Petition for Writ of Certiorari — United States v. Bloom

Page

TTI niin: ib cients ee hiswinndinmmemiomnamentinieteeitas 1

RENEE RAR ee ll LAS IAAE A S85 ail 1

Es tclatecadninene comanquabedmmadmmmienma ean 2

Statutes | rtd tiédcia nisaecchendnaididendavedduedbanes 2

nnn uinbtbdaihandetan sem ocink baudnbusamana esas 2

Reasons for granting the writ. pit nh son nutgpareigid atieeardidiawicaiee ui 3

SS baila co dadi ake hars abe owehedaiabtoume ste 12

Ei diatabdunamhweveetesousasesevehactwtehindesans 13

CITATIONS

Cases:

American Iron Co. v. Seaboard Air Line, 233 U. 8. 261___. 11

Capital Foundry Corp., In re, 83 F. Supp. 413_.._-______- 6

Case v. Los Angeles Lumber Co., 308 U. 8S. 106___________ s

Consolidated Rock Co. v. Du Bois, 312 U. 8. 510_________. 8

Deep Rock Oil Corporation, In re, 113 F. 2d 266, certiorari

Tee. Wx Slo ings ore aréencttaqiataistinanw wate rue whe 9

Lezingion Homes, In re, 94 F. Supp. 482__._...________. 5

Massachusetts v. Thompson, 190 F. 2d 10_.._.__________. 4,6

New York v. Saper, 336 U. 8. 328........._..._- _ 3,7, 8,9, 12

Northern Pacific Ry. v. Boyd, 228 U. 8. 482_.....-______. s

Securities Commission v. U. 8. Realty Co., 310 U. S. 434... 8

United States v. Bloom, No. i00____.......__________. J ae

United States v. General Engineering & Mfg. Co., 188 F. 2d

ata benscmnnerduduncdutab iwiewlesdeibe tidctebiodn ie 34, 6

Statutes:

Bankruptey Act, c. 541, 30 Stat. 544, as amended by the

Act of June 22, 1938 (Chandler Act), c. 575, 52 Stat. 840:

- 101 (11 'U.

102 (11 U.

106 (11 U.

146 (11 'U.

- 174 11 U.

199 (11 U.

200 (11 'U.

221 (11 'U.

266 (11 'U.

271 (11 'U:~

PPPS RTT R TT

nanananana

é

g

965827 —51——-1

ERTS EE TE

Statutes—Continued Page

Internal Revenue Code:

Sec. 1420 (26 U. 8. C. 1946 ed., Sec. 1420)... ...---. 3, 13

Sec. 1605 (26 U. 8. C. 1946 ed., Sec. 1605). ..-.....- 3,13

Sec. 1627 (26 U. 8. C. 1946 ed., Sec. 1627)......-.-- 3, 13

Miscellaneous:

6 Collier on Bankruptcy (14 ed., 1947). ...-----.-------- 7,9,10

H. Rep. No. 1409, 75th Cong., Ist Sess., pp. 55-56......- 10

Letter from Charles Oliphant, Chief Counsel, Bureau of

Internal Revenue, to Assistant Attorney General Caudle,

dated August 90, 1061... .22.2-sccssccccccsccccccsce 5

50 Vale Law Found 1b .cccccccoccccrcaccsccsseccesss 9

Ynthe Supreme Gourt of the Wnited States

OctToseR TERM, 1951

No. 299

Unirep States or AMERICA, PETITIONER

v.

N. WALSER Epens anp W. H. Corry, as TRUSTEES

or CAROLINA Miits, INnc., aA CORPORATION OF

SoutH CAROLINA, DEBTOR

PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

The Solicitor General, on behalf of the United

States, prays that a writ of certiorari issue to

review the judgment of the United States Court

of Appeals for the Fourth Circuit, entered in

this case on June 6, 1951.

