In Uncategorized on 10/12/2022 at 16:23

Judge Travis A. (“Tag”) Greaves authors a full-dress T. C. today, Daniel Cochran and Kelley Cochran, 159 T. C. 4, filed 10/12/22. And it’s definitely short-listed, as it’s only six (count ’em, six) pages long.

Dan and Kelley have a confirmed Ch 11 Plan;  their trusty attorney wants the 11 USC§362 automatic stay lifted, so they can proceed in Tax Court with the SNOD they petitioned before they filed chapter. They claim confirmation discharges any pre-petition debt.

The pre-2005 amendment language of 11 USC §1141(d) led Tax Court to this conclusion in Moody v. Com’r, 95 T. C. 655 (1990).

But Congress played the spoiler.

“In Moody we held that a bankruptcy court’s confirmation of the taxpayer’s chapter 11 bankruptcy plan served to effectively discharge or deny discharge to the taxpayer-debtor for purposes of 11 U.S.C. § 362(c)(2)(C), thereby terminating the automatic stay that was in place with this Court under 11 U.S.C. § 362(a). Moody, 95 T.C. at 664. In reaching this holding, we relied upon 11 U.S.C. § 1141(d)(1), which provides that a bankruptcy court order confirming a debtor’s chapter 11 bankruptcy plan generally acts to discharge the debtor from any debt that arose before the date of the confirmation. See Moody, 95 T.C. at 659–62. The version of 11 U.S.C. § 1141(d) applied in Moody was subsequently amended in 2005 as part of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109-8, §321(d), 119 Stat. 23, 95–96, and in 2010 as part of the Bankruptcy Technical Corrections Act of 2010, Pub. L. No. 111-327, § 2(a)(36)(A), 124 Stat. 3557, 3561.” 159T. C. 4, at p. 4. (Footnote omitted, but it says that Moody was pre-SNOD and petition, Cochran post-SNOD and petition, but mox nix).

Judge Tag Greaves finds that the amended statute doesn’t discharge anything unless all payments have been made (here they haven’t), or the BJ orders the debt discharged after notice and hearing. So the automatic stay remains. And no need for legislative history, as the statute is unambiguous.

So Dan and Kelley (and trusty attorney, who gets a Taishoff “Good try, third class”) are left singing the Moody blues.


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