Bavely v. United States (In re Terwilliger's Catering Plus, Inc.)

KENNEDY, Circuit Judge.

The United States and the State of Ohio each claim priority in this bankruptcy case to proceeds from the sale of the debtor's liquor license. The United States’ claim is based on a valid, perfected federal tax lien filed against all of the debtor’s property prior to the bankruptcy proceedings. The state’s claim is based on an Ohio statute that prohibits the Liquor Control Commission from approving the sale of a license until the licensee pays all taxes owed to the state. The Bankruptcy and District Courts held that under the priority rules of the Bankruptcy and Tax…