UNITED STATES BANKRUPTCY COURT FOR THE EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISION In Re: COLLINS & AIKMAN

CORPORATION, et al., ) ) ) ) Chapter 11 ) ) Case No. 05-55927 (SWR) ) (Jointly Administered) ) ) (Tax Identification #13-3489233) ) ) Honorable Steven W. Rhodes

Debtors.

UNITED STATES RESPONSE TO THE COLLINS & AIKMAN POST-CONSUMATION TRUSTS TWENTY-SEVENTH OMNIBUS OBJECTION TO CLAIMS (INSUFFICIENT BOOKS AND RECORDS) The United States of America, by and through its attorneys, Stephen J. Murphy, United States Attorney for the Eastern District of Michigan, and John W. Stevens, Special Assistant United States Attorney, on behalf of the Internal Revenue Service (hereinafter, the Service), files its Response to the Collins & Aikman Post-Consummation Trusts Twenty-Seventh Omnibus Objection to Claims (Insufficient Books and Records) (hereinafter, PostConsummation Trusts Objection). The Service is an administrative claimant of the debtor due to the failure of the debtor to fully satisfy its tax liabilities. Consequently, the Service appropriately filed an
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administrative claim totaling $159,448.90, dated December 1, 2006 (Exhibit A), and appropriately amended this administrative

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claim upward to $237,775.91 due to the continued failure of the debtor to abide by its tax responsibilities (Exhibit B). Attached are records from the Services Information Data Retrieval System (IDRS), or business records, reflecting the failure to pay these tax liabilities (Exhibit C). The burden of proof is on the objecting party to rebut "claimants prima facie case." Ohio 1996). In re Hollars, 198 B.R. 270 (S.D.

A proof of claim executed and filed in accordance

with the Bankruptcy Rules shall constitute prima facie evidence of the validity and the amount of the claim. Fed.R.Bankr.P.

3001(f); In re Hemingway Transport, Inc., 993 F.2d 915, 925 (1st Cir. 1993), cert. denied, 510 U.S. 1914 (1993). The Service's

claims are to "be afforded the normal presumption of validity." In re Hollars, 198 B.R. 270, citing In re Federated Dep't Stores, Inc., 135 B.R. 950, 957-58 (Bankr. S.D. Ohio 1992), aff'd 964 F.2d 822 (6th Cir. 1992). In order to rebut the presumption that attaches to a proof of claim, a party objecting to a proof of claim must produce substantial evidence. Hemingway Transport, 993 F.2d at 925. A

mere objection to a proof of claim and oral argument do not deprive a proof of claim of its presumptive validity. Chapman, 132 B.R. 132, 143 (Bankr. N.D. Ill. 1991). In addition, under applicable non-bankruptcy law, a presumption of correctness attaches to the audit examinations and See In re

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assessments of the Service. 1176, 1178 (6th Cir. 1992).

See Kearns v. Commissioner, 979 F.2d See also, Sinder v. United States,

655 F.2d 729, 731 (6th Cir. 1981); Cebollero v. Commissioner, 967 F.2d 986, 990 (4th Cir. 1992). In order to overcome this

presumption, an objecting party must demonstrate by the preponderance of evidence that the determination is entirely incorrect. See United States v. Janis, 428 U.S. 443, 441 (1976);

Coleman v. United States, 704 F.2d 326, 328-29 (6th Cir. 1983). This presumption applies to claims in bankruptcy cases. See

Raleigh v. Illinois Dept. of Revenue, 520 U.S. 15, 20-22 (2000). The referenced Post-Consummation Trusts Objection makes only a conclusionary statement that the Services claim, along with many others, is not shown in its records; it has not met its burden to show that the Services amended administrative claim is incorrect.

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WHEREFORE, the United States respectfully requests the Court deny the Post-Consummation Trusts Objection to the Internal Revenue Service, as well as provide the United States with other appropriate relief.

STEPHEN J. MURPHY United States Attorney

Date:

May 12, 2008

By:

/s/ John W. Stevens______ John W. Stevens (P58184) Special Assistant U.S. Attorney 477 Michigan Avenue, Suite 1870 Detroit, MI 48226

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