Professional Documents
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SBN: 245045) BUCHALTER NEMER A Professional Corporation 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 900 17-2457 Telephone: (213) 891-0700 Facsimile: (213) 896-0400 Email: pwebster@buchalter.com parrow@buchalter.com ayates @buchalter.com Attorneys for creditor Dolan Group
PRELIMINARY STATEMENT
1. During the months and days before the Debtors bankruptcy case commenced,
Dolan sold and delivered various apparel items to the Debtor. As a seller of goods, Dolan is entitled to an administrative expense claim for the goods it delivered to the Debtor in the twenty days preceding the filing of the Debtors chapter 11 petition.
BN 8996314v2
FACTUAL BACKGROUND
2. The Debtor operates 70 retail stores in 21 states and a retail website selling
apparel and accessories targeted at shoppers aged 25-3 5. The Debtor filed its chapter 11 petition on May 2, 2011 (the Petition Date). 3. Dolan manufactures and sells apparel. From April 12, 2011 through May 2, 2011,
within the 20 day period prior to the petition date (the Administrative Claim Period), the Debtor purchased and received $28,646.25 worth of goods from Dolan. A chart listing the invoice numbers, shipping dates and the value of goods received by the Debtor during the Administrative Claim Period is attached as Exhibit 1 to the Declaration of Jodie Dolan.
LEGAL DISCUSSION
4. Pursuant to section 503 of the Bankruptcy Code an entity is entitled to payment of
an administrative expense for the value of any goods received by the debtor within 20 days before the date of commencement of a case under this title in which the goods have been sold to the debtor in the ordinary course of such debtors business. 11 U.S.C. 503(b)(9). A. 6.
of the Debtors business. Those goods were received by the Debtor within the Administrative Claim Period. It is beyond dispute that all of the goods were delivered on or after April 12, 2011. Thus, Dolan is entitled to an administrative claim for the value of the goods received by the Debtor during the Administrative Claim Period in the amount of $28,646.25.
B.
7.
including claims for the value of goods pursuant to subsection 503(b)(9). Thus, Dolan is entitled to immediate payment of its administrative expense claim for the value of the goods received by the Debtor in the twenty days preceding the Petition Date, and requests that it be paid simultaneously with the first payment made by the Debtor on any other administrative claim. 8. Prepetition administrative claims under section 503(b)(9) are accorded higher
priority than other postpetition administrative claims under section 503 because section 503(b)(9) claims are not subordinated upon conversion to chapter 7. Upon conversion of a case under any other chapter of the Bankruptcy Code to one under chapter 7, section 726(b) subordinates section 503(b) administrative claims incurred under that other chapter of bankruptcy to section 503(b) claims incurred under the chapter 7 case. However, because section 503(b)(9) claims are not incurred under any chapter of the bankruptcy code, but rather prior to the filing of a bankruptcy case, even in converted cases they are pan passu in priority with chapter 7 administrative claims. Thus, it is clear the Bankruptcy Code provides preferential treatment to such claims in order to ensure their payment, and therefore, Dolan is entitled to immediate payment of its administrative claim.
C.
9.
goods were received through and including the date of payment of such claim. See e.g. In re Sen-Wel Industries, Inc., Employee Benefits Cas. 2405, 1993 WL 328488 (W.D.N.Y. Mar. 17, 1993) (No. 88-11490 M) (holding that interest on administrative claim allowed as administrative expense where interest would accrue on the claim in the ordinary course of business, outside of
To the extent such goods were received by the Debtor after the Petition Date, Dolan holds an administrative claim for the value of those goods pursuant to 11 U.S.C. 503(b)(l) as a necessary cost and expense of preserving the Debtors estate.
bankruptcy); In re Mesa Refining, Inc., 66 B.R. 36 (Banks. D.Colo. 1986). As the Mesa Refining court concisely ruled: Interest is awarded as an administrative expense because it is an integral part of the underlying debt that is so classified. Any normal commercial transaction incorporates interest due with the debt as compensation to the creditor for debtors use of the sum loaned. In this case, creditors sold oil to the debtor with the expectation that they would be paid. Had debtors bankruptcy petition not intervened, creditors would have had the use and benefit of the sum paid for oil or at least been able to reclaim the oil as a regular commercial practice. Being frustrated in payment and reclamation of the actual goods, creditors should not also be frustrated in payment of interest on their claims. Interest on the reclamation claims is due creditors as part of the debt and in payment for debtors post petition use of the oil. Id. at 38; see also, In re Wheeling-Pittsburgh Steel Corp., 74 B.R. 656, 661 (Bankr. W.D. Pa. 1987) (bankruptcy court awarded post-petition interest to reclaiming seller). Furthermore, to the extent payment of Dolans administrative claim is delayed pursuant to the request of the Debtor, Dolan should not be penalized by the delay, and therefore is entitled to payment of interest for the period of any such delay.
CONCLUSION
10. For the foregoing reasons, Dolan respectfully requests that this Request be
granted, and that the Debtor tender full payment of Dolans administrative claim in the amount of $28,646.25 plus interest, to be paid contemporaneously with the first payment made by the Debtor on any other administrative claim. Dolan also requests that the Court order such other relief as it deems necessary and appropriate.
By: Is! Pamela K. Webster Pamela K. Webster Paul S. Arrow Angella D. Yates BUCHALTER NEMER 1000 Wilshire Boulevard, Suite 1500 Los Angeles, CA 90017-2457 Telephone: (213) 891-0700 Facsimile: (213) 896-0400 Attorneys for Creditor Dolan Group
EXHIBIT 1
Metropark Date
04/20/11 04/12/11
Terms
Net 60
Shipped
04/20/11 04/12/11
Bill of Lading#
5228430420 5228420412
Amount
1,196.25 27,450.00
Net 60