Court Opinion

ID: 9696577
Source: CourtListenerOpinion
Date Created: 2023-08-25 18:51:48.371421+00
Date Added: 2024-06-11T18:20:23.566039
License: Public Domain

JAROSLOVSKY, Bankruptcy Judge,
concurring in part and dissenting in part:
I agree with the majority’s disposition of the setoff issues. I respectfully dissent from their overly-sterile conclusion that a fully secured creditor can also have rights under § 503(b)(9). Not only is my statutory analysis different, but I see compelling policy reasons for a different result.
I do not see the issue of whether a secured creditor can be entitled to an administrative expense claim being as simple as the “plain meaning” analysis of the majority. It is considerably complicated by the amendment to § 503(b)(1)(B)(i) of the Code made by Congress at the same time it added § 503(b)(9).
At the same time as Congress was adding § 503(b)(9), it amended § 503(b)(1)(B)(i) by adding the language “whether secured or unsecured” to the section, thus resolving the disagreement as to whether a secured tax could be entitled to administrative priority. However, § 503(b)(9) does not include the same language. It is generally presumed that Congress acts intentionally when it includes particular language in one section of a statute but omits it from another. Keene Corp. v. United States, 508 U.S. 200, 208, 113 S.Ct. 2035, 124 L.Ed.2d 118 (1993); City of Chicago v. Envtl. Defense Fund, 511 U.S. 328, 338, 114 S.Ct. 1588, 128 L.Ed.2d 302 (1994). If Congress had intended that all administrative expenses have priority regardless of secured status, it would certainly have added “whether secured or unsecured” in the first sentence of § 503(b) and not in just one of nine enumerated subsections.
Moreover, some fundamental policy considerations are at stake in this case. While allowing a priority claim to a secured creditor may not have a big impact in most Chapter 7 cases, it can make a huge difference in a Chapter 11 case like this one. If AGI’s $6 million claim is entitled to priority status, § 1129(a)(9)(A) requires that it must be paid in full in cash upon confirmation. If it is treated as a secured claim, it still must be paid in full but is subject to cramdown pursuant to § 1129(b)(2)(A). If we incorporate by implication the “secured or unsecured” language into § 503(b)(9), we may be in effect giving a secured creditor veto power over a plan of reorganization when § 1129(b)(2)(A) and sound bankruptcy policy dictate that a secured creditor can be forced to accept a plan which is fair and *882equitable to it, honors its secured status and pays its secured claim in full over time.11
Provisions of the Bankruptcy Code cannot be read in isolation but should be interpreted in light of the remainder of the statutory scheme. United Savings Ass’n v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 370-72, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988); In re Howard, 972 F.2d 639, 640 (5th Cir.1992); In re Kaveney, 60 B.R. 34, 36 (9th Cir. BAP 1985). This is sometimes difficult when Congress has made an isolated change to one section of the Code without providing specific guidance as to how the new section is to be integrated. However, I see our proper role as meeting this challenge.
I would weave the new § 503(b)(9) into the tapestry of American bankruptcy law, preserving the clear intent of Congress to protect recent suppliers of goods to debtors without unraveling other provisions of the Code meant to facilitate reorganization.12 I prefer this result to the crazy quilt patched together by my brethren.

. These are not merely hypothetical concerns. The issue of how to treat AGI's claims in a plan of reorganization is now pending before the bankruptcy court.

. Specifically, I would hold that a creditor would not be entitled to priority status for its twenty-day sales claim to the extent the claim is indubitably secured, applying any security first to claims other than the twenty-day sales claim. I note that AGI might well end up with an allowed priority twenty-day sales claim under this rule.