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.
Courts disagree over whether substantial contribution claims can
also be allowed in cases under chapter 7 of the Bankruptcy Code.
The U.S. Bankruptcy Court for the Northern District of Illinois
examined this thorny issue in In re Concepts Am., Inc.,
625 B.R. 881 (Bankr. N.D. Ill. 2021). The court ruled that
"[t]he plain and unambiguous language of § 503(b)(3)(D)
is conclusive—substantial contribution claims are allowed as
administrative expenses only in Chapters 9 and 11, not in Chapter
7."
