519 B.R. 628
Bankr. W.D. Va.2014Background
- Keith’s Tree Farms filed a chapter 12 petition in Aug 2013 and has submitted four plans, none confirmed.
- Two largest secured creditors, Grayson National Bank and First Community Bank, object to treatment and seek dismissal for delay and lack of rehabilitation.
- Plan proposes surrender credits and long-term payments to secured creditors, including a $615,000 credit for the Patterson Rock Quarry to Grayson Bank.
- The court found data unreliable (including cash-flow projections and collateral valuations) and questioned feasibility and present-value compliance.
- Court denied confirmation and leave to amend; case dismissed under section 1208(c).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Feasibility of the plan | Keith’s Tree Farms argues projections show feasibility. | Banks contend projections are flawed and infeasible. | Plan not feasible; feasibility burden unmet. |
| Treatment of secured creditors under 1225(a)(5) | Debtor asserts sufficient payment and value to secured claims. | Creditors dispute valuation and ongoing payments; present value not met. | Plan fails to provide full value or commercially reasonable payments to secured creditors. |
| Commercial reasonableness of plan term | Thirty-year term is permissible given farm context. | Term is unreasonable and not supported by market standards or notes. | Term deemed commercially unreasonable; not confirmable. |
| Leave to amend and case dismissal | Debtor should be allowed to amend for a feasible plan. | Further amendments unlikely to succeed; delay prejudicial to creditors. | Leave to amend denied; case dismissed under 1208(c). |
Key Cases Cited
- In re Brown, 244 B.R. 603 (Bankr.W.D.Va.2000) (burden to prove confirmation elements, including feasibility)
- In re Tofsrud, 230 B.R. 862 (Bankr.D.N.D.1999) (feasibility burden and confirmation standards)
- In re Torelli, 338 B.R. 390 (Bankr.E.D.Ark.2006) (duration and feasibility considerations in plan confirmation)
- Till v. SCS Credit Corp., 541 U.S. 465 (Supreme Court 2004) (reasonableness of interest rate and plan terms in bankruptcy)
- In re Rose, 135 B.R. 603 (Bankr.N.D.Ind.1991) (maximum acceptable repayment period evidenced by market standards)
- In re Pertuset, 492 B.R. 232 (Bankr.S.D.Ohio 2012) (unreasonable delay and mismanagement can support dismissal)