term interest was to be given an expansive definition and second make clear that a party holding an interest is entitled to be compensated for the value of its extinguished interest and that the compensation will usually come from proceeds in these cases i do you are held the successful liability claim against each of the purchasers as each of the sales met the criteria of so the issue then is how we see its costs and forgive me but rather than discuss cases that may or may not be relevant would you talk about the fact that judge gold bar ga you gave my door the opportunity to put on evidence of the value of its interest but as judge gold car no did i do or essentially came forward with nothing if you could help us with that i think and it would be more helpful than as i say some cases that might or might not be relevant we proceed at the hearing because we were hoping to convince a judge gold car that the purchaser was paying a significant amount of extra because the sale was free and clear of our  interest we think that we did establish that there were additional assets however upon further review we don't think it matters because we don't think that the correct test for valuing this interest is whether the purchaser has assets after the closing with which to pay the department's successful liability claim which is already been extinguished  always interest based on what would have occurred had the sale taken place outside of bankruptcy or are you valuing it we're basing it the first way the way that we would calculated under the bowl sells provisions and that is you take the taxes owed by the seller and that is the amount that would be claimed up to a cap of the value of the assets sold so we believe that that is the value since that is the amount that we require to be remitted to the department in order to get a release now then let me ask you a question about the purchasers liability under the bulk sale proficiency yes yes as i understand it the purchaser only becomes personally liable for the unpaid taxes if it fails to give i do or never notice of the purchase and sets aside the fun if the seller has not satisfied the tax liability the buyer then has to turn over those withheld funds to the department and demand welp see here's what i'm not getting purchaser will comply with the outside of bankruptcy absolutely if they if they want to well they could do one of two ways they could do it withhold some of the funds in the manner as they did in the horn strip case and turn it over to the department if the seller does not satisfy the tax liability the other way would be that they could assume the liability but just adjust their purchase price accordingly now bankruptcy as an overlay on that and if you accept the notion that a sale can be free and clear of this interest  then they don't have to go through this process instead i view our greaves to coming in and ask for adequate protection which is what we did but look at it and tell not if the funds were held pursuant to a conditional proceeding as the purchaser did in the horn street case proceeds and when we look at the extent of the claim all of their interest halters they were gonna walk away palace and any intelligent informed purchaser why be quick chill realize that the interests of my door and the other creditors were essentially worth zero and it's just very hard for me to get past that if i may explain the dynamics of how this would happen outside of bankruptcy i think it may illustrate  if the sale takes place outside of bankruptcy the purchaser will not buy unless it can be free of this liability so it has to account for that in one way or another if the bank does not agree to a deal that would allow the department paid then the bank's other remedy is to foreclose in a foreclosure i do you are would not get paid but what happens is the foreclosure sales result almost always result in a whole lot less being collected foreclosure sales almost always not always but almost always result in a smaller recovery than a going concern sale so the bank would have to decide whether it was would be economically wise for it to park close and forgo some of this money and idea why our would have to decide whether it needs to negotiate its claim so somewhere between one concern value and foreclosure value would be room for negotiation if this took place outside of bankruptcy or if it took place inside a bankruptcy but the sale was subject to myopically you know and insisting that had the sale taken place outside of packard c it would be able to collect all the taxes was oh good you know up to the outside of bankruptcy the bank by virtue of its lien against the property would have had to climb to the very same funds that the purchaser was or  at those funds and the amount of the bank's claim happens to have been greater then the purchase price so the bank would be able to take all of the money still had a liability against the purchaser and the purchaser refused to pay it i don't be in a position to shut them down it would be if it would be a tax owed by the purchaser and i view ours remedies are our vast i q i cannot imagine a responsible purchaser ever being in that position i mean in both of these cases we have purchasers who wanted to make sure that they did they took care of these issues in the way that these seals took place they did they did exactly what i would or the problem that i have with the bank saying that all these proceeds are there is that because the purchasers can take free and clear of i had or centrist they can bid more i what they do they will bid more they will they'll pay more for the assets if it's free and i don't see why that additional amount being paid should flow to the bank when they're the reason that it is being paid is because property is being taken free and clear of doors successfully ability interest let me move on i think you have covered much of what i was going to present i would like to address just a few things there's an argument made that this and then they go down through the priorities that that's how that's how all payments have to be made in bankruptcy oversimplifies what actually does happen in bankruptcy in a bankruptcy case administrative claims are going to be paid in the ordinary course