5-19: Markell owes your client, Ponoroff, $3,000,000. The debt is secured by a first mortgage on Blackacre. Markell filed a Chapter 11 petition. You have credible appraisals of Blackacre ranging from $2,500,000 to $3,500,000. What, if any action, do you recommend to Ponoroff? What, if any, additional facts would be helpful to you in deciding what to recommend to Ponoroff?

5-20: D, a Chapter 11 debtor, owns a ski resort Colorado Outdoor Lodge (COL). D owes F $4,000,000; F has a first mortgage on COL that provides for 5% interest. D also owes S $2,000,000; S has a second mortgage on COL that provides for 10% interest. The value of COL is no more than $5,500,000 and no less than $5,000,000.

1. If S moved for relief from stay under section 362(d)(2), could S satisfy the burden of proof under section 362(d)(2)(A)?
2. If F moved for relief from stay under section 362(d)(2), could F satisfy the burden of proof under section 362(d)(2)(A)?
3. Would F be allowed interest on its secured claim under section 506(b)?
4. Would S be allowed interest on its secured claim under section 506(b)?
5. To the extent that either F or S would be allowed interest on its claim under section 506(b), does section 506(b) require that the interest be paid monthly? Quarterly? Annually?
6. If F was allowed interest on its secured claim and that interest accrued, what is S's strongest argument for relief from stay under section 362(d)(1)?

5-21: D owes C $200,000 on an unsecured basis. The D-C contract provides for interest-only payments of $1,100 a month. D files a Chapter 11 petition on January 15. D's Chapter 11 plan is confirmed later that year, on December 7. Does C have an allowable claim for the interest that accrued between January 15 and December 7?

5-22: D rents a building from L in April 2018. The term of the lease is 32 years; the lease terms call for monthly rental payments of $20,000 a month. In April 2019, D files a Chapter 7 bankruptcy petition. At the time of D's bankruptcy filing, D owes L $60,000 in back rent.

(a) What is the amount of L's maximum allowable claim?

(b) What additional information is needed to determine the amount of L's actual allowable claim?

(c) What additional information is needed to determine the amount of the actual payment on L's allowable claim?

(d) What are the consequences of determining that only part of L's claim is allowable?

5-23: D Co. has filed for bankruptcy. The Environmental Protection Agency (the "EPA") has filed a proof of claim in the D Co. bankruptcy stating that the basis of the claim is that D Co. and T Corp. (which is not in bankruptcy) are jointly and severally liable for the pollution of Walden Pond and indicating that the amount of the claim is "still unknown." Does the EPA have a section 101(5) claim? An allowable claim? Does T Corp. have a section 101(5) claim? If both

the EPA and T Corp. have claims, should both claims be allowable? See section 502(e)(1)(B) ("the court shall disallow any claim for reimbursement or contribution of an entity that is liable with the debtor or has secured the claim of a creditor to the extent that ... such claim for reimbursement or contribution is contingent as of the time of allowance or disallowance of such

claim for reimbursement or contribution.")

5-24: In April 2019, Markell borrowed $190,000 from Epstein, who, as a condition to making the loan, demanded: (1) a security interest in Markell's car, which Markell owned free and clear; and (2) a personal guaranty from Nickles, which Nickles foolishly agreed to give Epstein. After Markell predictably defaulted on the loan and filed bankruptcy, Epstein demanded and received full payment from Nickles. As a matter of law, Nickles is entitled to a claim for reimbursement and he is entitled to be subrogated to Epstein's rights. See sections 502(e) and 509. If Nickles asserts his right of subrogation, will his reimbursement claim be allowed? How about if he does not assert his subrogation right? Is there any reason for Nickles to prefer subrogation over reimbursement or vice versa?

5-25: D, a cigar store, files for Chapter 7. Are the costs that the Chapter 7 trustee incurs in advertising the sale of D's assets an administrative expense? Are the costs that the Chapter 7 trustee incurs in storing the cigars an administrative expense?

5-26: D, a cigar store, files for Chapter 11 on June 30.

1. Is the July salary for its store manager an administrative expense?

2. What about payment of utility services for June and July?

3. What about a post-filing bonus to the store manager paid on December 31, pursuant to an agreement entered into at the beginning of the year with several key employees, providing for the payment of two times the manager's annual salary if he remained in the company's employ through the entire year? See section 503(c)

5-27: Ponoroff Blasting Co. ("PBC") has filed Chapter 11 and is operating the company's dynamite hauling business as debtor-in-possession. One day, one of PBC's trucks careens into a school bus loaded with (adorable) elementary school children because, as it is subsequently determined, the PBC driver's blood alcohol level was four times the legal limit. The resulting explosion caused a catastrophic loss of life and limb. The parents of the victims of the accident have filed tort claims against PBC, the sum of which exceed by a factor of ten the aggregate assets of the company. The claimants also contend that their claims should be allowed as a second priority administrative expense. The Official Committee of Unsecured Creditors has opposed the plaintiffs' entitlement to priority on the basis that these expenses do not represent costs of preserving the assets of, nor do they in any way benefit, the estate. Once the claims are liquidated, should they receive administrative expense priority?

5-28: X Co., which operates a chain of convenience stores, files a Chapter 11 petition. In the 20 days before D's bankruptcy filing, D received the following:

1. New software from A,

2. Inventory from B,

3. Equipment from C,

4. Electricity and natural gas from D.

Before its bankruptcy filing, X Co. did not make any payments to A or B or C or D on these deliveries. Are the amounts owed to A, B, C, and D administrative expenses under section 503(b) (9)? See In re NE Opco, 501 B.R. 233, 247-57 (Bankr. D, Del. 2013). PLEASE DISCUSS THE CASE.

5-29: W comes to you for advice. Her husband, H, who just graduated from medical school, has filed for divorce. H and W have no children. They were married during H's first year of medical school, and W worked two jobs to pay H's medical school tuition and their living costs. H has offered to make monthly payments to W for four years measured by 75% of W's earnings during the four years H was in medical school. Before the payments are to begin, however, H files for bankruptcy. How will W's claim against H be treated in the bankruptcy case? See section 507(a)(1)(A). Can you figure out the order of priority among the types of claims described in section 507(a)(1)?

5-30: D files bankruptcy on April 10, 2020, owing income taxes to the IRS for the years 2016, 2017, and 2018. D received no extensions of the deadline for filing her return in any of these years. Are these tax claims entitled to priority? See 507(a) (8) (A). What about the government's claim for taxes relating to 2019 and 2020? What if, prior to D's bankruptcy filing, the IRS had obtained a federal tax lien for the 2016 taxes? Is the IRS better off with the tax lien or a section 507(a) priority?

5-31: Markell is employed by Ponoroff as a janitor in Ponoroff's law office. Although Markell is supposed to be paid on the last day of each month, the past two months Ponoroff has not paid him because of financial troubles. On the first day of the third month, Ponoroff seeks relief under Chapter 11 and continues to run his business. Being a good soul, Markell stays on the job, but when at the end of the third month he is not paid again, he quits. He then goes to work for Epstein & Nickles, LLC, a fancy downtown law firm, where he relays to Epstein his travails with Ponoroff, and asks Epstein is he has any claim in Ponoroff's bankruptcy case. What should Epstein tell him (besides, that is, stop asking for free legal advice and get back to work)?