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Workers' Compensation Insurance Premiums Not Entitled to Priority Status
Description Appeals court affirmed a decision that unpaid workers' compensation insurance premiums were not entitled to the priority status that is allowed for payments to employee benefit plans. Workers' compensation is mandated by state law; it is not a benefit provided voluntarily.
Topic Bankruptcy
Key Words Priority Status; Employee Benefits; Insurance Premiums; Workers' Compensation
C A S E   S U M M A R Y
Facts BNE filed chapter 11 bankruptcy to reorganize operations. For six months prior to the filing, it failed to pay premiums to TPCC for its workers' compensation insurance. TPCC filed an unsecured claim for the unpaid premiums and asserted that claim was entitled to priority. The bankruptcy court and the district court held that the claim was not entitled to priority. TPCC appealed.
Decision Affirmed. The Bankruptcy Code grants priority to claims for contributions to employee benefit plans. But premiums for workers' compensation insurance are not "contributions" for purposes of the Code's definition of employee benefits. A contribution is "something given voluntarily to a common source." Workers' compensation is mandated by state law; it is not a contribution to an employees benefit plan as that is generally defined.
Citation In re Birmingham-Nashville Exp., Inc., - F.3d - (2000 WL 1051784, 6th Cir., 2000)

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