Schafer and Weiner Reduce IRS Proof of Claim by $3 Million

September, 2019

John Stockdale, Jr. and Kim Hillary successfully prosecuted a chapter 11 debtor’s claim objection against the Internal Revenue Service (the “IRS”).  Because this case involved a $10 million claim, the IRS were represented by attorneys from the Department of Justice in Washington D.C.  At the hearing on the claim objection, the IRS withdrew two arguments, which reduced the IRS’s claim by more than $3 million and made the claim wholly unsecured.  The bankruptcy court decided the remaining arguments, agreeing with Schafer and Weiner that the relevant contract did not substantively consolidate the Debtor with the taxpayer, but nevertheless finding that the claim was entitled to priority status under 11 U.S.C. § 507(a)(8).  Click here for a copy of the unpublished decision.