Court Opinion

ID: 8982381
Source: CourtListenerOpinion
Date Created: 2022-11-27 11:32:18.566199+00
Date Added: 2024-06-11T17:10:42.647336
License: Public Domain

COX, Circuit Judge,
dissenting:
I believe that under 26 U.S.C. § 6012(b)(3) and (4) and section 6151 the liquidating trustee is obligated both to file income tax returns and to pay taxes on behalf of the corporate debtors and the estate of the individual debtor. Contrary to the court’s holding, I believe that section 6012(b)(3) applies to an individual, like the liquidating trustee in this case, who is appointed as a part of a confirmed plan of reorganization and who possesses title to substantially all the debtors’ assets. I further conclude that given the broad powers granted to the liquidating trustee in Article Y of the Plan, he qualifies as a “fiduciary” within the meaning of section 6012(b)(4).
The court holds that “section 6012 refers only to trustees who are appointed under Chapter 11 of the Bankruptcy Code” (emphasis added). The court reasons that since the liquidating trustee was appointed to administer the Plan, he is a “contract trustee” as opposed to a trustee appointed under title 11. The plain language of section 6012(b)(3), however, makes its filing requirements applicable to a “trustee in a case under title 11 of the United States Code_” (emphasis added). While it is not readily apparent from the face of the opinion, the court seems to have equated the meaning of the phrase “a trustee in a ease under title 11” with the Bankruptcy Code’s definition of a trustee appointed under 11 U.S.C. § 1104(a) (1979).1 This interpretation of section 6012(b)(3) is too restrictive and fails to comport with the broad wording of the statute. Section 6012(b)(3) is properly viewed as encompassing trustees of a corporate debtor who, like the liquidating trustee, are appointed to administer a reorganization plan in a bankruptcy case. It is not limited to just those trustees who are appointed under 11 U.S.C. § 1104 or section 702.
The legislative history of section 6012(b)(3) further indicates that Congress intended this section to reach a broad spectrum of persons acting in a fiduciary capacity for a corporation in bankruptcy. Committee reports suggest that the phrase “receiver, trustee in a case under title 11 of the United States Code, or assignee ...” is to be read as encompassing “receivers or other fiduciaries.” H.R.Rep. No. 1337, 83d Cong., 2d Sess. 3, reprinted in 1954 U.S. Code Cong. & Admin.News 4017, 4543; and S.Rep. No. 1622, 83d Cong., 2d Sess. 3, *1547reprinted in 1954 U.S.Code Cong. & Admin.News 4621, 5211. Thus, section 6012(b)(3) anticipates any situation where substantially all the assets of a corporation are vested in a person acting in a fiduciary capacity for the bankrupt corporation. Accordingly, the liquidating trustee, not the assetless corporate debtors, should be responsible for discharging tax obligations.
The court further holds that the liquidating trustee is more like a “disbursing agent” of the trust rather than a “fiduciary” of the individual debtor. Article V of the Plan vests the liquidating trustee with all right, title, and interest of the debtors in their estate property and empowers the trustee to administer the liquidation of that property pursuant to the Plan. The Plan authorizes the liquidating trustee not only to liquidate the debtors’ property but also to manage the property “in all other ways as would be lawful for any person owning the same to deal therewith.... ” Article Y, paragraph 3. These broad powers include the power to lease, improve or encumber the property, the authority to sue and be sued, and the power to settle litigation in which the debtors are involved and to waive rights on behalf of the debtors.
The court’s attempt to characterize the liquidating trustee as simply a disbursing agent denies the reality of his rights, duties and obligations under the Plan. A mere label does not magically transform the liquidating trustee into something he is not. In fact, his job description squarely fits within the Internal Revenue Code description of a “fiduciary.”2 Consequently, he is obligated under section 6012(b)(4) to file returns on behalf of the individual debtor.
The court nonetheless analogizes the facts of this case to those in In re Alan Wood Steel Co., 7 B.R. 697 (Bankr.E.D.Pa. 1980), to support its conclusion that the liquidating trustee is a “disbursing agent” instead of an assignee or fiduciary of the debtors. However, In re Alan Wood is distinguishable from the present case. In re Alan Wood involved a disbursing agent under the former Bankruptcy Act.3 The disbursing agent in In re Alan Wood did not have possession of or hold title to the property of the debtors. Moreover, by statute he was only entitled to “distribute, subject to the control of the court, the consideration ... deposited by the debtor.” 7 B.R. at 701 (quoting 11 U.S.C. §§ 110, 743 and 737 (1976)). In this case, the liquidating trustee has possession of the debtors’ property and is authorized to do more than simply distribute funds. Therefore, the liquidating trustee more closely approximates an assignee or fiduciary than a disbursing agent.
Since both section 6012(b)(3) and (4) apply to the liquidating trustee, he is obligated to file tax returns on behalf of the corporate debtors and the estate of the individual debtor. Necessarily, then, he is also responsible for the payment of those taxes under 26 U.S.C. § 6151. The court’s decision to the contrary encroaches upon the IRS’s ability to collect taxes successfully in situations where a reorganization plan provides for the appointment of a trustee to take possesion of substantially all the debtors’ assets and to administer the Plan. Although the court encourages us to take consolation in the fact that the government may seek collection of the tax monies from the reorganized debtor, it remains unclear from where that money will come.

. 11 U.S.C. § 1104(a) (1979) in pertinent part reads:
At any time after the commencement of the case but before confirmation of a plan, on request of a party in interest, and after notice and a hearing, the court shall order the appointment of a trustee—

. A "fiduciary" is defined broadly in § 7701(a)(6) of the Internal Revenue Code as "a guardian, trustee, executor, administrator, receiver, conservator, or any person acting in any fiduciary capacity.”

. In re Alan Wood Steel Co. was decided under the old Bankruptcy Act which provided for the appointment of bankruptcy trustees under § 44(a), receivers under § 332, and disbursing agents under § 337(a). A disbursing agent is a statutorily distinct entity.