United States Bankruptcy Appellate Panel of the Sixth Circuit
Argued: November 14, 2017
Appeal from the United States Bankruptcy Court for the
Western District of Kentucky at Bowling Green. No.
16-10383-Joan A. Lloyd, Judge.
R. Pollock, STITES & HARBISON PLLC, Louisville, Kentucky,
D. Freeburger, DEITZ, SHIELDS & FREEBURGER, LLP,
Henderson, Kentucky, for Appellee.
R. Pollock, STITES & HARBISON PLLC, Louisville, Kentucky,
for Appellant. Sandra D. Freeburger, DEITZ, SHIELDS &
FREEBURGER, LLP, Henderson, Kentucky, for Appellee.
Before: DELK, HARRISON, and HUMPHREY, Bankruptcy Appellate
HUMPHREY, Bankruptcy Appellate Panel Judge.
these consolidated appeals, SummitBridge National Investments
V LLC ("SummitBridge") appeals the Bankruptcy Court
for the Western District of Kentucky's Memorandum-Opinion
overruling Branch Banking & Trust Co.'s
("BB&T") objection to the confirmation of Tony Dian
Perkins' ("Perkins") Chapter 12 plan, and the
subsequent order confirming that plan.
12 relief is only available to family farmers or family
fisherman. 11 U.S.C. § 109(f). A family farmer is an
"individual . . . engaged in a farming operation whose
aggregate debts do not exceed $4, 153, 150,
"and who receives more than half of her
gross income from "such farming operation." 11
U.S.C. § 101(18)(A). SummitBridge contends that the
bankruptcy court improperly found Perkins to be a family
farmer, arguing that Perkins both exceeded the
"aggregate debt" limit and did not receive more
than half of her income from her farming operation. In the
alternative, SummitBridge argues that even if Perkins
qualified for Chapter 12 relief, Perkins' plan should not
have been confirmed because it was not feasible, provided
improper treatment to BB&T's secured claim, and
failed to meet the best interests of creditors test. We
reject SummitBridge's arguments and affirm the bankruptcy
1. How is "aggregate debt" calculated in
determining a farmer's eligibility for Chapter 12 relief?
2. In determining a farmer's eligibility for Chapter 12
relief, can partnership income received by the individual
debtor from the liquidation of separate farming partnerships
and from an S corporation constitute income from "such
farming operation" when the partnerships and S
corporation are not being reorganized in the Chapter 12 case?
3. Did the bankruptcy court err by confirming the Chapter 12
plan in finding the plan was feasible, met the best interest
of creditors test, and provided appropriate treatment to the
BB&T secured claim?
Bankruptcy Appellate Panel of the Sixth Circuit has
jurisdiction to decide this appeal. The United States
District Court for the Western District of Kentucky has
authorized appeals to the Panel, and neither party has timely
elected to have this appeal heard by the district court. 28
U.S.C. §§ 158(b)(6), (c)(1). A final order of the
bankruptcy court may be appealed as of right pursuant to 28
U.S.C. § 158(a)(1). For purposes of appeal, a final
order "ends the litigation on the merits and leaves
nothing for the court to do but execute the judgment."
Midland Asphalt Corp. v. United States, 489 U.S.
794, 798, 109 S.Ct. 1494, 1497 (1989) (citations omitted). An
order confirming a plan is a final order. Bullard v. Blue
Hills Bank, 135 S.Ct. 1686, 1692 (2015) (citing 11
U.S.C. § 1327(a); United Student Aid Funds, Inc. v.
Espinosa, 559 U.S. 260, 275, 130 S.Ct. 1367 (2010));
Burden v. Seafort (In re Seafort), 437 B.R.
204, 206 (B.A.P. 6th Cir. 2010) (citing Gen. Elec. Credit
Equities, Inc. v. Brice Rd. Devs., LLC (In re Brice
Rd. Devs., LLC), 392 B.R. 274, 278 (B.A.P. 6th Cir.
of law are reviewed de novo. Mediofactoring v.
McDermott (In re Connolly N. Am., LLC), 802
F.3d 810, 814 (6th Cir. 2015) (citations omitted); Isaacs
v. DBI-ASG Coinvester Fund III, LLC (In re
Isaacs), 569 B.R. 135, 139 (B.A.P. 6th Cir. 2017)
(citation omitted). "Under a de novo standard
of review, the reviewing court decides an issue independently
of, and without deference to, the trial court's
determination." Matteson v. Bank of Am., N.A.
(In re Matteson), 535 B.R. 156, 159 (B.A.P. 6th Cir.
2015) (citation omitted).
other hand, "[f]indings of fact . . . must not be set
aside unless clearly erroneous, and the reviewing court must
give due regard to the trial court's opportunity to judge
the witnesses' credibility." Fed.R.Civ.P. 52(a)(6);
see Sutter v. U.S. Nat'l Bank (In re
Sutter), 665 F.3d 722, 728 (6th Cir. 2012); In re
Aubiel, 534 B.R. 300, 302 (B.A.P. 6th Cir. 2015)
(quoting Lester v. Storey (In re Lester),
141 B.R. 157, 160 (S.D. Ohio 1991)).
findings are clearly erroneous only when the reviewing court
'is left with the definite and firm conviction that a
mistake has been committed.'" United States v.
