Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca2-14-03381/USCOURTS-ca2-14-03381-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 

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14‐3381‐bk

City of Concord, N.H. v. Northern New England Telephone Operations LLC

(In re Northern New England Telephone Operations LLC)

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

August Term, 2014

(Argued: June 16, 2015      Decided: August 4, 2015)

Docket No. 14‐3381‐bk

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x

In re: NORTHERN NEW ENGLAND TELEPHONE OPERATIONS LLC,

Debtor,

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x

CITY OF CONCORD, N.H.,

Appellant,

‐ v.‐

NORTHERN NEW ENGLAND TELEPHONE OPERATIONS LLC,

Debtor‐Appellee.

‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐ ‐x

Before: NEWMAN, JACOBS, and RAGGI, Circuit Judges.

Case 14-3381, Document 75-1, 08/04/2015, 1568287, Page1 of 22
This appeal is brought by a secured creditor that contends its lien passed

through a Chapter 11 reorganization unaffected, even though the reorganization

plan purported to extinguish all liens as to all of the debtor’s property.  The lien

of the City of Concord, New Hampshire, secured outstanding property taxes

owed by the debtor, Northern New England Telephone Operations LLC

(“NNETO”).  The City filed proofs of claim with respect to property tax bills

issued pre‐petition; at issue are tax bills issued immediately post‐petition, which

were secured by the same lien as secured the pre‐petition bills.  The United States

Bankruptcy Court for the Southern District of New York (Morris, C.J.)

determined that the plan had extinguished the City’s tax lien pursuant to 11

U.S.C. § 1141(c), and denied the City’s Motion for Allowance and Payment of Tax

Claims.  The United States District Court for the Southern District of New York

(Sweet, J.) affirmed.

We have not previously decided the circumstances under which a plan of

reorganization extinguishes a lien.  We hold that a lien is extinguished by a

reorganization plan if: (1) the text of the plan does not preserve the lien; (2) the

plan is confirmed; (3) the property subject to the lien is “dealt with” by the terms

of the plan; and (4) the lienholder participated in the bankruptcy proceedings.

2

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As they apply to the facts of this case, all four requirements are satisfied.  We

conclude that the plan extinguished the City’s lien, and we therefore AFFIRM.

JAMES W. KENNEDY, City Solicitor,

Concord, New Hampshire, for Appellant.

JAMES T. GROGAN, Paul Hastings LLP,

Houston, Texas, for Debtor‐Appellee.

DENNIS JACOBS, Circuit Judge:

The City of Concord filed timely proofs of claim for property taxes owed

by a Chapter 11 debtor with respect to quarters of the 2009 tax year that had been

billed pre‐petition, but did not file proofs of claim with respect to property tax

bills for later quarters that were billed during the bankruptcy proceedings.  A

single lien secured payment of the entire tax burden‐‐both taxes that were the

subject of claims and those that were not.  Upon the City’s Motion for Allowance

and Payment of Tax Claims that were not filed, the United States Bankruptcy

Court for the Southern District of New York (Morris, C.J.) ruled that the now‐

confirmed plan extinguished the lien, reasoning that the plan declared “all

property” of Northern New England Telephone Operations LLC (“NNETO”) to

3

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be free and clear of liens, including the City’s lien, because the City had asserted

the tax liabilities for the earlier quarters but not for the later quarters.

Before the enactment of the U.S. Bankruptcy Code, 11 U.S.C. § 101 et seq.,

the rule governing extinguishment of liens was simple: “liens pass through

bankruptcy unaffected.”  Dewsnup v. Timm, 502 U.S. 410, 417 (1992); see Long v.

Bullard, 117 U.S. 617 (1886).  The Code preserves that background rule, see 11

U.S.C. § 506(d), with a caveat: liens are extinguished if the underlying property

was “dealt with” by a confirmed plan, unless the plan or the order of

confirmation provides otherwise.  Id. § 1141(c).

