In re: Marquez Construction and Maintenance, LLC

Summary

The court held that OSC Energy, LLC’s application for an administrative expense claim was timely because no claims deadline had been set and OSC lacked notice of the bankruptcy until after conversion. The court granted the entire claim chapter 11 administrative expense status because it arose under a post-petition rental agreement entered into by the chapter 11 debtor, including expenses incurred after conversion to chapter 7. However, the court denied chapter 7 administrative expense status for post-conversion expenses because the equipment and services did not benefit the chapter 7 estate and were not accepted by the chapter 7 trustee.

Holdings

1. The application was timely because no claims bar date had been set in the chapter 7 case. Alternatively, any missed deadline should be extended for cause because OSC did not receive notice of the bankruptcy until after conversion and promptly filed its application after receiving notice.
2. The expenses incurred before conversion under the post-petition rental agreement were entitled to chapter 11 administrative-expense status.
3. All expenses arising under the post-petition rental agreement, including expenses that arose after conversion to chapter 7, were entitled to chapter 11 administrative-expense status.
4. The post-conversion expenses were not entitled to chapter 7 administrative-expense status because they did not benefit the chapter 7 estate and were not sought or accepted by the chapter 7 trustee.

Questions Presented

1. Whether OSC's application for an administrative expense claim was timely under Federal Rule of Bankruptcy Procedure 1019(f), including whether the deadline could be extended because OSC lacked notice of the bankruptcy.
2. Whether expenses arising under a post-petition contract entered into by a chapter 11 debtor before conversion qualify as chapter 11 administrative expenses when some expenses arose after conversion to chapter 7.
3. Whether expenses arising after conversion to chapter 7 under the post-petition rental agreement qualify for the higher priority of chapter 7 administrative expenses when the agreement did not benefit the chapter 7 estate and was not assumed by the chapter 7 trustee.

Disposition

other