574 B.R. 15
Bankr. D. Me.2017Background
- F. Lee Bailey received Tax Court determinations for 1993–2001 tax liabilities; IRS holds in rem tax liens on all his property, including pensions and Social Security.
- Bailey obtained a Chapter 7 discharge in 2016; the IRS’s liens survived and exceeded $5 million.
- In 2017 Bailey filed Chapter 13 and scheduled three pensions (total $1,488/month) and Social Security ($1,786/month).
- The IRS moved for relief from the automatic stay to enforce its liens and apply monthly pension/SS payments to the tax debt.
- Bailey proposed valuing the streams and borrowing a lump sum to pay the IRS (third‑party loan) but offered no concrete valuation or present funding; he argued the streams are necessary for reorganization.
- The bankruptcy court found the IRS entitled to stay relief under 11 U.S.C. § 362(d)(1) for lack of adequate protection and granted the motion without an evidentiary hearing.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Adequate protection under § 362(d)(1) | Bailey: propose valuation and third‑party loan to pay IRS; that protects IRS interest | IRS: monthly payments are being spent and collateral is eroding; no present adequate protection offered | Court: granted relief — Bailey hasn’t provided concrete protection or payment; expedited stay relief is appropriate |
| Equity / necessity for reorganization under § 362(d)(2) | Bailey: has equity in streams (present‑value) and needs them to reorganize | IRS: liens exceed value; no equity and not necessary | Court: did not decide § 362(d)(2) because § 362(d)(1) relief was sufficient |
Key Cases Cited
- Glass City Bank v. United States, 326 U.S. 265 (court cites breadth of § 6321 lien language)
- United States v. Nat'l Bank of Commerce, 472 U.S. 713 (reiterating broad reach of federal tax liens)
- In re Wesche, 193 B.R. 76 (Bankr. M.D. Fla. 1996) (treating IRS lien on pension as present actuarial value of future payments)