OPINIONS BELOW

The memorandum opinion of the referee in

bankruptcy (R. 1-4) is unreported. The opinion

of the District Court (R. 4-8) is reported in 97

F. Supp. 793. The opinion of the Court of Ap-

peals (R. 9-12) is reported in 189 F. 2d 876.

JURISDICTION

The judgment of the Court of Appeals was

entered on June 6, 1951. (R. 12.) The juris-

(1)

SR PR We DS ed OR Se RS Sate

2

diction of this Court is invoked under the pro-

visions of 28 U.S. C., Section 1254.

Whether, in a corporate reorganization pro-

ceeding under Chapter X of the Bankruptcy Act,

the United States is entitled to interest on unpaid

taxes for the period following the date of the

filing of the petition for reorganization.

STATUTES INVILVED

The pertinent statutory provisions are printed

in the Appendix, infra, pp. 13-19.

STATEMENT

On November 11, 1948, the debtor, Carolina

Mills, Ine., a South Carolina corporation, filed

a petition for reorganization under Chapter X

of the Bankruptey Act. (R. 4.) In that pro-

ceeding, the United States filed claims for

unemployment taxes, federal insurance contribu-

tions taxes, and income taxes collected by with-

holding. No question is raised as to the principal

amount of these taxes nor as to _ interest

up to the date of the filing of the reorganization

petition. (R. 4.) The referee allowed the full

amount of the taxes with interest at the rate of

6% to November 11, 1948. (R. 4.)

The sole question presented is whether the tax

claims bear interest subsequent to November 11,

1948, the date of the filing of the reorganization

petition. (R. 1.) After a hearing, the bank-

— atl

3

ruptey referee denied post-petition interest

(R. 4), and the District Court adopted and con-

firmed the referee’s decision (R. 8). Upon

appeal by the United States, the court below

affirmed the order of the Distriet Court, holding

that the United States is entitled to interest on

its tax claims only to date of the filing of the

petition in reorganization. (R. 12.)

REASONS FOR GRANTING THE WRIT

1. The sole issue in this case is whether the

United States is entitled to interest on unpaid

taxes in a corporate reorganization proceeding

under Chapter X of the Bankruptey Act for the

period following the date of the filing of the peti-

tion and until the taxes are paid or otherwise

satisfied. The Internal Revenue Code provides

that when taxes are not paid when due there shall

be added as part of the tax interest ‘‘at the rate

of 6 per centum per annum from the date the tax

became due until paid’? (26 U. 8. C. 1946 ed.

1420, 1605 and 1627, Appendix, ixfra, pp. 13-14).

However, this Court held in New York v. Saper, 336

U. 8. 328, that in the case of straight bankruptey,

the Government’s right to interest stops at the date

of filing of the petition. The question here is

whether the same limitation applies in Chapter X

proceedings.

The United States is filing, concurrently with

this petition, a petition for a writ of certiorari

to the United States Court of Appeals for the

4

Eighth Circuit to review its decision in United

States v. General Engineering & Mfg. Co., 188

F. 2d 80. That case involves the application of

the rule of the Saper case to a proceeding for

arrangement under Chapter XI of the Bank-

ruptey Act, and the issue is closely related to the

issue here involved.’

Still a third related case is now pending before

this Court on a petition for certiorari. United

States v. Bloom, No. 100, this Term. That case

involves the question of whether interest on fed-

eral taxes continues to run, in a state proceeding,

after the date of an assignment for the benefit

of creditors.

These cases as a group cover the major types

of insolvency proceedings apart from straight

bankruptcy. The question of whether interest

on taxes should be permitted to run during these

different proceedings involves related problems

of statutory interpretation and policy. The al-

lowance of the petition in this case and in the

related cases would afford the Court the oppor-

tunity to review the problem in its entirety.

2. Even taken by itself, the instant case pre-

sents an important question of continuing im-

portance to the administration of the tax laws

and the functioning of corporate reorganization

We have been informed that the Commonwealth of

Massachusetts intends to file a petition for certiorari to the

First Circuit in another Chapter XI case involving the

same issue. Massachusetts v. Thompson, 190 F. 2d 10.

