If you provide goods or services to a bankrupt company after the bankruptcy filing, your claim may be classified as an "administrative claim." This status gives you higher priority than general unsecured claims. Here's what that means.

What Is an Administrative Claim?

An administrative claim is a debt incurred by the bankruptcy estate during the bankruptcy case—after the filing date. Examples include:

  • Supplies or services provided to the company post-filing
  • Wages earned by employees during the bankruptcy case
  • Professional fees for bankruptcy lawyers and accountants
  • Utility bills and rent due after filing

Priority Advantage

Administrative claims are paid before general unsecured claims from pre-filing debts. This means you recover a much higher percentage—often 100% if the estate has sufficient assets.

How Administrative Claims Are Paid

The trustee or debtor-in-possession typically pays administrative claims as they accrue (or periodically) from cash flow. If a 363 sale occurs, sale proceeds often prioritize payment of administrative claims.

The Tradeoff

Providing goods/services to a bankrupt company is risky (you're unpaid if the company has no cash). But if you do, you get administrative claim priority, which increases your recovery odds significantly.

Filing an Administrative Claim

You typically don't file a formal Proof of Claim for administrative claims. Instead, you submit a request to the trustee or debtor-in-possession's counsel. Follow the procedures in the bankruptcy notice or case website.

What if the trustee denies my administrative claim?
You can dispute it in court. The burden is on the trustee to prove the claim isn't properly incurred. Administrative claims are largely presumed valid.
Does the priority of administrative claims mean I get paid first?
After secured creditors and priority unsecured claims (wages, taxes), yes. Administrative claims get paid before general unsecured claims.