and it was "necessary to consummate and implement the plan." Based on these findings, the
bankruptcy court ruled that the Kissimmee refinancing qualified for the section 1146(c) transfer
tax exemption. The district court reversed on appeal, ruling that section 1146(c) does not apply
because the transaction involved two non-debtors.
The Eleventh Circuit's Opinion
The Eleventh Circuit reversed. Examining the language of section 1146(c), the Court of Appeals
concluded that a transfer "under a plan" refers to a transfer "authorized by a confirmed Chapter
11 plan," and "a plan authorizes any transfer that is necessary to the confirmation of the plan."
Because the bankruptcy court found that the Kissimmee refinancing was necessary to the
consummation of T.H. Orlando's chapter 11 plan, the Eleventh Circuit ruled that the refinancing
was exempt from Florida's stamp tax under the "plain language" of section 1146(c), "irrespective
of whether the transfer involved the debtor or property of the estate."
The Court rejected the taxing authority's contention that a bankruptcy court does not have
jurisdiction to determine whether a non-debtor third party is entitled to an exemption from state
stamp and intangible taxes, observing that "[t]he adjudication of substantive entitlements created
by bankruptcy law falls squarely within the core jurisdiction of bankruptcy courts." Divesting a
bankruptcy court of jurisdiction in any case involving a state's imposition of a stamp or similar
tax on a non-debtor, the Court of Appeals emphasized, would encourage states to shift the tax
burden entirely to third parties even in transactions involving the debtor.