Cooper Commons Carve-Out, A Cautionary Tale

Law360, New York (August 15, 2008, 12:00 AM EDT) -- As a general rule, absent an express agreement to the contrary, expenses associated with administering the bankruptcy estate, including pledged assets, are not chargeable to a secured creditor's collateral or claim but must be paid out of the estate's unencumbered assets.

Recognizing, however, that the bankruptcy estate may be called upon to bear significant expense in connection with preserving or disposing of encumbered assets as part of an overall reorganization (or liquidation) strategy, U.S. bankruptcy law has long recognized an exception to this general principle in...
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