In this case, we consider whether 11 U. S. C. § 506(c) allows an administrative claimant of a bankruptcy estate to seek payment of its claim from property encumbered by a secured creditor's lien.
This case arises out of the bankruptcy proceedings of Hen House Interstate, Inc., which at one time owned or operated several restaurants and service stations, as well as an outdoor-advertising firm. On September 5, 1991, Hen House filed a voluntary petition under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Eastern District of Missouri. As a Chapter 11 debtorin-possession, Hen House retained possession of its assets and continued operating its business.
Respondent had been Hen House's primary lender.
During the attempted reorganization, Hen House obtained workers' compensation insurance from petitioner Hartford Underwriters (which was unaware of the bankruptcy proceedings). Although the policy required monthly premium payments, Hen House repeatedly failed to make them; Hartford continued to provide insurance nonetheless. The reorganization ultimately failed, and on January 20, 1993, the Bankruptcy Court converted the case to a liquidation proceeding under Chapter 7 and appointed atrustee. At the time of the conversion, Hen House owed Hartford more than $50,000 in unpaid premiums. Hartford learned of Hen House's bankruptcy proceedings after the conversion, in March 1993.
Recognizing that the estate lacked unencumbered funds to pay the premiums, Hartford attempted to charge the premiums to respondent, the secured creditor, by filing with the Bankruptcy Court an "Application for Allowance of Administrative Expense, Pursuant to 11 U. S. C. § 503 and Charge Against Collateral, Pursuant to 11 U. S. C. § 506(c)." The Bankruptcy Court ruled in favor of Hartford, and the District Court and an Eighth Circuit panel affirmed, In re Hen House Interstate, Inc., 150 F.3d 868 (CA8 1998). The Eighth Circuit subsequently granted en banc review, however, and reversed, concluding that § 506(c) could not be invoked by an administrative claimant. In re Hen House Interstate, Inc., 177 F.3d 719 (1999). We granted certiorari. 528 U.S. 985 (2000).
Petitioner's effort to recover the unpaid premiums involves two provisions, 11 U. S. C. §§ 503(b) and 506(c). Section 503(b) provides that "the actual, necessary costs and expenses of preserving the estate, including wages, salaries, or commissions for services rendered after the commencement
Petitioner therefore looked to § 506(c), which constitutes an important exception to the rule that secured claims are superior to administrative claims. That section provides as follows:
Petitioner argued that this provision entitled it to recover from the property subject to respondent's security interest the unpaid premiums owed by Hen House, since its furnishing of workers' compensation insurance benefited respondent by allowing continued operation of Hen House's business, thereby preserving the value of respondent's collateral; or alternatively, that such benefit could be presumed from respondent's consent to the postpetition financing order. Although it was contested below whether, under either theory, the workers' compensation insurance constituted a "benefit to the holder" within the meaning of § 506(c), that issue is not before us here; we assume for purposes of this decision that it did, and consider only whether petitioner—an
In answering this question, we begin with the understanding that Congress "says in a statute what it means and means in a statute what it says there," Connecticut Nat. Bank v.Germain, 503 U.S. 249, 254 (1992). As we have previously noted in construing another provision of § 506, when "the statute's language is plain, `the sole function of the courts' "—at least where the disposition required by the text is not absurd—"`is to enforce it according to its terms.' " United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241 (1989) (quoting Caminetti v. United States, 242 U.S. 470, 485 (1917)). Here, the statute appears quite plain in specifying who may use § 506(c)—"[t]he trustee." It is true, however, as petitioner notes, that all this actually "says" is that the trustee may seek recovery under the section, not that others may not. The question thus becomes whether it is a proper inference that the trustee is the only party empowered to invoke the provision.
Several contextual features here support the conclusion that exclusivity is intended. First, a situation in which a statute authorizes specific action and designates a particular party empowered to take it is surely among the least appropriate in which to presume nonexclusivity. "Where a
Nor can it be argued that the point of the provision was simply to establish that certain costs may be recovered from collateral, and not to say anything about who may recover them. Had that been Congress's intention, it could easily have used the formulation just suggested. Similarly, had Congress intended the provision to be broadly available, it could simply have said so, as it did in describing the parties who could act under other sections of the Code. Section 502(a), for example, provides that a claim is allowed unless "a party in interest" objects, and § 503(b)(4) allows "an entity" to file a request for payment of an administrative expense. The broad phrasing of these sections, when contrasted with the use of "the trustee" in § 506(c), supports the conclusion that entities other than the trustee are not entitled to use § 506(c). Russello v. United States, 464 U.S. 16, 23 (1983).
