Alabama Surface Mining Commission v. N.P. Mining Co. (in re N.P. Mining Company)

963 F.2d 1449 (1992)

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Alabama Surface Mining Commission v. N.P. Mining Co. (in re N.P. Mining Company)

United States Court of Appeals for the Eleventh Circuit
963 F.2d 1449 (1992)

Facts

N.P. Mining Company (N.P.) (debtor) filed for Chapter 11 bankruptcy and continued some mining operations as a debtor-in-possession. After N.P. filed its bankruptcy petition, the Alabama Surface Mining Commission (ASMC) assessed penalties on N.P. for violations of the Alabama Surface Mining Control and Reclamation Act. The fines assessed against N.P. were simply punitive. The bankruptcy court subsequently appointed a Chapter 11 trustee. N.P. ceased operating, and the trustee administered the estate and kept the company operating at status quo. The ASMC assessed more fines against N.P. during this time. The bankruptcy case was subsequently converted to a Chapter 7 liquidation. The ASMC requested that all the assessed fines be considered administrative expenses under Bankruptcy Code § 503(b) and given priority status over other creditors’ claims. The bankruptcy court disagreed and held that the penalties were not administrative expenses because the fines would not benefit the estate in any way. Upon appeal, the district court affirmed.

Rule of Law

Issue

Holding and Reasoning (Kravitch, J.)

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