How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask Paul K, Esq. Your Own Question

Paul K, Esq.
Paul K, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 141
Experience:  10 years Exp., Great customer service, Prompt responses.
70873552
Type Your Bankruptcy Law Question Here...
Paul K, Esq. is online now
A new question is answered every 9 seconds

Im still in Ch. 13, not confirmed yet as i am trying to clear

Resolved Question:

I'm still in Ch. 13, not confirmed yet as i am trying to clear this last title issue with the IRS. I completed the Application for Subordination and filed it with the IRS but they have asked me to file a motion in BK court and obtain an order stating that the IRS can subordinate their lien. Is this correct and if so, can you provide me with the language for the motion.
Submitted: 1 year ago.
Category: Bankruptcy Law
Expert:  Paul K, Esq. replied 1 year ago.

Paul K, Esq. :

Hello, my name is XXXXX XXXXX I would love to assist you. Give me a moment to research your issue and I will answer promptly.

Paul K, Esq. :

So, who would the IRS subordinate their lien too?

Paul K, Esq. :

The mortgage?

Customer:

To my current lender who is modifying my loan

Paul K, Esq. :

So did they request the motion or the IRS?

Customer:

The IRS made the request. They will not process my application until I have a court order

Paul K, Esq. :

So the IRS wants you to file a Motion to Subordinate their own lien to the mortgage company?

Paul K, Esq. :

That sounds odd, why would they want to do that?

Paul K, Esq. :

Or are they saying we wont voluntarily do it without a Court Order?

Customer:

That's what they are saying. They also stated that because I am in Bk. they cannot do it without a court order

Paul K, Esq. :

Hmm

Paul K, Esq. :

Ok

Paul K, Esq. :

Well I will look into this. This is not really a common or regular thing, and is something that may take you and an attorney alot of time.

Customer:

I find it strange as well. What can I do

Paul K, Esq. :

I will see if I can find something and let you know.

Paul K, Esq. :

I will get back to you soon. Please don't forget to hit Accept by my responses and have great day!!!

Customer:

Ok. I will wait for your response so I can hit accept.

Expert:  Paul K, Esq. replied 1 year ago.

I will look through this today and tonight and see what I can find out for you. Prepping a Motion for you can take time, so please be patient.

Expert:  Paul K, Esq. replied 1 year ago.
Here is one that was filed against the IRS. Obviously you will need to change the wording to fit your situation, but here is a successful one. I will post it in a minute to try to keep the formatting.
Expert:  Paul K, Esq. replied 1 year ago.

MORANDE

ENTERPRISES, INC. (the "Reorganized Debtor"), by and through its


undersigned attorneys

and pursuant to 11 U.S.C. § 510(c) files this Motion to Subordinate


Nonpecuniary

Tax Penally Claim of the Department of the Treasury - Internal Revenue


Service (the "

IRS") as set forth in Claim No. 67, and in support thereof states as follows:


I.

Background


1. On January 13,2005 (the

"Petition Date"), the Debtor filed with this Court its


Voluntary

Petition for relief under Chapter 11 or the Bankruptcy Code.


2. The Debtor's P

lan of Reorganization was confirmed on July 14, 2006


pursuant to t

his Court's Order Confimling Debtor's Plan ofReorganizalion as Supplemented,


Amended

and Modi fied Pursuant to I I U.S.c. § 1129 (the "Plan") (D.E. # XXXXX).


3.

Pursuant to Section 3.3 of the Plan, the Reorganized Debtor wishes to to pay


all

allowed priority tax claims in full from the proceeds of the sale of the 10 Acre Property


which

closed on December 29, 2006.


Case 9:05-bk-00699-ALP Doc 890 Filed 05/25/07 Page 2 of 8


Case No. 9:05-bk-00699-ALP


II.

Claim No. 67 filed by .he IRS


4. On

or about June 8, 2006, the lRS filed Claim No. 67, amending its


previollsly

filed Claim No. 41 dated May 19,2005.


5. As

set fonh in Claim No. 67, the lRS asserts that it is ent itled to: (i) an


unsecured

non-priority claim in the amollnt ofS 14,973.90 (the "Unsecured Ponion"); (ii) a


secu

red tax claim in the amount of$75, 193.69 plus $3,626.08 in pre-petition interest for a


10

lal of$78,8 19.77 (Ihe "Secured Tax Claim Portion"); (iii) a secured pre-petition penalty


claim

in the amount of$40,0 13.26 (the "Secured Penalty Portion"); and (iv) an unsecured


priority claim in the

amount of $74,501.47 (the "Priori ty Portion"), for a total claim of


$208,326.40.


6.

