f/d/b/a Gillis Used Cars and

Trucks; Gillis Trucking

Company, Inc.

DEBTOR CASE NO. 91-00281





This matter is before the Court on the trustee's Objection to Claim No. 8 of Franklin County for delinquent taxes in the amount of $124.03. The trustee's objection was based on the untimely filing of the claim. The record in this case shows that the debtor's bankruptcy petition was filed in this Court on June 11, 1991, and that Franklin County's claim was not filed until January 7, 1992. Franklin County contends that it has a lien pursuant to KRS 134.148 for property taxes which the debtor owed on several vehicles.

The pertinent state statute, KRS 134.148, states in part:

(1) The sheriff may, ..., ... provide the county clerk with a list of taxpayers whose tax bills on motor vehicles or trailers are delinquent.

(2) The county clerk may file a lien on such vehicle or trailer on behalf of the state, county, city, special district and school district and record such lien on the face of the certificate of title and registration and in the manner in which lis pendens are recorded.

. . . . . . . . .

(4) In the event that a bona fide purchaser for value without notice purchases a motor vehicle or a trailer on which no lien has been filed on the certificate of title of such motor vehicle or trailer as provided for in subsection (2) of this section, such person shall not be held responsible for paying delinquent ad valorem taxes or lien fees on the certificate of title of such motor vehicle or trailer if such lien was placed on the certificate of title after same person's purchase of the motor vehicle or trailer.

This lien qualifies as a statutory lien since it is a "lien arising solely by force of a statute on specified circumstances or conditions,..." See 11 U.S.C. '101(53).

Having established that the county has a lien for delinquent taxes, the issue which the Court must resolve is whether the trustee may avoid this lien. Pursuant to 11 U.S.C. '545(2) "[t]he trustee may avoid the fixing of a statutory lien on property of the debtor to the extent that such lien is not perfected or enforceable at the time of the commencement of the case against a bona fide purchaser that purchases such property at the time of the commencement of the case, whether or not such a purchaser exists".

All the elements which would allow the trustee to avoid the lien of Franklin County appear to be present in this case. The lien created by KRS 134.148 is a statutory lien. The statute provides in subsection (4) that a bona fide purchaser may avoid the lien if it was not recorded on the certificate of title before the purchase was made. The trustee is in the position of a bona fide purchaser pursuant to '545(2), so that if the liens in question were not noted on the pertinent certificates of title at the time of the commencement of this case, the trustee may avoid them.

An order in conformity with this opinion will be entered separately.


By the Court -







Copies to:

James E. Boyd, Esq.

Mark T. Miller, Esq., Trustee

John C. Ryan, Esq.