Business Restructuring and Bankruptcy Alert: The key is in the code

An Eastern District of Michigan Bankruptcy Court (“Court”) recently held that a supplier to a bankrupt debtor was entitled to receive immediate payment on its 20-day administrative expense notwithstanding an outstanding avoidable transfer. More specifically, based on the Bankruptcy Code’s explicit distinction between a claim and an administrative expense, the Court found that section 502(d) of the Bankruptcy Code prevents payment of any claim of any entity that received an avoidable transfer, but does not preclude payment of an administrative expense.