New Massachusetts bankruptcy judge says no to trustee-paid claims

The first written opinion by the newest Massachusetts bankruptcy judge is of interest to Chapter 13 debtors and Massachusetts bankruptcy attorneys.

In the Pearson case, judge Melvin Hoffman struck down a provision in a debtor’s Chapter 13 plan that would have provided for administrative claims to be paid by the trustee out of the plan money set aside for reimbursing unsecured creditors.

Judge Hoffman reasoned that if unexpected administrative claims surfaced after the Chapter 13 plan was confirmed, it was possible they could suck up most or even all of the money that was supposed to be paid to creditors, and that therefor the plan did not meet the requirements of the bankruptcy code.

Administrative claims typically involve professional services such as legal or accounting fees.

 

By Doug Beaton

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