Damages for a Prepetition Default are Not Administrative Expenses

The following is a summary of a Minnesota bankruptcy case or a case relevant to Minnesota bankruptcy law.

Minnesota Bankruptcy Case:

In re Twin Cities Stores, Inc., Twin Cities Avanti Stores, LLC, BKY 09-34468, BKY 09-34469 (Bankr. D. Minn. 3/19/10) (O’Brien, J.).

Case Summary:

Damages for a Prepetition Default are Not Administrative Expenses

Marathon Petroleum Company, LLC filed a motion for allowance of an administrative expense for post-petition removal of the Marathon brand trademarks from properties under the control of the debtors, for the debtors’ retention of certain of Marathon’s personal property, and, for post-petition real estate taxes and accruing penalties. The court found that Marathon was entitled to a “superpriority” administrative expense in the Avanti case in the Amount of $44,070.07 pursuant to 11 U.S.C. §§ 507(b), (a)(2), and 503(b)(1) because Avanti failed to pay real estate taxes pursuant to post-petition cash collateral stipulations and orders. The court otherwise denied Marathon’s motion because: 1) the claim was based on the breach of a pre-petition executory contract terminated by Marathon pre-petition; and 2) Marathon had not shown that the bankruptcy estate actually used Marathon’s personal property or that the debtors’ retention otherwise benefitted the estates.

Credit: The preceding was a summary of a case relevant to Minnesota bankruptcy law. The case summary was prepared by the U.S. Bankruptcy Court through Judge Robert J. Kressel & attorney Faye Knowles.