ] § 136.3 Taxes after BAPCPA.
3 11 U.S.C. § 503(b)(1)(D), discussed in § 513.1 [ Taxes ] § 136.3 Taxes after BAPCPA.
4 See § 495.1 [ Leases and Executory Contracts after BAPCPA ] § 102.3 Leases and Executory Contracts after BAPCPA.
5 11 U.S.C. § 503(b)(9).
6 11 U.S.C. § 1304(a), discussed in §§ 57.1 [ Operating a Chapter 13 Debtor Engaged in Business ] § 52.1 Operating a Chapter 13 Debtor Engaged in Business and 57.2 [ Additional Filing and Reporting Requirements ] § 52.2 Additional Filing and Reporting Requirements.
McBride v. Riley, No. 1:17-01302, 2018 WL 1768602, at *5–*7 (W.D. La. Apr. 12, 2018) (Trimble) (Filing fees, credit counseling fees and credit report fees are not reimbursable to debtor’s counsel under 11 U.S.C. § 503(b)(1)(A) or § 503(b)(2) or under 11 U.S.C. § 330(a) because they are not administrative expenses of the Chapter 13 estate. “This court agrees with Judge Kolwe and finds that he (1) did not err in holding that the filing fee for a Chapter 13 case is not a post-petition expense (2) did not err in holding that the filing fee for a Chapter 13 case accrues pre-petition (3) did not err in holding that advances of filing fees, credit counseling fees, and credit report fees by debtor’s counsel in Chapter 13 are not reimbursable under 22 U.S.C. § 503 (b)(1)(A). . . . [A]llowing debtor’s counsel to advance that fee and then subsequently seek reimbursement of that fee through the plan, would take away the discretion of the Court to allow the fee to be paid in installments because of necessity, eviscerate Rule 1006(b) and divert available funds from unsecured creditors to the debtors’ counsel.”), aff'g 577 B.R. 497 (Bankr. W.D. La. Sept. 29, 2017) (Kolwe) (Although amended “no look” fee rule in district does not prohibit debtors’ attorneys from seeking reimbursement of advances for filing fee, a credit report and prepetition briefing, those advances are not administrative expenses under § 503 and are not separately reimbursable because expenses are included in the no-look amount. “Effective February 1, 2017, this District’s Bankruptcy Judges revoked the prior standing order on no-look fees and adopted a new one. . . . Under this order, the total no-look fee is $3,600, but the last $600 of the fee is not payable until the last six months of the debtor’s plan . . . . [I]t no longer expressly states that the no-look fee is inclusive of the filing fee and other advances. . . . [T]he filing fee, credit counseling fee and credit report fee are all prepetition expenses of the Debtor, not the estate. . . . [T]he advances do not provide a direct and substantial benefit to the estate. . . . [I]t only serves to satisfy the personal obligation of the Debtor to pay each of these costs. . . . This Court disagrees . . . that the filing fee is a post-petition expense. . . . [W]hile this Court acknowledges that a Chapter 13 debtor’s attorney may incur certain reimbursable expenses, the Court finds that those expenses are included in the Court’s contemplation and implementation of the no-look fee. . . . [T]he no-look fee is intended to be inclusive of all expenses. If the debtor’s attorney seeks any amount over the no-look fee, the current standing order requires a formal fee application setting forth both compensation and expenses requested. . . . [A]dvances are not reimbursable . . . as an administrative expense of the Debtor’s estate under 11 U.S.C. § 503(b)(1)(A) or (b)(2).”).
Sharkey v. Stevenson & Bullock, PLC (In re Sharkey), No. 17-11237, 2017 WL 5476486, at *1–*9 (E.D. Mich. Nov. 15, 2017) (Borman) (District court applies Mediofactoring v. McDermott (In re Connolly North America, LLC), 802 F.3d 810 (6th Cir. Sept. 21, 2015) (White, Donald, O’Malley), to Chapter 13: creditor can recover attorney fees and costs as administrative expenses under § 503(b)(3)(D) for a “substantial contribution”—here, successfully objecting to exemptions—in a Chapter 13 case. “[I]n Connolly, the Sixth Circuit held that administrative expenses under 11 U.S.C. § 503(b)(3)(D), nominally available only in Chapter 9 and Chapter 11 cases, could be awarded to a creditor in a Chapter 7 proceeding owing to special circumstances present in that case. . . . § 503(b)(3)(D) provides for the award of reimbursement claims for creditors who incur ‘actual, necessary’ expenses by making ‘substantial contribution[s]’ in cases under Chapter 9 or Chapter 11. . . . Connolly stands for the proposition that the word ‘including’ in the first clause of 11 U.S.C. § 503(b) confers discretion on a bankruptcy court to award administrative expenses on a case-by-case basis, and that the express mention of Chapter 9 and Chapter 11 in § 503(b)(3)(D) does not negate that fact. . . . [I]n successfully objecting to the exemptions . . . Creditor . . . deserved reimbursement through an administrative expense under Connolly’s interpretation of 11 U.S.C. § 503(b). . . . Creditor/Appellee’s actions substantially benefited the bankruptcy estate. . . . [T]he creditor seeking reimbursement had stepped in because another party that was meant to act as a safeguard for the bankruptcy estate was unable or unwilling to do so: the U.S. Trustee in Connolly, and the Chapter 13 Trustee in this case. . . . [Lamie v. United States Trustee, 540 U.S. 526, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (Jan. 26, 2004),] established employment under 11 U.S.C. § 327 as a prerequisite to receiving compensation under 11 U.S.C. § 330. But the Bankruptcy Court’s award of administrative expenses in this case was based on 11 U.S.C. § 503(b)(3)(D)— a different statutory provision entirely.”).
