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Section 1146(a) grants an exemption from stamp and other similar taxes for certain instruments of "transfer under a plan confirmed under section 1129." A number of cases have considered whether the exemption applies to pre-plan transactions in anticipation of a plan or which are necessary to the ultimate consummation of a plan. In In re Piccadilly Cafeterias, Inc., 128 S. Ct. 2326 (2008) the Supreme Court held that the exemption only
applies to transactions pursuant to a confirmed plan. See also In re New 118th, Inc., 51 BCD P 18 (Bk. S.D.N.Y. 2008) (Piccadilly n/a to sale approved under 363 before confirmation where sale was essential to plan and closed post confirmation.)
Although not by any means a bankruptcy case, the decision in Ashcrof v. Iqbal, 2009 WL 1361536 (May 18, 2009) has important ramifications for bankruptcy practice. Plaintiff sued the Attorney General and Director of the FBI for various actions including unlawful discrimination relating to his detention as an alleged terrorist, and defendants moved to dismiss in part on the ground that plaintiff's pleading failed to state a claim upon which relief could be granted. The District Court denied the motion and the Second Circuit affirmed, with both courts finding that the complaint satisfied the plausibility standard under Bell Atlantic v. Twombly. On appeal, the Supreme Court reversed. According to the Court, plaintiff had to plead sufficient facts to show that the detention policies were adopted not for a neutral, investigative reason but on account of race, religion or national origin. But, general conclusory statements were inadequate and, even when allegations were well pleaded, the complaint had to show a plausible basis for relief. Here, in essence, plaintiff failed to allege a factual basis for his allegation that the retention policies were adopted for discriminatory reasons. As applied to bankruptcy cases, the Court appears to have reinforced the importance of pleading, directed lower courts to take the Bell Atlantic case seriously, and made it clear that Bell Atlantic applies to all cases, not just big antitrust cases such as Bell Atlantic.
Court denies auto manufacturer stay relief to repossess tooling equipment which it had largely paid for and was in debtor's possession to produce molded auto parts on the manufacturer's behalf, even though the manufacturer clearly needed to obtain parts from another supplier to avoid interruption in production. Tools were property of the estate. Here, permitting repossession would have a devastating effect on continued operation of debtor's facilities, and the motion for relief was filed only one day after the petition was filed and the case was in its infancy--under such circumstances, burden of demonstrating cause was especially high. The court found no equity, but that the property was necessary for an effective reorganization. In re Plastech Engineered Prods., Inc., 382 B.R. 90 (Bk. E.D. Mich. 2008)
©2009 Jonathan M. Landers
