Court Opinion

ID: 3172266
Source: CourtListenerOpinion
Date Created: 2016-01-26 20:00:49.322457+00
Date Added: 2024-06-11T15:31:56.700178
License: Public Domain

PUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT

                               No. 15-1316

In Re:    HENRY LONDON ANDERSON, JR.,

                  Debtor.

-------------------------

STUBBS & PERDUE, P.A.,

                  Appellant,

            v.

JAMES B. ANGELL, Chapter 7 Trustee,

                  Trustee – Appellee,

            and

UNITED STATES OF AMERICA,

                  Appellee.

Appeal from the United States District Court for the Eastern
District of North Carolina, at Wilmington. James C. Fox, Senior
District Judge. (7:14-cv-00079-F; 10-00809-8-SWH)

Argued:    December 9, 2015                  Decided:   January 26, 2016

Before WILKINSON, KEENAN, and HARRIS, Circuit Judges.

Affirmed by published opinion. Judge Harris wrote the opinion,
in which Judge Wilkinson and Judge Keenan joined.
ARGUED:   Trawick Hamilton Stubbs, Jr., STUBBS & PERDUE, P.A.,
New Bern, North Carolina, for Appellant.    Paul Andrew Allulis,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; James B.
Angell, HOWARD, STALLINGS, FROM, HUTSON, ATKINS, ANGELL & DAVIS,
P.A., Raleigh, North Carolina, for Appellees. ON BRIEF: Joseph
Z. Frost, STUBBS & PERDUE, P.A., Raleigh, North Carolina, for
Appellant.    Caroline D. Ciraolo, Acting Assistant Attorney
General, Thomas J. Clark, Tax Division, UNITED STATES DEPARTMENT
OF JUSTICE, Washington, D.C.; Thomas G. Walker, United States
Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Raleigh, North
Carolina; Nicholas C. Brown, HOWARD, STALLINGS, FROM, HUTSON,
ATKINS, ANGELL & DAVIS, P.A., Raleigh, North Carolina, for
Appellees.

                               2
PAMELA HARRIS, Circuit Judge:

        Stubbs      &   Perdue,      P.A.      (“Stubbs”)         represented       Henry   L.

Anderson, Jr. (the “Debtor”) in bankruptcy proceedings, and is

owed      approximately           $200,000          in     legal        fees     from    that

representation.             But the Debtor also is subject to nearly $1

million in secured tax claims, and the estate has insufficient

funds to pay both Stubbs’s fees and the tax claim.                              In practical

terms, this case is about which of those claims takes priority

in a Chapter 7 liquidation under the Bankruptcy Code.

       The answer is found in § 724(b)(2) of the Bankruptcy Code,

11 U.S.C. § 724(b)(2).               And under the version of § 724(b)(2) in

effect when the bankruptcy court rendered its decision, it is

clear that the secured tax claim takes priority over Stubbs’s

claim    to    fees.        Stubbs      argues,      however,       that   application      of

current law to its claim would have an impermissible retroactive

effect,       and   that     it   can    prevail         under    the   prior    version    of

§ 724(b)(2) that should govern this case.                            Like the bankruptcy

court    and     the    district     court,         we   disagree,      and    we   therefore

affirm the judgment of the district court.

                                               I.

                                               A.

       On February 3, 2010, the Debtor filed a voluntary petition

for    relief       under    Chapter      11    of       the     Bankruptcy     Code,   which

                                                3
governs     reorganizations         of     debtors’        estates.        Shortly

thereafter, the bankruptcy court approved Stubbs to serve as the

Debtor’s counsel.      In July of 2011, the IRS filed a proof of

claim against the estate in the amount of $997,551.80, of which

$987,082.88 was secured by the Debtor’s property interests.

      During the pendency of the Debtor’s Chapter 11 case, the

bankruptcy court entered five orders approving compensation to

Stubbs for legal services, for a total of slightly more than

$200,000.     The allowance of Stubbs’s fees, as the “actual” and

“necessary”    expenses     of    preserving    the     Debtor’s      estate,    gave

Stubbs an unsecured claim for “administrative expenses” against

the estate.     See 11 U.S.C. §§ 330(a), 503(b).                 The Bankruptcy

Code establishes a hierarchy of unsecured creditors like Stubbs,

and as an administrative expense claimant, Stubbs holds second-

priority status under § 507(a)(2) of the Code.                       See 11 U.S.C.