In re Spinks, 591 B.R. 113 (Bankr. S.D. Ga. Aug. 21, 2018) (Coleman) (180-day lookback for priority of wage claims in § 507(a)(4) is not subject to equitable tolling during a prior Chapter 13 case; even if equitable tolling is available, the automatic stay is not an exceptional circumstance that would toll the running of the 180-day period during the prior case.).
In re Stroud, No. 15-74063-WLH, 2018 WL 3533347, at *4–*5 (Bankr. N.D. Ga. July 20, 2018) (Hagenau) (After conversion from Chapter 13 to Chapter 7 and reconversion to Chapter 13, Chapter 7 trustee is not allowed compensation because no funds were distributed during the Chapter 13 phase for purposes of § 326(a) and no benefit was realized for the estate for purposes of quantum meruit; but attorney for Chapter 7 trustee is allowed a reduced fee for opposing reconversion and that fee will be allowed as an administrative expense in the Chapter 13 case after reconversion. “The Trustee did not disburse any funds to anyone and in fact never came into possession of any funds. Therefore, any reasonable compensation to which the Trustee would otherwise be entitled would be capped by the distribution of zero and the Trustee would receive no funds. Even if the Court were to follow the cases that permitted a trustee to recover fees on a quantum meruit basis, the Court finds on the facts of this case that the Trustee’s services, while required of him as a trustee, do not rise to the level of providing any substantial benefit to the estate or to the creditors. . . . [T]here could legitimately be some difference of opinion as to whether the Court could reconvert a case from Chapter 7 to Chapter 13 and the Trustee’s opposition to the motion to reconvert was not wholly unfounded. . . . [T]he compensation for attorneys for the Trustee in responding to the motion to reconvert should be reduced . . . which shall be an administrative expense claim in the Debtor’s Chapter 13 case.”).
In re Roberts, No. 17-60103, 2018 WL 2392147 (Bankr. N.D. Ohio May 25, 2018) (unpublished) (Kendig) (Chapter 13 trustee can recover as an administrative expense the fee for an appraiser hired by the trustee in contested valuation at which the trustee successfully increased the amount the debtor would have to pay to satisfy the best-interests-of-creditors test at confirmation.).
In re Riley, No. 17-80108, 2017 WL 4990441 (Bankr. W.D. La. Oct. 27, 2017) (Kolwe) (Denies stay pending appeal of order disallowing reimbursement of advances for filing fee, briefing and credit report.).
In re Russell, No. 16-40484-EJC, 2017 WL 1173547, at *3–*7 (Bankr. S.D. Ga. Mar. 28, 2017) (Coleman) (Payment of filing fee by debtor’s attorney is not reimbursable expense under § 503(b)(1)(A) or (b)(2) and is not an allowable postpetition claim under § 1305. Debtor filed application to pay filing fee in installments. Before last installment, debtor warned attorney that as a result of a fire, debtor would be unable to pay the last installment. Court entered an order to pay the filing fee in full else the case would be dismissed. Debtor’s attorney “advanced” the $310 filing fee on the debtor’s behalf. Debtor’s attorney then filed a proof of claim for the $310. Trustee objected. “Hill’s [debtor’s attorney] ‘advance’ arises out of a transaction with the Debtor, not her estate. . . . The advancement of the Debtor’s filing fee does not provide . . . a benefit to her estate. Rather, it only serves to satisfy the Debtor’s requirement to pay a filing fee under 28 U.S.C. § 1930. . . . Hill’s advance fails both prongs of the two-prong test under 11 U.S.C. § 503(b)(1)(A), he is not entitled to an administrative expense under that code section. . . . [T]his Court acknowledges that a Chapter 13 debtor’s attorney may incur certain reimbursable expenses, but these expenses are included in the Court’s ‘no-look’ fee. . . . [T]he advance of a Chapter 13 debtor’s filing fee is not properly reimbursable under 11 U.S.C. § 330(a) . . . . Pursuant to 28 U.S.C. § 1930, a debtor’s filing fee is, in essence, his or her cost of admission. To allow a debtor’s attorney to satisfy this obligation of the debtor and seek repayment as an administrative expense funded by the Trustee has the potential to push this cost onto creditors. . . . Hill’s $310.00 advance is likely a ‘consumer debt’ . . . . However, the Court doubts whether such debt was ‘for property or services necessary for the debtor’s performance under the plan.’ . . . Hill’s decision to advance the filing fee was not prompted by an emergency situation that rendered obtaining the Trustee’s approval impracticable. . . . [T]he Court ‘shall’ disallow a post-petition claim which fails to meet the requirement of § 1305(c)[.]”).
