St. John’s Law Student
Following the conversion of the bankruptcy case from chapter 11 to chapter 7, the Bankruptcy Court for the Southern District of Florida, in In re National Litho, LLC
, recently held that a DIP lender’s pre-conversion superpriority claim had priority over any and all post-conversion administrative expenses.
In National Litho
, the debtor initially filed its bankruptcy case under chapter 11 of the Bankruptcy Code. In its motion to approve the post-petition financing, the debtor requested the authority to grant the DIP lender a superpriority claim under section 364(c)(1), which would have priority over “any and all administrative expenses.”
Two days after the court approved the DIP financing, the court converted the case from chapter 11 to chapter 7. 
The chapter 7 trustee subsequently objected to the DIP lender’s motion to allow its superpriority claim.
The court found that the phrase “any and all administrative expenses” included any and all chapter 7 administrative expenses.
Therefore, the court opined that the conversion of a bankruptcy case under chapter 7 did not impact the priority of a pre-conversion superpriority claim granted under section 364(c)(1).
Accordingly, the court held that the DIP lender’s claim had priority over the post-conversion administrative expenses.