Legal Definitions - administrative expense

An administrative expense is a cost incurred by a business to continue operating after filing for bankruptcy. These expenses are necessary for the business to keep running and are given priority when the estate is distributed. Examples of administrative expenses include rent, utilities, and legal and accounting services.

For instance, if a company files for bankruptcy, it may still need to pay rent to keep its office space and utilities to keep the lights on. These expenses are considered administrative expenses and are given priority over other expenses when the estate is distributed.