UNITED STATES BANKRUPTCY COURT

EASTERN DISTRICT OF KENTUCKY

CORBIN DIVISION

IN RE:

PUCKETT'S CREEK COAL COMPANY, INC. CASE NO. 91-60886

DEBTOR

PUCKETT'S CREEK COAL COMPANY, INC. PLAINTIFF

VS. ADV. NO. 92-6002

UNITED STATES OF AMERICA,

INTERNAL REVENUE SERVICE DEFENDANT

MEMORANDUM OPINION

This matter was initiated by the filing of the plaintiff's Adversary Complaint to Determine Dischargeability of Claim on January 24, 1992. The Complaint states that the plaintiff, a Kentucky corporation, had been administratively dissolved on July 10, 1989, for failure to file its annual report and pay the $10.00 fee. Apparently unaware of the administrative dissolution, the corporation continued to do business and did not liquidate its assets. The Complaint contends that the defendant incorrectly treated the administrative dissolution as a liquidation, and assessed a tax against the shareholders of the corporation on that basis. The proof of claim filed by the defendant in the bankruptcy case shows a total tax debt claimed in the amount of $109,010.62, with $44,866.64 attributable to taxes, penalties and interest assessed on account of the alleged liquidation. The defendant filed its Answer on March 6, 1992.

The plaintiff's Motion for Summary Judgment contends that the two provisions of the Kentucky Revised Statutes set out above have the effect of permitting an administratively dissolved corporation to reinstate itself at any time after such dissolution, and to be treated "...as if it had continuous and uninterrupted existence and that the administrative dissolution or revocation had never occurred." KRS 271B.14-225. The plaintiff further contends that it "...is entitled to receive the status of uninterrupted existence." KRS 271B.14-225 states that a

As set out above, the first corporation is then treated as though it had a continuous and uninterrupted existence.

The plaintiff states that "...Articles of Incorporation and Merger as well as the reinstatement packet were tendered to the Secretary of State on November 19, 1992." The plaintiff has filed a copy of an Application for Reinstatement. This Court has entered an Agreed Order between the plaintiff and the Kentucky Revenue Cabinet in the bankruptcy case which directs the Kentucky Secretary of State to reinstate the plaintiff. The plaintiff has further filed a copy of a Certificate of Existence/Domestic Corporation signed by the Kentucky Secretary of State on March 2, 1993. The plaintiff's Articles of Merger (of Pucketts Creek and Pucketts Creek II) were filed in the Secretary of State's office on the same day.

A corporation is a creature of the state, and the state therefore controls its existence. As the Supreme Court opined in Chicago Title & Trust Co. v. Forty-One Thirty-Six Wilcox Bldg. Corporation, 302 U.S. 120, 124, 58 S.Ct. 125 (1937), "...a private corporation in this country can exist only under the express law of the state or sovereignty by which it was created." See also Village of Montpelier v. Riche, Chenevert and Andress Construction Company, Inc., 43 B.R. 736, 738 (U.S.D.C. M.D.La. 1984), in which the court stated, "The legal status of a corporation is governed by state law." Pursuant to Kentucky law, then, the plaintiff has apparently "...receive[d] the status of uninterrupted existence."

It is therefore the opinion of this Court that the plaintiff has carried forward its burden of demonstrating that it is entitled to judgment as a matter of law, and that its Motion for Summary Judgment should be sustained. An order in conformity with this opinion will be entered separately.

Dated:

By the Court -

____________________________

Judge

Copies to:

Debtor

Ronald D. Bowling, Esq.

Charles H. Keen, Esq.