Applying § 1141(c), the bankruptcy court held that the reorganization plan

of debtor NNETO extinguished a tax lien held by the City of Concord.  The

bankruptcy court therefore denied the City’s Motion for Allowance and Payment

of Tax Claims, filed more than two years after confirmation.  The United States

District Court for the Southern District of New York (Sweet, J.) affirmed.  On

appeal, the City argues in the alternative as to why its lien survived the

bankruptcy proceedings, including: (1) that a plan extinguishes a lien under

§ 1141(c) only if the plan’s text “dealt with” the property subject to the lien, and

that the text of NNETO’s plan did not deal with the relevant property; (2) that a

4

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plan extinguishes a lien under § 1141(c) only if the lienholder participated in the

bankruptcy proceedings, and that the City’s participation was insufficient to

support extinguishment; (3) that § 506(d)(2) preserves the lien because the plan

was confirmed without any proof of claim having been filed for those tax bills the

City now asserts; (4) that, even if § 1141(c) applies and the City’s lien was

extinguished by the plan, equitable principles should prompt this Court to

recognize the City’s lien; and (5) that the doctrine of excusable neglect required

the bankruptcy court to accept the City’s untimely assertion of the lien.  Each of

these arguments fails.

We have not previously considered the circumstances under which a

reorganization plan extinguishes a lien.  We now hold that a lien is extinguished

by a Chapter 11 plan if: (1) the text of the plan does not preserve the lien; (2) the

plan is confirmed; (3) the property subject to the lien is “dealt with” by the terms

of the plan; and (4) the lienholder participated in the bankruptcy proceedings.

As they apply to the facts of this case, all four requirements are satisfied.  We

conclude that the plan extinguished the City’s lien, and we therefore affirm.

5

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BACKGROUND

On October 26, 2009, NNETO, along with its parent corporation FairPoint

Communications, Inc., filed petitions for relief under Chapter 11 of the U.S.

Bankruptcy Code in the Southern District of New York.  On January 13, 2011, the

bankruptcy court confirmed the operative reorganization plan (i.e., the Third

Amended Joint Plan of Reorganization Under Chapter 11).

As of the petition date, NNETO owned several parcels of real property in

Concord, New Hampshire.  The City of Concord would bill NNETO for property

taxes on a quarterly basis.  The tax year begins each April 1, with quarterly tax

bills issuing in July for Q1, October for Q2, January for Q3, and March for Q4.

When NNETO filed its bankruptcy petition in October 2009, the City had already

issued property tax bills for the first and second quarters of the 2009 tax year.

The City filed several proofs of claim in NNETO’s bankruptcy proceedings,

including the Q1 and Q2 property tax bills for 2009.  However, the City never

filed proofs of claim for Q3 and Q4.  Payment on those bills was due January 2,

2010, and March 31, 2010, and the City mailed both bills to NNETO on November

20, 2009.  (All dates pertinent to the tax bills preceded the April 26, 2010 bar date‐

‐the deadline for governmental units to file proofs of claim against NNETO.)

6

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Ultimately, the bankruptcy court allowed the City’s claims for the Q1 and

Q2 tax bills (after reducing some of the amounts).  As to the Q3 and Q4 tax bills,

the City moved the bankruptcy court on October 11, 2013 (i.e., after the January

13, 2011 confirmation) to formally allow those tax bills and order payment.  The

motion contended, inter alia, “that [] the Tax Claim is secured by a lien and that

such lien was not discharged by the Plan.”  (J.A. 367.)  NNETO opposed the

motion on the ground that the lien was extinguished on confirmation of the plan.

The bankruptcy court denied the City’s motion, citing the plan provision

that “all property” of NNETO be free and clear of creditors’ interests, which the

court interpreted to mean that the tax lien on NNETO’s real property in Concord

was extinguished.  The district court affirmed.  The City challenges that

affirmance on further appeal to this Court.

