Thanks for visiting! Welcome to a new way to research case law. You are viewing a free summary from Descrybe.ai. For citation and good law / bad law checking, legal issue analysis, and other advanced tools, explore our Legal Research Toolkit — not free, but close.
Massachusetts Electric Co. v. Keydata Corp. (In Re Keydata Corp.)
Citations: 12 B.R. 156; 4 Collier Bankr. Cas. 2d 1018; 1981 Bankr. LEXIS 3436; 7 Bankr. Ct. Dec. (CRR) 1122Docket: 81-9003
Court: Bankruptcy Appellate Panel of Massachusetts; July 2, 1981; Us Bankruptcy; United States Bankruptcy Court
An appeal was filed by Massachusetts Electric Company (MEC) against a bankruptcy court order that determined a $25,000 deposit constituted adequate assurance of payment under 11 U.S.C. § 366(b) for electric services provided to Keydata Corporation during its Chapter 11 proceedings. MEC argued that the deposit was insufficient, citing a 13-day period in which Keydata would consume electricity without prior payment assurance, thus exposing MEC to an unreasonable risk of nonpayment. The Bankruptcy Appellate Panel clarified that "adequate assurance of payment" does not require a guarantee but should protect the utility from unreasonable nonpayment risks. The court found that the risk posed by possible billing delays was inherent in MEC's customer relationships and deemed the $25,000 deposit adequate. The court also stated that the consideration of MEC's potential administrative expense claim under 11 U.S.C. § 507(a)(1) was permissible in determining adequate assurance of payment. The decision affirmed the bankruptcy court's ruling while allowing for future review of the deposit's adequacy should circumstances change. The panel emphasized that Congress did not intend for utilities to receive greater protection in bankruptcy than in regular transactions.