Whose Refund? Eleventh Circuit Muddies the Law on Ownership of Bank Tax Refunds in Bankruptcy

Whose Refund? Eleventh Circuit Muddies the Law on Ownership of Bank Tax Refunds in Bankruptcy

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In a recent decision, the Eleventh Circuit held that tax refunds remitted by the Internal Revenue Service to a holding company were not the property of the holding company's bankruptcy estate, but instead had to be forwarded to the Federal Deposit Insurance Corporation, as receiver for the separate estate of the holding company's bank subsidiary. The ruling, Zucker v. FDIC (In re BankUnited Fin. Corp.), ___ F.3d __, No. 12-11392, 2013 WL 4106387 (11th Cir. Aug. 15, 2013) (In re BankUnited Fin. Corp. II), is contrary to that of several bankruptcy and district courts, including that of the bankruptcy court below in the BankUnited case. Those earlier decisions held that tax refunds received by a holding company were the property of its bankruptcy estate, even if those refunds would have been payable to the subsidiary if the holding company and its bank subsidiary had filed separate returns.
 
Whether the Eleventh Circuit's decision will result in a fundamental and permanent change in the case law, or end up as a mere odd detour in bankruptcy jurisprudence, will turn on whether courts in the future distinguish it based on its somewhat unusual facts, and, if not, to what extent they are willing to accept its analysis of the applicable legal principles. Under either scenario, however, it appears that when a tax sharing agreement is in place, courts will continue to view disputes between bank holding companies and their bank subsidiaries as a matter of contract interpretation, meaning that tax sharing agreements that clearly and explicitly address who owns any refunds should be dispositive. 


Background
 
In bankruptcy cases or other insolvency proceedings involving more than one affiliated corporation, it is not uncommon for intercompany issues to arise-e.g., which assets and which liabilities belong to the estates of which entities. These issues can be particularly important in the banking industry, when a bank holding company and its subsidiary bank both become insolvent. One reason is that, while the holding company can file for bankruptcy, a bank cannot, because the US Bankruptcy Code does not permit banks to become bankruptcy debtors. Instead, if the bank is insolvent, it is typically placed into receivership with the FDIC appointed as receiver.1 Thus, there are separate fiduciaries for the estates of the holding company and the bank: a debtor-in-possession (or bankruptcy trustee) and perhaps a creditors' committee for the bankruptcy estate of the holding company, and the FDIC for the receivership estate of the bank.
 
Moreover, the creditor body of the two estates is often very different. The most significant creditors of the holding company may be bondholders or lenders that provided financing to the holding company (often for it to capitalize its bank subsidiary), whereas the most significant creditor of the bank can be the FDIC itself because it will be subrogated to the claims of the bank's depositors to the extent that the FDIC's insurance fund pays those depositors.2 
 
As a result, where a holding company and bank are both insolvent, disputes often arise between the bankruptcy estate of the holding company and the receivership estate of the bank. One leading subject of such disputes has been which estate is entitled to receive any tax refunds that may be payable by the IRS (or state taxing authorities). These tax refunds have been in the tens or hundreds of millions of dollars in some cases; indeed, in the Chapter 11 case of Washington Mutual and the receivership of its bank subsidiary, the tax refunds were potentially in the billions of dollars. Whether the refunds are property of the holding company's estate or, instead, are property of the bank's estate can thus have a significant impact on the respective recoveries of creditors of the two separate estates. If the refunds are owned by the bank holding company, those refunds can potentially lead to a recovery for "structurally subordinated" holding company creditors that is in excess of the recovery for operating bank creditors. It is perhaps not surprising, therefore, that this issue has led to considerable litigation.
 
The potential for controversy arises because IRS regulations generally permit affiliated corporate entities to file a consolidated income tax return. The regulations provide that if a group of affiliated corporations files such a consolidated return, the common parent will act as the "sole agent" for the group on all matters relating to the group's tax liability.3 Accordingly, the IRS will pay any refund "to and in the name of the common parent."4 But courts have held that these regulations are purely procedural; they do not determine as a substantive matter that the parent, rather than another member of the consolidated group, is entitled to the refund.5 And where the parent is a holding company with no operations of its own, it is unlikely that it generated the losses that give rise to the tax refund. Instead, it is likely that an operating company-in the case of a bank holding company, its subsidiary bank-generated those losses.
 
