IN RE WPRV-TV, INC., Bankruptcy No. 87-01393.

• Decision Date: 24 May 1989
• Docket Number: Bankruptcy No. 87-01393.
• Citation: 102 BR 234
• Parties: In re WPRV-TV, INC., EID # XX-XXXXXXX, Debtor.
• Court: U.S. Bankruptcy Court — Eastern District of Oklahoma

102 B.R. 234 (1989)

In re WPRV-TV, INC., EID # XX-XXXXXXX, Debtor.

Bankruptcy No. 87-01393.

United States Bankruptcy Court, E.D. Oklahoma.

May 24, 1989.

Dale Gilsinger, Tulsa, Okl., on behalf of the debtor-in-possession (DIP).

Kwame Mumina, Oklahoma City, Okl., and Ed Barth, Syracuse, N.Y., for Viacom Intern., Inc. (Viacom).

Warren L. McConnico, Tulsa, Okl., for RCA Corp. (RCA).

Thomas Creekmore, Tulsa, Okl., for Ponce Federal Bank (Ponce).

Tony Ringold, for Puerto Rico Telephone Co. (PRTC).

David Loeffler, Jr., Bristow, Okl., for ABC Video Enterprises, Inc. (ABC).

William Bonney and Glenn Harrison, Muskogee, Okl., for Antiques, Inc. (Antiques).

Katherine Vance, Tulsa, Okl., for U.S. trustee.

ORDER

JAMES E. RYAN, Bankruptcy Judge.

On May 3, 1989, this Court conducted a hearing with regard to a Motion for Order Clarifying Claim for Purposes of Classification, Voting and Distribution and Brief in Support Thereof filed by Viacom International, Inc., with corresponding Objection by the Debtor-in-Possession, a Joint Objection of ABC Video Enterprises, Inc., RCA Corporation, Puerto Rico Telephone Company and the Ponce Federal Bank, and a Response to the Motion by Antiques, Inc.

Appearances were entered at the hearing by Dale Gilsinger on behalf of the Debtor-in-Possession (DIP), Kwame Mumina and Ed Barth for Viacom International, Inc. (Viacom), Warren L. McConnico for RCA Corporation (RCA), Thomas Creekmore for Ponce Federal Bank (Ponce), Tony Ringold for Puerto Rico Telephone Company (PRTC), David Loeffler, Jr. for ABC Video Enterprises, Inc. (ABC), William Bonney and Glenn Harrison for Antiques, Inc. (Antiques) and Katherine Vance for the United States Trustee.

At the hearing, counsel present provided legal argument and introduced documentary evidence in support of their respective legal positions. A determination was made that no further legal briefing was necessary, but that counsel for the DIP and Viacom would enter into Joint Stipulations in order to aid the Court in the resolution of this matter. Said Stipulations were timely received by this Court on the 10th day of May, 1989.

After review of the file and consideration of the legal arguments of counsel and the applicable law in the area in dispute, this Court does hereby enter this Final Order with the following Findings of Fact in this core matter:

STATEMENT OF ISSUE

At issue in this case is whether Viacom has sufficiently set forth the criteria for an informal Proof of Claim on behalf of Department de Hacienda (the taxing authority in Puerto Rico) thereby allowing a priority claim for taxes due and owing.

FINDINGS OF FACT

1. The DIP commenced this bankruptcy case by filing a Petition seeking the protection of the Bankruptcy Code under Chapter 11 reorganization on December 3, 1987. On that same date, the Clerk of this Court mailed to the matrix a Notice of § 341 Meeting of Creditors, wherein the bar date for filing Proofs of Claim by creditors required to do so was established as April 4, 1988.

2. Viacom was in fact included on the matrix and did admittedly receive the aforementioned Notice of Meeting of Creditors, setting forth the bar date of April 4, 1988. Subsequently, Viacom filed a Proof of Claim on April 8, 1988, after an unsuccessful attempt on March 31, 1988. The total amount claimed by Viacom in that Proof of Claim was $356,061.48, based upon "payments due under various program license agreements — see attached judgment." The judgment referenced was rendered June 23, 1987 in the United States District Court for the District of Puerto Rico. The Proof of Claim form stated at Paragraph 10 "this claim is a general unsecured claim, except to the extent that the security interest, if any, described in Paragraph 9 is sufficient to satisfy the claim. If priority is claimed, state the amount and basis thereof." (emphasis added by Court). An Objection to this claim was filed by the DIP on June 3, 1988, stating as the reason for said Objection the filing of the Proof of Claim after the expiration of the claims bar date and that the amount owed Viacom by the DIP was overstated in said Proof of Claim.

3. Creditor Viacom was included in the Schedules of the DIP as an unsecured creditor holding a disputed claim in the amount of $89,084.90, representing the cost of programming from January through November, 1987 which remained unpaid.