Petitioner's primary argument from the text of § 506(c) is that "what matters is that section 506(c) does not say that
Petitioner further argues that § 1109 evidences the right of a nontrustee to recover under § 506(c). We are not persuaded. That section, which provides that a "party in interest" "may raise and may appear and be heard on any issue in a case under [Chapter 11]," is by its terms inapplicable here, since petitioner's attempt to use § 506(c) came after the bankruptcy proceeding was converted from Chapter 11 to Chapter 7. In any event, we do not read § 1109(b)'s general provision of a right to be heard as broadly allowing a creditor to pursue substantive remedies that other Code provisions make available only to other specific parties. Cf. 7 L. King, Collier on Bankruptcy ¶ 1109.05 (rev. 15th ed. 1999) ("In general, section 1109 does not bestow any right to usurp the
Because we believe that by far the most natural reading of § 506(c) is that it extends only to the trustee, petitioner's burden of persuading us that the section must be read to allow its use by other parties is "`exceptionally heavy.' " Patterson v. Shumate, 504 U.S. 753, 760 (1992) (quoting Union Bank v. Wolas, 502 U.S. 151, 156 (1991)). To support its proffered reading, petitioner advances arguments based on pre-Code practice and policy considerations. We address these arguments in turn.
Section 506(c)'s provision for the charge of certain administrative expenses against lienholders continues a practice that existed under the Bankruptcy Act of 1898, see, e. g., In re Tyne, 257 F.2d 310, 312 (CA7 1958); 4 Collier on Bankruptcy, supra, ¶ 506.05. It was not to be found in the text of the Act, but traced its origin to early cases establishing an equitable principle that where a court has custody of property, costs of administering and preserving the property are a dominant charge, see, e. g., Bronson v. La Crosse & Milwaukee R. Co., 1 Wall. 405, 410 (1864); Atlantic Trust Co. v. Chapman, 208 U.S. 360, 376 (1908). It was the norm that recovery of costs from a secured creditor would be sought by the trustee, see, e. g., Textile Banking Co. v. Widener, 265 F.2d 446, 453-454 (CA4 1959); Tyne, supra, at 312. Petitioner cites a number of lower court cases, however, in which—without meaningful discussion of the point— parties other than the trustee were permitted to pursue such charges under the Act, sometimes simultaneously with the trustee's pursuit of his own expenses, see, e. g., First Western Savings and Loan Assn. v. Anderson, 252 F.2d 544, 547-548 (CA9 1958); In re Louisville Storage Co., 21 F.Supp. 897, 898
It is questionable whether these precedents establish a bankruptcy practice sufficiently widespread and well recognized to justify the conclusion of implicit adoption by the Code. We have no confidence that the allowance of recovery from collateral by nontrustees is "the type of `rule' that . . . Congress was aware of when enacting the Code." United States v. Ron Pair Enterprises, Inc., 489 U. S., at 246. Cf. Dewsnup v. Timm, 502 U.S. 410, 418 (1992) (relying on "clearly established" pre-Code practice); Kelly v. Robinson, 479 U.S. 36, 46 (1986) (giving weight to pre-Code practice that was "widely accepted" and "established"). In any event, while pre-Code practice "informs our understanding of the language of the Code," id., at 44, it cannot overcome that language. It is a tool of construction, not an extratextual supplement. We have applied it to the construction of provisions which were "subject to interpretation," id., at 50, or contained "ambiguity in the text," Dewsnup, supra, at 417. "[W]here the meaning of the Bankruptcy Code's text is itself clear . . . its operation is unimpeded by contrary . . . prior practice," BFP v. Resolution Trust Corporation, 511 U.S. 531, 546 (1994) (internal quotation marks omitted). See, e. g., Pennsylvania Dept. of Public Welfare v. Davenport, 495 U.S. 552, 563 (1990); United States v. Ron Pair Enterprises, Inc., supra, at 245-246.
Finally, petitioner argues that its reading is necessary as a matter of policy, since in some cases the trustee may lack an incentive to pursue payment. Section 506(c) must be open to nontrustees, petitioner asserts, lest secured creditors enjoy the benefit of services without paying for them. Moreover, ensuring that administrative claimants are compensated may also serve purposes beyond the avoidance of unjust enrichment. To the extent that there are circumstances in which the trustee will not use the section although an individual creditor would,
Although these concerns may be valid, it is far from clear that the policy implications favor petitioner's position. The class of cases in which § 506(c) would lie dormant without nontrustee use is limited by the fact that the trustee is obliged to seek recovery under the section whenever his fiduciary duties so require. And limiting § 506(c) to the trustee does not leave those who provide goods or services that benefit secured interests without other means of protecting themselves as against other creditors: They may insist on cash payment, or contract directly with the secured creditor, and may be able to obtain super priority under § 364(c)(1) or a security interest under §§ 364(c)(2), (3), or § 364(d). And of course postpetition creditors can avoid unnecessary losses simply by paying attention to the status of their accounts, a protection which, by all appearances, petitioner neglected here.
On the other side of the ledger, petitioner's reading would itself lead to results that seem undesirable as a matter of policy. In particular, expanding the number of parties who could use § 506(c) would create the possibility of multiple administrative claimants seeking recovery under the section.
In any event, we do not sit to assess the relative merits of different approaches to various bankruptcy problems. It suffices that the natural reading of the text produces the result we announce. Achieving a better policy outcome—if what petitioner urges is that—is a task for Congress, not
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We have considered the other points urged by petitioner and find them to be without merit. We conclude that 11 U. S. C. § 506(c) does not provide an administrative claimant an independent right to use the section to seek payment of its claim. The judgment of the Eighth Circuit is affirmed.
It is so ordered.
Carter G. Phillips and Shalom L. Kohn filed a brief for the Commercial Finance Association as amicus curiae urging affirmance.