Chapter 7 “administrative expenses,” 11 USC § 503(b); In re Connolly N. Am. (Bankr. ED MI); “Equitable principles” governing the exercise of bankruptcy jurisdiction; Bank of Marin v. England; United States v. Ron Pair Enters., Inc.; Whether § 503(b)(3)(D) was a "per-se bar" to reimbursement under § 503(b); City of White Plains v. A & S Galleria Real Estate, Inc.; In re Al Copeland Enters. (5th Cir.); United States v. Flo-Lizer, Inc.; RadLAX Gateway Hotel, LLC v. Amalgamated Bank; Morales v. Trans World Airlines, Inc.

[This appeal was from the ED-MI.] In this Chapter 7 case, the district court erred in upholding the bankruptcy court’s decision to not allow the plaintiffs-unsecured creditors, who had the previous trustee removed for misfeasance, to claim their litigation costs as “administrative expenses” under § 503(b). Plaintiffs sought to recover $164,336.28 in attorney fees and costs under § 503(b), which allows the bankruptcy courts “the general authority to allow ‘administrative expenses[.]’” The bankruptcy court concluded that “Congress’s failure to extend § 503(b)’s express provision for reimbursement for a creditor that makes ‘a substantial contribution in a case under chapter 9 or 11 [of the Bankruptcy Code],’ § 503(b)(3)(D), to a creditor making such a contribution in a case under Chapter 7 reflected ‘a Congressional intent’ to deny reimbursement in Chapter 7 cases.” The district court agreed with the bankruptcy court. The court reversed, holding that the statutory construction of § 503(b)(3)(D) was not “a per-se bar to reimbursement of the instant administrative expenses under § 503(b) . . . .” Rather, the court held that “§ 503(b) allows for reimbursement in Chapter 7 cases.” The Code “encourages an expansive reading of § 503(b)[,]” and “the categories listed in the statute are not exhaustive.” Congress’s decision to use the term “‘including’ in the opening lines of the subsection,” created a “mechanism” to “reimburse expenses not specifically mentioned in § 503(b)’s subsections.” Moreover, Congress could have explicitly excluded reimbursement in Chapter 7 cases if that was its intention. The court noted that “had the U.S. trustee fulfilled its duty as the ‘bankruptcy watch-dog’ here, there is no question that the estate would have paid the expenses associated with removing the former trustee and prosecuting the malpractice action.” Reversed and remanded.