§ 507(a)(2).

      On    November   17,       2011,     after     the     Debtor     failed     to

demonstrate     that   he        could     effectuate       a   final     plan     of

reorganization under Chapter 11, the Debtor’s bankruptcy case

converted to one under Chapter 7, which governs liquidations.

The   bankruptcy   court     then        appointed    James     B.    Angell     (the

“Trustee”) as the Chapter 7 Trustee.

      The   Trustee    was       able     to   accumulate       $702,630.25       for

distribution to the estate’s creditors.               He estimated that total

                                          4
Chapter 7 administrative expenses would amount to $278,921.42,

leaving the Debtor’s estate with just $423,708.83 – far short of

what would be required to satisfy the IRS’s secured tax claim of

nearly    $1   million        and     Stubbs’s         unsecured     Chapter    11

administrative expense claim of roughly $200,000. 1                     So unless

Stubbs’s unsecured claim took priority over the secured claim of

the IRS, Stubbs would not collect its fees.                        Whether Stubbs

could “subordinate” the IRS’s claim in this manner was governed

by 11 U.S.C. § 724(b)(2), and that provision is the focus of

this case.

                                        B.

     The general rule in bankruptcy is that secured claims are

satisfied from the collateral securing those claims prior to any

distributions to unsecured claims.              See 11 U.S.C. §§ 506, 725;

In re Midway Airlines, Inc., 383 F.3d 663, 669 (7th Cir. 2004).

Secured   claims,   in    other      words,   take     priority.      Under    that

general rule, the IRS’s claim in this case would be paid first

and nothing    would     be   left    for    payment    on   Stubbs’s   unsecured

claim for administrative expenses incurred during the Chapter 11

proceeding.

     1   Stubbs’s  total   allowed    compensation amounted  to
$213,408.06. But because the Debtor paid $27,977.85 of Stubbs’s
fees, Stubbs is now owed $185,430.21.

                                        5
       But in Chapter 7 liquidations, there is a limited exception

to this norm.         Under § 724(b)(2) of the Bankruptcy Code, certain

unsecured creditors may “step into the shoes” of secured tax

creditors in Chapter 7 liquidation proceedings, so that when the

collateral     securing       the    tax    claims   is    sold,   the    unsecured

creditors are paid first.                  If Stubbs’s claim for Chapter 11

administrative expenses was among the unsecured claims covered

by § 724(b)(2), then — and only then — could it recover from the

estate.

       Because the history of § 724(b)(2) is directly relevant to

this case, we cover it in some detail.                    Until 2005 (and before

any of the events at issue here), § 724(b)(2) was relatively

uncomplicated, providing all holders of administrative expense

claims, like Stubbs, with the right to subordinate secured tax

creditors in Chapter 7 liquidations.                 See 11 U.S.C. § 724(b)(2)

(2000).     But that statutory scheme was criticized on the ground

that   it   created      perverse     incentives,      encouraging       Chapter   11

debtors     and       their   representatives        to    incur   administrative

expenses even where there was no real hope for a successful

reorganization, to the detriment of secured tax creditors when

Chapter 7 liquidation ultimately proved necessary.                       See In re

K.C.   Mach.      &   Tool    Co.,   816 F.2d 238,    248   (6th    Cir.   1987)

(Merritt, J., dissenting).

                                            6
     In      2005,   Congress      responded    with     a    fix.    Under     the

Bankruptcy Abuse Prevention and Consumer Protection Act of 2005,

Pub. L. No. 109–8, 119 Stat. 23 (the “BAPCPA”), Congress sought

to   limit     the   class    of    administrative       expenses    covered    by

§ 724(b)(2), excluding claims for the expenses incurred during

prior Chapter 11 proceedings.                In other words, in order “to

provide greater protection for holders of tax liens . . . from

erosion   of    their   claims’      status    by   expenses     incurred     under

chapter 11 of the Bankruptcy Code,” H.R. Rep. No. 109–31(I), at

100 (2005), unsecured Chapter 11 administrative expense claims

would no longer take priority over secured tax claims in Chapter

7 liquidations.

