MEMORANDUM OPINION
I. Introduction
This case is before the court on an appeal from the United States Bankruptcy Court for the Northern District of Alabama’s January 8, 2016 Order (I) Approving the Sale of the Acquired Assets Free and Clear of Claims, Liens, Interests and Encumbrances; (II) Approving the Assumption and Assignment of Certain Exec-utory Contracts and Unexpired Leases; and (III) Granting Related Relief (the “Sale Order”) (Doc. # 1-3, or Doc. # 15-3 at A235-265). Appellants raise arguments in this appeal regarding the jurisdiction of the Bankruptcy Court and the reach of 11 U.S.C. § 363(f). Specifically, this court must determine the following two questions:
1. Whether the Bankruptcy Court had jurisdiction to order a free and clear sale pursuant to 11 U.S.C. § 363(f) precluding the purchaser of the Debtors’ assets from future liability for payments made under the Coal Industry Retiree Health Benefit Act, 26 U.S.C. §§ 9701-9722 (the “Coal Act”).
2. Whether future Coal Act liabilities for periods after the closing of the asset sale pursuant the Sale Order constitute “interests in... property” that may be extinguished under 11 U.S.C. § 363(f). .
This appeal is fully briefed (Docs. # 15, 39, 40, 44), and the relevant record has been transmitted (Docs. # 15, 39, 44). Because the court held extensive oral argument concerning the “merits” of this appeal during the February 1, 2016 hearing
II. Background and Proceedings Below
The Sale Order applies to certain of Debtors’ assets and would prevent the proposed purchaser, Coal Acquisition LLC, from assuming Coal Act liabilities for those assets.
A. The Coal Act
The Coal Act applies to Debtors. This court has previously addressed the origin and purpose of the Coal Act:
The Coal Act requires present and former coal operators, such as the plaintiffs in this case, to pay for the health benefits of coal industry retirees and then-dependents. 26 U.S.C. §§ 9702, 9704. Congress passed the Coal Act in 1992 to ensure that retired coal miners and then-dependents and widows continue to receive the lifetime health benefits guaranteed by earlier collective bargaining agreements with coal operators. Before the Coal Act was passed, the two multi-employer health care plans that provided benefits to retired miners (the “Plans”) were operating at a deficit. The financial instability of the Plans led to a breakdown in labor relations, the cessation of operator contributions to the Plans, and an eleven-month strike by mine workers. National Coal Association v. Chater,81 F.3d 1077 , 1078-79 (11th Cir.1996). In an effort to remedy the funding problems yet maintain a privately financed program, Congress consolidated the Plans into the Combined Fund with financing primarily provided by coal operators.
AJ Taft Coal Co., Inc. v. Barnhart,
The Coal Act Funds are funded primarily through statutorily required “premiums.” 26 U.S.C. §§ 9704, 9711, 9712. Combined Fund premiums are assessed against “assigned operators,” and those assigned operators’ related persons and successors in interest are jointly and severally liable. See id. at §§ 9701(c), 9704(a), 9706. The amount of the Combined Fund assessment fluctuates annually, depending on the number of retirees and the premium rate set by the Commissioner of Social Security. Id. at § 9704(a)-(b), (g). Under the 1992 Plan, Premiums are assessed monthly against “last signatory operators” (the most recent coal industry employеrs of the retirees, including “related persons” and their successors in interest) based on the number of 1992 Plan beneficiaries assigned to that last signatory operator. Id. at §§ 9701(c), 9711(g), 9712(d)(2)-(4). If these funding schemes prove insufficient, Congress has created means for addressing shortfalls in Coal Act Funds premiums to be paid. See U.S. Steel Corp. v. Astrue,
B. The Walter Energy Bankruptcy and the Sale Order
Debtors — that is, Walter Energy and twenty-two affiliated cоmpanies (collectively, “Walter Energy”) — produce and export metallurgical coal for the global steel industry, with mineral reserves in the Unit- ' ed States, Canada, and the United Kingdom. In re Walter Energy, Inc.,
On July 15, 2015, due to market forces, Walter Energy was compelled to file petitions for relief under Chapter 11 -of the Bankruptcy Code. In re Walter Energy,
After motions and briefing, the Bankruptcy Court issued the 1113/1114 Order on December 28, 2015, and the Sale Order on January 8, 2016.
