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for relief was not timely paid.75 However, § 366(b) allows the utility to alter, refuse or discontinue service if the debtor does not, within 20 after the date of the order for relief, furnish adequate assurance of payment through a deposit or other security after such date. The court may order reasonable modification of the deposit amount or other security upon request of interested party. If there was a prepetition deposit and a prepetition default, there is authority that the utility may recoup its prepetition claim against the deposit without obtaining stay relief.76 The legislative history to § 366 indicates the burden is on the debtor to offer to furnish the adequate assurance before the expiration of the twenty-day period and then seek court determination of what constitutes adequate assurance.
Section 366 was significantly amended by BAPCPA's addition of § 366(c) to specify what may and what may not constitute adequate "assurance of payment." "Assurance of payment" is defined by § 366(c)(1)to mean a cash deposit, letter of credit, certificate of deposit, surety bond, prepayment or another form of security satisfactory to the utility, and to exclude administrative expense priority. And new § 366(c)(2) seems to say that the "assurance of payment" must be satisfactory to the utility, and is not to be determined by the court, and at least one court has so interpreted it.77
Pre-BAPCPA, what constituted adequate assurance of payment was a factual question that must be resolved on a case-by-case basis with consideration given to debtor's net worth,
See Robinson v. Michigan Consol. Gas Co., Inc., 918 F.2d 579 (6th Cir. 1990) (purpose of 366 to prevent utility company from forcing payment of prepetition debt by withholding postpetition service).
76 New York State Electric and Gas Corporation v. Richard L. McMahon (In re McMahon), 129 F.3d 93 (2nd Cir. 1997).
77 In re Lucre, Inc., 333 B.R. 151 (Bankr. W.D. Mich. 2005).
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