     Thanks to a drafting error, however, it is not clear that

Congress accomplished what it set out to do.                     The Bankruptcy

Code is complicated, and the original version of § 724(b)(2)

covered   claims     for     unsecured   administrative        expenses   through

cross reference to 11 U.S.C. § 507(a)(1), a provision that gave

such claims first priority as among other unsecured claims.                    See

11   U.S.C.     § 507(a)(1)        (2000).     So      when    Congress   amended

§ 724(b)(2) to exclude Chapter 11 administrative expenses, it

did so by clarifying that subordination rights would extend “to

any holder of a claim of a kind specified in section 507(a)(1)”

— that is, administrative expenses — “(except that such expenses

. . . shall be limited to expenses incurred under chapter 7 of

                                         7
this title and shall not include expenses incurred under chapter

11 of this title).”           11 U.S.C. § 724(b)(2) (2006) (emphasis

added).        And it would have worked — except that in a separate

amendment, the BAPCPA simultaneously altered the § 507 priority

scheme    for    unsecured    claims,    dropping       administrative     expense

claims from first to second and moving them from § 507(a)(1) to

§ 507(a)(2).       See § 212, Pub. L. No. 109-8.            The end result was

that     the    exclusion    of     Chapter   11    expenses       inserted   into

§ 724(b)(2), read literally, did not apply to the administrative

expenses that were its target, but instead to the new set of

claims now enumerated under § 507(a)(1).

       That was the state of affairs when the Debtor filed his

initial Chapter 11 petition in February of 2010.                    At the time,

none of this was of particular importance, because § 724(b)(2)

applies only in Chapter 7 liquidations and not in Chapter 11

reorganizations.      See 11 U.S.C. § 103(b).            And ten months later,

while     the    Debtor’s    case    remained      in    Chapter    11,   Congress

corrected its error with the Bankruptcy Technical Corrections

Act of 2010, Pub. L. No. 111-327, 124 Stat. 3557 (the “BTCA”).

The BTCA made “technical” changes to the Bankruptcy Code, see

id., necessitated by a “number of technical drafting errors” in

the BAPCPA.       See 156 Cong. Rec. H7161 (daily ed. Sept. 28, 2010)

(statement of Rep. Scott) (“This bill before us today is simply

a technical cleanup of the [BAPCPA].”).                 In particular, the BTCA

                                         8
coupled the parenthetical excluding Chapter 11 expenses with a

cross-reference            to       § 507(a)(2),           where    unsecured          claims     to

administrative           expenses         are       now    enumerated,      clarifying          that

Chapter      11      administrative                expense      claimants        do    not      hold

subordination rights under § 724(b)(2).                            See § 2(a)(27), Pub. L.

No. 111-327.

        Congress enacted the corrected BTCA version of § 724(b)(2)

in December 2010.                   It was not until eleven months later, in

November 2011, that the Debtor’s bankruptcy case converted from

Chapter 11 to Chapter 7, implicating § 724(b)(2) for the first

time.        Now    in     a    Chapter        7    proceeding,      Stubbs       could       invoke

§ 724(b)(2)’s         exception           to       the    general    rule       that    unsecured

claims like its own take a back seat to secured claims like the

IRS’s    —   but     only       if    its      claim      to   Chapter     11    administrative

expenses was covered by the governing version of § 724(b)(2).

                                                    C.

        For guidance on this question, the Chapter 7 Trustee filed

a Motion in Aid of Distribution before the bankruptcy court.

The Trustee, with the support of the United States, took the

position that the version of § 724(b)(2) then in effect — the

corrected      BTCA        version        —     controlled,         and    that       under     that

provision,         there       is    no   question        but   that      Stubbs’s      unsecured

claim to Chapter 11 administrative expenses is excluded.                                         And

even under the prior BAPCPA version of § 724(b)(2), the Trustee

                                                     9
and the United States argued, it is clear enough that Stubbs is

not entitled to subordinate the IRS’s secured tax claim.

       Stubbs filed an objection.                    It did not dispute that it had

no     subordination    rights           under       the    current          BTCA   version   of

§ 724(b)(2).        But it argued that regardless of Congress’ intent,

the    plain   language       of    the        prior    version         of    § 724(b)(2)     did

entitle it to subordinate the IRS’s secured tax claim.                                        And

according      to   Stubbs,        application             of    the    new     and    corrected

version of § 724(b)(2) would have an impermissible retroactive

effect,     cutting     off        its    right        to       recover      for    Chapter    11

administrative        expenses       incurred           before         Congress       fixed   its

drafting error.

