Ill. Tax Agency Needs Proof To Collect In Bankruptcy Sale

Law360 (July 9, 2018, 8:32 PM EDT) -- The Illinois Department of Revenue can't collect delinquent taxes from the bankruptcy sale of several businesses because it didn't present evidence of how much it lost when the courts allowed the deals to go forward free of any creditor's interest, the Seventh Circuit said Monday.

In a ruling that consolidated the department's appeals in two separate bankruptcies, the appellate court said without proof of its losses the state agency couldn't rely on the bankruptcy code's section allowing creditors to be compensated if their interests are wiped away when a bankruptcy judge allows some of the debtor's assets to be sold free...

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