United States v. Ron Pair Enterprises, Inc. Page 2

United States v. Ron Pair Enterprises, Inc. general information

Media for United States v. Ron Pair Enterprises, Inc.

Audio Transcription for Oral Argument - October 31, 1988 in United States v. Ron Pair Enterprises, Inc.

John Paul Stevens:

Mr. Wallace, can I interrupt for just a second?

It is true that the words "such claim"... you are saying there are two kinds of such claims, and you use the same words, "such claim", to describe both of them.

Lawrence G. Wallace:

--Yes.

John Paul Stevens:

The words "such claim" are used repeatedly in the sentence.

Lawrence G. Wallace:

I believe that the "such" refers back to the fact that the claim has to be an oversecured claim--

Correct.

Lawrence G. Wallace:

--to put it in the shortest verbiage.

The beginning part of subsection (b) explains that we're talking only about oversecured claims and only to the extent that the oversecured aspect would cover the interest payments.

So the "such" really has to refer back to that.

Otherwise, that limitation on the right to post-petition interest would be lost in the subsequent clauses.

Sandra Day O'Connor:

Mr. Wallace, you do concede that the majority rule before the new Code was to the contrary, that interest would not be allowable?

Lawrence G. Wallace:

We concede that indeed.

Sandra Day O'Connor:

Isn't... is it a little odd that there is nothing in the legislative history and nothing more explicit than the placement of commas to change a rule like that?

Lawrence G. Wallace:

It's a little odd that there's nothing in the legislative history.

I would not say that there's nothing more explicit than the changing of commas, which I will get to in a moment, but I do, I do agree that the case probably never would have reached this Court if the legislative history had addressed this precise question, which it did not.

If anything in the legislative history had said we are now rejecting the rule that several courts of appeals had adopted, there would be no basis on which any court would have ruled against the holders of a claim like ours, a nonconsensual, oversecured claim.

And I don't think the case would be here.

So it is--

Sandra Day O'Connor:

I suppose most of the government's claims would fit in this oversecured category.

Lawrence G. Wallace:

--That is correct.

Sandra Day O'Connor:

Certainly if taxes are due, the government asserts a lien on everything the taxpayer owns.

Lawrence G. Wallace:

That is correct, and it is also correct with respect to judgment liens, and for the most part, workmen's or mechanics' liens would be similarly oversecured.

John Paul Stevens:

Yes, but there is a difference in mechanics' liens because they do just attach to a limited number of assets, I presume.

Lawrence G. Wallace:

That is correct, and that is--

Whereas the tax lien will... covers the whole estate.

Lawrence G. Wallace:

--But there is no basis to distinguish them from tax liens under this provision.

Right.

Lawrence G. Wallace:

They are nonconsensual liens, and if nonconsensual liens are not entitled to post-petition interest, mechanics' liens would fall along with ours for that purpose.

John Paul Stevens:

May I ask, isn't it true that customarily in a mechanic's lien foreclosure that under most state statutes, doesn't the lienor get attorneys' fees and costs?

Lawrence G. Wallace:

Insofar as I am aware--