EXIDE BATON ROUGE UPDATE: Baton Rouge wants Exide to pay $1.9 million in unpaid taxes; Exide wants its bankruptcy judge to let it get away with not paying the owed taxes because it says claim is untimely and barred under its second bankruptcy reorganization plan

By Khadijah M. Britton

Law360, New York (June 11, 2015, 5:46 PM ET) — Battery maker Exide Technologies Inc. asked a Delaware bankruptcy judge on Wednesday to sanction Baton Rouge’s pursuit of $1.9 million for a tax assessment, saying its claims are untimely and barred under its reorganizational plan.
The bankrupt automotive and industrial battery maker argued that the city of Baton Rouge and parish of East Baton Rouge’s state tax court claim was submitted far after a December 2013 deadline set by the court to file proofs of claim, and they failed to seek leave to file their claim.

“The city/parish’s pursuit of the claim is a clear violation of the plan’s discharge and permanent injunction provisions effected by the confirmation order,” the motion said. “Moreover, the city/parish cannot claim lack of notice: Exide caused no less than four copies of the bar date notice to be served on the city/parish.”

The company’s reorganizational plan, approved by the bankruptcy court in March, says that late-filed claims by corporations are automatically disallowed and provides for a permanent injunction against prosecuting such discharged claims, according to Exide. Though Baton Rouge argued its claim was exempt from the discharge, Exide responded that the discharge exception they cited applies to only individual — not corporate — debtors.

Exide’s motion asked the court to enforce the injunction provision in the plan against the tax claims, sanctioning the city and parish and requiring them to pay Exide’s costs and expenses in defending itself against those claims.

Exide filed for Chapter 11 bankruptcy in June 2013. Four months later, the company filed its first of four bar date notices with the city and parish, according to the motion.

Despite that notice, on Dec. 8, the city and parish issued a sales and/or use tax assessment for $1,925,202.17, according to Exide’s motion. The city and parish’s complaint sought East Baton Rouge Parish sales and/or use tax for the period January 1, 2006 to June 30, 2009 based on a 2010 audit.

In its motion, the company argued that as a result of its emergence from Chapter 11 bankruptcy in April, it was protected from “any entity commencing or continuing any action, employment of process, or act to collect, offset or recover any claim, interest or cause of action satisfied or discharged under the plan or pursuant to the confirmation order.”

Exide recently used similar grounds when it asked this court to sanction a California air pollution regulator over its claims of alleged environmental violations seeking up to $80 million.

Georgia-based Exide, one of the largest producers of lead-acid batteries for the industrial and transportation markets, sought court protection in 2013 in the face of rising production costs, intense competition and reduced access to credit.

Representatives for the city and parish did not immediately respond to requests for comment on Thursday.

Counsel for Exide did not respond to requests for comment Thursday morning.

Exide is represented by Anthony W. Clark, Dain A. De Souza, Kenneth S. Ziman and James J. Mazza Jr. of Skadden Arps Slate Meagher & Flom LLP.

Counsel for the city was not immediately available.

The bankruptcy case is Exide Technologies, case number 1:13-bk-11482, in the U.S. Bankruptcy Court for the District of Delaware.

–Editing by Rebecca Flanagan.

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