In Re ACE Elevator Co., Inc.

MEMORANDUM OF DECISION ON MOTION OF THE TRUSTEES OF NATIONAL ELEVATOR INDUSTRY BENEFIT PLANS FOR AN ORDER DIRECTING PAYMENT OF DELINQUENT CONTRIBUTIONS AS ADMINISTRATIVE EXPENSES

The trustees (the “Trustees”) of the National Elevator Industry Benefit Plans (the “Plans,” consisting of the Pension Plan, the Welfare Plan and the Educational Plan, as defined below) seek an order directing the debtor, A.C.E. Elevator Co., Inc. (“ACE”) to pay delinquent Plan contributions, interest, liquidated damages, and attorney’s fees and costs as expenses entitled to administrative priority under 11 U.S.C. §§ 365(b)(1), 503(b)(1)(A), 507(a)(1), 1113(f) and 1114(e).

ACE concedes that it has not paid certain Plan contributions but contends that its obligation to do so arose before December 21, 2004, the date that it filed its chapter 11 petition and, therefore, that the Trustees’ claim is not entitled to administrative priority. 1 ACE also argues that because the Trustees induced ACE’s covered employees to walk off their jobs shortly after the start of the chapter 11 case in an attempt to coerce ACE to pay the Delinquent Contributions in violation of both the automatic stay under 11 U.S.C. § 362(a) 2 and the collective bargaining agreement under which ACE’s Plan fund *476 ing obligations arise, the Trustees’ claim should be disallowed or subordinated. 3 The Trustees contest these allegations, which also are the subject of a pending adversary proceeding.

Jurisdiction

This contested matter is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (B) over which the Court has jurisdiction under 28 U.S.C. § 1334(b). Venue is proper under 28 U.S.C. § 1409(a).

Facts

No evidence was offered at the hearing on the Trustees’ motion. Appended to the motion are (i) the affidavit, dated October 31, 2005, of Angela M. Vandegrift, Director of Finance for the Plans; (ii) the Joinder Agreement (the “Joinder”), which expired by its terms on March 16, 2005, under which ACE and the International Union of Elevator Constructors Local One (the “Union”) agreed that ACE would be bound by (x) the 2000-2005 collective bargaining agreement (the “CBA”) among the Union, the Elevator Manufacturers Association of New York, Inc. and other parties, and (y) each of the Plans; (iii) the face page and pages 8-10 and 31-32 of the CBA, which pertain to the Plans; (iv) excerpts from the Restated Agreement and Declaration of Trust of the National Elevator Industry Pension Plan (the “Pension Plan Agreement”) establishing a pension plan (the “Pension Plan”); (v) excerpts from the Restated Agreement and Declaration of Trust of the National Elevator Industry Welfare Plan (the “Welfare Plan Agreement”) establishing a welfare, or health plan (the “Welfare Plan”); (vi) excerpts from the Restated Agreement and Declaration of Trust of the National Elevator Industry Educational Plan (the “Educational Plan Agreement;” with the Pension Plan Agreement and the Welfare Plan Agreement, the “Plan Agreements”) establishing an educational plan (the “Educational Plan”); (vii) copies of ACE’s reports to the Trustees of its Union employees’ monthly hours; (viii) the Trustees’ chart of Plan contributions made by ACE, as well as the Trustees’ calculation of the Delinquent Contributions; and (ix) the Trustees’ allocation of the Delinquent Contributions among the Plans. 4 ACE has not disputed the allocation, although the Trustees’ chart has certain headings (“Health-er,” “Health-ee,” and “Work Preservation”) whose meaning is not clear.

ACE’s objection attaches a letter, dated December 31, 2004 that the Trustees acknowledge 5 they sent to ACE’s Union employees. The letter informs the employees that if ACE’s November Plan contribution is not made, the Trustees “will have no alternative but to terminate your coverage effective January 31, 2005,” and that to be eligible for continued coverage “you must either voluntarily terminate your employment with the delinquent employer or participate in a work stoppage against the employer ....” 6 ACE’s objection also at *477 taches the transcript of the March 2, 2005 hearing in this case and a letter, dated August 18, 2005, from Robert Curley, the Trustees’ counsel, to Kevin Russell, counsel to American Manufacturers Mutual Insurance Company, ACE’s surety on several contracts, which pertain to whether and under what conditions the CBA prohibited the Union from engaging in a strike or its members from staging a walk-out.

