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Basic Energy Services Objection Filed

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Louisiana Department of Revenue (LDR) filed with the U.S. Bankruptcy Court an objection to Basic Energy Services’ Disclosure Statement and Joint Prepackaged Chapter 11 Plan of Reorganization.

The objection asserts, “To date, LDR has not received the outstanding returns due in the ordinary course of business since the filing for the pre-petition periods or the payments due and therefore are not in compliance with the bankruptcy code regarding the filing of pre-petition returns, making the plan objectionable pursuant to 11 U.S.C. section 1129(a)(2)….Further, LDR has not received multiple corporation income and franchise tax returns from several of the Debtors as itemized herein above for periods which were due before the filing of the petition and the respective Debtors appear to be in violation of state filing requirements, making it impossible to determine the full amount of the LDR’s priority tax claims.”

In addition, “The Plan does not treat Unsecured Priority Tax Claimants at least as good or better than 11 U.S.C. sections 1129(a)(9)(C) and LDR does not accept a lesser treatment….Unsecured General Claims are being treated more favorably than Unsecured Priority Tax Claimants….the Plan is inconsistent at Article 10 in that it contains a discharge and an injunction. Priority Tax Claims are not being treated in accordance with 11 U.S.C. sections 1129(a)(9)(C) because the Plan fails to provide for post-effective date interest at the applicable non-bankruptcy rate pursuant to 11 U.S.C. section 511 if the claim is not paid on the Effective Date….Finally, the phrase ‘Effective Date’ is not defined with a degree of specificity which will allow the LDR to know when the Effective Date has occurred and Notice of the Effective Date should be required.”

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