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needed to take place as soon as possible despite the fact that the Trustee was still sorting through the Debtors' financials. However, it is undisputed that the sale of the Properties was the "linchpin in the liquidating plan...[and] integral to the consummation of the anticipated plan." Although the sale was approved prior to a plan being filed, the sale did not close until after the plan was filed and confirmed. The plan that was ultimately filed contained a section under which it detailed that the Trustee was to sell the Properties in accordance with the sale contract that had been previously approved by the court. Thus, went the plan, under § 1146, the sale of the Properties was exempt from any NY state or local deed recording or other similar taxes. New York City objected and argued that because the sale took place prior to the plan, under Florida Dep't of Revenue v. Piccadilly Cafeterias, Inc., 128 S.Ct. 2326 (2008), § 1146 did not apply and the Debtors owed stamp or similar taxes. The plan was confirmed on August 8 and became effective on August 18, 2008. The closing of the sale of the Properties concluded on September 8, 2008.
Issues: Whether the tax exemptions granted under § 1146(a) to transfers under a plan confirmed pursuant to § 1129 apply "to a pre-confirmation sale that closes after confirmation and is necessary to the consummation of the plan."
Rules: Section 1146 provides: "The issuance, transfer, or exchange of a security, or the making or delivery of an instrument of transfer under a plan confirmed under section 1129 of this title, may not be taxed under any law imposing a stamp tax or similar tax." (emphasis added). The Supreme Court adopted the temporal test imposed by the Fourth Circuit in NVR Homes, Inc. v. Clerks of the Circuit Courts of Anne Arundel County (In re NVR, LP), 189 F.3d 442 (4th Cir. 1999) cert. denied, 528 U.S. 1117 (2000) which stated that "'[a] transfer cannot be 'under a plan confirmed' until the court confirms a plan, and '[i]f the statutory context suggests anything, it is that § 1146(a) is inapplicable to preconfirmation transfers.'" (Notably, the Supreme Court did not adopt the Third Circuit's interpretation of § 1146 in In re Hechinger Inv. Co. of Del., 335 F.3d 243 (3d Cir. 2003) that "'under a plan confirmed' necessarily meant authorized by the plan.")
Holding: "[A]lthough the sale of the Rental Properties occurred before confirmation, the delivery of the deeds took place after confirmation, and was necessary to the consummation of the plan. The transfers were, therefore, made 'under a plan confirmed,' and are exempt from the payment of stamp or similar taxes under § 1146(a)."
Reasoning: The "post-confirmation delivery of the deed, and hence, the transfer, satisfies Piccadilly's 'simple, bright-line rule.' Furthermore, the Supreme Court's adoption of the NVR standard, and by extension, the reasoning of Jacoby-Bender, suggests that the § 1146(a) exemption applies to a post-confirmation transfer that follows a pre-confirmation sale if the transfer facilitates the implementation of the plan, or in the words of Jacoby-Bender, is necessary to the consummation of the plan." The transfers of the Properties did not just facilitate the implementation of the plan in this case, they were essential to its consummation.
IV. PROCEDURAL AND MISCELLANEOUS ISSUESa. Other Issues — Reopening Bankruptcy Case
In re Aztec Supply Corp., 2009 WL 73233 (Bankr. N.D. Ill., Jan. 9, 2009)
Facts: On August 21, 2007, Aztec Supply Corporation (the "Debtor") filed for chapter 11 bankruptcy. AztecAmerica Bank (the "Bank") was the Debtor's only secured creditor. Postpetition, the Debtor received a check (the "Check") in the amount of around $15,800. The Debtor used the Check to purchase a cashier's check from the Bank (the "Cashier's Check") for roughly the same amount. The Cashier's Check was drawn to the order of National Packing Services ("NPS"), a supplier of the Debtor's, as payee. In turn, NPS assigned the Cashier's Check to Inlander as payment for goods. At the time the Bank issued the Cashier's Check, it did not have notice of the Debtor's bankruptcy. Ultimately, the Bank refused to honor the Cashier's Check and took the position that the Debtor's use of the Check to purchase the Cashier's Check