The Secured Penalty Ponion and the Unsecured Portion of Claim o. 67


r

epresent at total of S55,005.16 in penalties relating to the Reorganized Debtor's nonpayment


of

FICA tax li abilities far the periods set forth in the Fonn 10 attached to Claim No.


67

(.he ''Tax Penally Claims").


7.

On December 20, 2006, the Reorganized Debtor filed its Corrected Objection


to

Claim No. 67, recommending that the Secured Tax Claim Portion be treated as a priority


cl

aim and the Secured Penalty Portion be treated as an unsecured non-prio rity claim (Docket


No.

748).


III.

Argument


(A) Subordination of

the Tax Penalty Claims Under Section 5 I O(c)


Pursuan! to Section

51 O(c) of the Bankruptcy Code, the Court may, "under principles


of equitable subord

inat ion, subordinate for purposes of distribution all or part of an allowed


claim to al

l or part of another allowed claim." 11 U.S.C. § 51 O(c). Thus, Ihe Statute clearly


2


Case 9:05-bk-00699-ALP Doc 890 Filed 05/25/07 Page 3 of 8


Cuse No.

9:0S-bk-00699-ALP


grants

this Court authority to subordinate the Tax Penalty Claims to the allowed unsecured


claims

of the estate's general creditors. III re Cassis Bistro, IIIC., 188 B.R. 472,473 (Bankr.


S.D.

Fla. 1995).


The

equities in this case strongly favor subordination. First, the Tax Penalty Claims


are clearly nonpecuniary claims

representing penalties re lating to the Reorgani zed Debtor's


failure to

withhold FICA taxes. Second, the LRS shall receive full payment plus interest on


its actua

l tax claims asserted in Claim No. 67 under the Plan since these claims are entitled to


priority treatment

under Section 507(a)(8) of the Bankruptcy Code. Third, after payment of


administ

rative claims and priority claims, the monies availab le for distribution to general


unsecu

red creditors will currently yield only a partial dividend. Consequently, it would be


inequitab

le for this dividend to be further diluted by having the Reorgani zed Debtor pay the


Tax

Penalty Claims to the detriment of the general unsecured Class 3 creditors. /d. at 475


(citing)

III re Airlift llllemational, In c., 120 B.R 597, 602 (Bankr. S.D. Fla. \990).


(

8 ) Subordination of the Tax Penalty Claims Under Section 1129(a)(7)


Moreover,

subordination is not only appropriate in this case but may indeed be


mandated as part

of the Plan to meet the requirements of § 11 29(a)(7). Bankruptcy Code


Sect

ion 1129(a)(7), the commonly called "best interest of creditors test", which requires


creditors

to receive a distribution nolless than they would receive if the Reorganized Debtor


were

liquidated under Chapter 7 on the effective date of the Plan.


Whether or

not the best interest of creditors test could have been satisfied in this case


without subordination,

reference to this Section 1 I 29(a)(7) confimlation requirement


provides additional support for subordinating

nonpecuniary tax penalty claims in a


liquidating Chapter

11 case. In re Cassis Bistro. Inc., 188 8.R. at 475. The Tax Penalty


3


Case 9:05-bk-00699-ALP Doc 890 Filed 05/25/07 Page 4 of 8


Case

No. 9:05-bk-00699-A LP


Claims

at issue in th is case would be subordinated to the other allowed unsecured claims


under

I I U.S .C. § 726(a)(4) if this estate was liquidated under Chapter 7. lei. Accordingly,


the Class 3

unsecured credi tors in this case would fare better in a Chapter 7 unless the Tax


Penalty

Claims were subordinated for distribution under the Plan because there is currently


not

enough funds available from the proceeds of the sale of the 10 Acre Parcel 10 satisfy all


of the

Class 3 Claims in this case. ld. Finally, it would make no sense to actually require a


conversion

to Chapter 7 (with its attendant administrative expenses) solely to obtain the


stat

utory right to subordinate the Tax Penalty Claims in a liquidation when Bankruptcy Code


Section 5

1 O(c) provides an appropriate vehicle for achieving the same legitimate goal. Id.


I

V. Conclusion


Paymen

t of Tax Penalty Claims in this case pro rata with other general unsecured


claims would

hann innocent creditors in favor of[RS which is going to receive full payment


plus

interest on its underlying tax claims. Equitable subordination of the Tax Penalty


Claims

is both pennissible under § 510(c) and appropriate under the facts of this case.


WHEREFORE

, the Reorgani zed Debtor, Morande Enterprises, Inc. respectfully


requests the

entry of an Order Subordinating the Tax Penalty Claims Asserted by the IRS in


the

Amount of $55,005.16 to the Claims of the Class 3 General Unsecured Creditors and


awarding

any further rel ief deemed fa ir and just under the circumstances.


