Simple English definitions for legal terms
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Administrative expenses are costs and expenses that arise after a company files for bankruptcy and are necessary to preserve the company's assets. These expenses have the highest priority among creditor claims in bankruptcy.
For a claim to be considered an administrative expense, it must meet two criteria:
Examples of administrative expenses include:
These examples illustrate how administrative expenses are necessary costs and expenses that arise after a company files for bankruptcy and are required to preserve the company's assets. They also show how administrative expenses have the highest priority among creditor claims in bankruptcy.