Lines v. System Board of Adjustment No. 94 Brotherhood of Railway, Airline & Steamship Clerks

GOODWIN, Circuit Judge.

Appellant Lines, the Trustee for Health Maintenance Foundation, et al. (HMF), the bankrupts, appeals the district court’s decision that severance pay for certain employees of HMF is entitled to priority status as a cost of administration payable before all other unsecured claims against the bankruptcy estate. See 11 U.S.C. § 104(a)(1) (section 64(a)(1) of the Bankruptcy Act of 1898, now repealed). The provisions and policies of the former bankruptcy act require us to reverse.

The facts of this case are not in dispute. Prior to June 1975, HMF operated several health…