       The bankruptcy court agreed with the Trustee and dismissed

Stubbs’s objection.           In re Anderson, No. 10-00809-8-RDD, 2014 WL
590481 (Bankr. E.D.N.C. Feb. 14, 2014).                             It held, first, that

the BTCA version of § 724(b)(2) governs this case, under the

normal rule that “a court is to apply the law in effect at the

time it renders its decision.”                    Id. at *2–3 (quoting Bradley v.

Sch.     Bd.   of    Richmond,           416 U.S. 696,       711    (1974)).        The

presumption against retroactivity described in Landgraf v. USI

Film Products, 511 U.S. 244 (1994), the court reasoned, has no

bearing here:        The BTCA version of § 724(b)(2) already was in

effect when the case converted to Chapter 7, so application of

current law would have no retroactive effect on Stubbs’s right

                                                10
to subordinate tax liens in a Chapter 7 proceeding.                                      2014 WL
590481, at *3.

        In the alternative, the bankruptcy court found that even

under the BAPCPA version of § 724(b)(2), Stubbs would hold no

right to subordinate the IRS’s secured tax claim.                                     Analyzing

“the    passage    of       the    BTCA,       its     legislative      history,       and    the

legislative       history         of    [the      BAPCPA]      Section    724(b)(2),” the

court    thought       it     “clear       that       Congress    intended       to      exclude

Chapter 11 professional expenses when a case is converted to

Chapter 7.”       Id. at *4.

        The district court affirmed the decision of the bankruptcy

court.       In   re    Anderson,        No.      7:14-cv-00079-F,        2015 WL 892363

(E.D.N.C.     Feb.      26,       2015).         Like    the     bankruptcy      court,       the

district     court     held       that     the    law    in    effect    at   the      time    of

decision — the BTCA version of § 724(b)(2) — governs the case.

Because      Stubbs     had        no    vested        right     to    subordinate         under

§ 724(b)(2) “until the case was converted to one under Chapter

7,    some   eleven     months         after     Congress      had    already    passed       the

BTCA,” the court reasoned, application of current law would have

no retroactive effect within the meaning of Landgraf.                                    Id. at

*3.     Having found that the BTCA version of § 724(b)(2) applies

and    precludes       Stubbs’s         claim     to    subordination,        the     district

court did not decide whether the same result would follow under

the BAPCPA version of § 724(b)(2).

                                                 11
       This timely appeal followed.

                                       II.

                                       A.

       This court reviews the judgment of a district court sitting

in review of a bankruptcy court de novo.                Jacksonville Airport,

Inc. v. Michkeldel, Inc., 434 F.3d 729, 731 (4th Cir. 2006).                   We

review the bankruptcy court’s findings of fact for clear error

and its conclusions of law de novo.              Id.     Whether § 724(b)(2)

empowers Stubbs to subordinate the IRS’s secured tax claim is a

pure question of law.

                                       B.

       The Supreme Court has identified two rules for interpreting

statutes that, like § 724(b)(2), do not specify their temporal

reach.     See Landgraf, 511 U.S. at 264.         The first is that, as a

general rule, “a court is to apply the law in effect at the time

it renders its decision.”           Id. (quoting Bradley, 416 U.S. at

711); see Velasquez-Gabriel v. Crocetti, 263 F.3d 102, 108 (4th

Cir. 2001) (“[N]ormally a court is to apply the law in effect at

the    time   it   renders    its   decision.”    (citation     and    internal

quotation     marks   omitted)).        The    second    is   effectively      an

exception to the first:         Because retroactivity is disfavored, a

court should not apply the law currently in effect if it would

have   a   “retroactive      effect”   on    conduct    predating     the   law’s

                                       12
enactment, “absent clear congressional intent favoring such a

result.”     Landgraf, 511 U.S. at 280.             Combined, these principles

dictate that a court apply the law in effect at the time it

renders      its      decision,      unless    that         law     would      operate

retroactively      without      clear   congressional       authorization.          See

Gordon v. Pete’s Auto Serv. of Denbigh, Inc., 637 F.3d 454, 458

(4th Cir. 2011) (describing Landgraf framework for analysis).

