- 16b0002p.06 Nos. 15-8009/8010
- Trial court held that Tennessee statute governing penalties on delinquent tax debt applicable only to claims in bankruptcy cases was unconstitutional as a violation of the Supremacy Clause. Panel affirmed trial court decision on other grounds holding that statute governing penalties on delinquent tax debt applicable only to claims in bankruptcy cases was not "applicable non-bankruptcy law" for purposes of 11 U.S.C. §511 and that appropriate rate of interest was 12% per annum.
- Procedural context:
- Appeal from final order establishing appropriate rate of interest to be applied to State's secured tax claim under confirmed plan in Debtor's chapter 13 case.
- Debtor owed delinquent property taxes to Davidson County Metropolitan government ("Metro"). Tax debt was secured by a lien and Metro was oversecured. Debtor proposed to pay claim 12% interest as provided in Tenn. Code Ann. § 67-5-2010(a)(1). Subsection (a)(1) provides in part that “a penalty of one-half of one percent (0.5%) and interest of one percent (1%)” shall be added to the tax each month. Metro objected asserting appropriate rate of interest was 18% as provided in Tenn. Code Ann. § 67-5-2010(d). Subsection (d) provides that “[f]or purposes of any claim in a bankruptcy proceeding pertaining to delinquent property taxes, the assessment of penalties determined pursuant to this section constitutes the assessment of interest. Trial court held that subsection (d) was unconstitutional under the Supremacy Clause and that interest rate could not be determined under this subsection. Rather, appropriate rate of interest was that under subsection (a)(1) which is 1% per month – or 12% per annum. Panel declined to reach the constitutional issue instead holding that because subsection (d) was only applicable in “bankruptcy proceedings” it was not “applicable nonbankruptcy law” and therefor was inapplicable in determining the appropriate rate of interest on a secured delinquent tax claim.
- Delk, Opperman and Wise
In re Khabushani
Summarizing by Amir Shachmurove
Loughran v. Wells Fargo Bank, N.A.
Summarizing by Sarah Tomlinson
3268 in the system
3 Being Processed