MEMORANDUM OF DECISION ON MOTION FOR SANCTIONS
FRANCIS G. CONRAD, Bankruptcy Judge.
Dr. North seeks sanctions
against Board for violation of the Bankruptcy Code’s automatic stay because Board refuses to stay its pre-petition administrative Order suspending Dr. North’s Chiropractic license for non-payment of pre-petition state taxes. Thus, we hold Board’s license suspension Order is stayed from taking effect post-petition under 11 U.S.C. §§ 362(a)(1)
because the plain purpose of Board’s Order is to comply with Vermont’s Tax Commissioner’s statutory direction to suspend Dr. North's license as a means to enhance the state’s coffers. Pecuniary collection activity is not excepted from stay under 11 U.S.C. § 362(b)(4).
This is the classic case of “if it looks like a duck, walks like a duck, and quacks like a duck, it must be a duck.”
On April 4, 1990, Board issued an Order suspending Dr. North’s license to practice chiropractic medicine. Board’s Order ensued from the Tax Commissioner’s February 9, 1990 letter enlisting Board’s suspen
sion of Dr. North’s license because Dr. North owed State taxes and charges in the amount of $9,799.17 since 1984. As stated by Board:
This action was brought under 32 V.S.A. § 3113(f),
which requires a board to suspend or revoke a license if it finds that state taxes have not been paid and are not under appeal.... Having found the nonpayment, the Board is left with little choice; it must either suspend or revoke the license until the taxpayer is in good standing with the Tax Department.
... The statute deprives taxpayers of a valuable privilege if they owe back taxes and have not made a satisfactory arrangement to pay them. Loss of the valuable privilege makes payment of the taxes even harder. The statute may be harsh, even draconian, but it is rational. Loss of license creates a powerful incentive to pay back taxes. Moreover, the statute is clear; suspension or revocation must follow a finding of unpaid taxes, if requested by the Commissioner of Taxes.
In re James T. North, DC, License No. 651,
Docket No. CD03-0290, pages 2-3 (Vermont Board of Chiropractic Examination and Registration, Order April 4, 1990).
Board s Order stated the suspension was effective “45 days after the date of [its] order, [May 19, 1990] and continuing until the Board receives a certificate of good standing from the [Tax Commissioner].” The effective date of the suspension occurred after Dr. North’s Chapter 7 bankruptcy filing on May 16, 1990. 11 U.S.C. §§ 101,
et seq.
Board’s Order further stated its ruling would become final on May 4, 1990 upon the expiration of the appeal period. Dr. North did not appeal Board’s Order.
On May 17, 1990, Dr. North’s attorney notified the Tax Department, by letter and FAX transmission, of the May 16, 1990 bankruptcy filing. The May 17,1990 letter proposed 4 monthly payments of $300.00 toward the outstanding non-dischargeable taxes totaling $1,125.73
in exchange for a “Certificate of Good Standing”
from the Tax Department before Dr. North’s suspension was to take effect. The Tax Department agrees that any state taxes owed by Dr. North prior to 1987 are dischargea-ble, and the May 17,1990 letter qualifies as a good faith proffer for a “payment plan”
for “good standing” under 32 Vt.Stat.Ann. § 3113(g). But no action was taken on this good faith offer.
In response to the suspension, Dr. North filed a motion for sanctions under 11 U.S.C. § 362 against Board. Dr. North asserts the sole purpose of Board’s action is to collect taxes for the state. Dr. North claims full compliance with Board’s supervisory and disciplinary provisions under 26 Vt.Stat.Ann. §§ 421 through 510, including § 505.
Nonpayment of taxes is not one of the reasons Board may suspend his license. Moreover, Dr. North argues, Board’s suspension of Dr. North’s license does not protect Vermont’s public welfare.