6. Upon the Closing: (a) the Debtors are hereby authorized and directed to consummate, and shall be deemed for all purposes to have consummated, the sale, transfer and assignment of all of the Debtors’ rights, title and interest in the Acquired Assets to the Stalking Horse Purchaser free and clear of all Encumbrances and Liabilities, other than the Assumеd Liabilities and the encumbrances identified on Schedule I hereto...; and (b) except as otherwise expressly provided in the Stalking Horse Agreement, all Encumbrances and Liabilities (other than the Assumed Liabilities and the Permitted Encumbrances) shall not be enforceable as against the Stalking Horse Purchaser or the Acquired Assets. Unless otherwise expressly included in the Assumed Liabilities and Permitted Encumbrances or as . otherwise expressly provided by this Order, the Stalking Horse Purchaser shall not be responsible for any claims, liens, interests and encumbrances, including in respect of the following: (i) any labor or employment agreements;... (v) any other emplоyee, worker’s compensation, occupational disease or unemployment or temporary disability related claim, including, without limitation, claims that might otherwise arise under or pursuant to,. (k) the Coal Industry Retiree Health Benefit Act of 1992, 26 U.S.C. §§ 9701, et seq. or (l) any other state or federal benefits or claims relating to any employment with the Debtors or any of their predecessors;... (ix) the Coal Act.
17. Upon the Closing, except as specifically included in Assumed Liabilities, the Stalking Horse Purchaser shall not and shall not.be deemed to: (i) be the successor of or successor employer ... to the Sellers, including without limitation, with respect to any Collective Bargaining Agreements and any Benefit Plans, except for Buyer Benefit Plans, under the Coal Act, and any common law successorship liability in relation to the UMWA 1974 Pension Plan, including with respect to withdrawal liability;... (iv) be a mere continuation or substantial continuation of Sellers or the enterprise(s) of Sellers....
(Doc. # 1-3). The Bankruptcy Court ordered that Debtors are not subject to any stay of the Sale Order. (Id.). The parties informed this court that the sale of certain of Debtors’ assets will occur sometime around the end of February or early March 2016. (See Docs. #29). The court has recently been informed the sale date has been moved bаck to later in March 2016.
III. Procedural History
Shortly after the Bankruptcy Court issued the Sale Order on January 8, 2016, Appellants unsuccessfully moved in that court for an emergency stay. (Doc. #20-12). Subsequently, both Appellants and the United Mine Works of America (“UMWA”) appealed the Bankruptcy Court’s Sale Order and 1113/1114 Order, and moved for an emergency stay of the sale Order. (Docs. # 1, 16); see also case nos. 2:16-cv-56-RDP, 2:16-cv-57-RDP, 2:16-cv-65-RDP. This court denied a stay, but granted an expedited briefing schedule for this appeal.
IV. Standard of Review
A district court reviews the Bankruptcy Court’s decision for abuse of discretion. In re Hillsborough Holdings,
V. Analysis
The court has carefully reviewed the Bаnkruptcy Court’s extensive factual findings and determines that they are not “clearly erroneous.” Hillsborough Holdings,
The real issue in this case is whether de novo review indicates that the Bankruptcy Court had the authority to order a sale free and clear of Coal Act assessments. In re Tennyson,
A. The Tax Anti-Injunction Act Does Not Preclude the Bankruptcy Court’s Jurisdiction
Appellants argue that the Tax Anti-Injunction Act (the “Tax AIA”) is a jurisdictional bar to the Bankruptcy Court’s order of a sale free and clear of future Coal Act payments because those payments аre in fact taxes. However, Coal Act payments are not “taxes” for purposes of the Tax AIA, and the Bankruptcy Court had jurisdiction to enter the Sale Order.
The Tax AIA withdraws from federal courts’ subject-matter jurisdiction the power to “restraint ] the assessment or collection of any tax.”