ACE’s business was, and, to the extent that it still has a business, is, the construction, modernization, maintenance and repair of elevators in the New York City area. 7 ACE built the elevator systems in the World Trade Center and until September 11, 2001 had been their sole servicer, from which it derived 90 percent of its revenue. 8 Unable to make up enough of that income from other sources, ACE filed under chapter 11 on December 21, 2004.

The Plans are multi-employer benefit plans under 29 U.S.C. §§ 1002(2), (3) and (37). 9 Under the Joinder, ACE agreed with the Union to be bound by the Plan Agreements, as well as the CBA, and “to make contributions covering all of its employees represented by the Union to the [Plans] as required by the [CBA].” Join-der, ¶¶ 1, 2.

The CBA obligates ACE to contribute to each of the Plans a specified dollar amount “for each hour of work performed” by Union members in its employ. CBA ¶¶ G(l)(a) and (b), at 8-9 and E, at 31 10 (pertaining to the Welfare, Pension and Educational Plans, respectively).

The Plan Agreements do not separately describe ACE’s Plan funding obligations, with the exception of addressing certain administrative matters and referring to the employer’s obligation to fund the Plans under the CBA. Thus, Article VI of each Plan Agreement provides,

Par 4. Effective Date of Contributions. All contributions shall be made effective as of the 15th day of each month for the preceding month and shall continue to be paid as long as the Employer is so obligated pursuant to the [CBA] or until he ceases to be an Employer within the meaning of this Agreement and Declaration of Trust as herein provided.

Par 5. Rules of Contributions. The Trustees shall have the power to adopt rules and regulations relating to the submission, processing and accounting of Employer contributions including but not limited to prescribing the time, place and manner in which contributions to the [Plan] are to be made by the Employer, and to prescribe the forms and reports that must be used in submitting contributions.

(Emphasis added.)

Article VI of each Plan Agreement gives the Trustees the following remedies:

Par 6. Collection and Enforcement. ... The Trustees shall have the power to demand and collect the contributions of the Employer to the Fund. In addition to any other remedies to which the parties may be entitled, any Employer in default for five (5) days will be required to pay interest on the monies due to the Trustees at the rate charged by the Internal Revenue Service at the time of *478 delinquency, together with all reasonable expenses of collection incurred by the Trustees, including but not limited to attorney’s fees. The foregoing five (5) day ‘grace period’ shall not apply to any Employer with an outstanding obligation to the Trustees.... If the Trustees file suit to collect any amounts due the Trust Fund, the Trustees shall also seek liquidated damages in the amount of twenty percent (20%) of the contributions due at the time the lawsuit is filed.

Finally, Art. VI ¶ 7 of each Plan Agreement provides that if the employer is two months late in making its required Plan contribution “and has failed to submit the required accounting of Employer contributions showing the Employee(s) who worked for him and the hours worked,” the Trustees may determine the amount of the delinquency by averaging past monthly payments.

As noted, ACE concedes that it has not paid the Delinquent Contributions to the Plans, excusing such default, however, on the basis that the Delinquent Contributions are on account of prepetition hours worked by its employees and, therefore, prepetition obligations that ACE is precluded from paying ahead of other prepetition unsecured claims. The parties agree that ACE has paid its Plan contributions attributable to all postpetition hours worked. Tr. at 19.

It is undisputed that ACE sent the Trustees its reports under Art. VI ¶ 5 of the Plan Agreements, which cover the Delinquent Contributions, and thus detail the number of hours that its Union employees worked in November and December 2004, only after the start of the chapter 11 case.

Discussion

1. The Trustees’ Claim under 11 U.S.C. §§ 503(b)(1)(A) and 507(a)(1)

The Trustees argue that the Delinquent Contribution claim is entitled to administrative priority under 11 U.S.C. §§ 503(b)(1)(A) and 507(a)(1) because the Plans accepted and processed ACE’s reports, and determined the amounts owing, postpetition. ACE argues, to the contrary, that because its Delinquent contributions to the Plans are based on its Union employees’ hours worked prepetition, the Delinquent Contributions are prepetition claims not entitled to administrative priority-

In the light of Bankruptcy Code section 503(b)(l)(A)’s plain meaning, relevant case law, and the underlying nature of the Delinquent Contribution claim, ACE’s position is correct; the Delinquent Contribution claim is not entitled to priority under 11 U.S.C. §§ 503(b) and 507(a)(1).

