609 B.R. 175
W.D. Va.2019Background
- Dale W. Akers, a family farmer in Carroll County, VA, filed a Chapter 12 petition on May 3, 2017; creditors included FSA, Skyline National Bank, and Farm Credit of the Virginias.
- Akers filed a series of plans (first through fourth amended plans); the bankruptcy court repeatedly found deficiencies in his filings, projections, and schedules (including undisclosed delinquent real estate taxes owed to Carroll County).
- The court repeatedly found Akers' financial projections and monthly operating reports inaccurate or inconsistent; he also borrowed from his son Ryan and had not provided for repayment in plans.
- Farm Credit foreclosed on LLC-owned property during the case, creating an unresolved deficiency claim that Akers’ fourth amended plan did not account for.
- The bankruptcy court denied confirmation of the fourth amended plan on January 3, 2019 (finding lack of feasibility), denied leave to file a fifth amended plan, and dismissed the Chapter 12 petition; Akers timely appealed.
Issues
| Issue | Plaintiff's Argument (Akers) | Defendant's Argument (Trustee / Bankr. Ct.) | Held |
|---|---|---|---|
| Feasibility of fourth amended plan (11 U.S.C. §1225(a)(6)) | Court should give benefit of doubt; Akers made required payments and weather (hurricanes) harmed 2018 crops | Projections were unreliable/mistake-laden, failed to account for tax and loan repayment, insufficient cash to meet plan payments | Affirmed: plan not feasible; debtor failed burden to show probable ability to comply |
| Right to file fifth amended plan / leave to amend (11 U.S.C. §1223) | §1223 permits modification before confirmation; Akers argues he could file another plan as of right | After denial of confirmation debtor must obtain leave; Chapter 12’s expedited scheme and §1208(c)(5) support requiring leave; discretion to deny | Affirmed: debtor required leave and denial was not an abuse of discretion |
| Dismissal of Chapter 12 petition (11 U.S.C. §1208(c)) | Dismissal was improper | Cause existed: unreasonable delay, gross mismanagement, failure to propose a confirmable plan; dismissal within court's discretion | Affirmed: dismissal for cause was appropriate |
Key Cases Cited
- Hall v. United States, 566 U.S. 506 (Chapter 12 purpose and eligibility)
- Gold v. First Tenn. Bank Nat'l Ass'n, 743 F.3d 423 (standard of review for bankruptcy appeals)
- Gilbane Bldg. Co. v. Fed. Reserve Bank, 80 F.3d 895 (mixed question review allocation)
- In re Ames, 973 F.2d 849 (failure to propose confirmable plan supports dismissal)
- Novak v. DeRosa, 934 F.2d 401 (factors for allowing amended Chapter 12 plans)
- Lynch v. Jackson, 853 F.3d 116 (statutory text read in statutory context)
- Keith's Tree Farms v. Grayson Nat'l Bank, 535 B.R. 647 (feasibility requires realistic, concrete projections)