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Full title: Objection to Confirmation of Plan filed by Florence Bonaccorso-Saenz for Creditor Louisiana Department of Revenue. (Attachments: # 1 Exhibit 1 # 2 Exhibit 2)(Bonaccorso-Saenz, Florence) (related document(s): 1026 Third Amended Chapter 11 Plan filed by David W. Parham for Debtor First River Energy, LLC. (Parham, David) (related document(s): 1025 Third Amended Disclosure Statement filed by David W. Parham for Debtor First River Energy, LLC. (Attachments: # 1 Appendix Third Amended Plan of Liquidation)(Parham, David) (related document(s): 1003 Second Amended Disclosure Statement filed by David W. Parham for Debtor First River Energy, LLC. (Attachments: # 1 Exhibit Plan of Liquidation)(Parham, David) (related document(s): 319 Disclosure Statement filed by David W. Parham for Debtor First River Energy, LLC. (Attachments: # 1 Exhibit # 2 Exhibit), 320 Chapter 11 Plan filed by David W. Parham for Debtor First River Energy, LLC.), 1014 Second Amended Chapter 11 Plan filed by David W. Parham for Debtor First River Energy, LLC. (Parham, David) (related document(s): 1003 Second Amended Disclosure Statement filed by David W. Parham for Debtor First River Energy, LLC. (Attachments: # 1 Exhibit Plan of Liquidation)(Parham, David) (related document(s): 319 Disclosure Statement filed by David W. Parham for Debtor First River Energy, LLC. (Attachments: # 1 Exhibit # 2 Exhibit), 320 Chapter 11 Plan filed by David W. Parham for Debtor First River Energy, LLC.)))))

Document posted on Aug 9, 2021 in the bankruptcy, 7 pages and 0 tables.

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Additionally, the tax return filing obligations of First River Energy LLC are delinquent pre-petition for the tax periods set forth on Claim 1308, attached hereto an identified as LDR Exhibit 2. D. LDR also objects to the Plan because it fails to provide LDR will be paid in accordance with 11 U.S.C. §1129(a)(9)(C) with post effective date required thereunder at the rate require by 11 U.S.C. §511 in a lump sum or in installment payments.It is unclear as to why claims for Cristyn E. Hallmak PCC and Edward Vrana are included on Exhibit C of the Plan Supplement which is labeled Priority Tax Claim an Secure Tax Claims.In addition to preserving setoff rights on the face of their proofs of claim (which are not required to be filed here, and which if filed would be considered expunged), the LDR asserts preservation of their setoff rights by objecting to any attempt to limit those rights through the Plan. C. Under § 553 of the Bankruptcy Code, setoff rights survive bankruptcy and are not affected by other sections of the Bankruptcy Code, including § 1141.

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UNITED STATES BANKRUPTCY COURT WESTERN DISTRICT OF TEXAS SAN ANTONIO DIVISION IN RE: CASE NO. 18-50085 FIRST RIVER ENERGY LLC, DEBTOR CHAPTER 11 LOUISIANA DEPARTMENT OF REVENUE’S OBJECTION TO CONFIRMATION OF DEBTOR’S THIRD AMENDED PLAN OF LIQUIDATION The Secretary of the Louisiana Department of Revenue (“LDR”), through undersigned counsel objects to the confirmation of the Debtor’s Third Amended Plan of Liquidation (and supplements thereto) based on the following representations: ADMINISTRATIVE TAXES 1. A. The post-petition filing obligations for First River Energy LLC as set forth on LDR Exhibit-1 have not been received by the LDR as of this date (including multiple Severance Oil, Oilfield Oil, Corporate and Withholding tax returns). Because the Plan Proponent is not in compliance with the provisions of this title, specifically 11 U.S.C. §521(j), the plan cannot be confirmed because the requirements of 11 U.S.C. §1129(a)(2) are not met. B. Because the returns are Delinquent prior to confirmation, estimations were made pursuant to Louisiana Law in the amounts set forth on LDR Exhibit 1. However, this Exhibit/Claim does not relieve the Debtor from the requirement of having to file these returns nor entitles them to simply pay estimations. A Trustee/Debtor-in-possession must operate the business in accordance with state law as must a trustee).1 See 28 U.S.C. §959.                                                              1 The LDR’s initial administrative Claim, Claim 1309 filed on 04/30/2018 is in the process of being amended as set forth on LDR Exhibit 1 but a claim number has not been received yet. The

