The Bankruptcy Appellate Panel reversed and vacated orders of the bankruptcy court. The court held that the bankruptcy court lacked subject matter jurisdiction to adjudicate the state tax consequences of its confirmation of a real estate partnership reorganization plan for the partnership’s former partners.
Wilshire Courtyard (Wilshire), a California general partnership, developed and owned two large commercial real estate complexes (the property). Following several financing transactions in 1989, Wilshire’s combined secured debt aggregated almost $350 million. Wilshire defaulted on the first loan, held by Continental Bank, in 1986, and the bank scheduled a foreclosure sale. In response, Wilshire filed a chapter 11 bankruptcy petition.
