IN RE RAY'S AUTOMATIC TRANSMISSION SERVICE, INC.

Full title: IN RE RAY'S AUTOMATIC TRANSMISSION SERVICE, INC

Court: United States District Court, D. Columbia

Date published: Jan 2, 1980

No. 79-0007 (D.D.C. Jan. 2, 1980)

Opinion

No. 79-0007

January 2, 1980

WHELAN, Bankruptcy Judge

Arrangements — Unsecured Debts — Secured Claims — Proof of Claim — Late Filing

A secured claim is not required under Bankruptcy Rule 11-33, to file a timely proof of claim. Chapter XI is limited to dealing with general unsecured creditors such that secured claims are not covered by the provisions of the chapter. Accordingly, the secured creditor's lien against the debtor's real estate represents a debt which must be paid by the debtor-in-possession. See Sec. 306(1) at ¶ 3304, Sec. 307(1) at ¶ 3310, and Rule 11-33 at ¶ 20,733.

[Digest of Opinion]

The debtor sought an order discharging tax liens which had been assessed by the creditor, the District of Columbia, and are being claimed from the proceeds due the debtor as a result of a refinancing transaction previously approved by the court as to a parcel of real estate. The debtor contended that the creditor was barred from asserting any claim for its pre-petition real estate taxes based on the fact that no proof of claim had timely filed in accordance with the requirements of Bankruptcy Rule 11-33.

Chapter XI is limited to dealing with general unsecured creditors only. Section 306(1) defines "arrangements" to mean "any plan of a debtor for the settlement, satisfaction, or extension of the time of payment of his unsecured debts, upon any terms. . ." Section 307(1) defines Chapter XI "creditors" to "include the holders of all unsecured debts. . ." Further, Bankruptcy Rule 11-33 deals with the procedure in respect to the filing of proofs of claim, and the time limits within which proofs of claim may be filed in Chapter XI, but is limited to "debts" and "claims" as defined in the Act.

The creditor's claim for real estate taxes due and owing as of the filing of the petition is a secured claim. Under applicable District of Columbia law, the assessment of taxes which are due and owing constitutes a lien upon the real estate. D.C. Code, Title 47, § 1011 and Title 47, § 1003, D.C. Code 1973 Ed. Therefore, the tax lien constitutes a lien against the subject real estate and represents a debt which must be paid by the debtor-in-possession in the proceeding.