Section 507(a)(1) of the Bankruptcy Code states that administrative expenses allowed under Bankruptcy Code section 503(b) shall have a first priority. Section 503(b)(1)(A) provides,

(b) After notice and a hearing, there shall be allowed, administrative expenses, other than claims allowed under section 502(f) of this title, including—

(1)(A) the actual, necessary costs and expenses of preserving the estate, including wages, salaries or commissions for services rendered after the commencement of the case.

11 U.S.C. § 503(b)(1)(A). As recently confirmed by the Supreme Court, when determining whether a particular claim or class of claims is entitled to priority, a court must be “guided in reaching [its] decision by the equal distribution objective underlying the Bankruptcy Code, and the corollary principle that provisions allowing preferences must be tightly construed.” Howard Delivery Service, Inc. v. Zurich *479 American Ins. Co., — U.S. -, -, 126 S.Ct. 2105, 2116, 165 L.Ed.2d 110 (2006). See also Trustees of Amalgamated Ins. Fund v. McFarlin’s, Inc., 789 F.2d 98, 100 (2d Cir.1986) (“Because the presumption in bankruptcy cases is that the debt- or’s limited resources will be equally distributed among his creditors, statutory priorities are narrowly construed.”). The claimed priority’s purpose needs to be clear from the statute, because “ ‘[t]o give priority to a claimant not clearly entitled thereto is not only inconsistent with the policy of equality of distribution; it dilutes the value of the priority for those creditors Congress intended to prefer.’ ” Howard Delivery Service, — U.S. at -, 126 S.Ct. at 2116 (quoting Cramer v. Mammoth Mart, Inc. (In re Mammoth Mart, Inc.), 536 F.2d 950, 953 (1st Cir.1976)).

Relying in large measure on the logic of Mammoth Mart, the Second Circuit in McFarlin’s determined that a debtor’s liability under 29 U.S.C. §§ 1381(a) et seq. for withdrawal from a pension plan did not give rise to a claim under Bankruptcy Code section 503(b)(1)(A) entitled to priority under section 507(a)(1), even though the withdrawal occurred six months after the start of the chapter 11 case. 789 F.2d at 103-104. Consistent with the plain meaning of section 503(b)(1)(A), the McFarlin’s court noted that “an expense is administrative only if it arises out of a transaction between the creditor and the bankrupt’s trustee or debtor in possession,” id. at 101 (internal citations omitted); that is, the claim will have a first priority only if the transaction giving rise to it occurred post-petition. The Second Circuit clarified, however, that “[a] debt is not entitled to priority simply because the right to payment arises after the debtor in possession has begun managing the estate.” Id. (internal citations omitted). Instead, the McFarlin’s court concluded, whether the “ ‘withdrawal liability’ is an administrative expense depends upon the consideration supporting the Fund’s right to receive it. ” Id. (emphasis added). Concluding that “the employer’s lump sum payment in satisfaction of this withdrawal liability is made to guarantee pension benefits already earned by those employees covered by the Plan,” the court held that “[t]he consideration supporting the withdrawal liability is, therefore, the same as that supporting the pensions themselves, the past labor of the employees covered by the Plan,” id. at 101-02, and denied the withdrawal claim administrative expense status. Accord, In re Cott Corp., 47 B.R. 487 (Bankr.D.Conn.1984); In re Kessler, Inc., 23 B.R. 722 (Bankr.S.D.N.Y.1982), afd sub nom., Amalgamated Insurance Fund v. William B. Kessler, Inc., 55 B.R. 735 (S.D.N.Y.1985). 11

*480 Based on the same rationale, in In re Finley, Rumble, 160 B.R. 882, 887-91 (Bankr.S.D.N.Y.1993), a debtor’s pension plan contribution obligations, which came due postpetition but were based on work performed by the debtor’s employees pre-petition, were not entitled to priority under section 503(b)(1)(A). The Finley, Rumble court reasoned that the funding obligations did not meet either of the two requirements of section 503(b)(1)(A), that they “(1) arise out of a postpetition transaction between the creditor and the ... debtor ... and (2) be allowable only to the extent that the consideration supporting the claimant’s right to payment was both supplied to and beneficial to the debtor’s estate in the operation of its business.” Id. at 889-91 (citing In re Mammoth Mart, 536 F.2d at 954).

