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 11plan of reorganization, unless administrative creditors agree to less than full payment. Therefore, administrative insolvency usually results in conversion of the case to a Chapter 7liquidation or a dismissal of the case.