In such a context, there is little question that, at the very least, the subsidiary has a claim against the parent for the amount of the refund, either as a matter of common law or contract. But if the parent is insolvent and in bankruptcy, it can make a substantial difference for the creditors of the bank and the creditors of the holding company whether, on the one hand, the refund is held to be the property of the bank, or on the other hand, it is deemed the property of the holding company and the FDIC as receiver of the bank is left with a mere general unsecured claim against the holding company's bankruptcy estate. In the former case, the receivership estate of the bank will receive the full amount of the refund, and the bankruptcy estate of the holding company will receive none of it. In the latter case, the bankruptcy estate of the holding company will receive the full amount of the refund, and the receivership estate of the bank may, at most, get to share, pari passu, with other general unsecured creditors of the holding company in any distributions from the holding company's bankruptcy estate to those creditors.
 
Because the IRS regulations are purely procedural, several courts have held that the members of the consolidated group are free to decide as a matter of contract which member of the group will be entitled to any refund-that is, whose property the refund will become.6 Thus, in deciding to which entity a tax refund belongs, the courts typically consider whether the parent and the subsidiary (and any other members of the consolidated group) entered into a tax allocation or sharing agreement concerning the consolidated filings and, if so, the terms of that agreement.
 
Where the members of the consolidated group have not entered into a tax allocation or sharing agreement, the receivership (or other) estate of the subsidiary has generally prevailed. In a leading case in which the members of the group had not entered into any such agreement, the Ninth Circuit held that "a tax refund resulting solely from offsetting the losses of one member of a consolidated filing group against the income of that same member in a prior or subsequent year should inure to the benefit of that member." See Western Dealer Mgmt., Inc. v. England (In re Bob Richards Chrysler-Plymouth Corp.), 473 F.2d 262, 265 (9th Cir. 1973). Applying this principle, the court determined that the refund was the property of the estate of the subsidiary, which had generated the losses giving rise to the refund, even though the IRS was required under its regulations to pay the refund to the parent. The Ninth Circuit reasoned that to allow the parent corporation to keep the funds under these circumstances simply because it and its subsidiary chose as a matter of procedural convenience to file a consolidated return would unjustly enrich the parent and its creditors at the expense of the subsidiary and its creditors.7 While the parent and subsidiary in Bob Richards were not a bank holding company and a bank, the Fifth Circuit reached the same result in a case involving such entities in which, again, the members of the group had not entered into an agreement concerning the issue. See Capital Bancshares, Inc. v. FDIC, 957 F.2d 203 (5th Cir. 1992).
 
In many cases, however, corporate groups that elect to file consolidated tax returns do enter into tax allocation or sharing agreements that address how the group's tax liabilities, tax payments and tax refunds will be handled. These agreements often differ in their precise language, and these differences can be critical. But, in general, most confirm that the parent will act for all members of the group with the IRS and thus will pay any tax liability to, and receive any refund from, the IRS. They typically go on to provide that to the extent the tax liability or refund is attributable to a particular subsidiary, that subsidiary will pay that portion of the tax liability to, or receive that portion of the refund from, the parent.
 
In a largely unbroken line of cases, bankruptcy and district courts construing tax agreements of this nature have ruled that the refund is the property of the bankruptcy estate of the holding company, not the property of the receivership estate of the bank-that is, they have reached the opposite result of that reached by the courts in cases in which there were no such agreements.9 These courts have distinguished Bob Richards, holding that it merely provides "a gap-filling rule for situations where there is no agreement-express or implied-between the parties" and that this "gap-filling rule does not apply when the parent and subsidiary have an agreement defining their relationship with respect to any tax refunds."10 Instead, these courts have concluded that, in the absence of overreaching by the parent, the terms of the agreement between the parent and its subsidiary will control. In particular, they have analyzed whether the agreement created a mere debtor/creditor relationship between the parent that receives the tax refund and the subsidiary that generated the loss giving rise to the refund or, alternatively, created a true trust/agency relationship. "If the parties are debtor-creditors, then the Tax Refunds go to [the holding company][;] . . . [if] the parties are in a trust-agency relationship, then the Tax Refunds go to the [b]ank."11
 
