GenOn Energy – Seeks Court Approval of Tax Settlement Which Reduces Stamp Taxes Relating to Chalk Point Power Plant from $6.7 million to $1.05 million

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November 19, 2018 – GenOn Energy filed a stipulation by and between the Debtors, NRG Chalk Point LLC (“NRG Chalk Point”), and Prince George’s County, Maryland (the “County,”) [Docket No. 1997] that settles a tax dispute between the Debtors and the County regarding stamp taxes owed in respect of the Debtors’ Chalk Point power plant. The stipulation notes, “The County shall accept that certain Deed of Trust, Security Agreement, Assignment of Leases and Fixture Filing, the form of which is attached hereto as Exhibit A (the ‘Deed of Trust’), for recording with the Land Records of the County and/or any other applicable agency upon presentment by NRG Chalk Point and, when the Deed of Trust is presented for recording, the County shall promptly record or cause the Deed of Trust to be recorded in said Land Records. NRG Chalk Point shall pay or cause to be paid $1,050,000 (the ‘Settlement Payment’) to the County upon the recording of the Deed of Trust.”

As previously reported, on October 19, 2018 GenOn Energy requested a Court order affirming that there are no stamp taxes owed in respect of a recorded deed that the Debtors are obligated to deliver pursuant to the Debtors’ Plan and a related settlement agreement [Docket No. 1902]. The County had argued that $6.7 million was owed by the Debtors in respect of stamp taxes. The motion explained, “The Debtors bring this Motion to enforce the Confirmation Order, which requires that taxing authorities forego stamp taxes on material transfers made under the Plan, including non-debtor GenMa recording the deed of trust in Chalk Point.  Setting aside that the County’s challenge to the Plan’s tax exemption should have been brought months ago, their legal challenge is misplaced….There are three requirements for a transfer to be tax exempt: (1) there must be a stamp tax (or a similar tax); (2) imposed upon the making or delivery of an instrument of transfer; (3) ‘under’ a confirmed chapter 11 plan. The County has not disputed (and with good reason) that the Transfer Taxes meet the first two requirements. This dispute centers on the third requirement: whether non-debtor transfers can be ‘under’ a plan. Section 1146(a), by its plain terms, exempts non-debtor transfers under a confirmed plan from stamp taxes. The text, context, and purpose of the statute compel this conclusion…The plain text of section 1146 applies to transfers under a confirmed plan. Under settled principles of statutory construction, interpreting a statute begins with the text—and also ends with the text is unambiguous.” 

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