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Full title: Objection to Confirmation of Plan Filed by Harris County, et al., Shelby County. (Related document(s):205 Amended Chapter 11 Plan) (Grundemeier, Tara) (Entered: 05/20/2021)

Document posted on May 19, 2021 in the bankruptcy, 4 pages and 0 tables.

Bankrupt11 Summary (Automatically Generated)

Harris County holds a secured claim in the estimated amount of $12,603.60 for ad valorem taxes for tax year 2021 on the Debtors’ property. The property taxes were duly assessed in accordance with the laws of the State of Texas and constitute valid, liquidated, secured claims against the Debtors’ property entitled to priority over other secured claims.Texas Property Tax Code § 32.05(b) provides that tax liens securing the property have priority over the claim of any creditor of a person whose property is encumbered by the lien.The Taxing Authorities’ liens take priority over the claim of any holder of a lien on property encumbered by the tax lien, whether or not the debt or lien existed before the attachment of the tax lien.The tax claims are entitled to priority as secured claims, senior to other secured claims, according to the Bankruptcy Code, 11 U.S.C. §506.

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IN THE UNITED STATES BANKRUPTCY COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION IN RE: § Chapter 11 § CASTEX ENERGY 2005 HOLDCO, § CASE NO. 21-30710 (MI) LLC, ET AL., § § Debtors. § (Jointly Administered) § OBJECTION OF HARRIS COUNTY AND SHELBY COUNTY TO SECOND AMENDED JOINT CHAPTER 11 PLAN (Ref. Docket No. 205) To the Honorable Marvin Isgur, United States Bankruptcy Judge: NOW COME Harris County and Shelby County (the “Taxing Authorities”), secured creditors in the above-numbered and styled bankruptcy case, and file this objection to Second Amended Joint Chapter 11 Plan (the “Plan”). In support of the objection, the Taxing Authorities would show the Court as follows: 1. The Taxing Authorities are political subdivisions of the State of Texas. 2. Harris County holds a secured claim in the estimated amount of $12,603.60 for ad valorem taxes for tax year 2021 on the Debtors’ property. Shelby County holds a secured claim in the amount of $2.503.42 for ad valorem taxes owed by the Debtor for tax years 2012-2021. The property taxes were duly assessed in accordance with the laws of the State of Texas and constitute valid, liquidated, secured claims against the Debtors’ property entitled to priority over other secured claims. 3. Texas Property Tax Code § 32.05(b) provides that tax liens securing the property have priority over the claim of any creditor of a person whose property is encumbered by the lien. The Taxing Authorities’ claims are for ad valorem taxes assessed against the Debtors on January 1 of each year pursuant to Texas Property Tax

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Code §§ 32.01 and 32.07. The taxes are secured by first priority liens on the property of the Debtors pursuant to Tex. Prop. Tax Code §§ 32.01 and 32.05. The Taxing Authorities’ liens take priority over the claim of any holder of a lien on property encumbered by the tax lien, whether or not the debt or lien existed before the attachment of the tax lien. See Texas Property Tax Code § 32.05 (b); See also Central Appraisal District of Taylor County v. Dixie-Rose Jewels, Inc., 894 S.W. 2d 841 (Tex. App. 1995) (bank’s foreclosure of its purchase money lien on personal property did not defeat or destroy the taxing unit’s statutory tax lien). The tax lien arises on January 1 of each tax year and “floats” to after acquired property. See City of Dallas v. Cornerstone Bank, 879 S.W. 2d 264 (Tex. App. - Dallas 1994). The tax lien is a lien in solido and is a lien on all property of the Debtor. See In re Universal Seismic, 288 F.3d 205 (5th Cir. 2002). The tax lien is also unavoidable. See In re: Winns, 177 B.R. 253 (Bankr. W.D. Tex. 1995). The tax claims are entitled to priority as secured claims, senior to other secured claims, according to the Bankruptcy Code, 11 U.S.C. §506. Stanford v. Butler, 826 F.2d 353 (5th Cir. 1987). 4. The Taxing Authorities object to the Plan for the reasons set forth below: a. The Plan is vague as to how and when the Taxing Authorities’ claims will be paid. The Plan should not be confirmed until the Debtors specifically provide how the tax claims will be paid. b. The Plan fails to properly provide for the payment of interest on the Taxing Authorities’ claims as required by 11 U.S.C. §§ 506(b) and 1129. The Taxing Authorities are entitled to interest on the claims at the statutory rate of 12% per annum continuing until the claims are paid in full. 11 U.S.C. § 511; See also U.S.v. Graham, 59 Fed. Appx. 660 (6th Cir. 2003); and In re Marfin Ready Mix Corp., 220 B.R. 148 (Bankr. E.D. N.Y. 1998). c. The Taxing Authorities object to the Plan on the basis that the Plan fails to provide for the retention of the Taxing Authorities’ liens on the collateral. The Plan

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should not be confirmed unless and until it specifically provides for the Taxing Authorities’ liens to remain on the collateral until the taxes are paid in full. d. Lastly, the Taxing Authorities object to the Plan on the basis that the Plan requires prior authorization to amend any claims after the Effective Date. The Taxing Authorities’ claims include estimated amounts for the 2021 tax year that will not become final until after the Effective Date. The Taxing Authorities should be allowed to amend their claims after the Effective Date without having receiving prior authorization to do so in order to reflect the final 2021 tax amounts. WHEREFORE, PREMISES CONSIDERED, the Taxing Authorities respectfully pray that this Court sustain this objection to the Plan, that it accordingly deny confirmation of the Plan, and for such other and further relief, at law or in equity, as is just. Dated: May 20, 2021 Respectfully submitted, LINEBARGER GOGGAN BLAIR & SAMPSON, LLP /s/ John P. Dillman JOHN P. DILLMAN Texas State Bar No. 05874400 TARA L. GRUNDEMEIER Texas State Bar No. 24036691 Post Office Box 3064 Houston, Texas 77253-3064 (713) 844-3478 Telephone (713) 844-3503 Facsimile john.dillman@lgbs.com tara.grundemeier@lgbs.com Counsel for the Taxing Authorities

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CERTIFICATE OF SERVICE The undersigned does hereby certify that a true and correct copy of the foregoing document was served by the Electronic Case Filing System for the United States Bankruptcy Court for the Southern District of Texas on May 20, 2021. /s/ Tara L. Grundemeier Tara L. Grundemeier

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CERTIFICATE OF SERVICE The undersigned does hereby certify that a true and correct copy of the foregoing document was served by the Electronic Case Filing System for the United States Bankruptcy Court for the Southern District of Texas on May 20, 2021. /s/ Tara L. Grundemeier Tara L. Grundemeier

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