New Bankruptcy Opinion: In re: A.B.A. FIRE EQUIPMENT, INC.; Issue: Surcharge of Collateral Pursuant to 11 U.S.C. § 506(c)


In re: A.B.A. FIRE EQUIPMENT, INC., A-1 FIRE EQUIPMENT, CORP., Chapter 11, Debtors.

Case No.: 11-35796-BKC-AJC, Case. No.: 11-35798-BKC-AJC, Proceeding Jointly Administered.

United States Bankruptcy Court, S.D. Florida.

June 29, 2012.


The debtors sought to surcharge JP Morgan Chase Bank, N.A.'s collateral after an asset sale pursuant to section 363, arguing that they were entitled to surcharge Chase's collateral for $408,186.98 because the debtors' post-petition continued operation permitted the sale of substantially all of the debtors' assets as a going-concern which resulted in a higher sale price. In response, Chase argued that the sales price was based almost exclusively on receivables and that those receivables did not arise post-petition, and that the Debtors' sale of substantially all of its assets was on substantially the same terms and conditions that was available before the bankruptcy. The Court concluded that the elements necessary to support a surcharge are not present in this case.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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