Angell v. Stubbs & Perdue, P.A.

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Stubbs is owed approximately $200,000 in legal fees from representing debtor in bankruptcy proceedings. Debtor is subject to nearly $1 million in secured tax claims, and the estate has insufficient funds to pay both Stubbs’ fees and the tax claim. At issue is which of these claims takes priority in a Chapter 7 liquidation under the Bankruptcy Code. Under the version of section 724(b)(2) of the Bankruptcy Code, 11 U.S.C. 724(b)(2), in effect when the bankruptcy court rendered its decision, the court concluded that it is clear that debtor is not entitled to subordinate the IRS’s secured tax claim in favor of its unsecured claim to Chapter 11 administrative expenses. The court need not reach the issue of whether the same result would have been obtained under the pre-Bankruptcy Technical Corrections Act of 2010, Pub. L. No. 111-327, 124 Stat. 3557, version of section 724(b)(2). Accordingly, the court affirmed the judgment. View "Angell v. Stubbs & Perdue, P.A." on Justia Law