Administrative Insolvency | Practical Law

Administrative Insolvency | Practical Law

Administrative Insolvency

Administrative Insolvency

Practical Law Glossary Item 3-383-9198 (Approx. 3 pages)

Glossary

Administrative Insolvency

Also known as administratively insolvent. The inability of a debtor in bankruptcy to pay its administrative expenses, such as attorneys' and other professional fees. Administrative claims must be paid in full as a condition to confirmation of a Chapter 11 plan of reorganization, unless administrative creditors agree to less than full payment. Therefore, administrative insolvency usually results in conversion of the case to a Chapter 7 liquidation or a dismissal of the case.