The opinion
DAVID R. THOMPSON, Circuit Judge,
concurring:
I concur. I write separately to clarify what I understand to be the holding of this case in Part II of the majority opinion.
The holding derives from the issue. The issue is: May the State of California require payment of its claim for prepetition tax penalties and postpetition interest on prepetition unsecured taxes out of the proceeds of the sale of a liquor license under California Business and Professions Code § 24049 (West 1985)? 1
In In re Petite Auberge Village, Inc., 650 F.2d 192, 195-96 (9th Cir.1981), we answered “no.” Petite Auberge, however, was decided under the former Bankruptcy Act. This cáse arises under the Bankruptcy Code. Under the Code, prepetition penalties and postpetition interest on prepetition taxes are treated differently. There is a flat prohibition against the recovery of postpetition interest on unsecured prepetition taxes. 11 U.S.C. § 502 (b)(2) (1988). As to prepetition penalties, however, the rule is different. A claim for these penalties is relegated to seventh priority. 11 U.S.C. § 507 (a)(7)(G) (1988).
As I understand the majority’s analysis, it is simply that we will apply the reasoning of Petite Auberge, an Act case, to this case which we decide under the Code. According to the Code, California is not entitled to postpetition interest on unsecured prepetition taxes, and because the assets of the estate were exhausted before getting to Class 7 claims, California is not entitled to prepetition penalties. I agree with this decision.
. The bankruptcy court granted summary judgment in favor of the trustee on his claim for a refund from the State of California of $14,236 in prepetition penalties and $1,368 in postpetition interest on prepetition unsecured taxes. The Bankruptcy Appellate Panel affirmed. Only the recovery of these items is involved in this appeal.