Is electricity a good for purposes of establishing an administrative priority claim under Section 503(b)(9) of the U.S. Bankruptcy Code? That is the question that U.S. Bankruptcy Judge Christopher Sontchi of the District of Delaware answers in In re NE Opco, Case No. 13-11483 (CSS) (Bankr. D. Del. Nov. 1, 2013). Faced with a split in authority from other jurisdictions and no written opinions on the subject in the U.S. Court of Appeals for the Third Circuit, Sontchi, in a fascinating opinion, holds that electricity is not a good for purposes of Section 503(b)(9).
The NE Opco case involved a utility provider’s claim for administrative priority status for electricity and natural gas it delivered to the debtors in the weeks before they filed for bankruptcy. Section 503(b)(9) provides for the allowance of an administrative priority claim if the claimant establishes: (1) the claimant sold goods to the debtor; (2) the goods were received by the debtor within 20 days prior to filing; and (3) the goods were sold to the debtor in the ordinary course of business. There was no dispute that the utility delivered electricity to the debtors in the ordinary course of business within the 20-day period. The parties’ disagreement concerned whether electricity is a good for purposes of Section 503(b)(9).
