Document: 462 U.S. 198 103 S.Ct. 2309 76 L.Ed.2d 515 UNITED STATES, Petitionerv.WHITING POOLS, INC. No. 82-215. Argued April 19, 1983. Decided June 8, Syllabus Section 542(a) of the Bankruptcy Reform Act 1978 (Act) requires an entity, other than a custodian, in possession property debtor that trustee bankruptcy can use, sell, or lease under § 363 to deliver trustee. 543(b)(1) custodian control any Promptly after Internal Revenue Service (IRS) seized respondent swimming pool firm's tangible personal satisfy tax lien, filed petition for reorganization Act. The Court, pursuant 543(b)(1), ordered IRS turn over on condition provide with specifi d protection its interests. District Court reversed, holding turnover order against was not authorized by either 543(b)(1). Appeals reversed could issue 542(a). Held: 1. estate includes has been creditor prior filing reorganization. Pp. 202-209. (a) Both congressional goal encouraging troubled enterprises and Congress' choice protecting secured creditors imposing limits conditions trustee's power subject interest, rather excluding such from estate, indicate Congress intended broad range property, including which be included estate. 203-204. (b) statutory language reflects this view scope 541(a)(1) Act, provides shall include "all legal equitable interests as commencement case," is made available provisions In effect, grants possessory interest certain held at proceedings. 204-207. (c) This interpretation supported legislative history consistent judicial precedent predating Any would deprive assets essential rehabilitation effort thereby frustrate purpose behind provisions. Pp.207-208 2. authorizes question. 209-211. bound same extent creditor. Nothing indicates special exception collectors. P. 209. While apply if levy seizure transferred ownership seized, Code does transfer until sold bona fide purchaser sale. 674 F.2d 144 (2 Cir.1982), affirmed. Stuart A. Smith, Washington, D.C., petitioner. Lloyd H. Relin, Rochester, N.Y., respondent. Justice BLACKMUN delivered opinion Court. 1 (IRS Service) respondent's 1978, hereinafter referred "Bankruptcy Code." before us whether respect property. 2 * 3 Respondent Whiting Pools, Inc., corporation, sells, installs, services pools related equipment supplies. As January 1981, owed approximately $92,000 Federal Insurance Contribution taxes federal withheld employees, but had failed respond assessments demands payment IRS. consequence, lien amount attached all Whiting's property.1 4 On 14, property—equipment, vehicles, inventory, office supplies—pursuant distraint provision 1954.2 According uncontroverted findings, estimated liquidation value was, most, $35,000, going-concern hands $162,876. very next day, 15, reorganization, Code's Chapter 11, 11 U.S.C. §§ 1101 et seq. (1976 ed., Supp. V), United States Western New York. continued debtor-in-possession.3 5 States, intending proceed sale property,4 moved declaration automatic stay Code, 362(a), inapplicable or, alternative, relief stay. counterclaimed requiring Code.5 use reorganized business. B 6 determined provision. re 10 B.R. 755 (Bkrtcy.1981). Because it found effort, refused lift Acting Code,6 542(a), court directed specified B.R., 760-761.7 7 App. Pet. Cert. 46a. Second Circuit, turn, (1982). It remanded case reconsideration adequacy Court's conditions. acknowledged ruling contrary reached Fourth Circuit Cross Electric Co. v. 664 1218 (1981), noted confusion among district courts. F.2d, 145 n. We granted certiorari resolve conflict important area law new Code. 459 ----, 442, 74 599 II 8 By virtue holds first examine generally debtor's entity "property may 363" Subsections authorize estate," defines "estate" "comprised following wherever located: (1) . case." Although these statutes read limit those "interests property" time petition, we them definition what limitation. 