Here, the right to administrative expense priority for the Delinquent Contributions is even less supportable than in McFarlin’s and Finley, Rumble because the parties’ agreements even more clearly provide that ACE’s funding obligation is “for each hour of work performed” by the covered employees, CBA ¶¶ G(l)(a) and (b), pp. 8-9; E, p. 31; see also Plan Agreements Art. VI ¶ 4 (providing that Plan contributions shall continue for as long as the employer “is so obligated pursuant to the [CBA]”); and the Delinquent Contributions concededly are in respect of pre-petition hours worked. 12 Moreover, as noted by the Supreme Court in Howard Delivery Service, employer contributions to pension and welfare plans, like those at issue here, together with wages, remunerate employees for services rendered. — U.S. at -,---, 126 S.Ct. at 2109, 2111-2112. If the contributions at issue are in respect of employees’ services that were rendered prepetition, as here, under the plain meaning of Bankruptcy Code section 503(b)(A) and the rationale of the foregoing decisions, the claim for such contributions cannot be accorded priority status under Bankruptcy Code sections 503(b)(1)(A) and 507(a)(1). McFarlin’s, 789 F.2d at 101-102.

All of the authorities cited by the Trustees for a contrary reading of sections 503(b) and 507(a) are from courts outside the Second Circuit or construe a different section of the Bankruptcy Code, section 507(a)(4). 13 See, e.g., In re Braniff, Inc., 218 B.R. 628, 631 (Bankr.M.D.Fla.1998) (holding that under Bankruptcy Code section 507(a)(4) the “services” were an insurer’s provision of health insurance coverage for employees during the 180-day period immediately before the petition date, rather than the earlier labor by the employees on which such coverage was based); accord, Ivey v. Great West Life & Annuity *481 Ins. Co. (In re Ivey), 308 B.R. 752, 759 (M.D.N.C.2004); Columbia Packing Co. v. Pension Benefit Guaranty Corp., 81 B.R. 205 (D.Mass.1988); Official Comm, of Unsecured Creditors v. Travelers Indem. Co. (In re Maxwell Newspapers, Inc.), 192 B.R. 633, 636 (Bankr.S.D.N.Y.1996) (“[CJourts have taken for granted that the provision of insurance constitutes ‘services’ for the purposes of section 507(a)(4).”).

The Trustees argue that because Congress used the phrase “services rendered” in both sections 507(a)(4) and 503(b)(1)(A), the Maxwell line of cases’ construction of “services” for purposes of section 507(a)(4) applies equally in the context of section 503(b)(1)(A). The Trustees ignore, however, that section 507(a)(4) applies by its plain terms only to prepetition services, while section 503(b)(1)(A) has two different requirements. To receive priority under Bankruptcy Code section 503(b)(1)(A), a claim must be for the “actual, necessary costs and expenses of preserving the estate,” that is, for services providing a postpetition benefit to the estate. 11 U.S.C. § 503(b)(1)(A). 14 See In re Finley, Rumble, 160 B.R. at 890.

Two other cases cited by the Trustees also are distinguishable. First, in In re Greater Southeast Cmty. Hosp. Found., Inc,, 267 B.R. 7, 24 (Bankr.D.D.C.2001), a debtor’s obligation, accruing postpetition, to make a benefit plan contribution in respect of prepetition work by its employees was held to be an administrative expense because the debtor’s liability hinged on workers’ employment as of a certain date, which fell postpetition. 15 Indeed, the court stated that were it not for this contractual distinction, it “would feel bound to separate the claim into its prepetition and post-petition components. But in this case, the employees gained no right to payment based on prepetition work....” Id.

