Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A.
United States Supreme Court
530 U.S. 1 (2000)
When Hen House Interstate filed for Chapter 11 reorganization, it owed Union Planters Bank (defendant) over $4 million secured by nearly all its assets; Union later lent Hen House another $300,000 to fund continued operations, including workers' compensation premiums owed to Hartford Underwriters Insurance Company (plaintiff). Hartford, unaware of the bankruptcy, kept providing coverage despite unpaid premiums. After the case converted to Chapter 7 liquidation and a trustee was appointed, Hartford — owed over $50,000 — sought payment as an administrative expense directly from Union's collateral under § 506(c). The bankruptcy court and district court sided with Hartford, and an Eighth Circuit panel affirmed, but the en banc court reversed.
Whether an administrative claimant, as opposed to the bankruptcy trustee, may seek payment from a secured creditor's collateral under 11 U.S.C. § 506(c).