BankruptcyProf Blog

Writing Competition

Insolvency Law Committee of the California State Bar Association is sponsoring a Student Writing Competition.

The Insolvency Law Committee is sponsoring a writing competition with a top prize of $1,000.  The competition is open to students at all California law schools, whether accredited or not.  Entrants are invited to submit a five to ten page essay on any topic concerning insolvency law or bankruptcy.  The Insolvency Law Committee’s members will then choose the winner and may recommend the winning essay for publication in the Business Law News.  Essays must be submitted by March 31, 2008.  The winner will be announced by May 1, 2008.  If you know law students who might wish to enter the competition, please pass this information to them.  Questions or comments should be addressed to Pamela K. Webster at Buchalter Nemer.

Program With Judge Vincent Zurzolo

Mark your calendar.

CENTRAL DISTRICT CONSUMER BANKRUPTCY ATTORNEYS ASSOC. 

Review of 9th Circuit Published Decisions on Bankruptcy for 2007

Saturday, January 26, 2008

Speakers:
Hon. Vincent P. Zurzolo
Chief Judge Central District of California Bankruptcy Court
M. Jonathan Hayes

Where:
11355 W. Olympic Blvd
First Floor Conference Room
West Los Angeles, CA

Times:
Registration: 10:00 am - 11:00 am
CDCBAA Membership Meeting: 10:00 am - 11:00 am
Program: 11:00 am - 1:00 am

2 Hours of MCLE Credit Provided – Limited Space

Cost: Free to CDCBAA Members
Non-Members: $150 (which includes one year membership in CDCBAA and
at least six more MCLE Programs this year)

Materials include brief on every published 9th Circuit bankruptcy
case in 2007 and a few others on consumer issues, 79 cases in all

M. Jonathan Hayes
Certified Bankruptcy Specialist
21800 Oxnard St. Suite 840
Woodland Hills, CA 91367
(818) 710-3656
(818) 710-3659 fax
(818) 402-7537 cell

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

10 Year Tax Collection Limitation Tolled During Bankruptcy per Tax Court Decision

Severo v. I.R.S.,  129 T.C. No. 17 (U.S. Tax Court, November, 2007)

Issue:   Is the 10 year statute of limitations for IRS collection tolled during a bankruptcy filing?               

Holding:   Yes, at least during the period the automatic stay protecting the debtor is in effect, i.e., until the discharge is entered, plus six months thereafter

Judge Swift
The debtor owed income taxes for the year 1991 which were not discharged in his 1994 bankruptcy case, a chapter 11 later converted to chapter 7.  “[B]ecause of the above automatic stay provided by the Bankruptcy Code, under subsections (b) and (h) of section 6503 the 10-year collection period of limitations relating to Federal taxes owed by a debtor in bankruptcy is suspended generally during part or all of a bankruptcy proceeding.”

“Section 6503(b) provides that the collection period of limitations is suspended for the period of time in which a taxpayer's assets are in the custody or control of any court plus an additional 6 months.”

“[S]ection 6503(h)(2) provides more specifically that the 10-year collection period of limitations on Federal income taxes also is suspended for the period of time that respondent is prevented from collecting taxes by reason of a pending bankruptcy proceeding, plus 6 months.”

The Tax Court ruled that 6503(h)(2) is not limited by 6503(b) because (h)(2) specifically refers to bankruptcy.  The Tax Court also ruled that the tolling extended to post-petition assets acquired by the debtor since the IRS was prevented by the stay from proceeding against those assets, at least until the discharge was entered which terminates the stay as to the debtor.