Board asserts several arguments and defenses for its action. First, Board says it took no affirmative action against Dr. North after it issued the April 4, 1990 suspension Order. Second, the license suspension qualifies for the “governmental unit”
exception of 11 U.S.C. § 362(b)(4). Third, and asserting a § 108 defense,
Board says the period of time between when its Order became final pre-petition and the post-petition effective suspension date is a “mere running of time” that is not subject to the automatic stay. Moreover, there was nothing left for Dr. North to cure. Alternatively, if § 108(b) applies, Dr. North lost whatever protection § 108(b) provides because the trustee failed to invoke § 108(b) within 60 days of Dr. North’s bankruptcy.
Fourth, Board acknowledges that § 362’s legislative history
indicates license revocation proceedings are subject to the automatic stay. But, it points out 32 Vt.Stat.Ann. § 3113(f) is a valid exercise of Board’s policy and regulatory powers, and thus, Dr. North’s license suspension is excepted from the stay under § 362(b)(4).
The interplay between the tax and the professional regulation statutes, Board claims, evinces a comprehensive regulatory scheme to protect public safety by encouraging the financial responsibility of licensed professionals.
Board also claims there is nothing for the automatic stay to stop after the appeal period expired pre-petition because Dr. North’s license is not property of the estate.
Finally, and asserting a Nurem
berg defense, Board says sanctions are inappropriate where it had no discretion but to act as directed by the Tax Department.
Dr. North’s post-hearing memorandum raised two new arguments. First, in the event we hold the automatic stay prevented Board’s Order from taking effect post-petition, then Board violated 11 U.S.C. § 108(c) by their “enforcement” of its Order three (3) days after Dr. North filed bankruptcy, when the license became property of the estate. Instead, Dr. North claims Board’s enforcement “should have been stayed at least 30 days after the notice of termination or expiration of the stay under Section 362.” Second, in the event we were to hold Board did not violate the automatic stay, Board is nevertheless enjoined from suspending Dr. North’s license under 11 U.S.C. § 108(b) because Dr. North’s license became property of the estate before the effective date of the suspension and the bankruptcy trustee had 60 days thereafter to determine what options to pursue with respect to that asset. Thus, Board violated § 108(b) “by continuing with its intention to suspend Dr. North’s license within 3 days of his declaration of bankruptcy.”
Dr. North’s motion presents four issues: (1) Does any section of § 108 apply, (2) what is the scope of § 362(a)(1) as it applies to Dr. North, (3) does § 362(a)(1) require an affirmative act, and (4) does § 362(b)(4)’s “governmental unit” exception apply?
The factual posture of this motion, as presented by the parties, has placed us in a quixotical frame of thought because we can imagine various outcomes of Dr. North’s case despite our ruling.
It is clear that only a limited subsection of § 108 applies here, regardless of the efforts of either Board or Dr. North to convince us otherwise. Before the filing of Dr. North’s Chapter 7 petition, there was little he could do under applicable non-bankruptcy law to stay the tax collection activity, a/k/a the license suspension. The State, in the wisdom of its legislature, deems it appropriate to suspend professional licenses for the non-payment of taxes. As the Board stated, the statute may be harsh, even draconian, but it is rational. Outside of bankruptcy the loss of a professional license creates a powerful incentive to pay back taxes. As a Court, we have no right to challenge or change that wisdom.
Any appeal of Board’s suspension passed because Dr. North did not appeal the Order.
Dr. North’s next step, under applicable nonbankruptcy law, if he so chose, was to negotiate a payment plan under 32 Vt.Stat. Ann. § 3113(g). He could have exercised that right under State law or under Federal bankruptcy law. We can only speculate about why Dr. North chose to exercise his § 3113(g) rights in bankruptcy because we are not informed about his reasons for so doing. We are aware that Dr. North had a previously failed Chapter 13 case. His Chapter 7 filing was probably inevitable. Outside of bankruptcy, a § 3113(g) payment plan would have been onerous.
Inside of bankruptcy, enhanced by the discharge of personal obligations and the majority of his tax debt, a § 3113(g) payment plan would be more manageable.
Board claims there was nothing left to be done in this matter but let the suspension go into effect. This claim misses the mark. Section 3113(g) provides for a “payment plan.” There was something the Tax Department could have done, it could have chosen to act either negatively or affirma
tively on Dr. North’s May 17, 1990 letter. It chose to do nothing. Whether its choice was inadvertent or intentional we don’t know. The only fact we have before us is that nothing was done by the state on the attempted exercise of a state granted right.
