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Into the Brambles: Section 507(a)(4) and Executoriness

Problems in the Code

21 American Bankruptcy Institute Journal No. 4 @ 36
May 2012

Pamela Egan's article focuses on employee severance claims and executory contracts under section 365 of the Bankruptcy Code. Courts have adopted different approaches to determine whether severance claims arising after a postpetition termination are entitled to administrative priority. Ms. Egan argues that rejection should not elevate a severance claim to section 507(a)(4) priority; the history of section 365 makes clear that it is intended to put the nondebtor party to an executory contract on a par with parties to nonexecutory contracts. It is not intended to create priority rights. 

Retrieve article in pdf below; reprinted with permission of the American Bankruptcy Institute.

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