After reviewing the terms of the tax allocation or sharing agreements, the bankruptcy and district courts in these cases have largely held that those agreements created only a debtor-creditor relationship between the parent and the subsidiary bank with respect to any tax refunds received by the parent but attributable to the subsidiary's operations.12 Accordingly, these courts have held that the refund was the property of the holding company and that the FDIC, as receiver of the bank, had no more than an unsecured claim in the holding company's bankruptcy for the amount of the refund. In so concluding, these courts have pointed to several aspects of the particular agreement at issue:

  • The agreement did not expressly provide that the holding company parent would hold any refund it received in "trust" or "escrow" for the subsidiary. 
  • The agreement used language that, at least in the view of these courts, implied that the refund became the parent's property and that the parent simply owed a debt to the subsidiary, such as, for example, that the parent would "pay" an amount of money equal to the amount of the refund attributable to the subsidiary's losses to that subsidiary. 
  • The agreement did not require the parent to make the payment immediately upon its receipt of the refund, but rather gave it a period of time (such as 30 days) before it had to do so, or imposed no time deadline at all for it to so act.
  • The agreement did not obligate the parent to put in escrow or otherwise segregate any portion of the refund from the parent's funds between the time it received the refund and made any payment to the subsidiary.13  

In addition, some of the courts have noted that the agreement before them provided, in effect, for the calculation of the amount of any refund the bank subsidiary would have been due by reason of its losses if it had filed a separate return. The agreement required the parent to pay the subsidiary that amount even if the parent did not receive a refund in that (or any other) sum, perhaps because a different subsidiary in the consolidated group had offsetting income (and even if that separate subsidiary was insolvent and could not reimburse the parent). As the courts have noted, such a structure arguably suggests that the parent's potential obligation to the subsidiary is a debt to be paid out of the parent's own funds and is independent of the receipt of any amount from the IRS.14
 
BankUnited
 
BankUnited concerned a tax sharing agreement executed in 1997 by BankUnited Financial Corporation, a holding company (Holdco), and one of its subsidiaries, BankUnited FSB, a bank (Bank). Although the Bank was the principal operating company in the BankUnited family of companies, there were additional subsidiaries as well, and the tax sharing agreement governed the tax filings made on behalf of all members of the consolidated group.
 
Consistent with the IRS regulations, the agreement provided that Holdco would file the consolidated tax returns for the family of companies. But it contained one unusual provision: the Bank, rather than Holdco, was responsible for the payment of all taxes on behalf of, and the distribution of all refunds to, members of the consolidated group. In particular, the tax sharing agreement specified that each member of the group would determine what its tax liability would be "without regard to any income tax expenses or benefits of other members of the Group"-that is, as if it were filing its own returns separately and not as part of the consolidated group-and each affiliate would "record an inter-company income tax receivable or payable with [the Bank]" in the amount of its calculated tax asset or liability.15 The agreement then provided that "[w]ithin 30 days following the remittance by [the Bank] of any income tax payment," or "within 30 days" of "the filing of any periodic income tax return," "each member of the Group having a net inter-company income tax payable shall pay such amount to [the Bank][,] and [the Bank] shall reimburse any member of the Group for net inter-company income tax receivables."16 Importantly, the agreement did not explicitly address Holdco's obligation to remit to the Bank any tax refunds it received.
 