In re Frazier, 569 B.R. 361, 367-71 (Bankr. S.D. Ga. Mar. 28, 2017) (Coleman) (Payment of filing fee by debtor’s attorney is not reimbursable expense under § 503(b)(1)(A) or (b)(2) and is not an allowable postpetition claim under § 1305. “[T]he obligation to pay the filing fee under 28 U.S.C. § 1930 is not an obligation of the estate. . . . Braziel’s ‘advance’ benefitted the Debtor personally by satisfying his obligation to pay the required filing fee. . . . Braziel’s advance fails both prongs of the two-prong test under 11 U.S.C. § 503(b)(1)(A) . . . . [T]he advance of a Chapter 13 debtor’s filing fee is not properly reimbursable under 11 U.S.C. § 330(a) . . . . Pursuant to 28 U.S.C. § 1930, a debtor’s filing fee is, in essence, his or her cost of admission. To allow a debtor’s attorney to satisfy this obligation of the debtor and seek repayment as an administrative expense funded by the Trustee has the potential to push this cost onto creditors. . . . Braziel’s $310.00 advance is likely a ‘consumer debt, . . . ’ as it was used to pay the filing fee for the Debtor’s personal bankruptcy. However, the Court doubts whether such debt was ‘for property or services necessary for the debtor’s performance under the plan.’ . . . Braziel’s decision to advance the filing fee was not prompted by an emergency situation that rendered obtaining the Trustee’s approval impracticable. . . . [T]he Court ‘shall’ disallow a post-petition claim which fails to meet the requirement of § 1305(c)[.]”).
In re Murray, No. 16-12000, 2016 WL8943848, at *2 (Bankr. W.D. La. Dec. 20, 2016) (Norman) (Accounting fees for preparation of tax returns are not allowable administrative expenses in a Chapter 13 case filed on November 10, 2016, when invoices indicate work was performed on November 7 and November 9. No party objected to application, but exercising its “independent” review bankruptcy court denies the $255 request. Under § 503(b)(1)(A)(i) an administrative expense must benefit the estate. Distinguishing attorney fees for prepetition services under § 330(a)(4)(B), “[t]he Court did not find any cases holding that claims for pre-petition services can be allowed as administrative priority claims under 11 U.S.C. § 503(b).”).
Boardwalk Realty Assocs., LLC v. Crespo (In re Crespo), 561 B.R. 25 (Bankr. D. Conn. Nov. 18, 2016) (Nevins) (Applying §§ 543 and 503(b)(3)(E), state court receiver for property owned by a Chapter 13 debtor is entitled to reduced fees for collecting rents and paying some bills; receiver’s request is substantially reduced because receiver failed to maintain adequate records. “The specific provisions of 11 U.S.C. § 503(b)(3)(E) control. . . . Boardwalk did provide a benefit to the estate by decreasing the amount due to the [metropolitan district] . . . . Boardwalk’s records lack the consistency, transparency, and integrity expected from a court-appointed receiver. . . . [T]aking into account the court’s concerns about the lack of transparency created by Boardwalk’s deliberate choice not to account specifically for time spent, and its deliberate choice to employ no reasonable accounting practices, the court concludes that Boardwalk is entitled to a fee of 5%, rather than of 21.9%, of the total collected.”).
In re Gray, 522 B.R. 619 (Bankr. D. Idaho Nov. 3, 2014) (Pappas) (Creditors' legal expenses in prosecuting motion to dismiss under § 707(b) that led to conversion to Chapter 13 did not qualify as administrative expenses under § 503(b).).
In re Ruiz, No. 12-63323-tmr13, 2014 WL 1576825, at *2 (Bankr. D. Or. Apr. 17, 2014) (Renn) (Postconfirmation homeowners association fees and charges are not administrative expenses under § 503(b)(1) when neither plan nor confirmation order prevented revesting of estate in debtor. "[W]ith no estate in existence post-confirmation, charges then arising cannot have administrative expense status under § 503(b)(1)(A)." Court reserved question whether the claims could be allowed as postconfirmation claims under § 1305(a)(2).).
In re Freeman-Coulbary, No. 11-00864, 2012 WL 1999432 (Bankr. D.D.C. June 4, 2012) (unpublished) (Teel) (Postpetition condominium association fees are not allowable administrative expenses when confirmed plan required debtor to pay postpetition fees directly to association.).
In re Holliday, No. 10-41617-JDP, 2011 WL 2518845 (Bankr. D. Idaho June 23, 2011) (Pappas) (Under Utah law, corporate officers and agents are liable for wages of corporate employees, and debtor qualified as employer owing wages that were priority claims when earned within 180 days of filing. Objection to priority claim was overruled.).