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Bankruptcy Litigation

Obtaining Administrative Claim Status When Doing Business With a Debtor

How is administrative claim status obtained in a bankruptcy case, and what risks does a service or goods supplier take by continuing to do business with the debtor after commencement of the bankruptcy case?

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The Bankruptcy Code encourages service and good suppliers to continue to do business with a company in Chapter 11 by providing that amounts owed for post-petition services and deliveries are eligible to receive administrative claim status if they provide a benefit to the estate, meaning that their claims are paid in full before pre-petition unsecured claims. But how is administrative claim status obtained in a bankruptcy case, and what risks does a service or goods supplier take by continuing to do business with the debtor after commencement of the bankruptcy case?

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