December 24, 2007
Supreme Court Issues Cert in New Bankruptcy Case
I'm probably just getting old so I won't spend too much time complaining here. The Supreme Court has accepted a bankruptcy case from Florida dealing with the momentous issue of whether or not a "stamp tax" can be assessed on a pre-confirmation sale of the chapter 11 debtor's assets. Section 1146(c) (now subsection (a)) exempts from stamp taxes property sold via confirmation of a plan. I guess the circuits are split on the issue.
What is stranger about the case is that the sale was for $80 million and the proposed tax is $39,000. How much do you think the debtor's attorneys fees are dealing with this issue?
The case is FLORIDA DEPARTMENT OF REVENUE v. PICCADILLY CAFETERIAS, INC. --- S.Ct. ----, 2007 WL 2605724 (U.S.). The opinion below is at 484 F.3d 1299.
The Circuit Court opinion states, "The bankruptcy court reasoned that the sale of substantially all of Piccadilly's assets was a transfer 'under' its confirmed plan of reorganization because the sale was necessary to consummate the plan."
and, "[T]he statute can plausibly be read . . . as describing eligible transfers to include transfers 'under a plan confirmed' regardless of when the plan is confirmed."
The Supreme Court issued two opinions on bankruptcy issues in 2007, three in 2006 and one in 2005. With the mess we are deadling with post-BAPCPA, you would think they could do better.
Happy holidays to everyone. Jon Hayes
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