DISCUSSION

When a bankruptcy appeal reaches us after district court review of the

bankruptcy court order, our review of the bankruptcy court order is “plenary.”

Momentum Mfg. Corp. v. Emp. Creditors Comm. (In re Momentum Mfg. Corp.),

25 F.3d 1132, 1136 (2d Cir. 1994).  In undertaking this plenary review, “we

7

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independently review the factual determinations and legal conclusions of the

bankruptcy court,” evaluating the bankruptcy court’s legal conclusions de novo

and its factual findings for clear error.  Id. (internal quotation marks omitted).

I

The longstanding background rule has been that “liens pass through

bankruptcy unaffected.”  Dewsnup v. Timm, 502 U.S. 410, 417 (1992); In re

Penrod, 50 F.3d 459, 461 (7th Cir. 1995).  For the most part, the federal

Bankruptcy Code, 11 U.S.C. § 101 et seq., (originally enacted as the Bankruptcy

Reform Act of 1978, Pub. L. No. 95‐598, 92 Stat. 2549), leaves that general

principle intact.  Dewsnup, 502 U.S. at 417; see 11 U.S.C. § 506(d).  However,

Chapter 11 of the Code contains a caveat:

Except as provided in subsections (d)(2) and (d)(3) of this

section and except as otherwise provided in the plan or in the

order confirming the plan, after confirmation of a plan, the

property dealt with by the plan is free and clear of all claims

and interests of creditors, equity security holders, and of

general partners in the debtor.

11 U.S.C. § 1141(c).  (The parties agree that the statutory exceptions, § 1141(d)(2)

and § 1141(d)(3), have no application to this case.)

8

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The phrase, “interests of creditors,” in § 1141(c) includes liens.  Cf. id.

§ 101(37) (defining “lien” as “interest in property to secure payment of a debt or

performance of an obligation”).  Although “§ 1141(c) does not explicitly reference

the extinguishment of liens, . . . courts have uniformly held that confirmation of a

reorganization can act to extinguish liens.”  In re Chrysler LLC, 576 F.3d 108, 126

(2d Cir.) (citing cases), vacated as moot sub nom. Ind. State Police Pension Tr. v.

Chrysler LLC, 558 U.S. 1087 (2009).  

Accordingly, whether a plan extinguishes a lien depends on the

requirements embedded in § 1141(c).  The express wording of § 1141(c) provides

that a lien is extinguished if (1) the plan is confirmed, (2) the property subject to

9

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the lien is “dealt with” by the plan,1 and (3) neither the plan nor the order of

confirmation preserves it.

Our sister circuits and the lower courts of this Circuit have inferred a

fourth consideration: that a reorganization plan extinguishes a lien only if the

lienholder participated in the bankruptcy proceedings.  The participation

requirement was recognized as such in Penrod.  See 50 F.3d at 462‐63.  The plan

in that case provided for payment of a claim secured by a lien on several hogs,

but was silent as to whether the lien was extinguished.  Id. at 461.  After the plan

effective date but before the debtors were required to make payment, the debtors

sold the hogs for slaughter and kept the proceeds.  Id.  The creditor believed it

had maintained a lien on the hogs and therefore was owed the sale proceeds; but

     1 Some courts have interpreted § 1141(c) to hinge on whether the plan “dealt

with” the lien itself, rather than with the property subject to the lien.  See, e.g.,

Penrod, 50 F.3d at 463.  More recent cases differ.  See In re WorldCom, Inc., 382

B.R. 610, 622 (Bankr. S.D.N.Y. 2008), aff’d sub nom. WorldCom Inc. v. Waldinger

Corp. (In re WorldCom, Inc.), No. 09 Civ. 9623, 2011 WL 1496378 (S.D.N.Y. Apr.

19, 2011), aff’d 466 F. App’x 28 (2d Cir. 2012) (summary order); see also Elixir

Indus., Inc. v. City Bank & Tr. Co. (In re Ahern Enters., Inc.), 507 F.3d 817, 823

(5th Cir. 2007); Universal Suppliers, Inc. v. Reg’l Bldg. Sys., Inc. (In re Reg’l Bldg.