Second, in addition to applying section 507(a)(4), the Columbia Packing court held that the debtor’s obligation to fund its pension plan was entitled to administrative priority under sections 503(b)(1)(A) and 507(a)(1) because the obligation became due during the postpetition period, notwithstanding that it was based on work performed prepetition. 81 B.R. at 208-09. The court concluded that this “past service liability” was “more properly viewed as an actuarial unit of measure for determining the employer’s current periodic contribution than as compensation for work performed before the inception of the plan.” Id. at 209. Columbia Packing is contrary, however, to the law in this Circuit that administrative priority is not based simply on an obligation’s due date, but, rather, depends on the date of the consideration underlying the claim, see McFarlin’s, 789 F.2d at 101 (internal citation omitted); In re Finley, Rumble, 160 B.R. at 892-93, and has been expressly criticized in this district. LTV Corp. v. Pension Benefit Guaranty Corp. (In re Chateaugay Corp.), 115 B.R. 760, 777 (Bankr.S.D.N.Y.1990) (“Cha-teaugay I”), subsequently withdrawn and vacated by consent order, 1993 WL 388809 (S.D.N.Y.1993). In Chateaugay I, the PBGC sought administrative expense priority for the debtors’ pension plan termination liability. 115 B.R. at 764. The court found that “although the administrative ac *482 tion did not occur until post-petition, the so-called ‘triggering event’ is not the termination of the plans by the PBGC, but rather the pre-petition labor of LTV Steel’s employees.” Id. at 774-75 (criticizing Avellino & Bienes v. M. Frenville Co. (In re M. Frenville Co.), 744 F.2d 332 (3d Cir.1984)) (emphasis added). On appeal, the district court also found that the PBGC’s claims were “pre-petition contingent claims because the labor giving rise to the pension obligations was performed pre-petition” and, therefore, the claims were not entitled to administrative priority. LTV Corp. v. Pension Benefit Guaranty Corp. (In re Chateaugay Corp.), 130 B.R. 690, 697 (S.D.N.Y.1991) (“Chateaugay II”), subsequently withdrawn and vacated by consent order, 1993 WL 388809 (S.D.N.Y.1993). 16 As discussed above, the consideration, or triggering event for the Delinquent Contributions was the prepetition labor provided by ACE’s hourly employees.

Moreover, even if it were legally relevant that ACE sent its Plan contribution reports to the Trustees postpetition, it is clear under Art. VI ¶ 4 of the Plan Agreements that ACE’s liability stems from the CBA (with its “for hours worked” formulation), not the administrative processes by which the Trustees calculate contributions amounts after-the-fact.

Finally, the services provided by the Trustees to ACE, as opposed to the Plan beneficiaries, in processing and calculating amounts due in respect of Plan contributions do not satisfy section 503(b)(l)(A)’s standard of “actual, necessary expenses of preserving the estate,” because they conferred no discernable benefit on the estate. See In re Finley, Kumble, 160 B.R. at 891, which similarly held that the benefit plan funding contributions at issue were not necessary to preserve the debtor’s estate or to promote administration of the case. 17

2. The Trustees’ Claim under 11 U.S.C. §§ 1113(f) and 365(b)(1)

The Trustees also argue that the Delinquent Contributions have administrative priority under section 1113(f) of the Bankruptcy Code, which provides,

No provision of this title shall be construed to permit a trustee to unilaterally terminate or alter any provision of a collective bargaining agreement prior to compliance with the provisions of this section.

11 U.S.C. § 1113(f). The Trustees contend that ACE’s failure to pay the Delinquent Contributions is a breach of the CBA and that such breach constitutes a unilateral termination or alteration prohibited by section 1113(f). 18

*483 As noted, ACE argues, to the contrary, that the Trustees and the Union breached the CBA, or should be estopped from asserting a breach, as a result of having precipitated an allegedly wrongful walkout. This issue may be left for the related adversary proceeding, however, because controlling precedent contrary to the Trustees’ position governs the section 1113(f) issue. See In re Ionosphere Clubs, Inc., 22 F.3d 403 (2d Cir.1994), in which the Second Circuit held that section 1113(f) does not preempt the priority scheme of section 507 of the Bankruptcy Code: “ ‘[¡judicial ordering of benefit claims pursuant to § 507 is not equivalent to employer avoidance of obligations under a collective bargaining agreement.’ ” Id. at 407 (quoting In re Ionosphere Clubs, Inc., 154 B.R. 623, 630 (S.D.N.Y.1993)).