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C. LDR objects to the plan provision which provides that estimated claims cannot be allowed in an amount greater than the estimated amount. The returns are required to be filed to determine the amount of a priority tax claim’s actual amount. Nothing in the bankruptcy code alleviates the requirement of filing the tax returns to liquidate the claims and the bankruptcy code requires the filing under section 521(j). The debtor / plan administrator should not be allowed to limit their liability to the estimated amount after filing the return which is required on the Effective Date per the plan. . D. This case is a liquidation case, and therefore, it is imperative that the responsible parties file the required returns before confirmation as the priorities of the bankruptcy code require these taxes to be paid on the Effective Date of the Plan pursuant to 11 U.S.C. §1129(a)(9)(A). This requires the payment of all tax, interest and penalty allowed pursuant to 11 U.S.C. §503(b)(1)(B)-(C) for which the Plan of Liquidation has not provided. LDR does not accept any lesser treatment than that required by 11 U.S.C. §1129(a)(9)(A) for the amounts allowed pursuant to 11 U.S.C. §503(b)(1)(B)-(C). E. Finally, the LDR objects to the provisions of the Plan with respect to Administrative Tax Claims because it fails to exempt governmental units from the requirement of filing requests for payment as required by 11 U.S.C. §503(b)(1)(D). For these reasons, the Plan cannot be confirmed pursuant to 11 U.S.C. §1129(a)(1). PRE-PETITION TAXES 2.                                                              Debtor’s accounts for each of these tax types remain open as of this date and have not been closed by the Debtor/Trustee. 

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A. Additionally, the tax return filing obligations of First River Energy LLC are delinquent pre-petition for the tax periods set forth on Claim 1308, attached hereto an identified as LDR Exhibit 2. Accordingly, LDR has estimated the amounts of these taxes for purposes of a place holing claim, and nothing relieves the Debtors from the obligation of filing these returns. The Plan Proponent is not in compliance with the requirements of state law as require by 28 U.S.C. §959. B. LDR objects to the plan to the extent it attempts to prohibit the amendment of estimated claims after the confirmation of the plan and the effective date. First River Energy, LLC is in control of when these are actually filed and nothing in the Bankruptcy Code prohibits the amendment of a timely filed undetermined or unliquidated claim (or estimate) once returns are filed. C. LDR also objects to the Plan for failure to provide for all interest an penalty due under the bankruptcy code. 11 U.S.C. §1129(a)(9)(C) requires Priority Tax Claims to be paid interest (and this includes interest on the pre-petition interest, as well as any priority penalty under 11 U.S.C. §507(a)(8)(G)) at the rate required by 11 U.S.C. §511.2. The Plan is not confirmable pursuant to 11 U.S.C. §1129(a)(1). D. LDR also objects to the Plan because it fails to provide LDR will be paid in accordance with 11 U.S.C. §1129(a)(9)(C) with post effective date required thereunder at the rate require by 11 U.S.C. §511 in a lump sum or in installment payments. The plan does not provide a commencement date or frequency of payment or that installment payments will be completed within five years of the Petition Date. Without commencement dates or a means of deterimining when a payment is due, the LDR cannot know if the plan is in default.                                                              2 If the plan is confirmed on or before 12/31/2021, the interest rate in effect on the date of confirmation will be 6.5%.  This amount adjusts annually.  If the plan is confirmed after December 31, 2021, the new rate will be set pursuant to La. Rev. Stat. Ann. §47:1601.  This rate is published annually in the LDR’s Revenue Information Bulletin. 

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E. LDR objects to the plan provision which provides that estimated claims cannot be allowed in an amount greater than the estimated amount. The returns are required to be filed to determine the amount of a priority tax claim’s actual amount an requires that the returns be filed. Nothing in the bankruptcy code alleviates the requirement of filing the tax returns to liquidate the claims and 28 U.S.C. §959 requires the returns to be filed. The debtor / plan administrator should not be allowed to limit their liability to the estimated amount after filing the return which is required on the Effective Date per the plan. F. Additionally, pursuant to 11 U.S.C. § 1123(a)(5)(G), a Plan is required to provide adequate means for the plan’s implementation, such as “curing or waiving of any default.” The Plan fails to do so. G. The LDR also objects to their being no separation of Priority Tax Claims from other potentially lower Priority Claimants. It is unclear as to why claims for Cristyn E. Hallmak PCC and Edward Vrana are included on Exhibit C of the Plan Supplement which is labeled Priority Tax Claim an Secure Tax Claims. SETOFF AND RECOUPMENT 3. A. In addition to preserving setoff rights on the face of their proofs of claim (which are not required to be filed here, and which if filed would be considered expunged), the LDR asserts preservation of their setoff rights by objecting to any attempt to limit those rights through the Plan. Alta + Cast, 2004 WL 484881 (Bankr. D. Del.) (confirmation objection to attempt to affect setoff rights is sufficient to preserve those rights). The case law does not require creditors to file a motion to preserve their setoff rights as Debtors attempt to do here. Confirmation should be denied