9 proceedings enterprise restructured enable operate successfully future. Until business plan 1121-1129 debtor-in-possession manage continue operation See 1108. permitting anticipated jobs, creditors' claims, produce return owners. H.R.Rep. 95-595, p. 220 (1977), U.S.Code Cong. & Admin.News 5787. presumed more valuable used rehabilitated "sold scrap." Ibid. have small chance success, however, running were excluded J. Moore L. King, Collier o ¶ 3.05, 431 (14th ed. 1978). Thus, facilitate business, must authorization extends even interest. 363(b) (c); see 182 (1977). might safeguarded outright chose instead "adequate protection" their 363(e), quoted 7, supra. At creditor's insistence, place are necessary protect look protection, nonbankruptcy remedy possession. reorganizations methods suggest 12 above, 541(a) "estate comprised 541(a)(1).8 House Senate Reports 541(a)(1)'s broad.9 Most important, context case, 367 Several bring into did commenced.10 13 (other custodian) trustee.11 Given repossessed falls within rule, therefore drawn there explicit limitations reach 542(a),12 none hold proceedings.13 14 law, modifies procedural rights liens.14 Wright Union Central Life Ins. Co., 311 273, 278-279, 61 196, 199-200, 85 L.Ed. 184 (1940). Nowak, Turnover Following Prepetition Levy Di traint Under 542, 55 Am.Bankr.L.J. 313, 332-333 (1981). proceedings.15 various rights, right adequate replace afforded C 15 section's history. reports silent precise us, hearings emerged guidance. witnesses noted, without contradiction, need authorizing creditors.16 appeared proposed legislation shortly hearings. H.R. 6, 95th Cong., 1st Sess., introduced 4, 1977. Klee, Legislative History 54 275, 279-281 (1980). section remained unchanged through subsequent versions legislation. 16 Moreover, 542 X, chapter 1878, amended, 101-276, 52 Stat. 883 (1938) (f rmerly codified 501-676 ed.)), collateral Reconstruction Finance Corp. Kaplan, 185 791, 796 (CA1 1950); Third Ave. Transit Corp., 703, 706 (CA2 1952); 6A 14.03, 741-742 1977); Murphy, Use Collateral Business Rehabilitations: A Suggested Redrafting 7-203 63 Calif.L.Rev. 1483, 1492-1495 (1975). evinces intent depart practice. provisions.17 17 conclude III 18 no reason why different result should obtain when expressly states term "entity," governmental unit. 101(14). Tr. Oral Arg. 16. carefully considered effect collection, S.Rep. 95-1106 (1978) (report Committee), decided collectors, IRS, enhanced priorities unsecured 507(a)(6), nondischarge liabilities, 523(a)(1). 95-989, pp. 14-15 (1978). Tax collectors also enjoy applicable 363(e) liens. collector form exclusion lien. 19 Of course, transfers apply. enforcement 1954, 26 6321-6326 do grant powers enforce liens greater possessed private state law. Rodgers, --- 75 ---- (1983) (slip op. 4); id., (dissenting opinion) 1, 7); Bess, 357 51, 56-57, 78 1054, 1057-1058, 1135 (1958). But IRS.18 20 Service's provisions, 6331 6332, devices liens, Sullivan, 333 100, 116 (CA3 1964), analogous remedies creditors. Uniform Commercial 9-503, 3A U.L.A. 211-212 (1981); They provisional determine merely custody. B. Bittker, Taxation Income, Estates Gifts 111.5.5, 111-108 Plumb, Collection Lien Problems, pt. L.Rev. 247, 272 point exceed U.S., S.Ct., 12); ("the Commissioner acts collection process capacity lienor distinguished owner"). obligated surplus 6342(b). Ownership only Bennett Hunter, Wall. 326, 336, 672 (1870); 6339(a)(2); Tax.L.Rev., 274-275. fact, itself refers owner sale.19 takes place, remains thus requirement IV 21 When dissolved; n r status destroyed. entitled interests, enjoyed creditors, specific privileges accorded simply seek according congressionally established procedures, withholding efforts reorganize. 22 judgment 23 so ordered. 