IN THE UNITED STATES BANKRUPTCY COURT
FOR THE NORTHERN DISTRICT OF CALIFORNIA
|DO NOT PUBLISH
This case disposition has no value as precedent and is not intended for publication. Any publication, either in print or electronically, is contrary to the intent and wishes of the court.
THEODORE W. CONNOLLY, No. 95-11748
The issue before the court is whether the County of Siskiyou is entitled to statutory interest
of 18% on its secured property tax claims. The debtor's Chapter 11 plan provides for 10%.
The court begins by noting that the County appears wrong in its basic premise that it is
entitled to statutory interest and nothing less. The principal case it relies on, Rankin v. DeSarno
89 F.3d 1123 (3rd Cir.1996, specifically holds that the interest rate of a county on its secured
property tax claims is modifiable. 89 F.3d at 1128. That court merely found that the statutory
rate of 12% was a proper rate under the facts of the case. The court cited with approval the
controlling case in this circuit, In re Camino Real Landscape Maint. Contractors
, 818 F.2d 1503,
1508 (9th Cir. 1987), which held that the postconfirmation interest rate on tax claims must be
determined on a case-by-case basis. To the extent that these two cases cannot be reconciled, this
court must follow Camino
The County cites no case where a rate as high as 18% has been found to be a proper rate of
interest for a governmental claim under a plan of reorganization, even at times when the prime
rate was much higher than the current rate of 8.5%.1
The County's 18% ______
1. Navis Realty v. City of New York
, 193 B.R. 998 (Bkrtcy.E. D.N.Y. was a chapter 7 case;
In re Liuzzo
, 204 B.R. 235 (Bkrtcy.N. D.Fla.1996) did not involve interest under a plan. rate is
irrelevant and should be disregarded. Matter of Fi-Hi
, 40 B.R. 258, 270 (Bkrtcy.D.Mass.1984).2
See also In re General Development Corp.
135 B.R. 1008, 1012-13 (Bkrtcy. S.D.Fla.1991), and In re Roxberry Residential Associates, Inc.
35 B.R. 348 (Bkrtcy.D.Conn.1983), both rejecting the same 18% urged here by the County.
In this circuit, a proper postconfirmation interest rate on a secured claim must be determined
on a case-by-case basis, considering all of the risk factors involved. In re Fowler
, 903 F.2d 694,
699 (9th Cir.1990). There is no exception for secured tax claims. In re Camino Real
, 818 F.2d
The County does not assert any significant risk factors, nor does the court see any. The
County's lien is senior and not subject to jeopardy by the actions of another lienholder, and the
value of the property on confirmation was more than enough to guarantee that the County's claim
will be paid in full. The debtor's proposed rate of 10% is therefore entirely reasonable, and will
Counsel for the Creditor's Committee shall submit an appropriate form of order.
Dated: February 26, 1998 _______________________
U. S. Bankruptcy Judge
2. It is interesting to note that at the time the court in Fi-Hi
rejected the 18% rate, the prime
rate was 12.5%. 40 B.R. a