IN RE EYEGLASS SPYGLASS, INC., (Bankr.E.D.Tex. 2000)

DONALD R. SHARP, United States Bankruptcy Judge.

NOW before the Court is Debtor's Motion for Reconsideration of the Order Allowing Application For Allowance of Administrative Expense of Parkdale Mall Associates entered as docket entry #215 in this case (the "Motion"). This opinion constitutes the Court's findings of fact and conclusions of law and disposes of the Motion for Reconsideration before the Court.

Eyeglass Spyglass, Inc. d/b/a/ Eyeland (the "Debtor") filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code on October 1, 1998. Parkdale Mall Associates ("PMA"), one of the Debtor's several landlord creditors, filed two proofs of Claim in the case (Claim #9 and Claim #31) and an Application for Administrative Claim. The Claims against Debtor by PMA arose out of a landlord-tenant relationship at Parkdale Mall in Beaumont, Texas. The details of the transaction are contained in this Court's opinion granting the Application for Administrative Expense. Although there may have been some overlap in the amounts set-forth in the two proofs of claim and the Application for Administrative Claim, PMA sought $28,011.47 as an unsecured non-priority claim from rent due and the amount of $7,014.21 as an administrative claim pursuant to 11 U.S.C. § 503(b)(1)(a) as a necessary expense of the preservation of the estate. Following the hearing on the Application for Administrative Claim, the Court took the matter under advisement and ultimately issued an opinion and order allowing PMA's post-petition administrative claim in the amount of $3,948.14.

While that matter was pending, an order confirming the amended plan of reorganization was entered and orders were entered on the two proofs of claim filed by PMA. Because the duplication in the amounts set-forth in the two claims, claim number 9 was disallowed in its entirety and claim number 31 was resolved by an agreed order which contained the language that it was "disallowed as filed, but allowed as treated in the plan by this Court's orders."

Debtor now argues that PMA's request for allowance of administrative claims has become moot "by virtue of the plan treatment of the claims and the disallowance of the claims." Debtor reaches this position by arguing that the provision in the Plan providing for the treatment of class four claims constitutes a res judicata ruling of this Court and fully satisfies all claims PMA holds. Class four claims are the allowed claims of landlords whose leases were not assumed. Clearly, PMA falls into that group. The Plan provides that the "holders of allowed class four claims shall retain, free and clear of any claims of ownership, security interest or liens of the Debtor or any other party, the kiosks owned by the Debtor and formerly used in the respective locations in full satisfaction of all their claims. This class is impaired."

The Debtor would ignore an equally important provision of the Plan which is the treatment of class one claims. Class one claims are described as administrative claims and provide that they shall be paid in full in cash on the effective date of the plan, 30 days after the effective date, or at any other time agreed to by the parties. Clearly, an administrative claim falls into class one and is treated under those provisions of the Plan. Nothing in the Plan would transform an administrative claim into an ordinary class four claim and certainly it is not transformed into such by operation of law.

Under 11 U.S.C. § 503(a), "An entity may timely file a request for payment of an administrative expense. . . .". Further, under § 503(b)(1)(a), "after notice and a hearing there shall be allowed administrative expenses . . . including the actual, necessary costs and expenses of preserving the estate including . . . commissions for services rendered after the commencement of the case." 11 U.S.C. § 503(b)(1)(a).

The appropriate vehicle for an administrative claimant to employ to have its claim determined and allowed is an application for the allowance of same. PMA filed the appropriate application and its claim was determined by this Court to be an administrative claim and allowed as same in the amount of $3,948.14.

The appropriate mechanism for having the Court consider and determine a pre-petition claim is for a creditor to file a proof of claim pursuant to 11 U.S.C. § 501, which is allowed or disallowed, then treated under a debtor's plan of reorganization should a plan be confirmed. PMA complied with the provisions of the Bankruptcy Code in this respect, also, to have its pre-petition claims heard, notwithstanding that post-petition administrative claims were claimed together with all other amounts sought.

According to 11 U.S.C. § 1144, the provisions of the confirmed plan are binding upon the debtor and any creditor regardless of impairment or acceptance of the plan.

The Debtor's Motion For Reconsideration ignores the plain language of the Plan in attempting to "lump" together PMA's Class 4 and Class 1 claims. The Plan as confirmed provides for Administrative claims (Class 1 Claims). It provides that: "Holders of Allowed Class 1 Claims will be paid in full of the effective date, within 30 days thereafter, or on a date agreed to by the Debtor and the Holder of an Allowed Class 1 claim. . . . . This class is unimpaired."

Claim 31 was "disallowed as filed, but allowed as treated in the plan" by this Court's orders. Therefore, under the Court's orders on the objection to claims, the portion of PMA's claim that qualifies as a Class 4 claim is to be treated under the Plan in accordance with its terms and treatment of Class 4 claims (lease rejection claims) and the portion of PMA's claim that qualifies as a Class 1 claim is to be treated under the Plan in accordance with its terms and treatment of Class 1 claims (administrative claims). Clearly, the administrative portion of PMA's claim, which was filed as an administrative expense claim in both proofs of claims and in the Application, and which is allowed as an administrative expense claim by this Court's order, must be treated in accordance with the provisions of the Debtor's confirmed plan and paid in full on the effective date or within 30 days thereafter unless the Debtor and PMA have agreed to payment on another date. This requirement holds true under the confirmed plan notwithstanding the fact that, like many other administrative claims in this and other bankruptcy cases, the allowable portion of PMA's claim had not been determined by this Court as of the date of confirmation, but was merely pending under advisement following the hearing. There is absolutely no basis upon which to vacate the order allowing PMA's administrative claim. Contrary to the Debtor's Motion For Reconsideration, the "underlying claims" have not been disallowed, they have been "allowed as treated in the Plan."

The Court considered the Motion and the record in this case and for the reasons set forth hereinabove, the relief requested in the Motion should be denied. An order will be entered accordingly.