In Re Allied Mechanical Services, Inc., Debtor. United States of America v. David W. Cranshaw, Trustee

KRAVITCH, Circuit Judge:

The government appeals from a decision of the bankruptcy court, affirmed by the district court, holding that interest accrued on tax liabilities incurred while the debtor was operating under Chapter 11 is not entitled to administrative expense priority when the case is converted to a Chapter 7 liquidation. We reverse.

I

Debtor Allied Mechanical Services, Inc., filed a voluntary petition for reorganization under Chapter 11 of the Bankruptcy Code on September 13, 1982. After the filing of this petition, and while the debtor was continuing to operate under Chapter 11, the…