during administration of the case even before any security claims are paid there is another example the estates concert church secure creditors collateral under section five of six c to the extent it provided the benefit it's enhanced the value of that and that money can be used to pay and secured creditors the rights that we seek to enforce here are granted us under the bankruptcy code we think that's three sixty three gives us a right to make a claim to the extent to that we have enhanced the value and the sale price now we are not claiming it under five six c but clearly the the price is increased because it's free of our interest and we think that that amount the tribut the increase in price your interview or a bottle of time you know yes should be given to the department one was just one question still what do you see in three sixty three that demonstrates a any sort of congressional intent that it seems pretty clear that stream court judge wants a pretty strong statement from congress if we're going to depart from from the ledge of three sixty three i would submit the three a please the court jeffrey dan on behalf of eugene crane the trustee in the village petroleum cases we believe that this actually boils down to two simple issues here the first is whether or not i'd order has a as judge barnes stated in the elk grove case i do orders i don't claim is really an inquiry that is not vested in till the bolts until the sale that happened post petition that means that on for one minute why can you explain why is that i do ours successor liability claim not an interest from both for the purposes of both three sixty only arises in time when there is a sale but it strikes me as a con interests non the last we don't deny that it's an interest we're only saying that it is not a protectable interest because the fact that it is in co wait until the sale which happened post bankruptcy that's why they're not entitled to the rights under section three sixty three but even even forgetting that for a moment they were given adequate protection by the order entered by judge barnes because they were granted to the extent that they had a protectable interest they were granted a right in the proceeds until judge barnes would then rule on the priorities which gets into the more important question which really arises from the judge a case that you have to follow the priorities of the bankruptcy code it's clear from what the supreme court said jeff and it's clear from the bankruptcy code secured creditors come first after that there's the succession of the line of creditors through section five zero seven i don't know has not tonight they are behind the bank as far as any liens and as far as what the priorities would be under the bankruptcy co one of the cornerstones of the bankruptcy code is the priority is if the court were to allow i'd or to be paid it would turn it would big basically turned bankruptcy on its head because you would now allow state state legislatures to enact legislation around the bankruptcy code federal law preempts state law and it's clear that you can't legislate around the bankruptcy code and make it meaningless either with the consent of the secured creditor or if the secured creditors adequately protected that's the only way that the administrative claims would be allowed to a case that's not the situation here because as we all know at least in the oak grove case there were fourteen million dollars and leans to the bank they gave up their rights with those liens just as i do or was so the argument of i do or that they should be compensated for giving up their right to seek successor liability which they admit that they waive that right how can you then say the banks are giving up their right on a first in time first and write much higher levy is not entitle to value in any event everything really boils down to jeff and five zero seven you have to follow the priorities here which i do or is asking this court to ignore those priorities and essentially ignore the bankruptcy code and that cannot be let's face it we're dealing with speculation at that point but for going to speculate i think it's fair to speculate that my client who had fourteen million dollars and secured prost lateral i secured liens liens against the property of these four debtors would have filed for foreclosure in illinois state courts and under the foreclosure laws and i had or concedes this the illinois and i do our rights to success or liability would be wiped out so what in the context of bankruptcy i think i need to draw your attention to section three sixty three after which is the section that that wipes out anyone with an interest claim in property pursuant to a sale my clients lost their rights my client's rights would wipe it out was wiped out and i think it cancels each other out and the equities of the case would say that my client is still in first priority regardless of what would happen outside of bankruptcy because of how i do or speculate it would have purchaser paid for the properties in these cases was consideration for i don't our interest for perhaps more accurately consideration for removing i do r c interest from the properties it does seem to me that the by her scott something of real value by being able to buy the properties free and clear of high doors so why should i do or get something in return your honor the second third fourth fifth sixth seventh eighth secured creditor priority secure that hypothetical for example they could make the argument that your honor if if my second priority lien wasn't wiped out in the sale the buyer would have paid as much as what it paid and that would be true right if a second party lien still hung around after the sale but presumably the price would go down and so any junior creditor with you know who is behind a first pair scriptwriter to make the same argument so i think it's a flawed argument and in there was releasing the one point five million dollars first part of the secured lien on that property so in other words what i did was argue you know it's you don't sell the property just sold the release of my successor liability rights and the trustee effectively gave the prakriti the purchaser for for nothing for zero dollars if you look at the