Opinion ID: 583483
Heading Depth: 2
Heading Rank: 3

Heading: Chapter 7 Liquidation

Text: 12 On April 14, 1989, the case was converted to chapter 7 liquidation proceedings and was transferred from Birmingham to the Tuscaloosa bankruptcy court. Presently, there appears to be between $400,000 to $500,000 in assets remaining in the estate. The ASMC is seeking administrative-expense priority for fines totalling $2,349,000. 13 N.P. and the chapter 7 trustee filed objections to the allowance of the claim. They did not challenge the validity of the penalties; they argued that the penalties should not be raised to the level of first-priority administrative expenses ahead of the unsecured creditors. The bankruptcy court agreed, denying the Commission's motions for summary judgment and payment of an administrative expense and holding that these punitive, postpetition, civil penalties did not constitute an administrative expense under 11 U.S.C. § 503(b)(1)(A), largely because they did not serve to benefit the estate in any way. The district court affirmed this decision.