The subsequent dispute arose in a typical fashion. In 2009, the Office of Thrift Supervision closed the Bank and appointed the FDIC as its receiver. Having lost its principal operating subsidiary, Holdco filed for bankruptcy the next day. Holdco and the Bank thereafter requested refunds from the IRS for prior fiscal years totaling more than $48 million. The IRS granted the request and sent the refunds to Holdco, which then took the position that the money was the property of its bankruptcy estate and that the Bank, at most, had a general unsecured claim for the amount of the refunds. Not surprisingly, the FDIC, as receiver of the Bank, disagreed. The parties stipulated that the money would be maintained in escrow until the dispute was resolved. Holdco then filed an adversary proceeding in its bankruptcy case seeking (among other relief) a declaration that the refunds were an asset of its bankruptcy estate.
 
Following the lead of the many bankruptcy and district court decisions that preceded it, the BankUnited bankruptcy court granted that relief. BankUnited Fin. Corp. v. FDIC (In re BankUnited Fin. Corp.), 462 B.R. 885 (Bankr. S.D. Fla. 2011) (In re BankUnited Fin. Corp. I), rev'd, In re BankUnited Fin. Corp. II, 2013 WL 4106387. The bankruptcy court acknowledged that "the [agreement] presumes that at some point [Holdco] is going to deliver a tax refund to the Bank"; this was "implicit in the [agreement's] provision that the Bank gives out the allocable shares in any refund to the group."17 But the bankruptcy court concluded that this obligation was nothing more than a contractual duty giving rise to a debt, making the Bank a mere creditor of Holdco. The money remained the property of Holdco, rather than funds held in trust for the Bank.
 
In reaching this conclusion, the bankruptcy court stressed that the tax sharing agreement described "the entire relationship between the various members of the [group] . . . only in terms of payables and receivables-inter-company debts and claims."18 Indeed, the bankruptcy court seemed to suggest that if and when Holdco remitted a refund to the Bank, any other members of the group that might have incurred losses under which they would have been entitled to all or a portion of that refund had they filed individual tax returns, would be mere unsecured creditors of the Bank: "Depending on how the tax balance sheet obligations are set up at a particular time, the fact that the Bank, when it holds the funds, stands as a debtor or creditor, does not change the fact that when [Holdco] holds the funds it also has the status of the debtor or creditor."19  
 
On the basis of this analysis, the bankruptcy court granted summary judgment to Holdco. The parties then stipulated to an immediate appeal to the Eleventh Circuit, bypassing the district court.20 A unanimous panel of the Eleventh Circuit reversed, rejecting the bankruptcy court's analysis. It agreed that the question was one of "contract interpretation": "Federal law does not govern the allocation of the Group's tax refunds; hence, a parent and its subsidiaries are free to provide for the allocation of tax refunds by contract."21 And it concluded that the tax sharing agreement was "ambiguous" both because it "does not state when [Holdco] must forward the tax refunds to the Bank" and because it "does not explain whether [Holdco] 'owns' the refunds before forwarding them to the Bank."22  
 
But, notwithstanding this "ambiguity," the panel viewed the parties' intent, which controlled under applicable state (Delaware) law, as "obvious"; the parties intended that Holdco "forward the tax refunds to the Bank on receipt," rather than "retain the tax refunds as a company asset and . . . be indebted to the Bank in the amount of the refunds."23 In the Eleventh Circuit's view, this reading of the tax sharing agreement was necessary to fulfill the agreement's "paramount purpose"-"to ensure that the tax refunds are delivered to the Group's members in full and with dispatch."24 And the panel found nothing in the language of the agreement to suggest the opposite. In particular, the agreement did not specify "a fixed interest rate, a fixed maturity date, or the ability to accelerate payment upon default"-the sorts of "protection[s]" the panel would have expected the Bank to have demanded if it were merely a creditor of Holdco.25 Accordingly, the panel concluded that "[w]hen [Holdco] received the tax refunds, it held the funds intact-as if in escrow-for the benefit of the Bank and thus the remaining members of the Consolidated Group."26 It therefore reversed the judgment of the bankruptcy court and instructed it to enter a new judgment directing Holdco "to forward the funds held in escrow to the FDIC, as receiver, for distribution to the members of the Group in accordance with the [tax sharing agreement]."27 
 
Analysis

The Eleventh Circuit's decision in BankUnited raises as many questions as it answers.
 
