In re Murray Energy Holdings, No. 21-8014 (6th Cir. 2022)
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Penn Line filed six proofs of claim seeking an administrative expense priority related to services provided to specific debtors in jointly administered bankruptcy cases. Debtors objected, asserting that “[t]he reclassified amounts are on account of labor and service charges listed on the claim which do not constitute a good under section 503(b)(9) and goods listed on the claim which were received outside of the proscribed 20-day receipt period under section 503(b)(9) thus not entitled to administrative priority.” The Plan Administrator responded in opposition to Penn Line’s Claims Objection Response and Administrative Expense Application. Penn Line offered no witnesses at the hearing, restating its primary argument that it was a critical vendor based on a theory of “implied assumption.” Penn Line also raised a new argument: that the work for which it filed its proofs of claim was performed post-petition.
The bankruptcy court ruled that the “implied assumption” theory is not a valid basis for allowing an administrative expense claim, rejected Penn Line’s new argument that the work had been performed post-petition, and sustained the debtors’ objections. The court subsequently denied a motion for reconsideration. The Sixth Circuit Bankruptcy Appellate Panel affirmed, holding that the bankruptcy court did not abuse its discretion in denying Penn Line’s motion for reconsideration; Penn Line did not appeal the original order denying its administrative expense or the order sustaining the objection to claims.
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