= eae:

POOL IE OE Maes

5

proceedings under Chapter X of the Bankruptey

Act, ¢. 541, 30 Stat. 544, Section 101, et seq., as

amended by the Act of June 22, 1938 (Chandler

Act), ¢. 575, 52 Stat. 840, See. 1 (11 U. S. ©.

1946 ed., Sec. 501 et seq.). The issue arises in

every case in which the United States asserts a

claim for taxes in a Chapter X proceeding. The

Chief Counsel, Bureau of Internal Revenue, hes

reported that there are currently pending 199 —

reorganization cases under Chapter X involving

federal tax claims, upon which the estimated

interest arising subsequent to the dates of the

filing of the petitions exceeds $4,000,000.2 Obvi-

ously, the right of the Government to recover

this substantial amount from the assets of the

debtors is of importance not only te the Govern-

ment and the debtors, but also to all other credi-

tors and all parties to the reorganization

proceedings.

3. While there is no existing conflict among

the cireuits on the issue here presented, there is

a sufficient diversity of judicial opinion to indi-

cate that the matter is hardly free from doubt.

The District Court for the District of New Jersey

has reached a conclusion opposed to that of the

court below (Jn re Lexington Homes, 94 F. Supp.

* Letter from Charles Oliphant, Chief Counsel, Bureau of

Internal Revenue, to Assistant Attorney General Caudie,

dated August 20, 1951. It is also stated in this letter that

both the number of proceedings and the amounts of interest

involved appear to be substantially constant from year to

year.

Pre.

482), while a position in accord with that of the

court below has led to the denial of post-petition

interest by the District Court for the Eastern

District of New York (In re Capital Foundry

Corp., 83 F. Supp. 413). In the related field of

post-petition interest on tax claims under Chapter

XI of the Bankruptey Act, both the First Cir-

cuit (Massachusetts v. Thompson, supra) and the

Eighth (United States v. General Engineering &

Mfg. Co., supra) have joined the court below in

refusing to allow the Government interest. How-

ever, the Court of Appeals for the First Circuit

has divided on the issue.

Given this contrariety of judicial opinion, it is

the Government’s view that this Court should

answer the question here presented now. For

not only is the question involved in a large num-

ber of cases, but the fact is that while only small

amounts of money may be involved in any indi-

vidual case, the aggregate is large. If there are

added together the 199 cases involving $4,000,000

arising under Chapter X; the 771 cases involving

$1,000,000 under Chapter XI (See petition in

United States vy. General Engineering and Mfg.

Co., No. 300, this Term, p. 6); the 810 cases

involving $430,000 in assignment proceedings (See

petition in United States v. Bloom, No. 100, this

Term, p. 9); and the 985 cases involving $7,000,-

000 in receiverships (ibid., p. 9),-the totals are

2,705 cases involving $12,430,000. Until the issue

is finally determined by this Court, the parties

Peewee nme —_

7

are faced with the alternative of letting adverse

initial rulings pass without contest because the

amount involved is small, or of repeated appeals in

order to attempt to preserve the issue until it can be

decided by this Court. Neither alternative to

immediate review by this Court would be conducive

to the economic, fair, and efficient administration of

justice.

4. The court below denied the Government’s

claim to post-petition intere-t on the assumption

that Chapter X proceedings are a kind of bank-

ruptey in whic creditors have the same rights

as in straight bankruptey.. The Government

challenges both the assumption and the conelu-

sion. It believes that differences in the purposes

and effects of the two types of proceeding are

so fundamental] that the reasoning underlying the

Saper case itself would require that interest con-

tinue to accrue in Chapter X cases rather than

that it be cut off.