First, the panel's approach toward the task of contract interpretation appears to be unusual. After determining that the tax sharing agreement was "ambiguous," the panel did not follow the approach often adopted by courts when they conclude that the terms of a contract are ambiguous: require a trial and permit each side to present parol evidence. Rather, it inferred the parties' intent, which it deemed "obvious" even though it acknowledged that the agreement did not directly address the critical question: "whether [Holdco] 'owns' the refunds before forwarding them to the Bank."28  
 
Second, the panel approached the lack of absolute clarity in the contractual terms seemingly from precisely the opposite standpoint many bankruptcy and district courts have taken. In interpreting the tax sharing agreement to mean that Holdco held the refund in trust for the Bank, the panel emphasized that the agreement lacked the sorts of contractual protections it would expect to see if the Bank were a mere unsecured creditor-a fixed interest rate, maturity date and right of acceleration. But the bankruptcy and district courts that have reached the opposite judgment, holding that refunds were the property of the holding companies and the banks were mere unsecured creditors, have pointed to the absence of the sorts of contractual provisions that they would expect to see if the parties had intended that the refunds would be held by the holding company in trust for the bank-provisions that specify that the refunds, when received by the holding company, must be segregated, not commingled with the holding company's own funds, and placed in an escrow account pending their virtually immediate transmission to the bank. The approach taken by these courts is arguably supported by the general bankruptcy law policy favoring equal treatment of creditors; by determining that the funds are the property of the holding company in bankruptcy, those funds are available for ratable distribution to all of the holding company's creditors and are not held in trust for the sole benefit of one creditor.29 On the other hand, the contrary approach of the Eleventh Circuit in BankUnited arguably furthers the tax law policy stated in the Bob Richards "gap-filling" rule-that, unless the parties contract to the contrary, a tax refund attributable to losses incurred by a particular subsidiary is its property to be used to satisfy the claims of its creditors.
 
Third, the opinion of the panel in BankUnited never discusses-indeed, does not even mention-all the bankruptcy and district court decisions that have found that tax refunds were the property of the holding company, not the property of the bank. It is thus unclear whether the panel thought those cases were distinguishable or wrong.
 
Finally, and relatedly, it is not clear the extent to which the Eleventh Circuit in BankUnited considered it critical to its decision that the tax sharing agreement before it-unlike most-provided for the Bank, not Holdco, to pay any taxes for the consolidated tax group and remit any refunds received to the applicable member of the group. The opinion certainly notes that unusual fact. Indeed, it stresses the point in concluding that its reading of the agreement fosters the agreement's "paramount purpose" of ensuring that the Bank can fulfill its contractual obligation to remit any tax refund to the appropriate members of the tax group "in full and with dispatch."30 But the opinion can also be read to suggest that the panel believed the refund was not necessarily the property of the Bank either, but rather was the property of whichever member(s) of the group generated the losses giving rise to the refund. Thus, the opinion states that "[i]n the Bank's hands, the tax refunds occupied the same status as they did in the Holding Company's hands-they were tax refunds for distribution in accordance with the [tax sharing agreement]."31 And, as noted, the panel directed the bankruptcy court to enter a judgment requiring Holdco to transmit the funds to the FDIC, as receiver of the Bank, "for distribution to the members of the Group in accordance with the [tax sharing agreement]."32 The decision can hence be read to suggest that had the Eleventh Circuit been confronted with the fact pattern present in most of the other cases-a tax sharing agreement that provides for the holding company to receive any tax refund and for it to distribute that refund to the applicable member(s) of the consolidated tax group-the panel would have disagreed with the prior bankruptcy and district court precedent and held that any such refund was not the property of the holding company's estate, but rather was the property of the bank and/or other applicable member(s) of the tax group.
 
The Bottom Line
  
Whether BankUnited will be a watershed moment in litigation over tax refunds and tax sharing agreements between insolvent holding companies and their bank subsidiaries is hard to say at this point. It is possible that it will lead to a fundamental change in the direction of the case law, causing courts in the future to rule for the FDIC in these disputes. That it is Circuit-level authority may make it more influential than the prior bankruptcy and district court decisions that found for the holding company.
 
