Appeal from the United States District Court for the Western District of Wisconsin.No. 10-CV-84-Barbara B. Crabb, Judge.
The opinion of the court was delivered by: Tinder, Circuit Judge.
Before TINDER and HAMILTON, Circuit Judges, and MURPHY, District Judge.
" "The Honorable G. Patrick Murphy of the Southern District of Illinois, sitting by designation.
When debtor and appellee Grede Foundries, Inc. entered bankruptcy, the Wisconsin smelting plant owed more than $1.3 million in delinquent utility charges to the local municipal utility, appellant Reedsburg Utility Commission. Months after Grede filed for bankruptcy, and despite the automatic stay that accompanied Grede's filing, Reedsburg implemented the process pursuant to state law by which it could collect on Grede's arrearage. Grede sought to enforce the stay. The bankruptcy court and the district court found that none of the exceptions to the automatic stay applied to Reedsburg's efforts to collect on Grede's debt, which is substantial considering that Grede's billings constituted more than one-third of Reedsburg's operating revenue. We are sympathetic to Reedsburg's plight but the exceptions to the automatic stay do not apply to Reedsburg's efforts to collect on Grede's debt. We affirm.
Grede owned properties in Reedsburg, Wisconsin, that received utility services from the Reedsburg Utility Commission, a municipal utility. The utility services- primarily electricity-were critical to Grede's operations. The foundry conducted the electricity through rods to heat vats of molten steel to press into parts for the automotive industry. Heating the rods to the appropriate degree to melt steel produced a hefty electric bill; Grede's average monthly utility bill was around $600,000 to $700,000. Reedsburg's billings with Grede were also significant, constituting about 35% of its operating revenue in 2008. Reedsburg provides electric, water, telephone, internet, and cable TV service to 4,170 residents and 681 businesses in the Reedsburg area in Sauk County, Wisconsin.
Perhaps triggered by the major downturn in the American automotive industry, Grede voluntarily filed for Chapter 11 bankruptcy on June 30, 2009, with assets between $100 million and $500 million. The filing initiated the automatic stay pursuant to 11 U.S.C. § 362(a)(4) & (6), halting "any act to create, perfect, or enforce any lien against property of the estate" or "any act to collect, assess, or recover a claim." Yet Congress also created several exceptions to the automatic stay, three of which are at issue in this appeal: perfecting prepetition interests in property, id. § 362(b)(3), determining the existence of and providing notice of a tax matter, id. § 362(b)(9), and creating or perfecting a lien for a special tax or special assessment on real property, id. § 362(b)(18). At the time of filing, Grede owed Reedsburg $1,312,314.09 in prepetition unpaid utility charges-or a few months' worth of utility services. Grede continued operating as a debtor in possession pursuant to 11 U.S.C. §§ 1107(a), 1108.
The Wisconsin law governing how municipal utilities collect on an arrearage is fairly straightforward for our purposes. Reedsburg must give delinquent property owners a written notice on October 15 of their pre-October 1 arrearage for the year pursuant to Wis. Stat. § 66.0809(3). The notice must state:
that unless the amount is paid by November 1 a penalty of 10 percent of the amount of arrears will be added; and that unless the arrears, with any added penalty, are paid by November 15, the arrears and penalty will be levied as a tax against the lot or parcel of real estate to which utility service was furnished and for which payment is delinquent.
Id. (emphasis supplied). On November 16 of each year, Reedsburg must submit to local government officials a certified list of the properties in arrears and the amounts due so that
[e]ach delinquent amount, including the penalty, becomes a lien upon the lot or parcel of real estate to which the utility service was furnished and payment for which is delinquent, and the clerk shall insert the delinquent amount and penalty as a tax against the lot or parcel of real estate. All proceedings in relation to the collection of general property taxes and to the return and sale of property for delinquent taxes apply to the tax if it is not paid within the time required by law for payment of taxes upon real estate.
Id. (emphases supplied). Thus, pursuant to Wis. Stat. § 66.0809(3), on October 15, 2009, Reedsburg's general manager David Mikonowicz sent Grede nineteen separate notices regarding the unpaid utility charges. The notices stated:
Our records indicate a current balance in the amount of $[amount] for the account of GREDE FOUNDRY at [location].
As provided for in sections 66.0809 and 66.0627 of the Wisconsin Statutes and Reedsburg City Ordinance No. 1083 Section 3.08, unpaid electric, water and sewer bills become a lien against the property if they remain uncollected after October 30, 2009.
We are aware that Grede Foundry is a debtor in a currently pending Chapter 11 bankruptcy proceeding. . . . This letter constitutes notice of the Reedsburg Utility Commission's right under municipal ordinance and state law to place amounts due on this account on the property tax roll. This notice does not constitute the filing of a lien. This notice ...