In re Lucre, Inc.

434 B.R. 807 (2010)

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In re Lucre, Inc.

United States Bankruptcy Court for the Western District of Michigan
434 B.R. 807 (2010)

Facts

Lucre, Inc. (debtor) provided telecommunications services to Verizon customers. AT&T Michigan (AT&T) (creditor) was statutorily required to provide Lucre with access to AT&T’s facilities to route calls through a separate circuit called the Verizon DEOT. AT&T charged Lucre $3,185.78 per month for the Verizon DEOT. Lucre filed a Chapter 11 bankruptcy petition in October 2005 and continued using the Verizon DEOT for roughly three and a half years during the bankruptcy proceeding. AT&T subsequently filed a $1.1 million administrative-expense request in the bankruptcy proceeding, asserting that AT&T was entitled to continued reimbursement of the monthly charges for the use of the Verizon DEOT. AT&T also asserted that at some point during the bankruptcy, the rate for the Verizon DEOT had increased to $17,974.80 per month. Lucre objected to the request, arguing that Lucre’s obligation to AT&T should be treated as a prepetition claim, rather than a postpetition administrative expense. Lucre also asserted that AT&T’s requested claim was excessive because Lucre had not benefited from its postpetition use of the Verizon DEOT. The bankruptcy court likened the contract between AT&T and Lucre to a license giving Lucre permission to use AT&T’s system to route the Verizon calls and then considered whether AT&T had an administrative-expense claim.

Rule of Law

Issue

Holding and Reasoning (Hughes, J.)

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