Case Summary:
Application of debtor's attorney for allowance of fees and costs totaling $62,988.25 as an administrative expense is denied. Debtor's chapter 11 plan was confirmed on November 26, 1984. Case was converted to chapter 7 on March 21, 1986. Debtor's assets were sold at auction on July 16, 1986; auction proceeds totaled $296,718.50. All property sold at auction was subject to valid, unavoided security interests. Security interests attached to proceeds of auction pursuant to 11 U.S.C. § 552(b). 11 U.S.C. §§ 725 and 726 and bankruptcy rule 6007 specify how property of estate is to be distributed. It is unlikely that there is any equity in remaining property above claims of secured creditors. While applicant attorney may well have valid administrative claim pursuant to 11 U.S.C. § 503, there are no assets available for distribution toward such claims. Should unsecured assets later become available, they would be distributed in accordance with 11 U.S.C. § 726.
Statue/Rule References:
11 U.S.C. § 503 -- Administrative Expenses
11 U.S.C. § 725 -- Disposition of Certain Property
11 U.S.C. § 726 -- Distribution of Property of Estate
11 U.S.C. § 552 -- Postpetition Effect of Security Interest
Fed. R. Bankr. P. 6007 -- Abandonment and Distribution of Property of Estate
Key Terms:
Administrative Expenses
Attorney Fees
Security Interests - Attachment