Legal Definitions - administrative-convenience exception

The administrative-convenience exception is a provision in bankruptcy law that allows for a separate classification of small, unsecured claims in a bankruptcy plan. This separate classification can help to dispose of the estate more efficiently by paying or eliminating the small claims earlier than other claims.

For example, if a bankrupt company owes $10,000 to a supplier and $100 to a small vendor, the administrative-convenience exception would allow for the small vendor's claim to be paid or eliminated first, even though the supplier's claim is larger. This can help to speed up the bankruptcy process and make it more efficient.

The administrative-convenience exception is designed to help bankruptcy trustees manage the estate in a way that is fair and efficient for all parties involved. By prioritizing small claims, trustees can help to ensure that creditors receive some payment for their debts, even if the estate is not able to pay all claims in full.