Upon the filing of the Chapter 7 petition, the State of Vermont’s rights changed. Instead of the pre-petition position vis a vis the owed taxes, its post-petition position is that of unsecured creditor for most of the taxes and a non-discharged obligee for those taxes not discharged in bankruptcy. But the collection on those non-discharged taxes must wait 30 days after notice of the termination or expiration of the automatic stay under § 362. If we were to hold otherwise we would be faced with the anomalous position of the automatic stay and the permanent injunction of § 524 being enforceable against the state post-petition and post-discharge for those taxes that are dischargeable but not have § 362 being in effect post-petition/ante-discharge for those taxes that are not dischargeable. This position would lay waste the protections afforded by the Bankruptcy Code. Moreover, we know of no case where a claimant may attempt to collect nondis-charged debts without first seeking relief from the automatic stay under § 362(d), or they must wait until the entry of a § 524 discharge. Thus, we hold that § 108(c)(1) applies to Dr. North’s license suspension for failure to pay taxes.
Having held that § 108(c)(1) applies to this matter, we turn our attention to the scope of the automatic stay as it pertains to Dr. North.
There is no doubt the automatic stay protects § 541 property of the estate to prevent the unsupervised dismemberment of the estate through a “chaotic and uncontrolled scramble for the debtor’s assets in a variety of uncoordinated proceedings in different courts.”
LTV Steel Company, Inc. v. Board of Education of Cleveland City School District (In re Chateaugay Corp., Reomar, Inc.),
93 B.R. 26, 30 (S.D.N.Y. 1988) (quoting,
Fidelity Mortgage Investors v. Camelia Builders, Inc. (In re Fidelity Mortgage Investors),
550 F.2d 47, 55 (2d Cir.1976)
cert. denied,
429 U.S. 1093, 97 S.Ct. 1107, 51 L.Ed.2d 540 (1977)).
Contrary to Board’s understanding, however, the automatic stay is not limited to estate property. A literal reading of the subsections of § 362(a) supports an interpretation that the majority of those subsections protect either debtors or debtors’ property. Only two of eight subsections under § 362(a) expressly require the presence of estate property; namely, §§ 362(a)(3) and (a)(4). Sections 362(a)(1), (5), (6), (7) and (8) protect debtors. Moreover, § 362(a)(2) stays enforcement of a pre-petition judgment against either debtors or property of the estate.
To simply limit the scope of the automatic stay to estate assets and not to a debtor when appropriate circumstance otherwise demands such protection not only defeats a literal reading of the applicable subsections of § 362(a) but also frustrates Congress’s purpose behind the automatic stay. The automatic stay “give[s] the debt- or a breathing spell from his creditors,” and “permit[s] the debtor to attempt a repayment or reorganization plan, or simply to be relieved of the financial pressures that drove him into bankruptcy.” S.Rep. No. 95-989, 95th Cong., 1st Sess. 54-55,
reprinted in
1978 U.S.Code Cong. & Admin.News 5787, 5840-41.
See also,
H.Rep. No. 95-595, 95th Cong., 1st Sess. 340-41,
reprinted in
1978 U.S.Code Cong. & Admin.News 5963, 6296-97. We hold § 362(a)(1) protects Dr. North because he is a debtor and the State’s action interferes with Dr. North's “breathing spell” under the Code. Our holding makes it unnecessary to decide if Dr. North’s license is property of the estate.
It is black letter law that administrative licencing revocation proceedings are subject to the automatic stay. Section 362(a)(l)’s legislative history indicates the stay applies to “arbitration,
license revo
cation, administrative, and judicial proceedings ...” Board’s argument is § 362(a)(1) does not stay the mere “running of time” that lapsed between the pre-petition date Board’s Order became final and the post-petition date the license suspension was to take effect. This is their “passive act” argument.
