Confirmation of Repayment Plan; Disgorgement of Pre-Petition Tax Withholding
The Iowa Department of Revenue appealed the bankruptcy court’s confirmation of debtors’ Chapter 12 plan, arguing that the Bankruptcy Court did not permit Chapter 12 plans to compel taxing authorities to disgorge pre-petition withholdings.
Where the plain language of the Code only permitted alteration of the priority of the state government’s tax claim, the bankruptcy court erred in approving the disgorgement of pre-petition tax withholdings in debtors’ Chapter 12 plan.
Judgment is reversed.
Relief from Automatic Stay; ‘Drop Dead’ Provision
Debtor appealed from the order granting First Central Bank McCook’s motion for relief from the automatic bankruptcy stay. The bankruptcy court had confirmed debtor’s Chapter 12 plan, which required debtor to pay the bank amounts on guaranteed and non-guaranteed debt. When debtor failed to pay amounts due by the deadline, the bank relied on the “drop dead” provision of the plan to successfully seek relief from the automatic stay.
Where the express terms of the Chapter 12 plan permitted bank to seek relief from the stay if debtor failed to pay amounts due by the deadline in the plan, debtor’s efforts to renegotiate the debt due did not save him from default.
Judgment is affirmed.