4. Viacom and the DIP entered into an agreed Order Allowing Claim of Viacom Enterprises, a division of Viacom International, Inc. on June 27, 1988 which was executed by this Court. This Order was the result of an announcement on the date of the hearing on the Objection to Viacom's claim conducted on June 22, 1988, wherein counsel for the DIP stated that the matter was resolved and that an agreed Order would be presented to the Court accordingly.

The agreed Order states in pertinent part:

"After due consideration of the evidence presented, arguments of counsel, and a thorough review of the file, the Court finds as follows:

1. This Court has jurisdiction over this proceeding pursuant to 28 U.S.C. § 1334(b). This is a core proceeding pursuant to 28 U.S.C. § 157(b)(2)(B).

2. WPRV is indebted to Viacom in the amount of $338,661.48 under the terms of certain Television Licensing Agreements (the "contracts") between WPRV and Viacom.

3. As a party charged by Puerto Rican law with responsibility for withholding taxes from payments to Viacom under the contracts, WPRV has a contingent tax liability to the pertinent Puerto Rican taxing authority.

IT IS THEREFORE ORDERED, ADJUDGED AND DECREED that

(a) Viacom is hereby granted and allowed an unsecured claim in the amount of $338,661.48.

(b) The allowance of Viacom\'s claim as provided herein shall not prejudice WPRV\'s contingent right to seek reimbursement or other redress from Viacom for any taxes assessed against WPRV as a result of past or future payments by WPRV to Viacom.

IT IS SO ORDERED." (emphasis added by Court)

This Order was subscribed by both counsel.

5. The Debtor also scheduled a tax liability to the Department de Hacienda, Puerto Rico, in the amount of $435,348.00, again listing said amount as disputed. Although this priority creditor was not included in the original matrix filed by the DIP, counsel for the DIP sent by First Class Mail to Department de Hacienda on December 29, 1987 all pleadings that had been filed to date, including the 341 Meeting of Creditors Notice, stating the bar date and advising the taxing authority of the necessity for filing a Proof of Claim when the amount owed is disputed by the Debtor. (See Debtor's Exhibit No. 2).

Further, the DIP's First Amended Plan of Reorganization filed on May 27, 1988 designates the disputed claim for taxes owed to the Commonwealth of Puerto Rico as "Class 9." The treatment of Class 9 under said Plan states: "If the holder of a Class 9 claim obtains permission to file its Proof of Claim out of time, the holder of the Class 9 claim and WPRV shall, within thirty days following the confirmation date, file with the Bankruptcy Court a stipulated allowed amount of such disputed tax claim." Records indicate that the Department de Hacienda did receive a copy of the DIP's First Amended Plan of Reorganization.

6. The parties jointly stipulate for the purposes of this Order to the following facts:

(a) Debtor had knowledge of its tax obligation to Department de Hacienda as a result of the Viacom licensing agreement at the time this case was filed. However, the Debtor was unsure of the amount owed Hacienda.

(b) The Debtor knew when the June 27th Order (Order Allowing Claim of Viacom Enterprises) was entered that Viacom's allowed claim could be satisfied in part by payment of taxes to Hacienda.

(c) A stipulated judgment was entered by Viacom and the Debtor in action Civil 86-1982 in the United States District Court for the District of Puerto Rico which reflects recognition by Viacom and the Debtor that the taxes were owed Hacienda and the stipulated judgment is attached to the Proof of Claim filed by Viacom.

(d) At the time of the filing of the case pursuant to Sections 231, 144 and 143 of the Puerto Rico Income Tax Act, 13 L.P.R.A. §§ 3231, 3144 and 3143, Viacom and the Debtor were jointly liable to Hacienda for the payment of taxes imposed on payments made by the Debtor to Viacom under the licensing agreement.

7. Viacom asserts that sufficient facts exist for it to establish an informal Proof of Claim on behalf of Department de Hacienda through pleadings filed by Viacom. Additionally, Viacom contends that it may assert the claim on behalf of Department de Hacienda due to its joint liability with the Debtor for withholding taxes owed to the Commonwealth of Puerto Rico. Finally, Viacom argues that since an informal Proof of Claim by Department de Hacienda may be established, said claim is entitled to priority status in contemplation of a Plan of Liquidation.

8. Debtor and the creditors joining with the Debtor in objecting to the Motion assert that insufficient facts exist in the record to establish an informal Proof of Claim on behalf of Department de Hacienda, and that any claim asserted by Viacom is strictly unsecured in nature.

CONCLUSIONS OF LAW

A. The initial problem this Court sees with the position taken by Viacom is the ability of the movant to assert an informal Proof of Claim on behalf of another entity. The Bankruptcy Code and Rules are clear as to the method...