## Facts

- Piccadilly Cafeterias, Inc. operated a cafeteria chain with approximately 145 locations in the southeastern United States.
- Before bankruptcy, Piccadilly executed an asset purchase agreement to sell virtually all assets for $54 million.
- The day after signing the agreement, Piccadilly filed for Chapter 11.
- During the Chapter 11 case, but before any plan confirmation, the bankruptcy court authorized the asset sale under 11 U.S.C. § 363(b)(1), approved a settlement with creditors, and ruled the transfer exempt from Florida documentary stamp taxes under 11 U.S.C. § 1146(a).
- The sale closed; Piccadilly later filed a Chapter 11 plan.
- Florida assessed stamp taxes on the transfer and objected that § 1146(a) did not apply because the transfer occurred before plan confirmation.
- The dispute involved approximately $39,200 in stamp taxes.
- The bankruptcy court granted summary judgment to Piccadilly; the district court and Eleventh Circuit affirmed, applying a preconfirmation “nexus” approach for transfers tied to a later-confirmed plan.

## Issues

1. Whether 11 U.S.C. § 1146(a), exempting transfers “under a plan confirmed under section 1129,” applies to asset transfers completed before confirmation of a Chapter 11 plan.
2. Whether courts may extend the exemption to preconfirmation transfers based on a functional “nexus” to a plan later confirmed.

## Decision

- The Supreme Court reversed the Eleventh Circuit.
- Section 1146(a) exempts from stamp or similar taxes only those transfers made pursuant to, and with the authority of, a Chapter 11 plan that has already been confirmed under § 1129.
- Preconfirmation asset transfers, including § 363 sales, are not covered by § 1146(a), even if they facilitate a later-confirmed plan.
- Florida could collect documentary stamp taxes on Piccadilly’s preconfirmation asset sale.

## Legal Principles

- Statutory text controls: “under a plan confirmed under section 1129” is best read to limit § 1146(a)’s exemption to postconfirmation transfers authorized by a confirmed plan.
- Context matters: placement of § 1146(a) within provisions addressing the effects of confirmation supports a postconfirmation limitation rather than coverage of preconfirmation transactions.
- Tax exemptions are construed narrowly; the party seeking an exemption must show it falls unambiguously within the statutory terms.
- A judicially created “nexus” test that extends § 1146(a) to preconfirmation transfers departs from the statute’s text and is improper.

## Conclusion

The Court held that § 1146(a)’s stamp-tax exemption applies only to transfers made under the authority of a confirmed Chapter 11 plan, and it does not shield preconfirmation asset sales from state documentary stamp taxes.


Fla. Dep’t of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 33 (2008)