The fundamental basis for the holding in the

Saper case was that, in straight bankruptey, in-

terest ceases to run on debts other than taxes

*The court below, in thus assimilating Chapter X to

straight bankruptcy proceedings, placed reliance on Section

200 of the Act (11 U.S. C. 600, Appendix, infra, pp. 17-18)

(R. 10). This indicates a misconception of the purpose of

Section 200 which is intended to relate to such matters as

the rights to possession and payment before and after the

approval of a petition. It has no relevance to the issue here

involved. See 6 Collier on Bankruptcy (14th ed., 1947), pp.

2869-2870.

965827—51--2

oO eee ey

atta oon

ae

from the date the petition is filed, and that Con-

gress had, in amendments to the Bankruptcy Aet,

evinced an intention to assimilate federal tax

claims to other debts. See New York vy. Saper,

336 U.S. 328, at 332. However, there is no gen-

eral rule cutting off interest on debts generally

in reorganization cases under Chapter X as of

the date of filing and, on the contrary, it appears

that interest to the date of consummation of a

plan or reorganization is recognized as one of the

fundamental rights which must be recognized in

order that a plan can be found “fair and equi-

table” as required by Sections 174 and 221 (2)

of the Aet. (Appendix, infra, pp. 16 and 18.)

To be ‘‘fair and equitable,’’ a plan must be the

product of the ‘‘absolute priority’’ rule announced

in Northern Pacifie Ry. v. Boyd, 228 U. 8. 482,

and reapplied in Case v. Los Angeles Lumber Co.,

308 U. S. 106, 115-119, and Securities Commis-

sion v. U. S. Realty Co., 310 U. 8S. 434, 452. It

is a part of this strict priority rule, as this Court

stated, in Consolidated Rock Co. vy. Du Bois, 312

U. S. 510, 527, in dealing with interest which

had acerued during a Section 77B proceeding

(the predecessor of Chapter X), that interest

until date of payment is required. Thus this

Court found the plan there involved defective,

in that:

no provision is made for the accrued in-

terest on the bonds. This interest is en-

titled to the same priority as the principal.

9

Similarly, the Court of Appeals for the Tenth

Circuit, in another Section 77B case, stated:

Where in the administration of the af-

fairs of an insolvent corporation there are

claims of different rank, the holders of

prior claims are entitled to interest to the

time of payment, even though the payment

thereof may deprive the holders of sub-

sequent claims of any participation in the

funds of the bankrupt. [Italies added.]

[In re Deep Rock Oil Corporation, 113 F.

2d 266, 269 (C. A. 10), certiorari denied, 311

U.S. 699.]

In 6 Collier on Bankruptey (14th ed., 1947), 2817,

it is stated, ‘It is settled, therefore, that in cor-

porate reorganizations, as a general rule, interest

on all claims, whether fixed by contract or by

the applicable local law, accrues until the date of

the consummation of the plan and must be ae-

corded the same priority as the principal of the

claim.’’ Many eases to this effect are collected

in footnote 15 on page 2817 of that work. See

also 50 Yale Law Journal 144.

These cases are not bottomed on the exception

to the rule referred to in the Saper case (336

U. 8S. 328, 330, fn. 7) relating to secured obliga-

tions, the security for which produces more than

sufficient interest to meet the interest accruing

on the debt. Rather, they appear to rest on the

fact that the purpose of Chapter X is the re-

habilitation of distressed corporations, not their

Mer re 2 ioe *

iAP Lat tees cea a AWN ees

& ee OL

10

liquidation; the estate is administered as a going

concern in order to reaiize the greatest recovery

for the benefit of all parties to the proceeding

(See 6 Collier on Bankruptcy, 14th ed. (1947)

103). In this context, it would be strange if as-

sets were permitted to be retained by a debtor

or trustee, and used to continue the business dur-

ing reorganization rather than used to pay prior-

ity debts without continuing to acerue interest.

The estate which enjoys the use of the asset

which it owes to another should pay interest for

the privilege of its use.