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because the Plan’s attempts to enjoin creditors’ setoff rights do not comply with § 553 of the Bankruptcy Code. B. Although the Bankruptcy Code does not establish a right of setoff, § 553 is widely recognized as preserving any right to setoff under applicable non-bankruptcy law. Citizens Bank v. Strumpf, 116 S.Ct. 286, 289 (1995). Setoff rights and all aspects of a particular right of setoff, including the waiver of such a right, are determined by non-bankruptcy law. C. Under § 553 of the Bankruptcy Code, setoff rights survive bankruptcy and are not affected by other sections of the Bankruptcy Code, including § 1141. IRS v. Luongo (In re Luongo), 259 F.3d 323 (5th Cir. 2001); United States on Behalf of IRS v. Norton, 717 F.2d 767772 (3rd Cir. 1983); In re Garden Ridge Corp., 338 B.R. 627, 632 (Bankr. D. Del. 2006); Carolco Television, Inc. v. National Broadcasting Co. (In re De Laurentis Entertainment Group, Inc.), 963 F.2d 1269, 1276-78 (9th Cir. 1992), cert. denied, 506 U.S. 918, 113 S. Ct. 330, 121 L.Ed.2d 249 (1992); Davidovich v. Welton (In re Davidovich), 901 F.2d 1533, 1537 (10th Cir. 1990); Pettibone Corp. V. United States (In re Pettibone Corp.), 161 B.R. 960, 964 (N.D. Ill. 1993); Womack v. United States (In re Womack), 188 B.R. 259 (Bankr. E.D. Ark. 1995); In re Whitaker, 173 B.R. 359 (Bankr. S.D. Ohio 1994). D. Section 553 “preserves for the creditor’s benefit any setoff right that it may haveunder applicable nonbankruptcy law.” In re Semcrude, L.P., 399 B.R. 388 (Bankr. D. Del. 2009)(quoting Packaging Indus. Group, Inc. v. Dennison Mfg. Co., Inc. (In re Sentinel Prod. Corp., Inc.), 192 B.R. 41, 45 (N.D. N.Y. 1996)). And “there is no basis in the Code to eliminate [a creditor’s] setoff rights” asserted prior to confirmation. In re ALTA+CAST, LLC, 2004 WL 484881 (Bankr. D. Del. 2004) (creditor was entitled to preserve its setoff rights under § 553 where those rights were asserted prior to confirmation).

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MISCELLANEOUS 4. A. The Plan also violates the absolute priority rule in proposing to pay any sum to General Unsecure Creditors on 10/1/2021 (or as soon as practicable) from the estate before the Priority Tax Claimants are paid in full. B. LDR joins in the UST’s objection to confirmation, as if copied herein in extenso as to the exculpation provisions of the plan. C. LDR objects to the De Minimis Distributions an Unclaimed Distribution Provisions of the plan. LDR does not give up its right to payment in full of its claims pursuant to the Bankruptcy Code. The LDR objects to the provisions of the Plan at Article 10.2 and 10.3 Unclaimed Distributions which allow the estate reclaim de minimis amounts as well as uncashed checks without any provision for notice to the claimant. The LDR is a taxing authority and should not lose its right to payment of any amount due under the code or for a potentially misdirected check or a check that gets lost in the mail. LDR does not waive its right to any distribution to which it may be entitled under the plan as such payments may be made electronically pursuant to the LDR’s ordinary procedures and should be made to the address contained on the Proof of Claim. This provisions of this Section are insufficient to ensure due process for the LDR.   WHEREFORE, the LDR prays that, after all due legal proceedings are had, that confirmation of the Plan will be denied, or temporarily denied, until the LDR’s objections are cured by an amended Plan or by inclusion of cure provisions within the Confirmation Order, and for all other relief that may be just in the premises. Respectfully submitted, LOUISIANA DEPARTMENT OF REVENUE /s/ Florence Bonaccorso-Saenz

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Florence Bonaccorso-Saenz (La. Bar No. 25493) Senior Bankruptcy Counsel, Litigation Division 617 N. Third St., Office 780 Post Office Box 4064 (Zip Code 70821-4064) Baton Rouge, LA 70802 Tele: (225) 219-2083, Fax: (225) 231-6235 Email: Florence.Saenz@la.gov Pro Hac Vice Application Filed  

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