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In re Erving Indus., Inc.

In re Erving Indus., Inc.

United States Bankruptcy Court for the District of Massachusetts, Western Division

April 7, 2010, Decided; April 7, 2010, Filed; April 7, 2010, Entered

Chapter 11, Case No. 09-30623 (Jointly Administered)

Opinion

 [*356]  MEMORANDUM OF DECISION

This case presents an issue of first impression in the First Circuit: whether a creditor's supply of electricity to a debtor within the 20 days preceding the commencement of a bankruptcy case constitutes a sale of goods, entitling the creditor to a priority administrative expense claim under § 503(b)(9) of the United States Bankruptcy Code. 1

I. FACTS AND TRAVEL OF THE CASE

Erving Industries, Inc., debtor and debtor-in-possession, together with certain of its affiliates, 2 (collectively the "Debtor") filed a voluntary petition under Chapter 11 of the Bankruptcy Code on April 20, 2009 (the "Petition Date"). On July 2, 2009, at the request of the Debtor, the Court entered an order setting August 7, 2009 as the deadline for creditors to file priority administrative claims under § 503(b)(9) with respect to goods delivered to the Debtor within the 20-day period preceding the Petition Date. Constellation NewEnergy, Inc. ("NewEnergy") timely submitted such a claim in the amount of $ 281,667.88 (the "Claim").

On September 16, 2009, the Debtor filed an objection to NewEnergy's Claim (the "Objection"), to which NewEnergy responded (the "Response"). 3 The Debtor and NewEnergy agree that the amount claimed by NewEnergy  [**3] accurately represents charges for electricity supplied to the Debtor during the relevant time period. But the Debtor objects to the priority asserted for the Claim under § 503(b)(9)  [*357]  on grounds that electricity is not a good covered by the relevant section of the Bankruptcy Code. This is the only issue to be decided. 4 If the Court concludes that electricity is a good within the meaning of § 503(b)(9), then NewEnergy is entitled to a priority administrative claim of $ 281,667.88 in the Debtor's Chapter 11 case; if the Court concludes that electricity is not a good, then NewEnergy is left with a general unsecured claim against the Debtor.

II. POSITIONS OF THE PARTIES

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432 B.R. 354 *; 2010 Bankr. LEXIS 1069 **; Bankr. L. Rep. (CCH) P81,729; 53 Bankr. Ct. Dec. 6

In re: ERVING INDUSTRIES, INC., et al., Debtors

CORE TERMS

customers, electricity, generation, energy, transmission, prices, costs, regulated, supplier, meter, deregulation, markets, plants, load, consumers, reliability, transmission line, wholesale, rates, commodity, fuel, turbine, retail, charges, natural gas, grid, Restructuring, peak, kWh, power plant

Bankruptcy Law, Unsecured Priority Claims, Administrative Expenses, Miscellaneous Expenses, Administrative Powers, Utility Services, General Overview, Governments, Legislation, Interpretation, Commercial Law (UCC), Subject Matter, Goods, Definition of Goods, Hybrid Transactions, Estate Property, Avoidance, Limitations on Trustee Powers