In re Quincy Medical Center, Inc., 466 B.R. 26

Gupta and Munger seek administrative expense priority under §503(b)(1) for severance under QMC’s Executive Severance Policy (Jan 1, 2011).
Both executives were QMC employees in good standing on July 1, 2011, the date QMC filed Chapter 11 with affiliates.
Steward Family Hospital acquired substantially all QMC assets; Steward did not offer continued employment to Gupta or Munger.
APA required Steward to offer at least three months’ employment at prior salary/position; if Steward terminated former QMC employees, it would honor QMC’s severance policy.
Gupta and Munger were terminated without cause effective Oct 1, 2011; severance policy provides six to twelve months’ salary but is not explicit for >6 months.
Court must decide whether severance claims are administrative expenses or claims against Steward, with potential alternative relief directing Steward to pay.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether severance pay qualifies as an administrative expense under §503(b)(1).	Gupta and Munger argue severance is postpetition consideration and arises from an employment contract.	QMC contends severance is not tied to postpetition services and stems from prepetition contract; not admin expense.	No; severance not tied to postpetition services, hence not $503(b)(1) admin expense.
What is the appropriate amount of severance entitlement under QMC’s policy for Gupta and Munger.	Gupta seeks 12 months; Munger seeks 6 months; policy unclear.	Policy implies 6 months unless mutually agreed; amount beyond 6 months not payable by QMC.	Gupta entitled to 6 months of severance ($156,000); Munger entitled to 6 months ($90,000).
Whether Steward is liable for severance by virtue of the APA or as a debtor in possession.	Steward failed to offer employment; seek recovery against Steward.	Steward’s obligations flow from APA; if not assumed, liability may not lie with QMC.	Liability for severance not established against QMC; may be pursued against Steward in alternative relief.
Whether the court has jurisdiction to interpret and enforce its prior sale order/APA in ruling on these claims.	Sale Order and APA bind all related parties; court should enforce.	Issues arise post-confirmation; jurisdiction limited.	Court retains jurisdiction to interpret and enforce the sale order/APA; matters reserved for further hearing.

In re Mammoth Mart, Inc., 536 F.2d 950 (First Circuit 1976) (circumstances for admin priority depend on postpetition consideration supplied to debtor)
FBI Distrib. Co. v. Mason (In re FBI Distrib. Corp.), 330 F.3d 36 (First Circuit 2003) (administrative priority for unassumed contracts depends on consideration supplied during reorganization)
Mason v. Official Committee of Unsecured Creditors (In re FBI Distribution Corp.), 330 F.3d 36 (First Circuit 2003) (contractual severance analysis under prepetition/unassumed contracts)