IN RE SENN

BILL PARKER, United States Bankruptcy Judge

ON THIS DATE the Court conducted a sua sponte review of the file in the above-referenced case, based upon an inquiry from Attorney's Title Company in Athens, Texas regarding the proper disposition of approximately $10,012.82 which has been held in escrow by Attorney's Title Company since September, 1994, pursuant to the order of this Court issued on September 27, 1994. which compelled compliance with an earlier order of this Court issued on September 6, 1994. The September 27, 1994 order, entitled "Order on Emergency Motion to Compel Compliance with Order on Emergency Motion to Sell Property of the Estate Free and Clear of Liens" (the September 27th Order") authorized the Debtor, Susan A. Senn, to sell the following described property:

Being all that certain lot, tract or parcel of land situated in Henderson County, Texas, a part of the J.M. Acosta Survey, A-1, and being Lot 20 of Unit 1 of Hillside Lake Addition, as shown on plat recorded in Volume 4 at Page 88, Cabinet A, Slide 329, Plat Records of Henderson County, Texas.

This property was claimed as exempt by the Debtor in her bankruptcy case and that exemption was unchallenged.

The September 27th Order authorized the payment of the first priority purchase money lien to Ruth A. Knight and further authorized Attorney's Title Company, as the party closing the sale, to pay for title insurance, ad valorem taxes to date of closing, attorneys fees and other incidental expenses customary in real estate transactions. Although it recognized the existence of a federal tax lien that had been filed by the United States Internal Revenue Service and recorded at Volume 1494, page 479 of the Henderson County deed records, the September 27th Order further provided that, while all liens were to attach to the proceeds of the sale, the title company was to "hold the balance of the funds from closing until further order of this Court." (emphasis added).

The purpose for this "holdback" is not readily apparent from the file, although it appears that the Debtor may have intended to challenge the validity of the IRS lien. Paragraph 4 of the Debtor's "Emergency Motion to Compel Compliance with Order on Emergency Motion to Sell Property of the Estate Free and Clear of Liens" contains the following relevant allegations:

4. The Internal Revenue Service has a lien recorded in Volume 1494, Page 479 in the deed records of 1-Henderson County, Texas, The Internal Revenue has refused to release this lien to enable this transaction to be closed. The Internal Revenue Service has demanded a list of requirements in order for them (sic) to properly evaluate this sale and to determine if in fact a partial discharge is in order. Now, it seems that the Internal Revenue Service is requiring some sort of an appraisal and a broker's opinion as to the value of the property. It is the position of the Internal Revenue Service that the order entered by this Court on September 6, 1994 is of no effect and that it has no application to them (sic).

However, the September 27th Order arising from the Court's consideration of the motion to compel, which contains the signatures of Joe Thigpen, as attorney for Debtor, Wilbert Lassiter, as the attorney for the senior lienholder, and Louise P. Hytken of the United States Department of Justice, Tax Division, as the attorney for the IRS, provides only for the interim resolution of the issue — by permitting the sale and the payment of the senior lien and closing costs, but reserving whether to pay all or any part of the remaining funds to the IRS in satisfaction of its lien. No further action regarding the disposition of these funds was indicated in the Court's review of the file.

The title company has been awaiting "a further order of this Court" for almost six (6) years. In order to resolve this issue promptly and in light of the failure of the affected parties to take action to resolve this issue over the past six years, the Court finds that sufficient cause exists for the entry of the following order.

IT IS THEREFORE ORDERED that a hearing will be conducted on Thursday, October 19, 2000 at 11:00 a.m. in the Courtroom of the United States Bankruptcy Court, 200 East Ferguson, First Floor, in Tyler, Texas, for the Debtor, Susan A. Senn, or any other affected party, to show cause as to why this Court should not enter an order providing for the payment to the United States Internal Revenue Service, in satisfaction of the existing federal tax lien, of all remaining funds currently being held by Attorney's Title Company as a result of the sale of the Subject Property.

IT IS FURTHER ORDERED that, notwithstanding the fact that the show cause order is specifically directed at the Debtor or her representatives, authorized representatives of the United States Internal Revenue Service shall also be required to attend the October 19th hearing.

IT IS FURTHER ORDERED that the October 19th hearing will be canceled in the event that an agreed order or other stipulated resolution of this enduring dispute is tendered to the Court prior to the date of such hearing.