Source: http://nj.findacase.com/research/wfrmDocViewer.aspx/xq/fac.20030513_0000156.DNJ.htm/qx
Timestamp: 2017-02-25 04:32:11
Document Index: 689421425

Matched Legal Cases: ['§157', '§157', '§ 505', '§ 707', '§707', '§707', '§ 707']

| In re G-I Holdings
IN RE: G-I HOLDINGS, INC., ET AL. (F/K/A GAF CORP.) DEBTORS.UNITED STATES, PLAINTIFFSv.G-I HOLDINGS, INC., RESPONDENTS.
Withdrawal from the bankruptcy court is mandatory under 28 U.S.C. §157(d), where the district court determines that resolution of the proceeding requires consideration of both Title 11 and other laws of the US. Courts have interpreted §157(d) to mandate withdrawal "only if [the] court can make an affirmative determination that resolution of the claims will require substantial and material consideration of... non-[bankruptcy] Code statutes." In re White Motor Corp., 42 B.R. 693, 705 (N.D. Ohio 1984). In order to determine if withdrawal is mandatory, the Court must decide if resolution of the tax issue requires substantial and material consideration of non-bankruptcy law.
The Bankruptcy Court has power pursuant to 11 U.S.C. § 505 to determine tax issues. It is well established in the Third Circuit that a bankruptcy court has the ability to determine any and all issues of tax liability of debtors, when there has been no prior determination by any state, quasi-judicial or judicial body. In re A.W.B. Assocs., G.P., 144 B.R. 270, 278 (Bankr. E.D.Pa. 1992) citing In re Century Vault Co., 416 F.2d 1035 (3d Cir. 1969).
The IRS cites In re CM Holdings, Inc., 301 F.3d 96 (3d Cir. 2002) to support its contention that the tax issue here is unsettled. The Court does not feel that "unsettled" is the best way to characterize the tax issue in this case. In re CM Holdings, Inc. involved interpretation of certain life insurance policy loans, and the district court found two conflicting opinions applicable to the determination. In this case, there are no decisions interpreting the federal statute at issue, let alone two conflicting decisions.
The interpretation of non-bankruptcy law in this case is more accurately characterized as an interpretation of first impression because neither party, nor the Court, could find any case law directly interpreting 26 U.S.C. § 707(a)(2)(B). G-I's attempt to characterize the resolution of the tax claims as simple and straight forward is unpersuasive. The briefs offer three different legal standards that may apply, including one option for which there is no guiding case law. *fn1 Further, the simple fact that no case has directly discussed §707(a)(2)(B) in the many years since the passage of 26 U.S.C. §707 weighs in favor of allowing the district court to resolve the issue.
G-I concedes that there is no case which interprets § 707(a)(2)(B). Rather, it argues that the statute is "plain on its face" and that the bankruptcy court would merely have to apply the facts in this case to the statute. To bolster its argument, G-I cites numerous cases where bankruptcy courts have interpreted state law. This case, however, involves interpretation of the Federal Internal Revenue Code. The bankruptcy courts operate as an adjunct of the district court and "frequently adjudicate and issue written opinions on matters of state law, including the [UCC], tax, and family law issues." Jones, "Rough Justice in Mass Future Claims: Should Bankruptcy Courts Direct Tort Reform?" 76 Tex.L.Rev. 1695, 1703 (1998). The difference here is that significant interpretation of a federal statute is required and there is a Congressional presumption in favor of Article III courts conducting such ...