Bankruptcy Section 507(a)
This is the statute that describes the
priority in which unsecured creditors
claim in a Chapter 7
bankruptcy. This is the text of 11 U.S.C. §507(a).
§ 507. Priorities
(a) The following expenses and claims
have priority in the following order:
(1) First, administrative expenses
allowed under section 503(b) of this title, and any fees and charges assessed
against the estate under chapter 123 of title 28 [28 USCS §§
1911 et seq.].
(2) Second, unsecured claims allowed
under section 502(f) of this title.
(3) Third, allowed unsecured claims,
but only to the extent of $4,000 for each individual or corporation, as
the case may be, earned within 90 days before the date of the filing of
the petition or the date of the cessation of the debtor's business, whichever
occurs first, for--
(A) wages, salaries, or commissions,
including vacation, severance, and sick leave pay earned by an individual;
or
(B) sales commissions earned by an
individual or by a corporation with only 1 employee, acting as an independent
contractor in the sale of goods or services for the debtor in the ordinary
course of the debtor's business if, and only if, during the 12 months preceding
that date, at least 75 percent of the amount that the individual or corporation
earned by acting as an independent contractor in the sale of goods or services
was earned from the debtor;
(4) Fourth, allowed unsecured claims for
contributions to an employee benefit plan--
(A) arising from services
rendered within 180 days before the date of the filing of the petition
or the date of the cessation of the debtor's business, whichever occurs
first; but only
(B) for each such plan, to the extent
of--
(i) the number of employees
covered by each such plan multiplied by $4,000; less
(ii) the aggregate amount paid to such
employees under paragraph (3) of this subsection, plus the aggregate amount
paid by the estate on behalf of such employees to any other employee benefit
plan.
(5) Fifth, allowed unsecured claims of
persons--
(A) engaged in the production
or raising of grain, as defined in section 557(b) of this title, against
a debtor who owns or operates a grain storage facility, as defined in section
557(b) of this title, for grain or the proceeds of grain, or
(B) engaged as a United States fisherman
against a debtor who has acquired fish or fish produce from a fisherman
through a sale or conversion, and who is engaged in operating a fish produce
storage or processing facility--
but only to the extent of $4,000 for each
such individual.
(6) Sixth, allowed unsecured claims
of individuals, to the extent of $1,800 for each such individual, arising
from the deposit, before the commencement of the case, of money in connection
with the purchase, lease, or rental of property, or the purchase of services,
for the personal, family, or household use of such individuals, that were
not delivered or provided.
(7) Seventh, allowed claims for debts
to a spouse, former spouse, or child of the debtor, for alimony to, maintenance
for, or support of such spouse or child, in connection with a separation
agreement, divorce decree or other order of a court of record, determination
made in accordance with State or territorial law by a governmental unit,
or property settlement agreement, but not to the extent that such debt--
(A) is assigned to another
entity, voluntarily, by operation of law, or otherwise; or
(B) includes a liability designated
as alimony, maintenance, or support, unless such liability is actually
in the nature of alimony, maintenance or support.
(8) Eighth, allowed unsecured claims of
governmental units, only to the extent that such claims are for--
(A) a tax on or measured by
income or gross receipts--
(i) for a taxable year ending
on or before the date of the filing of the petition for which a return,
if required, is last due, including extensions, after three years before
the date of the filing of the petition;
(ii) assessed within 240 days, plus
any time plus 30 days during which an offer in compromise with respect
to such tax that was made within 240 days after such assessment was pending,
before the date of the filing of the petition; or
(iii) other than a tax of a kind specified
in section 523(a)(1)(B) or 523(a)(1)(C) of this title, not assessed before,
but assessable, under applicable law or by agreement, after, the commencement
of the case;
(B) a property tax assessed before the
commencement of the case and last payable without penalty after one year
before the date of the filing of the petition;
(C) a tax required to be collected
or withheld and for which the debtor is liable in whatever capacity;
(D) an employment tax on a wage, salary,
or commission of a kind specified in paragraph (3) of this subsection earned
from the debtor before the date of the filing of the petition, whether
or not actually paid before such date, for which a return is last due,
under applicable law or under any extension, after three years before the
date of the filing of the petition;
(E) an excise tax on--
(i) a transaction occurring
before the date of the filing of the petition for which a return, if required,
is last due, under applicable law or under any extension, after three years
before the date of the filing of the petition; or
(ii) if a return is not required, a
transaction occurring during the three years immediately preceding the
date of the filing of the petition;
(F) a customs duty arising out of the
importation of merchandise--
(i) entered for consumption
within one year before the date of the filing of the petition;
(ii) covered by an entry liquidated
or reliquidated within one year before the date of the filing of the petition;
or
(iii) entered for consumption within
four years before the date of the filing of the petition but unliquidated
on such date, if the Secretary of the Treasury certifies that failure to
liquidate such entry was due to an investigation pending on such date into
assessment of antidumping or countervailing duties or fraud, or if information
needed for the proper appraisement or classification of such merchandise
was not available to the appropriate customs officer before such date;
or
(G) a penalty related to a claim of a
kind specified in this paragraph and in compensation for actual pecuniary
loss.
(9) Ninth, allowed unsecured claims based
upon any commitment by the debtor to a Federal depository institutions
regulatory agency (or predecessor to such agency) to maintain the capital
of an insured depository institution.
