United States v. Key

PETITIONER: United States
RESPONDENT: Key
LOCATION: 17th Judicial Circuit Green County Alabama Jury Commission

DOCKET NO.: 402
DECIDED BY: Burger Court (1969-1970)
LOWER COURT: United States Court of Appeals for the Seventh Circuit

CITATION: 397 US 322 (1970)
ARGUED: Jan 21, 1970
DECIDED: Mar 30, 1970

Facts of the case

Question

Media for United States v. Key

Audio Transcription for Oral Argument - January 21, 1970 in United States v. Key

Warren E. Burger:

Number 402, United States against Key.

Mr. Wallace, you may proceed whenever you're ready.

Lawrence G. Wallace:

Mr. Chief Justice and may it please the Court.

This case is concerned with the single aspect of the proceedings under a voluntary petition for corporate reorganization originally filed in 1954 pursuant to Chapter X of the Bankruptcy law by the debtor, Hancock Trucking Incorporated.

In the petition, Hancock alleged that it was unable to meet its debts as they became due and requested the appointment of a trustee to operate its business and manage its property.

The respondent here is that trustee.

The claims of the United States against the debtor are for unpaid income withholding, employment and excise taxes in the total amount of more than $375,000.00.

Because of the narrow focus of the questions presented by the Government's petition for a certiorari, little of the lengthy history of these reorganization proceedings need be recounted here.

The issues in this Court concerned an amended plan of reorganization filed by the trustee in June 1967 and approved by the courts below over the Government's objection.

The amended plan reflected in agreement approved by the District Court and by the Interstate Commerce Commission for the sale of the debtors principle asset, its Interstate Commerce Commission operating rights for truck freight services to Hennis Freight Lines Incorporated.

The purchase price of $935,000.00 was to be paid in accordance with the schedule requiring $300,000.00 to be paid within 90 days of the Commission’s approval of the sale and the balance in 78 monthly installments.

The amended reorganization plan reflecting this sale agreement did not contemplate that the debtor Hancock Trucking would continue to exist.

The amended plan is in effect a liquidation plan.

The Government made no objection to the terms of the sale agreement, its objections relates solely to the provisions for payment to creditors in the amended reorganization plan.

Byron R. White:

You say this was basically a liquidation plan and not a continuing?

Lawrence G. Wallace:

That is correct.

Byron R. White:

Where were the installment payments going to be generated?

Lawrence G. Wallace:

The payments being made by Hennis Trucking Company which has purchased the Interstate Commerce Commission rights to operate the freight line.

Byron R. White:

Based on the capital equipment?

Lawrence G. Wallace:

Now, the capital equipment had previously been disposed off.

Byron R. White:

I see.

Lawrence G. Wallace:

The major remaining asset was simply the --

Byron R. White:

Was the license?

Lawrence G. Wallace:

The license.

That is correct.

Warren E. Burger:

While youre pausing for a moment could you answer this for me.

If the plan had provided for equal participation across the board, would you still be objecting to it on a priority basis for the tax claims?

Lawrence G. Wallace:

We would be entitled to object to it but the secretary also would have had discretion to accept for the plan if he wishes.

Warren E. Burger:

He can and sometimes does accept, does he not?

Lawrence G. Wallace:

Yes, he does sir specially when it will contribute to rehabilitation of the debtor and enable the debtor to continue in business.