administrative priority claims that
likely exist in a retailer’s bankruptcy.
This is precisely what happened in
Family Christian. The debtors in
that case operated one of the largest
chains of Christian retail bookstores,
with approximately 286 stores in 36
states and annual sales exceeding
$200 million. Before the auction,
the debtors’ assets were valued at
approximately $28 million, against
secured debt totaling about $58 million.
Administrative priority claims totaled
about $14 million, $5.6 million of
which were Section 503(b)( 9) claims.
When Congress enacted the
Bankruptcy Abuse Prevention and
Consumer Protection Act of 2005
(BAPCPA), it amended the Bankruptcy
Code to include Section 503(b)( 9),
which granted administrative priority
status to claims for “the value of any
goods received by the debtor within 20
days before the date of commencement
of a case under [title 11] in which the
goods have been sold to the debtor in
the ordinary course of such debtor’s
business.” 11 U.S.C. § 503(b)( 9).
For retail debtors, these claims can be
quite substantial. Family Christian,
for example, received over $5 million
in inventory from publishers within
20 days of its bankruptcy filing.
Notably, however, unlike other
administrative priority claims,
See 11 U.S.C. § 1129(a)( 9)(A).
What happens, however, when the
debtor sells its assets instead of filing a
plan and, after satisfying the secured
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