UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. Chapter 11

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1 brl Doc 2607 Filed 01/18/12 Entered 01/18/12 13:16:59 Main Document Pg 1 of 5 RANDY M. FERRIS, Acting Chief Counsel ROBERT W. LAMBERT, Assistant Chief Counsel VICTORIA C. BAKER, SBN DANA FLANAGAN-MCBETH, SBN California State Board of Equalization 450 "N" Street MIC: 82 Sacramento, CA Telephone: (916) dana.flanagan-mcbeth@boe.ca.gov Attorneys for Creditor CA State Board of Equalization UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF NEW YORK In re BB Liquidating Inc., et al, Debtors. Chapter 11 Case No.: 10:14997 (BRL) (Jointly Administered) RESPONSE OF CALIFORNIA STATE BOARD OF EQUALIZATION TO DEBTOR'S FIFTEENTH OMNIBUS OBJECTION TO CLAIMS The California State Board of Equalization (the "SBE"), hereby files its response and opposes BB Liquidating Inc., et al ("Debtors") Fifteenth Omnibus Objection to Claims (the "Objection") as follows: BACKGROUND 1. The SBE is charged with administering certain taxes due under the Revenue and Taxation Code of the State of California, including California s Sales and use Tax Law under Cal. Rev. & Tax. Code 6001 et seq. 1

2 brl Doc 2607 Filed 01/18/12 Entered 01/18/12 13:16:59 Main Document Pg 2 of 5 2. Debtors are the holders of Board of Equalization Account Number OHC , and are indebted to the SBE in the amount of $205, with further interest accruing after January 31, The liability for which SBE timely filed a Proof of Claim for the priority taxes owed stems from an audit of the taxpayer s records for the period from July 1, 2005 through December 31, A detailed report of the field audit sets forth the basis for the liability owed to SBE, and determines the tax to be comprised of $252, in tax and $24, in interest for total liability of $276, with further interest accruing after January 31, Attached hereto as Exhibit A and Exhibit B is the Report of Field Audit. 4. Without setting forth any basis for objecting to SBE s claim, other than asserting that the tax is not owed to SBE, Debtors run afoul of the 5. On January 1, 2009, the Board issued an estimated billing, for the audit period from January 1, 2009, through September 22, 2010, based upon the previously completed field billing order for amounts due up to the filing of the Debtor s bankruptcy petition (September 23, 2010 )in the amount of $185, in tax, plus interest in the amount of $20, for a total of $205, was owed to the Board. Attached hereto as Exhibit C is the Billing and Refund Notice/Notice of Determination issued on July 21, On or about January 5, 2012, Debtors filed Debtor s Fifteenth Omnibus Objections to Claims, claiming that Debtors had no liability for claim number APPLICABLE LAW 7. Rule 3001(f) of the Federal Rules of Bankruptcy Procedure (Bankruptcy Rules) provide that a proof of claim filed in accordance with the Bankruptcy Rules shall constitute prima facie evidence of the validity and the amount of the claim. Fed. R. Bankr. P. 3001(v); In re Planet Hollywood Int l, 274 B.R. 391, 394 (Bankr. D. Del. 2001). 8. To overcome this presumed validity, Debtors must present evidence that, if believed, would refute at least one of the allegations that is essential to the claim s legal sufficiency. See In re Allegheny Int l., Inc. 954 F.2d 167, 173 (3 rd Cir.). 9. Further, Allowable unsecured tax claims are entitled to priority status to the extent they are based upon or measured by income or gross receipts for a taxable year ending on or before the date of the filing of the petition for which a return, if required, is last due, including extensions, after three years before the date of the filing of the petition. 11 U.S.C. 507(a)(8)(A)(i). [Emphasis added] "In the case of a use tax, the obligation to 2

