Chapter Twenty-two. Administration
 After reading this chapter, you will be able to:
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List the order of distribution to classes of
creditors
Describe how to outline the entire bankruptcy
administrative process, in terms of both steps
and time
Order of Distribution
 When the assets of an estate have been fully
liquided and all allowable claims have been
determined as to priority and amount, the
proceeds will be distributed to the creditors.
 The order of distribution for nonsecured
creditors is specifically outlined in Section
726.
General Priority of Claims
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1. Administrative (503)
2. Priority (507)
3. Secured (506)
4. Unsecured (726)
5. Subordinated (510(c))
6. Interest
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7. Debtor
Solvent
Estate
Method of Distribution
 When assets are distributed, they are
distributed on a pro rata basis to each
category or class of claim until the class has
been paid in full.
 Pro rata means that if there are insufficient
assets to pay the claims of a class in full, then
the claimants within the class are paid an
equal percentage of their claims.
Order of Claims Distribution
 Priority Secured Administrative Claims
 Administrative Claims
 Priority Claims Authority
 Secured Claims
 Timely Filed Unsecured Claims
 Late Filed Unsecured Claims
 Fines or Penalties Not Compensation for Actual
Damages; Punitive Damages
 Subordinated Claims
 Postpetition Interest
 Debtor—Solvent Estate
Bankruptcy Administration
Timeline