The Eleventh Circuit has not yet had the occasion to address whether Coal Act assessments are taxes or, alternatively, should be given some different characterization. This court recognizes that there are courts outside our circuit which have found that the payments at issue under the Coal Act should be construed as “taxes.” See, e.g., UMWA 1992 Benefit Plan v. Leckie Smokelеss Coal Co. (In re Leckie Smokeless Coal Co.),
Appellants argue that Coal Act premiums “are involuntary assessments, defined by the Internal Revenue Code, assessed periodically, and paid to further a congressional purpose.” (See Doc. # 15 at 6). An assessment such as Coal Act premiums may be a tax in the constitutional sense, but be outside of the statutory grasp of the Tax AJA. The Supreme Court has defined taxes as “pecuniary burdens laid upon individuals or their property, regardless of their consent, for the purpose of defraying the expenses of the government or of undertakings authorized by it.” City of New York v. Feiring,
The court agrees that in NFIB the Supreme Court did not endorse a formalistic, label-driven approach to the Tax AIA. But this application of NFIB and the conclusions reached here are not only consistent with the Supreme Court’s teachings in that decision, they also make legal sense for other reasons. At its core, the Coal Act essentially functions akin to a funding mechanism for a multi-employer benefit plan, not as a taxing scheme. For federal income tax purposes, it allows a coal company to take tax deductions for its Coal Act premiums just as it would for contributions to a multi-employer benеfit plan. See 26 U.S.C. §§ 9704(g)(2), 9712(d)(5). The assessments are made and received by a private, non-governmental trust (Appellants). The funds are used to pay for health and welfare benefits of retired mine workers who previously worked for private businesses. In any way material to their characterization, the assessments are treated no differently than ERISA or Mul-ti-employer Benefit Plans. Enforcement, if necessary, is executed by the same private group which assesses the premiums. See 26 U.S.C. § 9721. All of this points to a straight-forward conclusion' — the Coal Act was not designed to raise revenue to fund governmental or government-sponsored endeavors.
But even if the court viewed the Coal Act’s treatment of premiums and the intervening NFIB decision differently, and even assuming further that Coal Act premium payments are in fact taxes, the same result would be reached here. Appellants’ Tax AIA argument has previously been rejected by the only Circuit to consider that precise issue. In Leckie, the Fourth Circuit held that “the [Tax] Anti-Injunction Act “was not intended to bar an action where... Congress has not provided the plaintiff with an alternative legal way to challenge the validity of a tax.’ ”
In Leckie, bankrupt coal operators sought to secure a declaration from the bankruptcy court that the purchasers of
Accordingly, for all these reasons the Tax AIA does not operate as a bar to the Sale Order. The Bankruptcy Court had jurisdiction to order a sale free and clear of future Coal Act assessments.
B. Coal Act Premiums Are Extinguishable under Section 363(f)
A bankruptcy cоurt has the power to approve the sale of a debtor’s assets free and clear of any interest or claims that could be brought against the bankrupt estate during a bankruptcy. 11 U.S.C. § 363(f); see In re Odes Ho Kim,
Section 363(f) of the Bankruptcy Code authorizes a bankruptcy sale of property “free and clear of any interest in such property.” 11 U.S.C. § 363(f). Section 363(f) reads as follows:
The trustee may sell property... free and clear of any interest in such property of an entity other than the estate, only if—
(1) aрplicable nonbankruptcy law permits sale of such property free and clear of such interest;
(2) such entity consents;
(3) such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property;
(4) such interest is in bona fide dispute; or
(5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.
11 U.S.C. § 363(f). So long as one of the five conditions provided by Section 363(f) applies to Coal Act premiums, the Bankruptcy Court had the authority to order a free and clear sale. The court concludes that the Bankruptcy Court had the authоrity under Sections 363(f)(1) and (5) to order the free and clear sale.
Section 363(f)(5) applies here because “[n]otwithstanding the question of price, it is clear that each and every [Appellant] herein ‘could be compelled, in a legal or equitable proceeding, to accept the money satisfaction of their interest.’ ” In re 18th Ave. Dev. Corp.,
To be sure, a minority of courts have narrowly interpreted the term “interests in property” as used in Section 363(f) to mean in rem interests in property, such as liens. See, e.g., In re White Motor Credit Corp.,
Although the Eleventh Circuit has not yet spoken to it directly, the “more expansive reading of the term ‘any interest’ ” has been approved by the First, Second, Third, Fourth, and Seventh Circuits. In re PBBPC, Inc.,
This broader and truer interpretation of the term “interest” applies to Coal Act premiums. In Leckie, the Fourth Circuit directly addressed Appellants’ argument that Section 363(f) of the bankruptcy code cannot be used to extinguish future Coal Act tax assessments. As the Leckie court unequivоcally stated, “even if [a buyer at a § 363 sale constitutes] a successor in interest, the Bankruptcy Court may extinguish Coal Act successor liability pursuant to 11 U.S.C. § 363(f)(5).” Leckie,
section 363(f) to extinguish future Coal Act payments because they are “interests” Debtors’ property.
