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The Liquidating Trustee and IRS agreed to adjourn adjudication of the tax-penalty motion from August 10 to September 14 at 1:00 p.m. ET, while the response deadline moved from August 3 to September 2 at 4:00 p.m. ET. The hearing-cancellation notice says the parties agreed to the adjournment, and the rescheduled-hearing notice identifies no substantive reason or merits resolution.
The 35-day deferral matters because the tax-liability motion says approximately $409,000 of asserted IRS penalties—about $386,000 against ONH AFC CS and $23,000 against ONH 1601 CS—are preventing final resolution while the Trust prepares its final creditor distribution and targets closing the cases by year-end. The adjournment leaves that stated distribution blocker unresolved for another five weeks, compressing the Trust’s path to its year-end closure target.
The Liquidating Trustee asked the court to disallow approximately $409,000 of IRS penalties—about $386,000 against ONH AFC CS and $23,000 against ONH 1601 CS—that are holding up the final distribution to creditors. According to the tax-liability motion, the penalties concern the 2023 tax year and surfaced after the IRS had reduced its earlier 2022 claims to zero.
The Trustee argues that the IRS failed to assert the penalties by the administrative-claims deadline and that any penalties based on paper rather than electronic filings are invalid because the debtors were exempt from electronic filing while in bankruptcy. It asks the court to determine the liabilities under Bankruptcy Code section 505, declare them barred or unenforceable, or alternatively subordinate them to claims held by victims of the underlying fraud. The dispute is now a direct obstacle to completing the post-confirmation wind-down and distributing remaining trust assets.
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