     The bankruptcy and district courts concluded that this is

the ordinary case, in which the law in effect at the time of

decision — here, the BTCA version of § 724(b)(2) — applies.

Stubbs,    on   the     other     hand,   argues     that    this       case   is   the

exception,      because      application       of     the        BTCA    version     of

§ 724(b)(2) to its claim for Chapter 11 administrative fees,

incurred and approved prior to enactment of the BTCA, would have

an   impermissible       retroactive      effect. 2         We     agree    with    the

bankruptcy and district courts, and conclude that Stubbs’s claim

is governed and foreclosed by the BTCA version of § 724(b)(2).

     A rule that courts should apply the law in effect when they

render their decisions has the advantage of being clear and easy

     2 On appeal, Stubbs limits its retroactivity challenge to
the $105,783.08 in Chapter 11 legal fees approved by the
bankruptcy court prior to the BTCA’s enactment date of December
22, 2010. Before the district court, Stubbs had argued that the
BTCA version of § 724(b)(2) could not be applied to a total of
$153,471.86 in unpaid fees, which included fees incurred before
the BTCA was enacted but approved only after enactment.

                                          13
to    administer.              And   that    is     especially      important     in     the

bankruptcy context.             Chapter 7 trustees have a fiduciary duty to

make already-complex calculations in an expeditious manner, see

In re Thompson, 965 F.2d 1136, 1145 (1st Cir. 1992), and we have

recognized “a public policy interest in reducing the number of

ancillary suits that can be brought . . . so as to advance the

swift and efficient administration of the bankrupt’s estate,” In

re Richman, 104 F.3d 654, 656–57 (4th Cir. 1997).                                Requiring

Chapter 7 trustees to distinguish between and apply different

versions      of    the    Bankruptcy        Code,     on    the   other     hand,     would

complicate         the         process       significantly,         necessitating        an

additional level of discovery and analysis.                        The result would be

the   potential          for    substantial         delays    in   administration       and

increased exposure for bankruptcy trustees, who are subject to

personal liability on claims for improper distribution.                                  Cf.

Yadkin Valley Bank & Trust Co. v. McGee, 819 F.2d 74, 76 (4th

Cir. 1987) (trustee subject to liability for negligently failing

to reduce the assets of the estate to money as expeditiously as

possible).

      Stubbs argues, however, that it would be unjust to apply

the    BTCA     version         of   § 724(b)(2)       retroactively        to    disallow

payment    on      its    unsecured         claim    for     Chapter   11    fees.      See

Landgraf, 511 U.S.       at   265    (presumption       against      retroactivity

flows from “[e]lementary considerations of fairness”).                           Prior to

                                              14
the BTCA, Stubbs contends, it was entitled to subordinate the

IRS’s secured claim under § 724(b)(2); denying it that right as

to Chapter 11 administrative expenses approved before the BTCA’s

passage would have an impermissible “retroactive effect” under

Landgraf.     We disagree.

      The problem with Stubbs’s argument is its premise: that

Stubbs held subordination rights under § 724(b)(2) before the

BTCA was enacted in December 2010.               Before the BTCA was enacted,

§ 724(b)(2) had no application to the Debtor’s case at all.                         It

afforded Stubbs no entitlement to subordinate the IRS’s secured

tax claim for the threshold reason that it simply did not apply

in the Chapter 11 proceedings that began in this case in early

2010 and did not end until November 2011, eleven months after

the BTCA’s passage.           The pre-BTCA version of § 724(b)(2) that

Stubbs invokes, in other words, never controlled this case.                         By

the   time    the    case    converted   to    Chapter     7   in    November   2011,

implicating § 724(b)(2) for the first time, the BAPCPA version

of § 724(b)(2) had been superseded already by the corrected BTCA

version.       Like    the    bankruptcy      and   district     courts,     2015 WL
892363, at *3; 2014 WL 590481, at *3, we think this sequence of

events is dispositive of Stubbs’s retroactivity argument.

