## Facts

- Hen House Interstate, Inc. filed for Chapter 11 and owed Union Planters Bank over $4 million, secured by liens on substantially all of Hen House’s assets.
- A post-petition financing order permitted Hen House to borrow additional funds and pay operating expenses, including workers’ compensation insurance.
- Hen House obtained workers’ compensation coverage from Hartford Underwriters but repeatedly failed to pay required premiums.
- After the case converted to Chapter 7 and a trustee was appointed, Hen House owed Hartford more than $50,000 in unpaid premiums, and the estate lacked unencumbered assets to pay the claim.
- Hartford sought to recover the unpaid premiums by surcharging Union Planters’ collateral under 11 U.S.C. § 506(c), asserting the insurance preserved the value of the secured collateral.

## Issues

1. Whether 11 U.S.C. § 506(c) authorizes an administrative claimant to seek payment directly from property securing a creditor’s allowed secured claim.
2. Whether § 506(c) permits only the trustee (or a debtor in possession acting with trustee powers) to pursue a surcharge against secured collateral.

## Decision

- The Supreme Court unanimously affirmed the Eighth Circuit.
- Section 506(c) does not grant an administrative claimant an independent right to surcharge a secured creditor’s collateral.
- The statute authorizes recovery under § 506(c) only by “the trustee,” and Hartford lacked standing to proceed under that provision on its own.
- The Court declined to expand standing based on policy concerns and did not decide whether a creditor may ever proceed derivatively in the trustee’s name with court approval.

## Legal Principles

- When a statute specifies a particular actor authorized to take a certain action (“[t]he trustee may recover”), courts ordinarily treat that specification as exclusive absent contrary text.
- 11 U.S.C. § 506(c) provides a surcharge remedy only to the trustee (and, in Chapter 11, a debtor in possession exercising trustee powers), not to individual administrative claimants.
- General participation rights in bankruptcy (such as the ability to appear and be heard) do not create substantive authority to prosecute a cause of action that the Code assigns to a specific party.
- Policy concerns about trustee inaction cannot override the statute’s text in determining who may invoke § 506(c).

## Conclusion

The Court held that § 506(c) authorizes only the trustee (or debtor in possession) to surcharge a secured creditor’s collateral for expenses that preserved or disposed of the collateral, and an administrative claimant may not invoke § 506(c) in its own name.


Hartford Underwriters Ins. Co. v. Union Planters Bank, N.A., 530 U.S. 1 (2000)