Sys., Inc.), 254 F.3d 528, 531 (4th Cir. 2001).  The property subject to the lien,

rather than the lien itself, must be dealt with by the plan.  After all, “[i]f the lien is

the property that must be dealt with, then [§] 1141(c) would have to be read to

say that ‘liens dealt with by the plan are free and clear of liens.’”  Ahern, 507 F.3d

at 823.

10

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the court held that the lien was extinguished by the plan.  As the court explained,

since lienholders “know that their liens are likely to be affected, and indeed

altered,” their participation in a reorganization qualifies the background rule that

liens pass through bankruptcy unaffected.  See id. at 462.  Accordingly, the court

held that a lien can be extinguished pursuant to § 1141(c) if the lienholder

participated; and that if the lienholder did not participate, then “his lien would

not be ‘property dealt with by the plan,’ and so the section would not apply.”  Id.

at 463 (quoting 11 U.S.C. § 1141(c)).

Similarly, the secured creditor in FDIC v. Union Entities (In re Be‐Mac

Transp. Co.), 83 F.3d 1020 (8th Cir. 1996), filed a proof of claim that inadvertently

characterized part of the claim as unsecured.  See id. at 1022.  The creditor

thereby lost the ability to vote and receive distributions.  Id. at 1027.  The Eighth

Circuit held that, in view of § 1141(c)’s “dealt with” language, the creditor’s

participation in the reorganization was insufficient to effect extinguishment.  Id.

Other circuits followed suit, citing Penrod and Be‐Mac.  See Elixir Indus.,

Inc. v. City Bank & Tr. Co. (In re Ahern Enters., Inc.), 507 F.3d 817, 821‐22 (5th

Cir. 2007); Universal Suppliers, Inc. v. Reg’l Bldg. Sys., Inc. (In re Reg’l Bldg. Sys.,

Inc.), 254 F.3d 528, 530‐33 (4th Cir. 2001); see also Am. Bank & Tr. Co. v. Jardine

11

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Ins. Serv. Tex., Inc. (In re Barton Indus., Inc.), 104 F.3d 1241, 1245 & n.1 (10th Cir.

1997) (adding justification that non‐participating creditor’s right to due process

forbade extinguishment of lien without adequate notice).  Whereas Penrod and

Be‐Mac conceived of this participation requirement as an element of § 1141(c)’s

condition that the plan “dealt with” the property underlying the lien, more recent

cases have (presumably for analytical convenience) treated participation as a

freestanding requirement, distinct from the inquiry whether a plan “dealt with”

the property.  See, e.g., Ahern, 507 F.3d at 822; In re WorldCom, Inc., 382 B.R. 610,

622 (Bankr. S.D.N.Y. 2008), aff’d sub nom. WorldCom Inc. v. Waldinger Corp. (In

re WorldCom, Inc.), No. 09 Civ. 9623, 2011 WL 1496378 (S.D.N.Y. Apr. 19, 2011),

aff’d 466 F. App’x 28 (2d Cir. 2012) (summary order).

We conclude that a requirement of lienholder participation is located

squarely within § 1141(c).  The text of the Code allows a plan to extinguish a lien

only if the underlying property is “dealt with,” and that condition cannot be

fairly satisfied in the absence of the interested parties, including the security

holder.2

     2 In concluding that the literal conditions of § 1141(c) cannot be fairly satisfied

without the lienholder’s participation‐‐and, accordingly, that lienholder

participation is a stand‐alone requirement for extinguishment of a lien‐‐we rely

12

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This conclusion is reinforced by the interaction between the section of the

Code that permits the extinguishment of certain liens, § 1141(c), and the section

of the Code that preserves certain liens, § 506(d).  See Wright v. SEC, 112 F.2d 89,

95 (2d Cir. 1940) (“Under the most elementary principles of statutory

construction [a section of the U.S. Code] must be so interpreted, if possible, as to

be consistent with other provisions of the statute.”) The Code preserves liens as

follows:

To the extent that a lien secures a claim against the

debtor that is not an allowed secured claim, such lien is void

unless . . . (2) such claim is not an allowed secured claim due

on the equitable character of bankruptcy law.  “Bankruptcy courts,” after all, “are

courts of equity and ‘apply the principles and rules of equity jurisprudence.’”