6321 6321, provides: "If person liable pay neglects refuses demand, favor upon real personal, belonging person." "(a) Authority Secretary days notice lawful collect (and further sum sufficient cover expenses levy) provided tax. "(b) Seizure "The 'levy' title means. he seize sell (whether intangible)." With exceptions relevant here, debtor-in-possession, Whiting, performs functions 1107(a) V). 6335, 1954 notice. taxpayer proceeds part: "[A]n possession, custody, control, during title, exempt 522 trustee, account for, unless inconsequential benefit estate." "deliver custodian's date acquires knowledge declined base because felt Avery Health Center, 1016 (D.W.D.N.Y.1981) (§ draw petition). Sect "Notwithstanding section, time, request used, sold, leased, leased prohibit sale, hearing burden proof protection." Pursuant set lien: $20,000 occurred; $1,000 month satisfied; retain period; make payments, lifted. 761. speaks terms property," meant expansive section. exclude others some minor bare title. 124 Cong.Rec. 32399, 32417 (remarks Rep. Edwards); 33999, 34016-34017 Sen. DeConcini); cf. 541(d) (property mortgage retained service supervise servicing mortgage, becomes part title); 33999 DeConcini) "reiterates general principle where property"). Similar statements expand describing succeeds causes action third parties debtor. 367-368 These ability regain well paragraph [§ ] broad. kinds intangible (see 70a(6)), forms currently 70a Act." (1977); 82 (1978), 5868, 6323. See, e.g., 543, 547, 548. sections permit demand due custodial arrangement, preferential transfer, fraudulent now decide outer boundaries note plainly trust petition. 541(b); 368 funds demonstrate 7501 (employee taxes), excludable Edwards) (Service trace), attempt trace case. 18, 28-29. Report recovered estate: ., out debtor, yet 'property debtor.' " 6323; 541.16, 541-72.10 (15th 1982). usable 363, required three situations: holder good faith 542(c), life insurance premium, 542(d). old court's summary jurisdiction limited filed. Phelps 421 330, 335-336, 95 1728, 1731-1732, 44 201 (1975); Taubel-Scott-Kitzmiller Fox, 264 426, 432-434, 396, 398-399, 68 770 (1924). Phelps, involved lacked direct levied which, proceedings, assignee First, abolished distinction between plenary jurisdiction, expanding courts beyond 48-49 Northern Pipeline Construction Marathon Pipe Line 102 2858, 2862, 73 598 (1982) (plurality 3). situation, consider here. One transactions take default. 211 resulting exercise restrictions 9-504, 256-257. Here, address abrogation obtained party independent For example, pledged default, require turnover. 541.08[9], 541-53 Indeed, largely superfluous light 541(a)(1). Interests exercised debtor—in supra —are already No coercive needed inclusion. fact 544 (trustee creditor); 545 avoid liens); 549 post-petition transactions). Hearings 31 32 Before Subcommittee Civil Constitutional Rights Committee Judiciary, 94th 2d 439 (1975) (statement Patrick Murphy); 1023 Walter W. Vaughn); 1757 Robert Grimmig); 1823-1839 statement Leon S. Forman, National Conference); 235 236 Improvements Judicial Machinery 125 William 464 Grimmig). general, find Judge Friendly's careful analysis Appeals, 152-156, unassailable. governs turnovers individual adjustment debt Chapters 701-766, 1301-1330 103(a). Our depends sought. express argued dictum (1975), suggests contrary. fund proceeding sought directing constructive Service, ousting jurisdiction. 1731-1732. rebutting t ustee's argument actual stated: gave full $38,000 claim petitioner receiver." Id., 337, 1732. sentence, restatement proposition irrelevant expanded 13, similar discussing 70a(8) 110(a)(8) ed.) vested "with creditors"), notwithstanding pre-petition levy. 1733, 8. rejected claim. cited concession surrendered conveying assignee, ibid., that, filing, covered 70a(8). went on, "the pre-bankruptcy displaced [the debtor] inapplicable." initial conveyance said extinguished claim, latter perhaps unnecessary our decision. 6335(a) ("As soon practicable writing given property"), 6335(b) ("The give

Category: 7