Challenging The 'Pay' In Pay-To-Play

Law360, New York (December 29, 2008, 12:00 AM EST) -- In order to use the bankruptcy process to liquidate collateral, lenders often are asked to “pay to play”, meaning they must ensure administrative expense claims will be paid in full in the case.

Should those lenders be required to fund pre-petition, § 503(b)(9) [1] administrative expense claims as well as post-petition expenses incurred to liquidate the collateral?

All across the United States, lenders are saying, “No.” Their position has drawn strong objections, both from § 503(b)(9) claimants, as well as unsecured creditors’ committees.

And, although, there...
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