Young v. United States, 535 U.S. 43, 50 (2002) (quoting Pepper v. Litton, 308 U.S.

295, 304 (1939)) (alteration omitted).

The participation requirement serves equitable principles in two symbiotic

ways.  First, it ensures that interested parties are notified that property subject to

a lien may be dealt with by the reorganization plan.  See Ahern, 507 F.3d at 823

(“[P]articipation ensures that the secured creditor has notice of the plan and its

potential effect on the creditor’s lien”).  Second, because the participation

requirement “requires more than mere passive receipt of effective notice,”

Acceptance Loan Co. v. S. White Transp., Inc. (In re S. White Transp., Inc.), 725

F.3d 494, 498 (5th Cir. 2013), the participation requirement implements the

background rule (that liens pass through bankruptcy unaffected) by allowing

each lienholder to decide whether to “bypass his debtor’s bankruptcy proceeding

and enforce his lien in the usual way” or (alternatively) to “collect his debt in the

bankruptcy proceeding,” Penrod, 50 F.3d at 461.

13

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only to the failure of any entity to file a proof of claim under

section 501 of this title.

11 U.S.C. § 506(d).  Section 506(d)(2) thus preserves liens of non‐participating

lienholders whose liens would otherwise be extinguished solely as a result of their

non‐participation.  If extinguishment under § 1141(c) is consistent with this

provision (as we must and do assume), then § 1141(c) must apply only to liens

located outside of § 506(d)(2)’s safe harbor.  Reading the “dealt with” limitation

in § 1141(c) to include only participating lienholders harmonizes these provisions.

See 8 Collier on Bankruptcy ¶ 1141.04[1], at 1141‐15 (Alan N. Resnick & Henry J.

Sommer eds., 16th ed. 2013).

We therefore hold that a reorganization plan has extinguished a lien

pursuant to § 1141(c) only if four conditions are satisfied: (1) the text of the plan

does not preserve the lien; (2) the plan is confirmed; (3) the property subject to

the lien is “dealt with” under the terms of the plan; and (4) the lienholder has

participated in the bankruptcy proceedings.

14

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II

As to whether the City of Concord’s lien survived or was extinguished by

NNETO’s reorganization plan, the parties agree that the first two conditions are

satisfied: NNETO’s reorganization plan contains no language preserving the

City’s lien, and the bankruptcy court confirmed the plan.  On appeal, the City

argues that the text of the plan did not sufficiently deal with the property subject

to the lien, and that the City as lienholder did not sufficiently participate in

NNETO’s bankruptcy proceedings.  We conclude that both disputed conditions

are satisfied and that, accordingly, the plan extinguished the City’s lien pursuant

to § 1141(c).

A

The City contends that the relevant property was not “dealt with” by the

terms of the reorganization plan.  The bankruptcy court and the district court

both concluded that the following plan language dealt with the property:

As of the Effective Date, all property of FairPoint and

Reorganized FairPoint shall be free and clear of all Claims,

Liens and interests, except as specifically provided in the Plan,

the Confirmation Order, or the New Credit Agreement.

(Plan ¶ 8.9.)

