IN RE MACCA CORPORATION

SAMUEL BUFFORD, Bankruptcy Judge

Debtor in this case moves for authority to pay a $30,000 retainer to The Bankruptcy Law Firm, P.C. ("BLF") and $15,000 to Moneymaker Moneymaker ("MM") from estate assets subject to an IRS lien. The purpose of the retainer to BLF is to defend the debtor in appeals brought by the IRS in this case and in related cases. The purpose of the MM advance is to fund further litigation of the IRS claim filed against the debtor in this case. The court has previously approved the appointment of counsel and the payment of the retainers for these purposes.

According to the evidence before the court, the debtor has $876,000 in an account in Bank of America, which constitute proceeds of the sale of eight properties. The IRS filed a lien on the debtor on June 25, 1999, which imposed a lien on all of Macca's assets. The purpose of this lien is to secure claims by the IRS totaling $3,541,935 against (1) Khaled Ahmed with respect to his tax liabilities for 1995 through 1998; (2) Apex Medical Lab, Inc., for 1999 and 2000 taxes; (3) Clinica Santa Maria, Inc. For 1996 taxes; and (4) Apex Reference Lab, Inc. For 1999 taxes.

To secure these same debts, the IRS also holds a lien against the assets of K M Luxor that are worth some $4,500,000, and against other assets with a total value of some $5,376,000. The IRS has not disputed this valuation.

The IRS alleges that Macca is the alter ego of each of these entities. However, the IRS has submitted no evidence that Macca in support thereof, except for a tax court decision against Ahmed which finds in part that Macca is an alter ego of Ahmed. Notably, Macca was not a party to that litigation.

There is no doubt that the IRS is oversecured. Even if the court credits the IRS claims against Ahmed as found by the tax court, as well as the claims with respect to Apex Reference Lab, Clinica Santa Maria and Apex Medical Lab, the IRS is oversecured by approximately $1,800,000.

The IRS is only entitled to be paid the amount owing to it. The excess belongs to the debtor in possession, and can be used by the debtor for any appropriate purpose. The use of a small portion of the excess for payment of counsel is a proper purpose.

The patent purpose of the IRS in opposing this motion is to deprive Macca of the funds necessary to hire counsel to represent it in this case and to defend itself against the IRS in pending appeals. The court finds this purpose is altogether improper. Macca is a corporation, and can only appear in court through counsel. If the court were to sustain the IRS objection, the IRS would thereby assure that it could proceed against Macca with no opposition, and obtain judgment against it by default. The IRS has admitted in open court that Macca has no other assets from which to fund the hiring of payment of counsel. The court finds that this conduct is an abuse.

For the foregoing reasons, by separate order of the court grants the motion by Macca to make the payments requested to its counsel.