Administrative Priority Granted To Secured Claim

In an issue the court notes is one of first impression, a Bankruptcy Appellate Panel for the U.S. Court of Appeals for the Ninth Circuit has held that a bankruptcy court could grant an administrative priority to a claim which also may be secured. Brown & Cole Stores, LLC v. Associated Grocers, Inc., 375 B.R. 873 (9th Cir. BAP, Aug. 17, 2007).

"We expect that the issue is of great importance to many sellers of goods to troubled companies," the court wrote, noting that the case involved the new section 503(b)(9) of the Bankruptcy Code. That section, as amended in 2005, gives administrative priority to a claim for the value of goods, received by a debtor within 20 days before the commencement of a case, which were sold to the debtor in the ordinary course of the debtor's business.