On June 16, 2008, the United States Supreme Court (the “Court”) held that section 1146(a)[1] of Title 11, 11 U.S.C. § 101 et seq. (the “Bankruptcy Code”) only affords a stamp-tax exemption to transfers made pursuant to a confirmed Chapter 11 plan of reorganization, thereby resolving a conflict among several federal circuit courts.[2] While the bright-line rule established by the Court is

clear, its practical implications fail to comport with the realities of most Chapter 11 cases today. The Bankruptcy Code is meant to preserve going concerns and maximize property available to satisfy creditors. The Court’s narrow interpretation of section 1146(a) is inconsistent with these basic tenets and, as a result, debtors must now think twice before conducting asset sales and transfers

prior to confirming a plan of reorganization.

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