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Goods sellers are the beneficiaries of an administrative priority claim arising under Bankruptcy Code section 503(b)(9). This section was added by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA). Trade creditors can now assert an administrative priority claim for the sums due for goods they had sold and delivered to the debtor that the debtor had received within 20 days of bankruptcy ("20-Day Goods").
Trade creditors that successfully assert a section 503(b)(9) administrative priority claim for 20-Day Goods have an increased likelihood of full and quicker recovery of this claim. However, this new priority claim has raised many questions, including the deadline for its assertion. The United Sates Bankruptcy Court for the Southern District of New York, in the Dana Corporation Chapter 11, recently addressed the applicability of a claims bar date for filing pre-petition claims to section 503(b)(9) priority claims for 20-Day Goods. The court ruled against the goods supplier, Goodyear Tire and Rubber Company ("Goodyear"), rejecting Goodyear's approximately $1.4 million section 503(b)(9) priority claim that was filed after passage of the pre-petition claims bar date some six months earlier.
Trade creditors should, therefore, be checking for the establishment of a deadline for asserting section 503(b)(9) priority claims for 20-Day Goods. At least one court, the United States Bankruptcy Court for the District of Massachusetts, has adopted a local rule that requires section 503(b)(9) creditors to file for relief with the Bankruptcy Court within 60 days of the first scheduled section 341 meeting, unless the court sets a different claims bar date. In other jurisdictions, bankruptcy courts have set bar dates for asserting section 503(b)(9) priority claims. Frequently, the claims bar date orders prescribe the manner for asserting section 503(b)(9) priority claims, including the creditor's filing a request for payment or proof of claim. Creditors should be cognizant of the local rules adopted by the Bankruptcy Court presiding over a bankruptcy case and also monitor the court's docket and carefully review claims bar date notices so the creditors could timely and properly assert their section 503(b)(9) priority claims.
Overview of section 503(b)(9) Administrative Priority Claims
Section 503(b)(9)'s administrative priority claim for 20-Day Goods amounts to a safety net for trade creditors that cannot recover on their reclamation claims. section 546(c)(1),...