The Second Circuit in
Lincoln Savings Bank, FSB v. Suffolk County Treasurer (In re Parr Meadows Racing Association, Inc.),
880 F.2d 1540 (2d Cir.1989),
cert. denied, Suffolk County Treasurer v. Parr Meadows Racing Association, Inc.,
— U.S. -, 110 S.Ct. 869, 107 L.Ed.2d 953 (1990), assumed, as an alternative holding, a post-petition tax lien could be created by operation of law and perfected without any “affirmative act,” but nevertheless held that such a lien violates § 362(a)(3):
In short, the county’s first argument, that the tax liens here were created without ‘action’ and thus did not violate the automatic stay, interprets the provisions of § 362(a) too narrowly and misconstrues congress’s intent when it included local governments among the entities subject to the automatic stay.
Id.,
880 F.2d at 1546. Although the factual circumstances in the proceeding
sub judice
are different than in
Parr,
we discern no significant reason why the rationale of
Parr’s
analysis under § 362(a)(3) would not also require a rejection of an “affirmative act” requirement in § 362(a)(1). The
Parr
Court had no trouble in ruling out an “affirmative act” requirement despite § 362(a)(3)’s literal requirement of an “act.”
The operative language in § 362(a)(1) is much broader than in § 362(a)(3).
Assuming,
arguendo,
§ 362(a)(1) required an affirmative act, the “hostage” status of Dr. North’s license is in essence an indirect post-petition affirmative act by Tax Department to collect on its pre-petition tax claim. While Board’s Order does not involve a
per se
creation or perfection of a post-petition lien as was involved in
Parr,
Board’s Order, if permitted to take effect post-petition, suspends Dr. North’s license until Tax Commissioner issues a certificate of “good standing” because of tax payment or acceptance of a tax payment plan. Thus, it is clear Board acts as Tax Department’s agent for Tax Department’s affirmative tax collection efforts. If we were to allow Board’s Order to take effect post-petition, we would be permitting Tax Commissioner to recover post-petition a pre-petition monetary obligation against Dr. North at the expense of Dr. North’s creditors.
The automatic stay is applicable to “all entities,” both public and private.
This equitable treatment requires that all creditors, both public and private, be subject to the automatic stay_ Recognizing this congress used broad language which prohibits “all entities,” ... including all “governmental unit[s],” ... from moving against a debtor’s property during the pendency of the bankruptcy proceedings ....
[I]f a bankruptcy court lacked such power, actions by local government “would pull out chunks of an estate from the reorganization court and ... [would] seriously impair the power of the court to administer the estate.”
Lincoln Savings Bank, FSB v. Suffolk County Treasurer (In re Parr Meadows Racing Association, Inc.), supra,
880 F.2d at 1545.
Section 362(b)(4) excepts certain public entities, known as “governmental units,” from the automatic stay if their actions are designed to enforce police or regulatory powers. Not every governmental unit’s power is excepted, however, as 11 U.S.C. § 362(b)(4)’s legislative history explains:
Paragraph (4) excepts commencement or continuation of actions and proceedings by governmental units to enforce police or regulatory powers. Thus, where a
governmental unit is suing a debtor to prevent or stop violation of fraud, environmental protection, consumer protection, safety, or similar police or regulatory laws, or attempting to fix damages for violation of such law, the action or proceeding is not stayed under the automatic stay.
H.R.Rep. 595, 95th Cong., 1st Sess. 342-43 (1977); S.Rep. No. 989, 95th Cong., 2d Sess. 51-52 (1978),
reprinted in
[1978] U.S.Code Cong., and Admin.News 5787, 5837, 5838, 5963, 6299. 11 U.S.C. § 362(b)(4)’s Congressional Record Statements (Reform Act of 1978) adds:
Section 362(b)(4) indicates that the stay under section 362(a)(1) does not apply to affect the commencement or continuation of an action or proceeding by a governmental unit to enforce the governmental unit’s police or regulatory power. This section is intended to be given a narrow construction in order to permit governmental units to pursue actions to protect the public health and safety and not to apply to actions by a governmental unit to protect a pecuniary interest in property of the debtor or property of the estate.