Since interest is not cut off on claims generally

in Chapter X reorganization proceedings, it is

submitted that there is no basis for treating fed-

eral claims for unpaid taxes as inferior. As a

matter of fact, federal tax claims, secured or un-

secured, are in effect given priority by Section

199 (11 U. S. C. 599, Appendix, infra, p. 17),

which requires that plans which do not provide

for payment of federal taxes in full, except when

a lesser amount has been accepted by the Secre-

tary of the Treasury, shall not be confirmed.

*The House Committee, which recommended Chapter X,

explained the purpose of Sections 199 and 271 (Appendix,

infra, pp. 17, 19) as follows (TT. Rep. No. 1409, 75th Cong.,

Ist Sess., pp. 55-56) :

“The committee believes these new tax provisions will

strike a balance between the necessity of safeguarding the

Government’s tax interests in a debtor corporation, or the

new corporation resulting from the reorganization proceed-

ings, and the necessity of sealing down the indebtedness of

the debtor corporation in order to make the plan successful.

SLT ARIE IS AFR SANIT EGR eu eet " —

BOM Ge Sea Me RN ae

11

Thus, under the reasoning of the Saper case,

that Congress intended to assimilate federal tax

claims to other debts, there can be no doubt that

interest on such claims should be permitted to

run in Chapter X proceedings.

The allowance of interest is very strongly in-

dicated when a plan can be worked out under

which stockholders of the debtor are permitted to

participate in the reorganization, an eventuality

clearly contemplated by Chapter X. Under such

a plan the situation is comparable to that in

which the debtor in a straight bankruptey pro-

ceeding is found not to be in fact insolvent.

American Iron Co. v. Seaboard Air Line, 233 U.S.

261, 266-267. However, the payment of interest

should not be made dependent on whether stock-

holders are permitted to participate, since re-

habilitation of a debtor corporation may be

worked out by turning the control over to bond-

holders with the same result of maintaining the

enterprise rather than dismembering it. So far

as priority claimants are concerned, the result

would be the same.

The court below stated that “It could hardly

have been contemplated that a tax claim filed

in a Chapter X proceeding should be entitled to

It is felt that any leniency of this kind on the part of the

Government, when its interests are properly safeguarded,

will contribute to the success of the plan of reorganization

and to the general objective of preserving a business enter-

prise so that it may not only continue to be economically

productive but also productive of future normal taxes.”

TOTES fw

12

post bankruptcy interest upon a reorganization

of the debtor but not if reorganization should

fail and an adjudication of straight bankruptcy

should follow.’”’ (R. 10.) But this seems no

more difficult than the admitted exception to the

rule in the case of straight bankruptcy, where

interest is permitted if the debtor proves solvent.’

See New York v. Saper, 336 U. 8. 328, fn. 7, p.

330. All that is required is that if the case is

transformed into a straight bankruptcy case,

taxes, like other debts, be refused post-petition

interest; if a plan can be worked out, then taxes,

like other claims, should be allowed interest.

CONCLUSION

For the foregoing reasons, this petition for

a writ of certiorari should be granted.

Respectfully submitted,

Puitie B. PERLMAN,

Solicitor General.

SEPTEMBER 1951.

‘If a reorganization petition is filed in the course of a

straight bankruptcy proceeding, the interest which a claim

bore during bankruptey, but which would not have been

allowed, will be regarded as part of the claim for the

purpose of the reorganization. 6 Collier, supra, 2819.

APPENDIX

INTERNAL REVENUE CODE:

Sec. 1420. CoLLECTION AND PAYMENT OF

TAXES.

* * * * *

(b) Addition to Tax in Case of Delin-

quency.—If the tax is not paid when due,

there shall be added as part of the tax

interest (except in the case of adjustments

made in aecordance with the provisions of

sections 1401 (¢) and 1411 at the rate of

6 per centum per annum from the date the

tax became due until paid.

* * *~ * *

(26 U.S. C. 1946 ed., See. 1420.)

Sec. 1605. PAYMENT OF TAXES.

* * * * *

(b) Addition to Tax in Case of Delin-

quency.—If the tax is not paid when due,

there shall be added as part of the tax

interest at the rate of 6 per centum per

annum from the date the tax became due

until paid.

