In Re Shoreline Concrete Company, Inc., Debtor. Shoreline Concrete Company, Inc. v. United States of America, and Harold Heath, Trustee

On June 18, 1979, Shoreline Concrete Company (Shoreline) filed for bankruptcy under chapter XI of the Bankruptcy Act of 1898, ch. 541, 30 Stat. 544 (1898 Act). Approximately 70 percent of the corporation’s assets were liquidated under chapter XI. Shoreline was unable to put forward an acceptable arrangement for reorganization, however, so in December 1981, the proceeding was converted into one for liquidation under chapter VII of the 1898 Act. A trustee was appointed to operate the business, which he managed to do at a slight profit. By 1985, the last of Shoreline’s debts had been paid off by the corporation or purchased by its principal stockholder, and the corporation moved for dismissal of the bankruptcy proceeding.

The bankruptcy court ruled that, as a condition of dismissal, Shoreline would be required to pay the statutory bankruptcy fees appropriate for partial liquidations. Oral Decision of Bankruptcy Judge Steiner, Sept. 18, 1985, at 4, E.R. at 4. Shoreline appealed to the district court, which held that Shoreline could instead pay the lower fees associated with chapter XI arrangements to the extent its assets were liquidated before the conversion to chapter VII. The…