brief that's exactly what they're trying to accomplish here and it's really just this is the hanssen a purchase price theory is just a legal fiction they're trying to create is not supported by the plain language of article nine section three fifteen which says that security interest of a secure creditor proceeds in the proceeds it's contravention contradiction to the plain language of the bankruptcy code under section five fifty two which says the same thing and and so it's a it's a fiction that they're trying to have this court read into the code that's just not  construction are under the same lies so you have to use the plain meaning of the word if it's if it's apparent from the context so in this case the chapter eleven trustee was appointed upon my client's motion the property was taken away from the taxpayer the taxpayer objected to the motion to point chapter eleven trustee we had a full trial on it and the court ruled that due to the taxpayer's mismanagement a trustee was going to be put in place to run the property so the taxpayer did not sell the property so it really is more akin to a foreclosure we have a third party selling the property not the taxpayer itself trying to sell the property and and presumably the policy behind these plot fails acts so that the property owner doesn't sell the property collect thus the sale proceeds and run away without paying taxes now the twisting arm of the purchaser in order to accomplish that but the policy behind that really wouldn't please the court my name is david fisher and i represent first community bank i'd like to reinforce a few things that mr roos alluded to but also to go to the policy that would happen if this court would adopt i do his position what i do or is essentially trying to get is a hidden priming lien that would prime every secured creditor in every bankruptcy and that secured creditor would have no idea until the bankruptcy unfolded or the sale how much its lien was private and as a result of that any thoughtful secured creditor would immediately either get out or to concede at the start of any bankruptcy case that they had no claim or a claim that the secured creditors was comfortable with what the secured creditor concluded that the assets were going to be sold far in excess of their debt or what that secured creditor would be forced to do i think is to move to lift the stay and go to state court and articulate its rights there in both of these that the security creditor would immediately go to the bankruptcy court demand it with the stay because no reorganization would be possible and every case would go to state court and as a result as mr newbold suggested the going concern values might be eroded and as a result i think all the employees would be harmed and bankruptcy as we know it any time that a state court lien that was sizable was out there would just stop in its tracks and it everything would change in a way that i don't think either the state of illinois intended when that statute was written or the bankruptcy code contemplates and indeed judge barnes in his footnote when he talks about preemption is absolutely right and the state can't do this and make the federal remedies substantially worse than the state remedies and i think mr bruce was right a to focus on the plain language of the statute which is the taxpayer shell and here the taxpayer really isn't selling it's a different kind of forced sale and the other point that i would make is that the  free in clear language of the orders also makes it free and clear of the secured creditors interest in leeds and if i do or interest continues lien if it was a properly perfected lien would continue would stay on those proceeds and then the purchaser would wind up turning the money over to the bank and all  this does is eliminate that unnecessary step and i know i do or has suggested somehow that the purchaser couldn't enter pleas but i really couldn't see how those cases were persuasive that they couldn't indeed both be york or interplay their cases and i think this court in both york and store which really are the same case and the only difference in that's what you'd have here so rather than create this i would say silliness that you the purchaser holds the money secured creditor claims in lehman and then there is some sort of interplay there it ought to just go the way these cases were structured in the sales or structure and that's all i had unless  but we have the rights under three sixty three that's all we're seeking now mr bruce says that they have the right to foreclose it have a state look to take it out we don't we don't disagree but there's a cost to them i mean if they want to do that that's fine we recognize that if they if they get foreclosed but the high likelihood is that they would not have realized anywhere near the five point eight million gross and about growth and if they had done a state foreclosure in naperville it's my understanding that that was those were at least premises for them to have realized that two million that was realized in a bankruptcy sale i suspect would have been highly unlikely you don't put profess to be an expert in appraisals but my experience is that when concerned sales through a in a bankruptcy process frankly tend to get much higher prices and they get much higher prices in part because they can sell free and clear of our interest now mr is might makes this argument that the trustee is not the taxpayer i going to have to beg to differ because mr crane the trustee i will guarantee you filed every single tax return that was this right in bankruptcy cases i would make i have to response to that number one we do this outside bankruptcy i don't see why i mean this is the department's policy and frankly we negotiate a lot of these with banks i told you what the dynamics work if it's in the department's best interest of the we oftentimes will compromise and then he's talking about the inner pleader and suggesting that under your are this basically the same cases they're not in b york first of all the money was not interplay by the buyer it was the interplay  by the buyers lawyers in both cases and they were truly disinterested holders of the fund but in bjrk because the money was not turned over to the department