February 10, 2011 Articles

ASARCO Decisions Elucidate Requirements for "Substantial Contribution" Claims

Two recent decisions denied substantial contribution requests by two different groups of creditors.

By Christopher Castillo and Brooks Hamilton

Sections 503(b)(3)(D) and (b)(4) of the Bankruptcy Code authorize bankruptcy courts to allow, as administrative expenses, the “actual, necessary expenses” incurred by a creditor in making a “substantial contribution” to a Chapter 11 bankruptcy case, including “reasonable compensation” for professional services rendered by the creditor’s attorneys.

In two recent decisions arising from the ASARCO LLC bankruptcy case, Judge Richard S. Schmidt of the U.S. Bankruptcy Court for the Southern District of Texas, Corpus Christi Division, denied substantial contribution requests by two different groups of creditors.

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