15

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A plain reading of this provision settles the issue.  It establishes that “all

property” of the debtor is unencumbered by liens unless another provision

specifies to the contrary.  “All property” categorically includes each individual

parcel and lot of the debtor’s property, and therefore includes the six parcels of

real property subject to the City’s putative lien.  Accordingly, the property

subject to the City’s lien is dealt with by this provision, and no other provision

specifies to the contrary.3

  Cf. WorldCom, 382 B.R. at 622 (“Article 10.01 of the

Plan stated that ‘all property of the estates of the Debtors shall vest in the

Reorganized Debtors free and clear of all Claims, Liens . . . .’  That section

encompasses the Data Center, the property subject to the Lien.” (omission in

original)).

     3 The City contends that other provisions of the plan implicitly preserve the

lien.  The premise of the argument is that, if any provision of the plan were to

extinguish the City’s lien, it would be either the paragraph titled “Discharge of

Claims and Termination of Old FairPoint Equity Interests” (Plan ¶ 13.2) or the

paragraph titled “Discharge of Debtors” (Plan ¶ 13.3).  Those provisions, the City

argues, discharge various claims and liabilities without mention of the City’s lien.

This argument has two flaws.  First, these plan provisions do not address liens at

all, while ¶ 8.9 does so explicitly; so the other sections do not preserve the lien

with enough specificity to overcome ¶ 8.9.  Second, the omission of the specific

property or lien at issue does no interpretive work given that no other property,

or claim, liability, or lien is specifically mentioned.

16

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Responding to the plan provision that “all property” be free and clear of

liens, the City argues that these words are insufficiently specific to support the

conclusion that the plan dealt with the specific parcels subject to the lien.  The

City contends that the debtor, which drafted the plan, should not benefit from

omission of specific properties by including a broad catch‐all clause

extinguishing liens.  Another circuit has expressed unwillingness to let the

“debtor as draftsman of the plan” benefit from vague terms in the plan.  Fawcett

v. United States (In re Fawcett), 758 F.2d 588, 591 (11th Cir. 1985).  However,

there is an equal and opposite principle: “creditors have a responsibility to take

an active role in protecting their claims.”  Barton Indus., 104 F.3d at 1246.  And

that latter principle allows a plan to deal in broad strokes with property subject

to liens.  Moreover, administrative considerations weigh heavily against the idea

that a reorganization plan must list each specific property in order to have “dealt

with” it.  The categorical phrasing has the not‐incidental advantage of alerting all

participants in the proceedings to the risk that interests left unprotected may be

swept away.

17

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B

It is conceded that the City pressed claims in the NNETO bankruptcy

proceedings, but the City argues that its participation was not of a kind that

would allow its lien to be extinguished by the plan.  Although the City filed no

proof of claim for the Q3 and Q4 tax bills now putatively secured by the lien, it

did file several proofs of claim, including some that were closely related to the

tax bills and lien at issue in this appeal.  The City contends that it did not

participate with respect to the Q3 and Q4 tax bills, or with respect to the lien that

arguably secured their payment.  But the City’s participation, even if limited,

assures us that the procedural safeguards embedded in the “dealt with” language

of § 1141(c) are satisfied.

The City participated in the NNETO bankruptcy most directly by

submitting several proofs of claim in the reorganization proceeding.  Six of them

relate to the same six real properties as are at issue here: the proofs of claim

concerned the Q1 and Q2 property tax bills for the 2009 tax year, while the lien at

issue today would secure payment of the Q3 and Q4 property tax bills for the

same tax year and the same properties.

18

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We are assisted by the New Hampshire statutes that establish the contours

of the contested lien.  See Butner v. United States, 440 U.S. 48, 55 (1979)

(explaining that “[p]roperty interests are created and defined by state law,” and

that this rule “appl[ies] with equal force to security interests”).  New Hampshire

law sets April 1 as the start of the tax year, N.H. Rev. Stat. § 76:2, and allows

municipalities the option to issue property tax bills on a quarterly basis, id.

§ 76:15‐aa.  Although the City elects to issue quarterly tax bills under that

provision, it is undisputed that a single, automatic statutory lien arises on April 1

of each year to secure payment of the entire tax burden for the tax year.  See id.