On the other hand, BankUnited may be viewed in the future as largely sui generis and limited to its unusual facts. Or, even if its reasoning is viewed as more generally applicable, that reasoning may be rejected by other courts in the future. Like the many prior bankruptcy and district court decisions, courts in subsequent cases may view references to inter-company "payables" and "receivables" in tax allocation or sharing agreements as suggesting that the parent and subsidiary have a debtor-creditor, not trustee-beneficiary, relationship. And, in light of the bankruptcy law policy favoring equal treatment of all creditors, they may demand express language in tax sharing agreements providing that refunds will be held by the holding company parent in trust before finding that any such refund is the property of the bank subsidiary. Only time will tell whether BankUnited will prove to be a seminal decision that alters the direction of the law, or a singular aberration in a continuing steady series of victories for the bankruptcy estates of holding companies in litigation over tax refunds with the receivership estates of their insolvent bank subsidiaries.
 
Whatever its other implications, BankUnited is perfectly consistent with the prior case law in one respect, and that respect may also prove significant for the future of litigation in this area. Like so many decisions before it, BankUnited approached the decision of which corporate affiliate owned the tax refund as a matter of contract interpretation-the terms of the tax sharing agreement controlled. This suggests that parties have the ability to pre-determine the outcome of future disputes over the ownership of tax refunds by including in their tax sharing agreements explicit language specifying the capacity in which the parent company will receive and hold any tax refunds attributable to losses of a subsidiary. To be sure, management of a group of corporate affiliates may not view the issue as critical in corporate planning, since it is likely to matter only if the holding company becomes insolvent. But, after BankUnited, bondholders and lenders to the holding company may be more concerned and may view the holding company as more creditworthy if it insists on a tax allocation or sharing agreement with its bank subsidiary (and any other subsidiaries) that specifies that any refund paid to the holding company is its property.
 
Conversely, bank regulators may want to insist that the agreements between bank holding companies and their bank subsidiaries provide precisely the opposite-that the agreements specify that any refund attributable to losses incurred by the bank are its property and that the holding company receives any such refund in trust or escrow for the bank. In this regard, the FDIC has argued in several cases that such a refund must be treated as the property of the bank under an interagency policy statement issued by the FDIC, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Office of Thrift Supervision, and under federal law.33 But that argument has been generally rejected by bankruptcy and district courts on the ground that the policy statement does not have the force of law, and the statutory provision does not clearly bar a tax sharing agreement from providing that a refund is the property of the holding company even if it is attributable to the operations of its bank subsidiary.34 Going forward, therefore, bank regulators may want to review tax sharing agreements executed by depository institutions and insist that they specify that any tax refunds received by the institution's parent, but attributable to losses incurred by the bank, are the bank's property held in trust by the parent. 
 
In short, the future remains uncertain in this important area affecting the recoveries of creditors of bank holding companies and their bank subsidiaries.


1 11 U.S.C. § 109 (specifying that a bank may not be a debtor in a bankruptcy case); 12 U.S.C. § 1821(c) (providing that a bank may be put into receivership with the FDIC to serve as the receiver). 
 
2 12 U.S.C. §§ 1821(g) (providing for the FDIC to pay claims of depositors up to specified limits and specifying that, upon such payment, the FDIC is subrogated to the claims of the depositors).
 
3 26 C.F.R. § 1.1502-77.
 
4 Id.
 
5See, e.g., Superintendent of Ins. v. First Cent. Fin. Corp. (In re First Cent. Fin. Corp.), 269 B.R. 481, 489 (Bankr. E.D.N.Y. 2001) (the establishment of the common parent as the agent for all members of the consolidated tax group under the tax regulation "is purely procedural in nature, and does not affect the entitlement as among the members of the Group to any refund by the I.R.S."), aff'd sub nom. Superintendent of Ins. v. Ochs (In re First Cent. Fin. Corp.), 377 F.3d 209 (2d Cir. 2004).
 