124 Cong.Rec. H11092 (daily ed. Sept. 28, 1978); S17409 (daily ed. Oct. 6, 1978); remarks of Rep. Edwards and Sen. DeConci-ni). Thus, for purposes of § 362(b)(4) in the proceeding
sub judice,
there are two groups of police or regulatory actions; namely, those that seek to protect public’s safety, health, and welfare, and those that protect the public’s pecuniary interests. The latter group is not excepted from the stay under § 362(b)(4); instead, the pecuniary group must either establish cause for relief from the automatic stay or participate in debtor’s bankruptcy like any other claimant.
Examples of state regulatory licensing schemes that meet § 362(b)(4)’s “governmental unit” exception include police or regulatory actions motivated to protect public health and safety.
See, e.g., Wade v. State Bar of Arizona (In re Wade),
115 B.R. 222, 228 (9th Cir. BAP 1990) (Post-petition disciplinary proceeding by state bar against an attorney, for reasons not disclosed, was excepted from stay under § 362(b)(4) because the purpose of attorney discipline was to protect the public and not to serve any pecuniary interest);
Thomas-sen v. Division of Medical Quality Assurance, Department of Consumer Affairs, State of California (In re Thomassen),
15 B.R. 907, 909-910 (9th Cir. BAP 1981) (post-petition license revocation was excepted under § 362(b)(4) because, aside from doctor’s failure to return certain insurance overpayment and failure to pay salaries of employees, revocation was needed to prevent doctor’s malpractice and professional incompetence);
Christmas v. Maryland Racing commission (In re Christmas),
102 B.R. 447, 460-461 (Bkrtcy.D.Md.1989) (post-petition revocation of debtor’s license as a horse trainer for failure to establish prospective financial responsibilities was excepted from stay under § 362(b)(4) to avoid corruption);
Beker Industries Corp. v. Florida Land and Water Adjudicatory Commission (In re Beker Industries Corp.),
57 B.R. 611, 628-630 (Bkrtcy.S.D.N.Y.1986) (state’s post-petition revocation of debtor’s license to transport phosphate rock by truck to protect off-site impact from mining operation was valid regulatory exercise);
Matter of Alessi,
12 B.R. 96, 98 (Bkrtcy.N.D.Ill.1981) (horse racing debtor’s pre-petition bad checks, substantial indebtedness and gambling debts excepted racing board’s post-petition denial of license under § 362(b)(4)).
Examples of where § 362(b)(4)’s “governmental unit” exception will not apply in a licensing context occur where the questioned action seeks to enhance pecuniary interests such as payment of taxes or fulfillment of some other monetary requirement as a prerequisite for a license renewal.
See, e.g., In re Hoffman,
65 B.R. 985, 988-989 (D.R.I.1986) (Section 362(b)(4) did not permit state tax authority to condition the post-petition transfer of debtor’s liquor license on payment of pre-petition delinquent taxes);
In re Massenzio,
121 B.R. 688 (Bkrtcy.S.D.N.Y.1990) (Insurance company filed pre-petition complaint before a state insurance department because of debtor’s failure to remit pre-petition insurance premiums to the insurance company.
State insurance department revoked debt- or’s insurance license post-petition. Court held the license revocation was not excepted from stay under § 362(b)(4) because it was designed to protect insurance company’s pecuniary interest);
Shimer v. Fugazy (Matter of Fugazy Express, Inc.),
114 B.R. 865, 873 (Bkrtcy.S.D.N.Y.1990) (FCC was stayed from rendering any administrative cancellation of radio call sign license);
St. Louis South Park II, Inc. v. Missouri Health Facilities Review Committee (In re St. Louis South Park II, Inc.),
111 B.R. 260 (Bkrtcy.W.D.Mo.1990) (Missouri’s post-petition declaration of forfeiture of debt- or’s certificate of need because of failure to meet required capital expenditures does not meet § 362(b)(4) exception to stay);
Nejberger v. Pennsylvania Liquor Control Board (In re Nejberger),
112 B.R. 714, 722 (Bkrtcy.E.D.Pa.1990) (liquor control board’s requirement of tax payments before renewal of license was not excepted from stay under § 362(b)(4)),
vacated and remanded on other grounds, In re Nejberger,
120 B.R. 21, 24 (E.D.Pa.1990) (Bankruptcy Court should have enjoined liquor board from refusing to renew debtor’s license instead of ordering board to renew the license. Section 362(b)(4) issue was not preserved on appeal.
