Court Opinion

ID: 6771668
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:44:42.271352+00
Date Added: 2024-06-11T16:02:44.587003
License: Public Domain

Alice Robie Resnick, J.,
dissenting. I respectfully dissent from the majority holding that the LTV Ohio subsidiaries do not qualify for exemption from the franchise tax during the period of their Chapter 11 reorganization proceedings. To hold, as the commissioner and majority have, that exemption is unavailable since LTV subsidiaries have not technically been “adjudicated bankrupt,” have not technically had a receiver appointed, and have not technically made a general assignment for the benefit of their creditors is to ignore the obvious intention of the legislature to provide franchise tax exemption to financially distressed corporations. The foregoing bankruptcy determinations, i.e., adjudged bankrupt, appointment of a receiver or general assignment for the benefit of creditors, have become obsolete by the reorganization provisions of the current federal Bankruptcy Code. The bankruptcy laws have evolved so that today no corporation is adjudicated bankrupt or has a receiver appointed. Unless the court interprets this provision in light of the evolution of the bankruptcy laws, R.C. 5733.06(E) has no application today.
The LTV Ohio subsidiaries argue compellingly to apply R.C. 5733.06 to their status as a debtor in possession. Their status is a direct descendent of a receiver *267in equity in reorganizing its business. A review of the history of the bankruptcy laws discloses this fact. This court has consistently read Ohio statutes in context with a federal scheme to interpret other Ohio statutes. See Ohio Chamber of Commerce v. State Emergency Response Comm. (1992), 64 Ohio St.3d 619, 624-625, 597 N.E.2d 487, 491.
The majority holds that the LTV Ohio subsidiaries have not been adjudicated bankrupt, nor has a receiver been appointed for them. Hence, strict construction of R.C. 5733.06(E) would require denial of the LTV Ohio subsidiaries’ exemption claim.
However, if the majority’s reasoning were followed, the statute would not apply to any corporation under today’s Bankruptcy Code. Perhaps the term “adjudicated bankrupt” could refer to a liquidation pursuant to an order for relief and the receivership language refers to Ohio’s receivership process. However, this tortured interpretation underscores the ambiguity which it presents, and if part of R.C. 5733.06(E) is ambiguous, perhaps the better result is to conclude that the entire statute is ambiguous and in need of interpretation.
According to R.C. 1.47:
“In enacting a statute, it is presumed that:
U sic * %
“(B) The entire statute is intended to be effective;
U * * *
“(D) A result feasible of execution is intended.”
Thus, this court must presume that the General Assembly intended these terms to continue to have some effect, especially in view of the fact that R.C. 5733.06 itself has been amended numerous times, but the provisions at issue have not been substantially altered. See History of R.C. 5733.06 and G.C. 5499, appearing in Page’s Ohio Revised Code Annotated and Ohio General Code Annotated.
Furthermore, under R.C. 1.49(A), the court, in determining the intention of the General Assembly in reviewing an ambiguous statute, may consider “[t]he object sought to be attained * * *.”
In determining the object sought to be accomplished, it becomes increasingly clear that R.C. 5733.06(E) must be held applicable to the corporate reorganizations of today. Corporate reorganizations are utilized for a variety of goals, rather than purely financial purposes. The BTA correctly pointed this out: “They [corporate reorganizations] are increasingly successful, and there may be an increased incidence of corporate reorganizations. Where does the public interest presently lie, [if not] with the protection of creditor’s interests and fostering of corporate reorganizations by forgoing the levy of franchise tax or the *268revenue needs of the state. The ultimate benefit to the state from the rehabilitation of corporate taxpayers may well outweigh the amount of tax forgone. Such considerations and others, suggest that the General Assembly might well review and consider the exemption now granted by R.C. 5733.06(E).”
According to R.C. 5733.06(E), a corporation is not charged tax “except for the portion of the then current tax year during which the tax commissioner finds such corporation had the power to exercise its corporate franchise unimpaired by” an adjudication in bankruptcy or appointment of a receiver or a general assignment for the benefit of creditors. According to Black’s Law Dictionary (6 Ed.1990) 752, to “impair” means: “[t]o weaken, to make worse, to lessen in power, diminish or relax, or otherwise affect in an injurious manner.” As the BTA concluded, the LTV Ohio subsidiaries’ power to operate their businesses was lessened or weakened or diminished by their need to ask the court for permission to perform many of their functions. The BTA correctly concluded that the LTV Ohio subsidiaries were impaired during the pendency of the reorganization.
I would affirm the BTA’s findings that the Chapter 11 reorganization proceedings are essentially receivership proceedings with the taxpayers as debtors in possession and that the exercise of the taxpayers’ corporate franchises is impaired by such proceedings. As a result, LTV Ohio subsidiaries should be exempt from the franchise tax during the years at issue.
Wright and Pfeifer, JJ., concur in the foregoing dissenting opinion.