9th Cir.;
15-60069

The court of appeals affirmed a Bankruptcy Appellate Panel decision. The court held that a Chapter 11 bankruptcy debtor was entitled to assert the rights of a trustee to avoid a county's liens on its personal property.

Mainline Equipment, Inc. failed to pay property taxes assessed by the Los Angeles County Treasurer and Tax Collector on its personal, non-real estate, property. The county recorded tax delinquency certificates with the Los Angeles County Recorder. Under Cal. Rev. & Tax. Code §2191.4, the recording of the certificates created broad liens on all of Mainline's property in Los Angeles county. Mainline later filed a voluntary Chapter 11 bankruptcy petition, scheduling the county as an unsecured creditor. No trustee was appointed, and Mainline administered its estate as a “debtor in possession.” It initiated an adversary proceeding to set aside the county's liens on its personal property, maintaining it had the power to do so under 11 U.S.C. §545(2).