Freeborn Client Hamni Bank won an appeal brought by the Illinois Department of Revenue in the Seventh Circuit Court of Appeals. Hanmi Bank, which had a security interest in multiple gas stations, received proceeds from the sale the gas stations which were owned by four chapter 11 debtors. The Illinois Department of Revenue took the position that it should receive a portion of the proceeds ahead of Hanmi Bank because the sale was cutting off its right under Illinois Bulk Sales Acts to pursue the purchaser for sales taxes and other taxes. The Seventh Circuit Court of Appeals, in a decision penned by Judge Rovner, upheld the decision of the Bankruptcy Court for the Northern District of Illinois giving Hanmi Bank the first priority to the sale proceeds. Shelly A. DeRousse, Co-Leader of the Bankruptcy and Financial Restructuring Practice Group and Partner of Freeborn, was the lead attorney on the case and in the argument before the Seventh Circuit Court of Appeals. The Daily Bankruptcy News covered the decision in the article “Creditors Not Required to Share Sale Proceeds to Pay Taxes,” published August 9th. The case was also covered by Law360 in the article “Ill. Tax Agency Needs Proof To Collect In Bankruptcy Sale, published July 9th.
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