* * * * *

(26 U.S. C. 1946 ed., Sec. 1605.)

Sec. 1627 [as added by the Current Tax

Payment Act of 1943, ¢. 120, 57 Stat. 126,

Sec. 2]. OTHER LAWS APPLICABLE.

(13)

aS

EPP SPL I NDS ELD A Lem

¥

le eae? a ee

A a Re TA TS OC RE a AT OA We en Bt cl,

14

All provisions of law, including penal-

ties, applicable with respect to the tax im-

posed by section 1400 shall, insofar as

applicable and not inconsistent with the

provisions of this subchapter, be applicable

with respect to the tax under this sub-

chapter.

(26 U. S. C. 1946 ed., Sec. 1627.)

pee tn ee

Bankruptcy Act, ¢. 541, 30 Stat. 544 [as

amended by the Act of June 22, 1938, ¢. 575, 52

Stat. 840, See. 1]:

RR RRA ead st

es Sele PT Soe 5

Ae ane? WOON Lm wr Bi Set F

CHAPTER X—CORPORATE

REORGANIZATIONS

* * * * *

Sec. 101. The provisions of this chapter

shall apply exclusively to proceedings under

this chapter.

(11 U.S. C. 1946 ed., See. 501.)

Sec. 102. The provisions of chapters I

to VII, inclusive, of this Act shall, insofar

as they are not inconsistent or in conflict

with the provisions of this chapter, apply

in preceedings under this chapter: Pro-

vided, however, That section 23, subdi-

visions h and n of section 57, section 64, and

subdivision f of seetion 70, shall not apply

in such proceedings unless an order shall

be entered directing that bankruptey be

proceeded with pursuant to the provisions

of chapters I to VII, inclusive. For the

purposes of such application, provisions

relating to ‘‘bankrupts’’ shall be deemed

to relate also to ‘‘debtors’’, and ‘‘bank-

15

ruptey proceedings’’ or ‘“‘proceedings in

bankruptcy”’’ shall be deemed to include

proceedings under this chapter. For the

purposes of such application the date of

the filing of the petition in bankruptcy

shall be taken to be the date of the filing

of an original petition under section 128

of this Act, and the date of adjudication

shall be taken to be the date of approval

of a petition filed under section 127 or 128

of this Act except where an adjudication

had previously been entered.

(11 U.S. C. 1946 ed., See. 502.)

Sec. 106. For the purposes of this chap-

ter, unless inconsistent with the context—

(1) ‘‘elaims”’ shall inelude all claims

of whatever character against a debtor or

its property, except stock, whether or not

such claims are provable under section 63

of this Act and whether secured or un-

secured, liquidated or unliquidated, fixed

or contingent;

* * * * *

(3) ‘‘corporation”’ shall mean a corpo-

ration, as defined in this Act, which could

be adjudged a bankrupt under this Act,

and any railroad corporation excepting a

railroad corporation authorized to file a

petition under section 77 of this Act;

* * * * *

(11 U.S. C. 1946 ed., See. 506.)

Sec. 146. Without limiting the general-

ity of the meaning of the term ‘‘good

ST RECEDES TNE NINN ARES FNS SE Aes — ‘

ol owen ae.

DB tense SAT

bets i aac eee ae tet st

Bete ae, ies

16

faith’’, a petition shall be deemed not to

be filed in good faith if— ;

(1) the petitioning creditors have ac-

quired their claims for the purpose of

filing the petition; or

(2) adequate relief would be obtainable

by a debtor’s petition under the provisions

of chapter XI of this Act; or

(3) it is unreasonable to expect that a

plan of reorganization can be effected; or

(4) a prior proceeding is pending in

any court and it appears that the interests

of creditors and stockholders would be best

subserved in such prior proceeding.

(11 U.S. C. 1946 ed., See. 546.)

