Debate Intensifies on Substantial Contribution Claims in Chapter 7 Cases

Summary

This article discusses substantial contribution claims filed in Chapter 7 cases. To encourage creditors, equity interest holders, indenture trustees, and unofficial committees to take actions that benefit a Chapter 9 or Chapter 11 estate, the Bankruptcy Code confers administrative expense status on claims for expenses incurred by them in making a substantial contribution in such cases. Administrative expense status is also given to claims for reimbursement of reasonable professional fees incurred by such entities in making a substantial contribution.