In Ionosphere, the debtor’s unions argued that unpaid prepetition vacation pay claims must be accorded a first priority under section 1113(f), sidestepping the requirements of section 507(a)(1). Id. at 405. The Second Circuit disagreed:

We find that the Third Circuit’s holding in Roth 19 — that sections 1113(f) and 507 can be reconciled — to be the better reasoned position [among the acknowledged split of authorities] and the one most consistent with our analysis of the preemptive scope of section 1113(f) in Ionosphere Clubs, Inc., 922 F.2d 984 (2d Cir.1990).... Implying a superpriority for claims arising under CBAs also would disrupt the careful balancing of competing policies embodied in section 507. Section 507 is intended to be the exclusive list of priorities in bankruptcy. Priorities are to be fixed by Congress. Courts are not free to fashion their own rules of superpriorities or subpriorities within any given priority class.... Recognizing this restriction, we are loath to create a class of claims with superpriority status absent express statutory authority. Section 1113 does not address the priority to be accorded claims arising from a debtor’s obligations under a CBA. We must therefore assume that Congress intended that the priorities set forth in section 507 should apply to these claims.

Ionosphere, 22 F.3d at 407-408 (internal citations omitted).

Therefore, while the Trustees may assert a general unsecured claim against ACE for the Delinquent Contributions, ACE’s adherence to the Bankruptcy Code’s requirements of when, and when not, to pay claims in full does not equate to ACE’s unilateral alteration of the CBA in derogation of section 1113(f). Section 1113(f) does not relieve the Trustees of the burden of establishing that the Delinquent Contributions claim is entitled to first priority under sections 507(a)(1) and 503(b)(1)(A), which, as discussed in the previous section, has not been met.

The Trustees also argue 20 that because ACE did not reject the CBA postpe-tition, and, after the walk-out, let it expire by its terms on March 16, 2005, ACE assumed the agreement. Were this true, ACE would have to cure all existing defaults, and its breach of the assumed agreement would give rise to a postpetition claim entitled to administrative priority. See 11 U.S.C. § 365(b)(1)(A); Nostas As socs. v. Costich (In re Klein Sleep Prod., Inc.), 78 F.3d 18 (2d Cir.1996). The Trustees rely on Adventure Resources, Inc. v. Holland, 137 F.3d 786, 798 (4th Cir.1998), *484 cert. denied, 525 U.S. 962, 119 S.Ct. 404, 142 L.Ed.2d 328 (1998), in which the debt- or was found to have assumed its collective bargaining agreement by virtue of having failed to reject it in accordance with section 1113. This aspect of the decision has been persuasively criticized, however, and it is inconsistent with the requirement of notice and a hearing before the assumption of an executory contract. See United Food & Commercial Workers Union, Local 211 v. Family Snacks, Inc. (In re Family Snacks, Inc.), 257 B.R. 884, 904 (8th Cir. BAP 2001) (“the Adventure Resources decision [is] inconsistent with the explicit requirement under § 365 that a debtor may assume a contract only upon a motion”); In re Greater Southeast Cmty. Hosp. Found., 267 B.R. at 25-26 (“[T]he analysis in Adventure Resources ignores § 365(a) of the Bankruptcy Code which provides that ‘the trustee, subject to the court’s approval, may assume or reject any executory contract or unexpired lease of the debtor;” assumption can be accomplished only by court order.). See also In re Leslie Fay Cos., 168 B.R. 294, 302 (Bankr.S.D.N.Y.1994) (“The Second Circuit’s framework for analyzing the interplay of section 1113(f) and other sections of the Code leads me to conclude that section 1113(f) does not negate the need for notice and a hearing where a proposed postpetition modification to a collective bargaining agreement is outside of the ordinary course of the debtor’s business.”); In re Certified Air Technologies, Inc., 300 B.R. 355, 367-69 (Bankr.C.D.Cal.2003).

This Court therefore declines to find an implied assumption of the CBA by virtue of ACE’s not having rejected the CBA under section 1113 before its expiration. For the same reason, the Delinquent Contributions claim is not entitled to be paid in full under section 365(b)(1) of the Bankruptcy Code, which requires the cure of all defaults if an executory contract is assumed. 11 U.S.C. § 365(b)(1)(A). Leslie Fay, 168 B.R. at 301-302; In re Family Snacks, Inc., 257 B.R. at 902-903 (“Implied assumption has no place in the law of executory contracts [in bankruptcy].”).

