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C. SUMMARY OF APPELLATE COURT DECISIONS-MCCREARY, VESELKA, BRAGG & ALLEN, P.C., AS LEGAL COUNSEL No. 11-93-050-CV, Walker's Country Place, Inc. v. Central Appraisal District of Taylor Co., 867 S.W.2d 111 (Tex.App.-Eastland 1993, no writ) Walker's Country Place, Inc. purchased an apartment building in Abilene from a lender sub- sequent to that lender having foreclosed upon the property in a bankruptcy. When the Taylor County taxing jurisdictions pressed the new owner for the payment of delinquent taxes, penalties and interest, the taxpayer filed a declaratory judgment action seeking to have the penalties and interest which arose during the bankruptcy declared void. The District Court in Taylor County ruled in favor of the taxing jurisdictions and the taxpayer appealed. On appeal the Eastland Court ruled that while the imposition of penalties subsequent to the filing of bankruptcy may have constituted a violation of the automatic stay under bankruptcy law, it was necessary for a party in interest to have challenged those penalties and interest during the bankruptcy, in bankruptcy court. Therefore the taxpayer could not collaterally attack the assessment in state court once the bankruptcy was over. This ruling protects the right of taxing jurisdictions to collect all penalties and interest which have accumulated on properties while they were in bankruptcy from subsequent holders of the property by lien enforcement once the bankruptcy is over. No. 90-60670, Longview Independent School District v. Machinery Supply & Grinding Company, Inc. (In the United States District Court for the Eastern District of Texas, Tyler Division, 1992) In a Chapter 7 bankruptcy, the personal property assets of Machinery Supply & Grinding Company, Inc. were liquidated by the Trustee. Longview Bank and Trust Company sought release of the proceeds of the sale to their commercial lien on that personal property. Longview ISD also sought the satisfaction of the personal property taxes from the proceeds of the sale in satisfaction of its delinquent ad valorem tax claims. The Bankruptcy Court denied the request of Longview ISD and granted the entirety of the funds to Longview Bank and Trust. Longview ISD appealed the decision to the Federal District Court and that Court reversed in favor of Longview ISD. In reversing the Bankruptcy Court, the District Court found that Longview ISD had a superior lien claim by virtue of Texas Property Tax Code § 32.05, and that while the tax lien may have been avoidable by the Trustee, no action was taken in the bankruptcy by the Trustee to avoid that lien. The Appellate Court further found that Longview Bank and Trust had no standing to initiate a lien avoidance action on its own part and thus Longview ISD would be awarded their portion of the proceeds of sale. McCreary, Veselka, Bragg & Allen 36