Dated

Ih is 25th day of May, 2007.


4

Expert:  Paul K, Esq. replied 1 year ago.
THis is all public record and public knowledge and therefore not copywrited or anything. You can use this format for your Motion.
Customer: replied 1 year ago.

This is for a Chapter 11 ( business) not a Chapter 13(individual). I'm not sure how I can use this for my motion. Please explain.

Expert:  Paul K, Esq. replied 1 year ago.
The Chapter doesn't matter as much, it is the BK Code sections that are important. Section 510 of the code discusses subordination, so the Motion here is the framework of you will use. You can basically use this motion and change the facts and chapter and dates to fit your situation.
Paul K, Esq., Attorney
Category: Bankruptcy Law
Satisfied Customers: 141
Experience: 10 years Exp., Great customer service, Prompt responses.
Paul K, Esq. and 2 other Bankruptcy Law Specialists are ready to help you

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
< Last | Next >
  • Mr. Kaplun clearly had an exceptional understanding of the issue and was able to explain it concisely. I would recommend JustAnswer to anyone. Great service that lives up to its promises! Gary B. Edmond, OK
  • My Expert was fast and seemed to have the answer to my taser question at the tips of her fingers. Communication was excellent. I left feeling confident in her answer. Eric Redwood City, CA
  • I am very pleased with JustAnswer as a place to go for divorce or criminal law knowledge and insight. Michael Wichita, KS
  • PaulMJD helped me with questions I had regarding an urgent legal matter. His answers were excellent. Three H. Houston, TX
  • Anne was extremely helpful. Her information put me in the right direction for action that kept me legal, possible saving me a ton of money in the future. Thank you again, Anne!! Elaine Atlanta, GA
  • It worked great. I had the facts and I presented them to my ex-landlord and she folded and returned my deposit. The 50 bucks I spent with you solved my problem. Tony Apopka, FL
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
 
 
 

Meet The Experts:

 
 
 
  • FiveStarLaw

    Attorney

    Satisfied Customers:

    3203
    Bankruptcy Lawyer. Experienced.
< Last | Next >
  • http://ww2.justanswer.com/uploads/FL/FLAandNYLawyer/2012-1-27_14349_3Fotolia25855429M.64x64.jpg FiveStarLaw's Avatar

    FiveStarLaw

    Attorney

    Satisfied Customers:

    3203
    Bankruptcy Lawyer. Experienced.
  • http://ww2.justanswer.com/uploads/TL/tleeders/2012-6-13_204815_TSL1.64x64.jpg Terry L.'s Avatar

    Terry L.

    Attorney

    Satisfied Customers:

    2204
    Better Business Bur 15yrs bankruptcy experience. Chicago Bar
  • http://ww2.justanswer.com/uploads/mnphillips2/2009-03-13_203105_10984459-249293407.jpeg Phillips Esq.'s Avatar

    Phillips Esq.

    Attorney-at-Law

    Satisfied Customers:

    950
    B.A.; M.B.A.; J.D.
  • http://ww2.justanswer.com/uploads/CO/cortrightlaw/2011-12-5_4117_Kevin.64x64.JPG cortrightlaw's Avatar

    cortrightlaw

    Attorney

    Satisfied Customers:

    490
    Attorney practicing Bankruptcy Law including Chapter 7, Chapter 11, Chapter 12, and Chapter 13.
  • http://ww2.justanswer.com/uploads/Jay1968/2006-12-03_004423_JoeRossPhoto.jpg JoeLawyer's Avatar

    JoeLawyer

    Attorney

    Satisfied Customers:

    376
    Attorney in the practice of Bankruptcy Law since 1996
  • http://ww2.justanswer.com/uploads/DY/Dylatess/2012-9-11_1968_BHBTemplePhoto.64x64.jpg dylatess's Avatar

    dylatess

    Attorney

    Satisfied Customers:

    370
    35 plus years of experience specializing in bankruptcy law
  • http://ww2.justanswer.com/uploads/US/USLawAnswers/2012-9-20_23143_20090105211638Headshot3b.64x64.jpg Brent Blanchard's Avatar

    Brent Blanchard

    Bankruptcy Attorney

    Satisfied Customers:

    315
    Twelve years experience in all aspects of debtor & creditor BK.
 
 
 

Related Bankruptcy Law Questions

Chat Now With A Bankruptcy Lawyer
Paul K, Esq.
Paul K, Esq.
Bankruptcy Lawyer
141 Satisfied Customers
10 years Exp., Great customer service, Prompt responses.