6See, e.g., In re Zucker v. FDIC (In re NetBank, Inc.), 459 B.R. 801, 809 (Bankr. M.D. Fla. 2010) ("However, while pursuant to § 1.1502-77 a parent company acts as an agent for the consolidated group in filing consolidated tax returns, the designation in § 1.1502-77 of the common parent of a consolidated group as agent for each member of the group is solely for the convenience and protection of the Internal Revenue Service and is not intended to affect the determination of the entity to which a tax refund belongs."), aff'd, 2012 WL 2383297 (M.D. Fla. June 25, 2012).

7Id.
 
8See also Sharp v. FDIC (In re Vineyard Nat'l Bancorp), No. 10-01815, 2013 WL 1867987 (Bankr. C.D. Cal. May 3, 2013) (denying summary judgment to the bankruptcy estate of the parent holding company because whether the tax sharing agreement between that holding company and its bank subsidiary remained in effect in the relevant tax year was a material issue of fact in dispute). 
 
9See, e.g., Imperial Capital Bancorp., Inc. v. FDIC (In re Imperial Capital Bancorp., Inc.), 492 B.R. 25 (S.D. Cal. 2013); FDIC v. Amfin Fin. Corp., 490 B.R. 548 (N.D. Ohio 2013); Zucker v. FDIC (In re NetBank, Inc.), 459 B.R. 801 (Bankr. M.D. Fla. 2010), aff'd, 2012 WL 2383297 (M.D. Fla. June 25, 2012); Team Fin., Inc. v. FDIC (In re Team Fin., Inc.), No. 09-5084, 2010 WL1730681 (Bankr. D. Kan. Apr. 27, 2010); In re IndyMac Bancorp Inc., No. 12-cv-02967, 2012 WL 1951474 (C.D. Cal. May 30, 2012); Resolution Trust Corp. v. Franklin Sav. Corp. (In re Franklin Sav. Corp.), 182 B.R. 859 (D. Kan. 1995); United States v. MCorp. Fin., Inc. (In re MCorp. Fin., Inc.), 170 B.R. 899 (S.D. Tex. 1994).
 
See also Superintendent of Ins. v. First Cent. Fin. Corp. (In re First Cent. Fin. Corp.), 269 B.R. 481 (Bankr. E.D.N.Y. 2001), aff'd sub nom. Superintendent of Ins. v. Ochs (In re First Cent. Fin. Corp.), 377 F.3d 209 (2d Cir. 2004). First Central involved an insurance company rather than a bank. Insurance companies, like banks, cannot file for bankruptcy but instead their insolvencies are addressed through receiverships. In First Central, the bankruptcy and district courts both concluded that the tax sharing agreement between the insurer and its holding company parent did not create a trust relationship and that the tax refunds at issue thus belonged to the parent's bankruptcy estate. In that case, the state insurance supervisor, acting as receiver for the insurer subsidiary, argued that a constructive trust should be imposed because the refund resulted from taxes that the subsidiary had paid and was principally generated by the subsidiary's losses. This was the only issue that the insurance supervisor raised on appeal. The Second Circuit rejected the argument, holding that the existence of a valid and enforceable tax sharing agreement precluded a finding that a constructive trust existed.
 
10In re Imperial Capital Bancorp, Inc., 492 B.R. 25, 32 (S.D. Cal. 2013).
 
11Id. at 29.
 
12 We are aware of only two decisions, issued before the Eleventh Circuit's recent opinion in BankUnited, construing a tax allocation or sharing agreement as making a refund the property of the subsidiary and requiring the parent when it received the refund to hold the money in trust for the subsidiary. In Lubin v. FDIC, No. 10-cv-00874, 2011 WL 825751, *5 (N.D. Ga. Mar. 2, 2011), the agreement specified that "if the Holding Company receives a tax refund from a taxing authority, these funds are obtained as agent of the consolidated group on behalf of the individual group members" and "[t]his allocation agreement . . should not be intended to consider refunds attributable to the subsidiary banks . . as the property of the Holding Company." In BSD Bancorp, Inc. v. FDIC (In re BSD Bancorp.), No. 94-1341, 1995 U.S. Dist. LEXIS 22588 (S.D. Cal. Feb. 28,1995), the agreement provided that "refunds due subsidiaries" that could not be "fully funded when due" would be carried on the applicable subsidiary's books as a "loan to parent" and would accrue interest; the court cited this language as evidencing that, in other circumstances where the parent could remit the refund in full to the bank subsidiary, the parent and the bank had intended that the parent receive the refund in trust for the subsidiary.
 
