Bankruptcy Court Erred in Denying "Superpriority" Claim
In In re: SCOPAC, No. 09-40307, creditors' appeal from the district court's dismissal of their appeal for lack of subject matter jurisdiction, where that appeal alleged that the bankruptcy court erred in denying their "superpriority" administrative claim on the bankruptcy estate, the court vacated where the bankruptcy court undervalued the noteholders' priority administrative section 507(b) claim by $29.7 million, and the court erred in not crediting their interest with timber sales proceeds that were received during the bankruptcy, on which they had a lien and priority interest arising from the court's many cash collateral orders.
As the court wrote: "This appeal involves a dispute over compensation for diminution in the
value of collateral during the pendency of a Chapter 11 bankruptcy. The appellants, holders of notes secured by the timber and non-timber assets of the Scotia Pacific Co., LLC ("Scopac"), seek review of the district court's dismissal of their appeal for lack of subject matter jurisdiction and contend that the bankruptcy court erred in denying their "superpriority" administrative claim on the bankruptcy estate. 11 U.S.C. § 507(b). The Appellees, supporters of Scopac's reorganization plan, argue that the district court lacked jurisdiction due to the Noteholders' separate appeal of the plan confirmation order, an order this court affirmed, in large part, last year."
- Read the Fifth Circuit's Decision in In re: SCOPAC, No. 09-40307