3 brl Doc 2607 Filed 01/18/12 Entered 01/18/12 13:16:59 Main Document Pg 3 of 5 pay the tax is created solely by the completion of a transaction to which the state statute applies." In re Los Angeles Int'l Airport Hotel Assocs., 196 B.R. 134, 139 (9th Cir. 1996). ARGUMENT 1. Debtor has, through an omnibus objection, summarily asserted that a duly calculated and supported tax liability is not owed without providing any evidence refuting the presumptive validity of the claim or, the priority status of the tax claim. Therefore, Debtors have failed to refute any elements of the sufficiency of SBE s claim. See In re Allegheny Int l., Inc. 954 F.2d 167, 173 (3 rd Cir.). 2. Further, the documents attached hereto clearly show that SBE s priority tax claim was correctly calculated based upon a review of Debtor s records and that said tax liability is entitled to priority status. CONCLUSION 3. Based on the foregoing, the SBE respectfully requests that the Debtor's Objection be overruled in as to Claim number Dated: January 18, 2012 RANDY M. FERRIS Acting Chief Counsel ROBERT W. LAMBERT Assistant Chief Counsel VICTORIA C. BAKER Tax Counsel III, Supervisor /s/ Dana Flanagan-McBeth DANA FLANAGAN-MCBETH Attorneys for the California State Board of 3

4 brl Doc 2607 Filed 01/18/12 Entered 01/18/12 13:16:59 Main Document Pg 4 of 5 AFFIDAVIT OF SERVICE The undersigned hereby certifies that a copy of the foregoing Response of California State Board of Equalization to Debtor s Fifteenth Omnibus Objections to Claims was served this 18 th day of January, 2012, via U.S. Mail prepaid, and/or Federal Express and/or facsimile transmission and/or ECF Noticing, to individuals listed below. Dated: January 18, 2012 /s/ Debbie Self State of California County of Sacramento Debbie Self Office of the United States Trustee for Region 2 33 Whitehall Street, 21st Floor New York, New York (Attn: Brian Masumoto, Esq.) Chambers of The Honorable Burton R. Lifland United States Bankruptcy Court For The Southern District of New York One Bowling Green Courtroom Number 623 New York, New York Weil, Gotshal & Manges LLP, Attorneys for the Debtors 767 Fifth Avenue New York, New York (Attn: Stephen Karotkin, Esq.) Weil, Gotshal & Manges LLP, Attorneys for the Debtors 200 Crescent Court, Suite 300 Dallas, Texas (Attn: Martin A. Sosland, Esq.) 4

5 brl Doc 2607 Filed 01/18/12 Entered 01/18/12 13:16:59 Main Document Pg 5 of 5 Sidley Austin, LLP 787 Fifth Avenue New York, New York (Attn: James Seery, Esquire) Cooley LLP 1114 Avenue of the Americas New York, New York (Attn: Richard Kanowitz, Esquire and Cathy Hershcoph, Esquire) Sheppard, Mullin, Richter & Hampton LLP Attorneys for U.S. Bank National Association 333 South Hope St., Floor 43 Los Angeles, California (Attn: Kyle J. Mathews, Esq.) Emmet, Marvin & Martin, LLP Attorneys for The Bank of New York Trust Company, N.A. 120 Broadway, 32nd Floor New York, New York (Attn: Edward P. Zujkowski, Esq.) Skadden, Arps, Slate, Meagher & Flom LLP, Attorneys for Wilmington Trust FSB as agent under the DIP Facility 4 Times Square, New York, New York (Attn: Alexandra Margolis, Esq. and Mark Chehi, Esq.) Attorneys to the Ad Hoc Studio Committee Pachulski Stang Ziehl & Jones LLP 780 Third Avenue, 36th Floor New York, New York (Attn: Robert J. Feinstein, Esq.). 5

6 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 1 of 15

7 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 2 of 15

8 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 3 of 15

9 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 4 of 15

10 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 5 of 15

11 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 6 of 15

12 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 7 of 15

13 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 8 of 15

14 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 9 of 15

15 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 10 of 15

16 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 11 of 15

17 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 12 of 15

18 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 13 of 15

19 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 14 of 15

20 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit SBE Response to Debtors Fifteenth Omnibus Objection to Claims Pg 15 of 15

21 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 1 of 15

22 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 2 of 15

23 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 3 of 15

24 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 4 of 15

25 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 5 of 15

26 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 6 of 15

27 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 7 of 15

28 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 8 of 15

29 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 9 of 15

30 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 10 of 15

31 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 11 of 15

32 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 12 of 15

33 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 13 of 15

34 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 14 of 15

35 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit B Part 2 Report of Field Audit Pg 15 of 15

36 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit C Billing and Refund Notice/Notice of Determination Pg 1 of 3

37 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit C Billing and Refund Notice/Notice of Determination Pg 2 of 3

38 brl Doc Filed 01/18/12 Entered 01/18/12 13:16:59 Exhibit Exhibit C Billing and Refund Notice/Notice of Determination Pg 3 of 3