§ 80:19.  That statutory lien is automatically extinguished eighteen months later,

on October 1 of the following year, unless the municipality‐lienholder takes steps

set forth in the statute to notice and perfect a full tax lien.  See id. § 80:59‐:86.

Accordingly: the City elected to bill NNETO for its 2009 taxes in quarterly bills;

the City gained an automatic statutory lien on NNETO’s real property to secure

the full year’s tax burden, on April 1, 2009; the automatic statutory lien was set to

expire on October 1, 2010; and to avoid automatic expiration, the City was

required to give notice and take steps to perfect it.  The City gave notice and

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perfected the lien on May 14, 2010, converting the inchoate, statutory lien into a

full tax lien.4

When the City filed proofs of claim for the Q1 and Q2 property tax bills

with respect to the same six parcels of real property at issue on this appeal, it

participated as to the property subject to the lien.  Moreover, payment of the Q1

and Q2 tax bills was secured by the same lien at issue on this appeal.  True, the

lien was converted from inchoate security into a full tax lien only after the City

filed its proofs of claim; nonetheless, an inference of sufficient participation

follows the fact that a single lien secured payment of tax bills as to which the City

participated and tax bills as to which the City stayed silent.

     4 The City’s brief asserts that the notice and perfection steps gave rise to an

entirely new lien, distinct from the inchoate statutory lien that preceded it.  This

conclusory assertion rests on an unnatural reading of the statute, which provides

the means by which to “convert[] the automatic lien into an equitable property

interest.”  First N.H. Bank v. Town of Windham, 639 A.2d 1089, 1091 (N.H. 1994);

see also Gaff v. Town of Pembroke (In re Doolan), 447 B.R. 51, 61 (Bankr. D.N.H.

2011) (describing the perfection process as “executing a tax lien in order to

maintain the perfection of the original lien” (emphasis added)).  Under New

Hampshire law, the City did not gain a new and distinct lien upon perfection, but

merely converted its automatic lien.

20

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We conclude that the City participated in NNETO’s bankruptcy as to the

property subject to the lien.5

III

We reject the City’s other alternative challenges to the lower courts’

decisions.

Contrary to the City’s argument, the lien cannot be saved by 11 U.S.C.

§ 506(d)(2).  That provision does no independent work in this analysis, because

§ 1141(c) is a complement to § 506(d)(2), and satisfaction of the conditions for

application of § 1141(c) establishes that § 506(d)(2) does not apply.

The City argues that, even if § 1141(c) applies, extinguishment of its lien is

so inequitable a result that the lien should survive nonetheless.  We have not

previously decided whether equitable principles may rescue a lien that would

     5 Because the City’s participation was so closely related to the property and

lien at issue on this appeal, we need not decide whether some quantum of

lienholder participation may be too limited or too unrelated to satisfy the

procedural element of § 1141(c)’s “dealt with” requirement.  Compare Be‐Mac, 83

F.3d at 1025 (holding a participation requirement unsatisfied, because secured

creditor filed a proof of claim but omitted the secured portion of its claim), with

Ahern, 507 F.3d at 823 (holding a participation requirement satisfied, seemingly

because creditor filed any proof of claim); WorldCom, 382 B.R. at 622 (same).

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otherwise be extinguished by a plan.  We need not decide that question on this

appeal, because the equities in this case would not support an exception.  The

equities favor neither side.

We also reject the City’s argument that the doctrine of excusable neglect

should save its lien.  Applying the deferential abuse‐of‐discretion standard, see

Midland Cogeneration Venture Ltd. v. Enron Corp. (In re Enron Corp.), 419 F.3d

115, 124 (2d Cir. 2005), we affirm the bankruptcy court’s refusal to allow the City

to file the necessary proofs of claim more than two years after confirmation of the

plan.

CONCLUSION

For the foregoing reasons, we AFFIRM the judgment of the district court.

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