Id.,
120 B.R. at 23, n. 5);
Aegean Fare, Inc. v. Licensing Board for the City of Boston (In re Aegean Fare, Inc.,
35 B.R. 923, 927-28 (Bkrtcy.D.Mass.1983) (Section 362(b)(4) did not permit state tax authority to refuse to renew debtor’s liquor license unless debtor paid pre-petition delinquent taxes);
Pizza of Hawaii, Inc. v. Department of Taxation, State of Hawaii (In re Pizza of Hawaii, Inc.),
12 B.R. 796, 799 (Bkrtcy.D.Ha.1981) (same).
Courts must find the balance between giving deference to a governmental unit’s unsupported explanation that its actions serve public safety, health, and welfare and to demanding proof to avoid self-serving declarations. As the proceeding
sub judice
demonstrates, the balance against deference shifts in favor of demanding proof of public safety purpose when it is obvious the plain purpose is to serve a pecuniary interest.
Board’s attempt to salvage the obvious pecuniary motivation behind its Order with a public safety argument fails miserably. Board offers no independent evidence of any legislative intent to support its self-serving argument of a possible interplay between 32 Vt.Stat.Ann. § 3113(f) and 26 Vt.Stat.Ann. §§ 421-510. Board failed to contradict the statute’s plain meaning. A cursory reading of 32 Vt.Stat.Ann. § 3113(f) and 26 Vt.Stat.Ann. §§ 421-510 reveals the reason for the absence of such evidence. As admitted to by the express language of Board’s Order, the sole purpose behind 32 Vt.Stat.Ann. § 3113(f) is to force a licensee to pay taxes. Neither nonpayment of taxes nor financial responsibility constitutes an enumerated ground for discipline under 26 Vt.Stat.Ann. § 505. We conclude § 3113(f) is a mere pecuniary procurement device that has nothing to do with the discipline of licensees. If we were to except Board’s Order from the automatic stay through § 362(b)(4) under these circumstances, we would be authorizing the Tax Department’s post-petition enforcement of its pre-petition tax claim at the expense of Dr. North’s other unsecured creditors. We will not grant a § 362(b)(4) stay exception to a creditor to enhance its pecuniary interest indirectly that it is forbidden to accomplish directly. Board’s Order is not excepted from the § 362(a)(1) stay under § 362(b)(4).
Having ruled Board’s Order is not excepted from § 362(a)(1) under § 362(b)(4), we must now decide what, if any, damages are appropriate. Our task here is brief because there is not enough evidence to support a willful violation of the automatic stay against Board and, accordingly, we hold § 362(h) is not applicable.
Ordinarily, our holding would leave Dr. North’s license intact until the automatic stay terminates. To realize on its nondis-chargeable tax claim, the Tax Department will have to participate directly in Dr. North’s bankruptcy like any other pre-petition claimant.
Given the unusual circumstance of this proceeding, however, we exercise our powers of equity to fashion a more appro
priate remedy for all of the parties. 11 U.S.C. § 105(a).
As conceded by the Tax Department, Dr. North’s filing of a bankruptcy petition resulted in the discharge of approximately 85% of taxes owed. Dr. North sought to take advantage of the greatly reduced taxes and proposed a “payment plan” to the Tax Department for the nondischarged taxes. It is obvious the parties have not negotiated a payment plan while awaiting our Decision. To promote negotiation, we limit the continuation of the automatic stay to 90 days from the date of the entry of our Order, and set this matter for a status conference in 60 days to give Dr. North an opportunity to obtain, a certification of “good standing.” If the parties are unable to report on their acceptance of a payment plan, or if Dr. North fails to comply with the terms of an accepted payment plan, then the stay shall be lifted 90 days from the entry of our Order or 10 days after he fails to comply with any payment plan.