3. The Trustees’ Claim under 11 U.S.C. § 1114(e)

Lastly, the Trustees contend that the Welfare Plan is entitled under Section 1114(e) of the Bankruptcy Code to be paid the Delinquent Contributions due it, as “retiree benefits.” 21

Section 1114(e) of the Bankruptcy Code states in pertinent part:

(e)(1) Notwithstanding any other provision of this title, the debtor in possession ... shall timely pay and shall not modify any retiree benefits ....

(2) Any payment for retiree benefits required to be made before a plan confirmed under section 1129 of this title is effective has the status of an allowed administrative expense as provided in section 503 of this title.

11 U.S.C. § 1114(e)(1), (2) (emphasis added). Therefore, Bankruptcy Code section 1114(e), unlike section 1113(f), apparently provides for the timely payment of any retiree benefits before confirmation of a chapter 11 plan and accords such obligation administrative expense priority, regardless of when earned. See In re *485 Ionosphere Clubs, Inc., 22 F.3d at 408 (contrasting sections 1113(f) and 1114(e)); In re Certified Air Technologies, 300 B.R. at 368. That is, by its plain terms Bankruptcy Code section 1114(e) does not appear to make any distinction between retiree benefit obligations on account of prepetition consideration and those arising postpetition; each would be payable as an administrative expense.

Notwithstanding the statute’s apparent plain meaning, however, one of the few cases dealing with section 1114(e) recognized a pre/postpetition distinction. See Adventure Resources, Inc. v. Holland, 193 B.R. 787 (S.D.W.Va.1996) (“Adventure Resources I”), rev’d in part on other grounds, aff'd in part, 137 F.3d 786 (4th Cir.1998), cert. denied, 525 U.S. 962, 119 S.Ct. 404, 142 L.Ed.2d 328 (1998) (“Adventure Resources II”). Noting the general proposition that priorities in bankruptcy should be construed narrowly and relying on an unofficial legislative history of section 1114, 22 the Adventure Resources I court held that section 1114(e) does not apply to obligations to fund retiree health plans that came due prepetition. Id. at 796-98. 23

The Court declines to follow Adventure Resources I with respect to the Delinquent Contributions to the Welfare Plan at issue here, however, because it conflicts with the plain language of section 1114(e). 24 Moreover, contrary to the suggestion in Adventure Resources I that section 1114(e)’s legislative history is “sketchy”, 193 B.R. at 796, it is clear that Congress was motivated to enact the provision by a widely publicized attempt to avoid paying prepetition retiree health claims. As the official legislative history states, “The bill, as amended, addresses situations with respect to retiree insurance benefits, such as occurred last year when LTV Corporation, after filing a Chapter 11 Bankruptcy petition, immediately terminated the health and life insurance benefits of approximately 78,000 retirees.” S. Rep. 100-119, at 1-2 (1987). If further clarification of what Congress was responding to is necessary, it is provided by In re Chateaugay Corp., 64 B.R. 990, 993 (S.D.N.Y.1986):

Upon filing for reorganization, LTV took the position that its obligation to provide benefits under the medical and health plans to Retirees derived from their pre-petition work for the debtors. LTV concluded that the Retirees held prepetition unsecured claims which could not be paid absent a court order or under a confirmed plan of reorganization.

*486 (Emphasis added). The informal legislative history relied upon by Adventure Resources I, moreover, is not to the contrary. It states merely that “retiree benefits paid during the pendency of the case have the status of allowed administrative expenses,” Winkler at App. Pt. 8-9, p. 1, and does not address whether the retiree benefits required to be “timely paid” under section 1114(e)(1) — and, thus, entitled to administrative priority under section 1114(e)(2)— include benefits arising prepetition. Also supporting a plain reading of the statute are Buckner v. Westmoreland Coal Co. (In re Westmoreland Coal Co.), 213 B.R. 1, 18 (Bankr.D.Colo.1997) (stating in dicta that “notwithstanding their prepetition nature, [section 1114(e)] claims must be accorded an administrative expense priority”); In re Certified Air Technologies, 300 B.R. at 358, 371; and In re GF Corp., 115 B.R. 579, 580-81 (Bankr.N.D.Ohio 1990) (“GF I”), vacated on settlement, 120 B.R. 421 (Bankr.N.D.Ohio 1990) (“GF II”), in which prepetition retiree benefit claims were considered, without discussion of