Lorbe

The United States Bankruptcy Code establishes priority for certain nondischargeable obligations owed by a debtor to a state that qualify as an excise tax. 11 U.S.C. § «Wa)®®)©. This case concerns a statutorily imposed obligation of the debtor, Lorber Industries (“Lorber”), to the California Self-Insurers’ Security Fund (“Fund”) for reimbursement of workers’ compensation benefits that the Fund paid on Lorber’s behalf. The issues on appeal are (1) whether the reimbursement amounts owed to the Fund qualify as an excise tax; and, if so (2) whether the transaction giving rise to the excise tax occurred in the three years preceding Lorber’s bankruptcy petition. We hold that the Fund’s reimbursement claim does not qualify as an excise tax, and therefore do not address when the transaction giving rise to the tax occurred. Although our reasoning differs from the Bankruptcy Appellate Panel’s (“BAP”), we affirm its holding denying priority to the Fund’s claim.

I. Background

Lorber is a California based textile manufacturer. In compliance with California law, Lorber obtained permission to satisfy its workers’ compensation obligations by self-insuring. It posted a letter of credit as a…