C. Coal Acquisition Is Not a Successor in Interest to Debtors’ Coal Act Liabilities
Appellants did not specifically raise as an issue for appeal whether Coal Acquisition would be a successor in interest to the assets of Debtors that it purchases. They argued at the hearing for their emergency motion to stay that this determination cannot be made until after the sale closes and Coal Acquisition’s business activities are examined. (Doc. # 29 at 63, 97). Nevertheless, Appellants’ arguments in this appeal presuppose that Coal Acquisition would be Debtors’ successor in interest simply by virtue of purchasing some of Debtors’ assets. While the Eleventh Circuit has yet to expressly answer this question, this court concludes Appellants’ assumption is misplaced.
“Under the traditional rule on corporate successorship liability, a corporation that acquires manufacturing assets from another corporation does not thereby assume the liabilities of the seller.” Holland,
The Bankruptcy Court expressly ordered that Coal Acquisition would not be Debtors’ successor for Coal Act purposes. (Doc. # 1-3 at ¶ 17). The Sale Order put into legal force the terms of the assets purchase agreement made by Debtors and Coal Acquisition. (See id. at ¶¶ 6, 17; Doc. #39-4 at A1432). Had Coal Acquisition and Debtors entered such an agreement outside the confines of Walter Energy’s Chapter 11 Bankruptcy, there would be no questiоn that arm’s length transaction would mean Coal Acquisition is not Debtors’ “successor in interest.” See Holland,
When an entity seeks bankruptcy relief it places itself in a stricter commercial environment than that available over the open market during the normal course of business. It places itself squarely within the confines of the Bankruptcy Code. But, that does not change the equation here. “The policy and purpose behind Chapter 11 proceedings is to give business debtors a respite..., a ‘breathing spell.’ ” In re Talladega Steaks, Inc.,
VI. Conclusion
Based on the foregoing reasons, the court concludes that the Bankruptcy Court had jurisdiction to order a free and clear sale pursuant to Section 363(f), and that Coal Act premiums are interests in prop
DONE and ORDERED this March 8, 2016.
Notes
. The 1113/1114 Order is also available at Doc. # 15-3 at A266-322.
. "A 'stalking horse’ contract is a first, favorable bid strategically solicited by the bankrupt company to prevent low-ball offers.” In re WestPoint Stevens, Inc.,
.The 1113/1114 Order is of limited relevance here.
. Appellants' motions in the Eleventh Circuit for a writ of mandamus and to stay the sale pending appeal were also denied. (Docs. # 49, 51).
. Similarly, the Declaratory Judgment Act places a limitation on a court's ability to grant declaratory relief concerning the assessment of taxes. 28 U.S.C. § 2201(a) (“In a case of actual сontroversy within its jurisdiction, except with respect to Federal taxes..., any court of the United States, upon the filing of an appropriate pleading, may declare the rights and other legal relations of any interested party seeking such declaration.,.,'').
. But see Leckie,
. Appellants argue that Leckie is bad law because it relies on an exception to the Tax AIA, and judges may not craft exceptions to the Tax AIA. (Dоcs. #15, 44). But this argument ignores the Supreme Court’s own findings of exceptions to the Tax AIA, and the Eleventh Circuit’s recent recognition of those exceptions. See, e.g., Gulden v. United States,
. While the Leckie court (among others) found that Coal Act payments were taxes, that ruling was made without the benefit of the Supreme Court's NFIB decision. This court concludes NFIB would change only that single holding of Leckie, but would not alter the ultimate holding and outcome of the Leckie decision.
. In addition to asserting that their claims are not interests in property within the meaning of Section 363(f), Appellants also assert that their claims are outside the scope of § 363(f)(5) because the Coal Act premiums are not interests on account of which they could be compelled to accept money satisfaction, This argument was also addressed in In re Trans World Airlines, Inc. There, thе Third Circuit held that where an interest is "subject to monetary valuation, the fifth condition had been satisfied.”
. The Bankruptcy Code’s definition of "claim” supports the broader reading of "interest” in Section 363(f). The Code defines "claim” as:
(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, legal, equitable, secured, or unsecured;
(B) right to. an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, un-matured, disputed, undisputed, secured, or unsecured.
11 U.S.C. § 101(5); see also Epstein v. Official Comm. of Unsecured Creditors of Estate of Piper Aircraft Corp.,