Src. 174. After the hearing, as provided

in section 169 or section 170 of this Act,

and, if a plan has been submitted to the

Securities and Exchange Commission, as

provided in section 172 of this Act, then

after the filing of the report or notice that

it will not be filed, or after the expiration

of the time for its filing, whichever first

occurs, the judge shall enter an order ap-

proving the plan or plans which in his

opinion comply with the provisions of

section 216 of this Act, and which are fair

and equitable, and feasible, and shall fix

a time within which the creditors and

stockholders affected thereby may accept

the same.

(11 U.S. C. 1946 ed., See. 574.)

* * * * *

17

Sec. 199. If the United States is a se-

cured or unsecured creditor or stockholder

of a debtor, the claims or stock thereof

shall be deemed to be affected by a plan

under this chapter, and the Secretary of

the Treasury is hereby authorized to accept

or reject a plan in respect of the claims

or stock of the United States. If, in any

proceeding under this chapter, the United

States is a secured or unsecured creditor

on claims for taxes or customs duties

(whether or not the United States has any

other interest in, or claim against the

debtor, as secured or unsecured creditor or

stockholder), no plan which does not pro-

vide for the payment thereof shall be con-

firmed by the judge except upon the accept-

ance of a lesser amount by the Secretary

of the Treasury certified to the court: Pro-

vided, That if the Secretary of the Treas-

ury shall fail to accept or reject a plan

for more than ninety days after receipt

of written notice so to do from the court

to which the plan has been proposed, ac-

companied by a certified copy of the plan,

his consent shall be conclusively presumed.

(11 U.S. C. 1946 ed., See. 599.)

Sec. 200. Where not inconsistent with

the provisions of this chapter, the rights,

duties, and liabilities of creditors and of

all other persons with respect to the prop-

erty of the debtor shall be the same, before

the approval of the petition, as in a bank-

ruptey proceeding before adjudication and,

18

upon the approval of the petition, as in

a bankruptey proceeding upon adjudication.

(11 U.S. C. 1946 ed., See. 600.)

Sec. 221. The judge shall confirm a plan

if satisfied that—

(1) The provisions of article VII, see-

tion 199, and article X of this chapter have

been complied with;

(2) the plan is fair and equitable, and

feasible ;

* * * * *

(11 U.S. C. 1946 ed., See. 621.)

Sec. 266. In addition to the notices else-

where expressly provided, the clerk and,

in the ease of a reference, the referee, after

such reference, shall forthwith transmit to

the Secretary of the Treasury copies of all

petitions, answers, orders, and applica-

tions, as more specifically enumerated in

section 265 of this Act, and copies of such

other papers filed in the proceedings as the

Secretary of the Treasury may request or

which the court may direct be transmitted

to him. Copies of the opinions or reports,

if any, of the judge, referee, or special

master, with respect to the matters so enu-

merated, shall also be transmitted to the

Secretary of the Treasury. And order fix-

ing the time for confirming a plan which

affects claims or stock of the United States

shall include a notice to the Secretary of

the Treasury of not less than thirty days.

(11 U.S. C. 1946 ed., See. 666.)

19

Sec, 271. Any provision in this chapter

to the contrary notwithstanding, all taxes

which may be found to be owing to the

United States or any State from a debtor

within one year from the date of the filing

of a petition under this chapter and have

not been assessed prior to the date of the

confirmation of a plan under this chapter,

and all taxes which may become owing to

the United States or any State from a re-

ceiver or trustee of a debtor or from a

debtor in possession, shall be assessed

against, may be collected from and shall

be paid by the debtor or the corporation

organized or made use of for effectuating

a plan under this chapter: Provided, how-

ever, That the United States or any State

may in writing accept the provisions of

any plan dealing with the assumption,

settlement, or payment of any such tax.

(11 U.S. C. 1946 ed., See. 671.)

U. S. GOVERNMENT PRINTING OFFICE. 1951

‘

4

2

m

&

«

a

2

CERES HE ete

ec toners. cores rete es NENG