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Post-Confirmation Administrative Claims Can Be Discharged

On August 30, 2021, the U.S. Court of Appeals for the Third Circuit ruled in Ellis v. Westinghouse Electric Co. that administrative claims arising after confirmation of a debtor’s plan, but before the plan’s effective date, can be discharged just like claims that arise prior to the plan confirmation date. This is the first federal appellate court decision to ever address this issue. 

In this Reuters article authored by Loeb & Loeb Restructuring & Bankruptcy lawyers Schuyler Carroll, Bethany Simmons and Noah Weingarten, the writers examine the Third Circuit’s Westinghouse decision, arguing that the appeal court’s ruling makes clear that parties doing business with debtors in bankruptcy at any time prior to the effective date of the debtor’s plan need to be mindful of the bar dates set forth in the debtor’s plan. The authors note that the consequence of missing the administrative claim bar date can result in a claim that should have been paid in full being discharged and the holder of the claim receiving no recovery. The text of the debtor’s plan and the confirmation order are key as they can alter the default provisions set forth in 11 U.S.C. §§ 503 and 1141.