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A Debt Is An Necessary For Administrative Expense Under Section 503 ( B )

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Courts have held that a debt qualifies as an "actual, necessary" administrative expense under section 503(b)(1) if “(1) the claim …arise[s] out of a post-petition transaction between the creditor and the debtor-in-possession (or trustee) and (2) the consideration supporting the claimant 's right to payment must be supplied to and beneficial to the debtor-in-possession in the operation of the business.” See, e.g., In re Merry-Go-Round Enterprises, Inc., 180 F.3d 149, 157 (4th Cir. 1999); see also Caradon Doors & Windows, Inc. v. Eagle-Picher Industries, Inc. (In re Eagle-Picher Indus.), 447 F.3d 461, 464 (6th Cir. 2006); In re Jartran, Inc., 732 F.2d 584 (7th Cir. 1984). Administrative priority is regularly conferred upon debts arising …show more content…

161 (Bankr. N.D. Ill. 1985) to distinguish between expenses that are mere overhead, and cannot be reimbursed, with those that are directly chargeable to the estate. As the Thacker court explained, expenses related to a professionals overhead “have a common characteristic in that they are incurred by the firm on a day-to-day basis, no matter whom it represents. The traditional way to spread these kinds of daily expenses among all the firm 's clients is for the firm to structure its hourly rates to take such expenses into consideration.” In re Thacker, 48 B.R. at 164. On the other hand, “[c]ompensable, out-of-pocket expenses are those which can be clearly and fairly charged to the Debtors. Court fees, transcription fees, out-of-town travel expenses, delivery service, long-distance telephone calls and postage expenses, are examples of expenses which can be clearly traced to an applicant 's representation of Debtors, as opposed to the firm 's other clients.” Id. at 10.
This Court in Wyche noted:
“The Thacker court 's distinction between overhead and reimbursable expenses comports with the Bankruptcy Code in that it permits reimbursement only for expenditures made to satisfy the particular necessities of individual case administration. Meanwhile, the Thacker definition disallows costs connected to the daily operations of a law firm. Such daily operations include efforts by individual attorneys and staff to ensure that the service they provide merits compensation

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