IRS: SIST owes nearly $1 million in taxes; Agency says no tax returns filed since 2006

Shawando Leader, Wisconsin/June 11, 2011

The IRS has weighed in on the Chapter 11 bankruptcy case of the Samanta Roy Institute of Science and Technology, maintaining SIST owes the government nearly $1 million in unpaid taxes.

The IRS filed a brief in a federal bankruptcy court in Delaware on Wednesday in support of a motion by the U.S. Trustee’s office requesting the court appoint a Chapter 11 trustee or examiner or dismiss SIST’s bankruptcy petition.

The IRS said in its filing it has a priority claim in the amount of $991,567 for unpaid taxes from 2003 through 2010.

The agency stated in its motion that the amount was an estimate because no tax returns have been filed since 2006.

The filing maintains that failure to file returns and pay taxes constitutes gross mismanagement of the affairs of the debtors, and is grounds for the court to appoint a Chapter 11 trustee.

The U.S. Trustee’s office called for the appointment of a trustee or examiner or the dismissal of the SIST bankruptcy in a May 25 motion.

A hearing on the trustee’s motion had been scheduled for June 16. However, SIST has asked for a June 13 hearing on a motion to reschedule the June 16 hearing to a later date to allow newly hired counsel to attend.

SIST and six of its subsidiaries originally filed for Chapter 11 bankruptcy protection in Delaware in March 2009. The case was dismissed in September 2009 and was subsequently appealed to the U.S. Third Circuit Court of Appeals.

Several of those subsidiaries subsequently withdrew from the appeal to file new bankruptcy petitions on their own.

Earlier this year, SIST also withdrew from the appeal to file a new bankruptcy case.

The new SIST filing came about a week after a civil suit was filed in Shawano County seeking foreclosure of seven properties in Shawano owned by SIST.

Previously, Midwest Properties of Shawano LLC, Midwest Oil of Minnesota LLC, and U.S. Acquisitions and Oil Inc. (USAO) pulled out of the appeal and refiled new Chapter 11 petitions in Delaware.

Midwest Properties and USAO have since filed motions seeking to have their cases consolidated with the new SIST filing.

Last week, the court tentatively granted a Midwest and USAO motion to reschedule a hearing on whether properties owned by those subsidiaries that have been put into receivership should be turned back over to the subsidiaries.

However, the court said it would rule on the trustee’s motion before deciding whether the turnover hearing would be held.

SIST and its subsidiaries own a number of Shawano area properties and businesses, including three gas station/convenience stores in the city. Several of those properties have been the subject of foreclosure action in Shawano County Circuit Court that has been delayed due to the various bankruptcy filings.

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