      We     recognize,       of   course,     that    the      BTCA      version   of

§ 724(b)(2)     is    being    applied   in    this   case      to   conduct    —   the

incurrence     and     approval     of   legal      fees   in       the   Chapter   11

                                         15
proceeding — that predates the provision’s enactment.                        But as

the    Supreme    Court     has    made   clear,    that    by   itself    does   not

trigger Landgraf’s presumption against retroactivity.                     Landgraf,
511 U.S. at 269 (statute does not operate retroactively “merely

because it is applied in a case arising from conduct antedating

the statute’s enactment”); see Gordon, 637 F.3d at 459.                            Nor

does       application    of   a   new    statute    to    old   conduct    have    a

retroactive        effect      under      Landgraf        whenever   it     “upsets

expectations based in prior law.” 511 U.S. at 269.         Before

enactment of the BTCA, Stubbs may have expected that if the

Debtor’s Chapter 11 bankruptcy case at some point converted to

Chapter 7, then it would acquire a right to subordinate the

IRS’s secured claim under § 724(b)(2). 3                   But such an inchoate

expectation is not the kind of “vested right[] acquired under

existing laws” that, if frustrated, gives rise to retroactivity

concerns.       Id. (citation omitted); see Jaghoori v. Holder, 772

       3Even that expectation, we note, would rest on the
contested proposition that because of a drafting error, the
BAPCPA version of § 724(b)(2) cannot be read to effectuate
Congress’ undisputed intent to exclude Chapter 11 expenses from
subordination rights.    We need not decide that question of
statutory interpretation, given our holding that it is the BTCA
version of § 724(b)(2), and not the BAPCPA version, that applies
to this case. But given the confusion and flux surrounding the
BAPCPA iteration of § 724(b)(2), any expectation Stubbs may have
had that it could prevail under that provision should the
Debtor’s case convert to Chapter 7 was doubly contingent.    Cf.
Velasquez-Gabriel, 263 F.3d at 108–09 (likelihood of success
under prior statute may inform retroactivity analysis).

                                          16
F.3d 764,      771–72     (4th     Cir.       2014)    (finding          impermissible

retroactive effect where application of new statute “takes away

or impairs vested rights acquired under existing laws” (citation

omitted)).

       For its argument to the contrary, Stubbs relies primarily

on In re J.R. Hale Contracting Co., 465 B.R. 218 (Bankr. D.N.M.

2011),       in     which     a     bankruptcy          court     held       impermissibly

retroactive the application of the BTCA version of § 724(b)(2)

to a claim for Chapter 11 administrative expenses incurred prior

to the BTCA’s enactment.             Id. at 224–25.             But on the single fact

most critical to our holding — that the pre-BTCA version of

§ 724(b)(2) was at no time applicable to this case — J.R. Hale

is not on point.            In J.R. Hale, unlike this case, the underlying

bankruptcy case converted from Chapter 11 to Chapter 7 almost

two    years      before    enactment       of   the    BTCA,     so    that      the   BAPCPA

version of § 724(b)(2) did in fact govern the case for a period

of time before the BTCA correction.                        See id. at 219.                That

distinction is fundamental to our analysis.

       As    we    have     emphasized,      the    retroactivity            inquiry      is   a

particularized one, asking “not whether the statute may possibly

have    an     impermissible        retroactive         effect     in    any      case,    but

specifically         whether       applying       the     statute       to     the      person

objecting would have a retroactive consequence in the disfavored

sense.”           Gordon, 637 F.3d    at    459     (emphasis         in    original)

                                             17
(citations and internal quotation marks omitted).                             We need not

decide     here      whether      application          of     the    BTCA     version       of

§ 724(b)(2) in a case that converted to Chapter 7 while the

prior version still controlled, as in J.R. Hale, would have an

impermissible        retroactive       effect.          It    is    enough    for     present

purposes       that       J.R.    Hale     is      no        authority       for      finding

retroactivity        as   “to    the   person     objecting”         in     this    case,    in

which    the    pre-BTCA         version    of    §     724(b)(2)         never     had     any

controlling effect.

     Accordingly, and like the district court, we hold that the

bankruptcy        court      properly      applied           the     BTCA     version        of

§ 724(b)(2) in effect when it rendered its decision.                               Under that

provision,      it      is   clear       that     Stubbs       is    not     entitled        to

subordinate       the     IRS’s     secured      tax        claim    in     favor    of     its

unsecured claim to Chapter 11 administrative expenses.                                Whether

the same result would have obtained under the pre-BTCA version

of § 724(b)(2), as urged by the Trustee and the United States,

is a question we need not reach.

                                           III.

     For the foregoing reasons, we affirm the judgment of the

district court.

                                                                                     AFFIRMED

                                            18