13See, e.g., In re NetBank, Inc., 459 B.R. at 813 ("the Court places . . . significance on the absence in the Tax Sharing Agreement of a provision requiring that the Debtor place tax refunds received by it in escrow, the absence of a provision requiring that the Debtor segregate any tax refund due to the Bank, and the absence of restrictions on how the money might be used during the time between the receipt of a refund and the payment to a member").
 
14See, e.g., In re NetBank, Inc., 459 B.R. at 815 ("Just as the Debtor [the parent holding company] is obligated under the Tax Sharing Agreement to pay the Bank, regardless of whether the Consolidated Group is receiving a refund, the Debtor's obligation to pay the Bank is nowhere conditioned on the Debtor's collection of tax payments from other members of the Consolidated Group.").
 
15In re BankUnited Fin. Corp. II, 2013 WL 4106387, at *2-3.
 
16Id. at *3.
 
17In re BankUnited Fin. Corp. I, 462 B.R. at 900.
 
18Id.
 
19Id.
 
20See 28 U.S.C. § 158(d)(2).
 
21 In re BankUnited Fin. Corp. II, 2013 WL 4106387, at *1, *2, *4 & n.2.
 
22Id. at *4.
 
23Id. at *5.
 
24Id.
 
25 Id.
 
26Id. at *6.
 
27Id.
 
28Id. at *4-5.
 
29See, e.g., Begier v. IRS, 496 U.S. 53, 58 (1990) ("Equality of distribution among creditors is a central policy of the Bankruptcy Code."); Poss v. Morris (In re Morris), 260 F.3d 654, 666 (6th Cir. 2001) ("bankruptcy policy of ratable distribution among creditors conflicts with the constructive trust remedy and counsels its sparing use"); Brockway Pressed Metals, Inc. v. Eynon Assocs. (In re Brockway Pressed Metals, Inc.), 363 B.R. 431, 456 n.19 (Bankr. W.D. Pa. 2007) (Bankruptcy courts generally are not inclined to utilize a trust theory as a means of obtaining preferential treatment in a bankruptcy. . . . Such claims are allowed to prevail in only the narrowest of circumstances as an exception to the "equality of distribution" rule.), aff'd sub nom Eynon Assocs v. LaSalle Bank Nat'l Assocs. (In re Brockway Pressed Metals, Inc.), 304 Fed. App'x 114 (3d Cir. 2008).
 
30In re BankUnited Fin. Corp. II, 2013 WL 4106387, at *5.
 
31Id. at *6.
 
32Id.
 
33See Interagency Policy Statement on Income Tax Allocation in a Holding Company Structure, 63 Fed. Reg. 64757-01, 1998 WL 804364 (F.R.) (Nov. 23, 1998), at *64759 ("[A] parent company that receives a tax refund from a taxing authority obtains these funds as agent for the consolidated group on behalf of the group members. Accordingly, an organization's tax allocation agreement or other corporate policies should not purport to characterize refunds attributable to a subsidiary depository institution that the parent receives from a taxing authority as the property of the parent"); 12 U.S.C. § 371c (placing restrictions on loans from a bank to its parent or other affiliate).
 
34See, e.g., In re NetBank, Inc., 459 B.R. at 818-19 ("the Policy Statement does not constitute a rule or regulation or have the force of law"); id. at 819 ("Even assuming that the Tax Sharing Agreement triggers the restrictions set forth in § 371c, the Court cannot determine from the record before it that the Tax Sharing Agreement violates these restrictions."); but see BSD Bancorp, 1775 U.S. Dist. LEXIS 22588, at **14-15 (citing § 371c as support for its reading of the tax allocation agreement as making the refund the property of the bank).

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