The administrative convenience exception is a provision in bankruptcy law that allows a bankruptcy plan to classify small, unsecured claims separately. This classification is intended to facilitate a more efficient handling of the bankruptcy estate. By addressing these smaller claims sooner, the process can be streamlined, potentially leading to quicker resolutions for creditors with minor debts.
This term is primarily used within bankruptcy law. It provides a framework for managing small, unsecured claims, which can often slow down the bankruptcy process if not handled efficiently. Legal professionals may utilize this exception when drafting bankruptcy plans to ensure that small claims are resolved promptly. Users may find it beneficial to explore legal templates from US Legal Forms to assist in preparing necessary documents related to this exception.
Here are a couple of examples of abatement:
Example 1: A bankruptcy plan may classify all unsecured claims under $1,000 as a separate group. This allows the debtor to pay off these smaller debts quickly, reducing the overall administrative burden.
Example 2: A business filing for bankruptcy might include a provision in its plan to settle all claims under $500 immediately, thus simplifying the claims process for larger creditors. (hypothetical example)
The primary statute governing the administrative convenience exception is found in 11 USCS § 1122(b). This section outlines the conditions under which a bankruptcy plan can designate a separate class for small, unsecured claims.
| Term | Description | Difference |
|---|---|---|
| Administrative Convenience Claim | A claim that is settled quickly for efficiency. | Focuses on small claims, while the exception refers to the classification of these claims. |
| Unsecured Claim | A debt not backed by collateral. | The administrative convenience exception specifically addresses how these claims can be classified in bankruptcy. |
If you are involved in a bankruptcy case and believe the administrative convenience exception may apply, consider the following steps:
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It allows for faster resolution of small, unsecured claims in bankruptcy, helping to streamline the process.