In Re A.g. Van Metre, Jr., Incorporated, Debtor.board of Supervisors of Fairfax County, Plaintiff-appellant. v. Donald F. King, Defendant-appellee, 16 F.3d 414 (4th Cir. 1994)

The Board of Supervisors of Fairfax County (the"Board") appeals the district court's order affirming the bankruptcy court's decision to subordinate the Board's $18,000 tax lien (on real property) to certain administrative expenses. The Board's central argument is that a trustee's sale of encumbered property free and clear of a tax lien pursuant to 11 U.S.C. § 363 precludes subordination of the tax lien under section 724(b). We disagree, and affirm on the reasoning of the bankruptcy court. In re A.G. Van Metre, Jr., Inc., 155 B.R. 118 (Bankr.E.D. Va. 1993), aff'd, No. 93-146-A (E.D. Va. May 7, 1993).

In a second argument that takes up barely a page in its brief, the Board contends that the district court, in affirming the subordination decision, rendered an unconstitutional advisory opinion. The Board's argument is that even if section 724(b) (allowing subordination of tax liens) generally trumps section 363(e) (requiring"adequate protection" for perfected liens), the subordination decision was unnecessary here because the sale of the encumbered property will yield enough money to pay the Board's tax lien in full. Neither the record before us nor the design of section 724(b) allows us to conclude that the subordination decision was unnecessary.

The bankruptcy court concluded that it "lack [ed] sufficient information to precisely determine whether the [Board's] tax lien [after subordination] would be paid from sale proceeds under the fifth priority in Sec. 724(b) (5)." 155 B.R. at 123. The district court likewise lacked that information, and we lack it as well.^*  In any event, it is consistent with section 724(b) to subordinate a tax lien even when the sale of the encumbered property might generate enough money to pay the subordinated tax lien in full. Specifically, section 724(b) (6) anticipates such a situation and provides that the surplus be distributed to the estate.

The order of the district court is affirmed.

AFFIRMED