Gough Industries, Inc., Debtor v. Don Rothman (Successor to A.J. Bumb, Deceased), Receiver, State Board Ofequalization

Gough Industries, Inc., the reorganized debtor, appeals from an order denying its petition to review the referee’s disallowance of Gough’s claims against the receiver A. J. Bumb and the debtor estate for penalties and interest assessed against Gough for late payment of California sales and use taxes.

This dispute concerns the construction of the plan for arrangement, the receiver’s implementation of the plan’s provisions, and the proper attribution of certain tax credits granted to the estate. On September 14, 1964, Gough petitioned for a section 322 arrangement under Chapter XI of the Bankruptcy Act. The plan of arrangement, as amended, provided that Gough, a wholesaler of electrical supplies, appliances, and other items, would pay to the receiver the cash value of the Supply and Lamp Division’s inventories and related assets and thereafter operate that division for its own account. The remaining assets would be converted into cash and distributed to Gough’s creditors in accordance with the arrangement.

The plan of arrangement classified Gough’s creditors and defined the classes. Priority debts were defined as “those which fall under the provisions of Sections 64(a) (2), (4),…