Hugo Black

“ It is true that the United States has long had an absolute priority for debts due from insolvent debtors and that the Bankruptcy Act generally accords secured creditors a preferred position. But § 57, sub. j places penalties in a category quite different from ordinary debts, one not favored in bankruptcy, and the character of a penalty is by no means changed by calling it a lien. ”

“ In bankruptcy a sharp distinction has always been drawn between secured and unsecured creditors. Secured creditors may not vote at creditors' meetings, § 56, sub. b, 11 U.S.C.A. § 92, sub. b, nor may their claims be allowed against the bankrupt estate, § 57, sub. e, except to the extent that these claims exceed the value of the security. Fully secured creditors are not counted in determining the total number of creditors in order to ascertain the number required to initiate involuntary bankruptcy, § 59, sub. ”

“ Congress has thus treated liens as outside the policy of equal treatment of creditors in bankruptcy. 3 Collier, supra, 57.07. A lienor does not hold simply a first priority; he has 'a right to enforcement independent of bankruptcy,' id., 64.02, at 2061. The Bankruptcy Act deals with the distribution of unencumbered assets among unsecured creditors. Id., 60.01. Lienholders need no Bankruptcy Act. Liens are independent of and essentially unaffected by bankruptcy proceedings. I agree with the court below that liens are unaffected by § 57, sub. ”