53 F.3d 1155 (10th Cir. 1995), 94-4034, In re CF&I Fabricators of Utah
|Docket Nº:||94-4034 to 94-4036.|
|Citation:||53 F.3d 1155|
|Party Name:||33 Collier Bankr.Cas.2d In re CF&I FABRICATORS OF UTAH, INC., Debtor. UNITED STATES of America, Appellant, v. REORGANIZED CF&I FABRICATORS OF UTAH, INC., Reorganized Colorado & Utah Land Company, Reorganized Kansas Metals Company, Reorganized Albuquerque Metals Company, Reorganized Pueblo Metals Company, Reorganized Pueblo Railroad Service Company,|
|Case Date:||April 27, 1995|
|Court:||United States Courts of Appeals, Court of Appeals for the Tenth Circuit|
Gary D. Gray, Attorney, Tax Div., Dept. of Justice, Washington, DC (Loretta C. Argrett, Asst. Atty. Gen., Kenneth W. Rosenberg, Attorney, and Scott M. Matheson, Jr., U.S. Atty. for State of Utah, of counsel, with him on the briefs), for appellant.
Steven J. McCardell, LeBoeuf, Lamb, Greene & MacRae, Salt Lake City, UT (Stephen M. Tumblin and Kevin C. Marcoux, LeBoeuf, Lamb, Greene & MacRae, Salt Lake City, UT, and Frank Cummings, LeBoeuf, Lamb, Greene & MacRae, Washington, DC, with him on the brief), for appellees.
Before TACHA and HOLLOWAY, Circuit Judges, and BURRAGE, [*] District Judge.
TACHA, Circuit Judge.
CF&I Fabricators of Utah, Inc. and various related entities (collectively, "CF&I") sponsored two qualified pension plans established for the benefit of their employees and retirees. Under the plans, CF&I was obligated to make annual plan funding contributions. On September 15, 1990, CF&I failed to make a required $12.4 million plan funding payment for the year ending December 31, 1989. Two months later, CF&I petitioned for reorganization under Chapter 11 of the Bankruptcy Code. The larger of the two pension plans was subsequently terminated by the Pension Benefit Guaranty Corporation ("PBGC"), a wholly-owned government corporation that guarantees payment of certain pension benefits. See 29 U.S.C. Secs. 1321-1322b. 1
The Internal Revenue Service ("IRS") filed several proofs of claim in the bankruptcy court. The claim that is the subject of this appeal arises under Internal Revenue Code ("IRC") section 4971(a), under which the IRS imposes a ten percent tax on the "accumulated funding deficiency" of specified pension plans. 26 U.S.C. Sec. 4971(a). CF&I's failure to make the required pension plan contribution on September 15, 1990, triggered the immediate imposition of the tax. See id. The parties do not dispute CF&I's underlying section 4971 liability. At issue is what, if any, priority the claim should be accorded.
In its proof of claim, the IRS asserted that CF&I's section 4971(a) liability was entitled to priority as an excise tax under Bankruptcy Code section 507(a)(7) (now codified at 11 U.S.C. Sec. 507(a)(8)). 2 The bankruptcy court disagreed with the IRS's position and held that CF&I's section 4971(a) liability was not an excise tax. Instead, the court characterized the claim as a penalty that did not compensate for pecuniary loss and was therefore not entitled to priority status. In re CF&I Fabricators, 148 B.R. 332, 337-40 (Bankr.D.Utah 1992). In a subsequent order, the bankruptcy court subordinated the IRC section 4971(a) claim to all other general unsecured claims pursuant to the Bankruptcy Code's equitable subordination provision, 11 U.S.C. Sec. 510(c)(1). The district court affirmed the bankruptcy court's orders, and the government appealed to this court. We have jurisdiction pursuant to 28...
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