Ray, 803 F.3d 244, 265 (6th Cir. 2015) (quoting
United States v. Navarro-Camacho, 186 F.3d 701, 705
(6th Cir. 1999)). A finding of fact "is clearly
erroneous when although there is evidence to support it, the
reviewing court on the entire evidence is left with the
definite and firm conviction that a mistake has been
committed." Anderson v. City of Bessemer City,
470 U.S. 564, 573, 105 S.Ct. 1504, 1511 (1985) (quoting
United States v. U.S. Gypsum Co., 333 U.S. 364, 395,
68 S.Ct. 525, 542 (1948)). "Inconsistencies alone do not
demonstrate clearly erroneous findings." Q.W. ex
rel. M.W. v. Bd. of Educ. of Fayette Cty., Ky., 630
Fed.Appx. 580, 583 (6th Cir. 2015). "Where there are two
permissible views of the evidence, the factfinder's
choice between them cannot be clearly erroneous."
Anderson v. City of Bessemer City, 470 U.S. 564,
574, 105 S.Ct. 1504, 1511 (1985) (citations omitted).
Findings of good faith and feasibility are factual
determinations, which we review for clear error. See In
re Gentry, 807 F.3d 1222, 1225 (10th Cir. 2015)
("Because a plan's feasibility is a question of
fact, we review for clear error. . . ."); Lexon Ins.
Co. v. Naser, 781 F.3d 335, 342 (6th Cir. 2015).
bankruptcy issues implicating both factual findings and legal
holdings, reviewing courts "must break it down into its
constituent parts and apply the appropriate standard of
review for each part." Bank of Montreal v. Official
Comm. of Unsecured Creditors (In re Am. HomePatient,
Inc.), 420 F.3d 559, 563 (6th Cir. 2005), reh'g.
denied (citations and internal quotation marks omitted).
"A mixed question asks whether 'the historical facts
. . . satisfy the statutory standard, or to put it another
way, whether the rule of law as applied to the established
facts is or is not violated.'" U.S. Bank Nat.
Ass'n ex rel. CWCaptial Asset Mgmt. LLC v. Vill. at
Lakeridge, LLC, No. 15-1509, 2018 WL 1143822, at *5
(U.S. Mar. 5, 2018) (quoting Pullman- Standard v.
Swint, 456 U.S. 273, 289, n.19, 102 S.Ct. 1781 (1982)).
"When an 'issue falls somewhere between a pristine
legal standard and a simple historical fact, ' the
standard of review often reflects which 'judicial actor
is better positioned' to make the decision."
Id. (quoting Miller v. Fenton, 474 U.S.
104, 114, 106 S.Ct. 445 (1985)). "[T]he standard of
review for a mixed question all depends-on whether answering
it entails primarily legal or factual work."
operates a farm on 200 acres of prime land in southern
Kentucky first purchased by her grandparents in 1948. She has
played an active role in farming this land since 1970, when
she married and the couple began farming the land in
partnership with her parents. In the intervening years, the
farming operation expanded to cultivate approximately 9, 500
acres in various partnerships with their son. Perkins'
husband retired from farming operations after becoming
seriously ill in 2008. Perkins and her husband lived on the
farm until their home was destroyed by a tornado in 2013.
encountered financial trouble in 2014 when high input prices
and low crop prices combined to force the partnerships to
begin talks with BB&T concerning the downsizing of their
operation. These circumstances eventually led to the
partnerships' filing of Chapter 11 bankruptcy
cases. In 2015, in the midst of this
restructuring, Perkins retired from her job as a teacher to
run the farm and care for her husband. The Chapter 11
bankruptcies were dismissed after liquidating substantially
all of the partnerships' assets and making over four
million dollars of payments to BB&T.
April 25, 2016 Perkins filed for Chapter 12 bankruptcy
protection,  listing a total of $3, 513, 803.72 of
secured and unsecured debts in Schedule E/F. As of the date of
the confirmation hearing, proofs of claim filed by creditors
totaled $4, 012, 908.79 for debts owed on the petition date.
In the preceding tax year, Perkins received $279, 000 of
gross income from her own farm, $764, 472 from her farm
partnerships with her son,  $161, 571 of capital gains from
the sale of farm equipment, and $132, 360 from wages, a
pension, and social security.
filed her Chapter 12 plan, and BB&T objected to
confirmation of the plan, as later amended. The bankruptcy
court held the confirmation hearing on October 19, 2016, with
BB&T being the only party contesting confirmation of the
plan. Perkins' amended plan projected gross income of
$784, 137 from corn and a double crop of wheat and soy as
well as rent from leasing land, a drying barn, and other
outbuildings to her son's tobacco growing operation.
Perkins' farm income is supplemented by $84, 000 of
retirement income. After deducting operating and living
expenses, Perkins' budget would pay $184, 000 on secured
debts each year leaving $18, 950 of disposable income to be
paid to unsecured creditors each year over the plan's
five-year life. The liquidation analysis accompanying the
plan projected that a Chapter 7 liquidation would produce no
payments to general unsecured creditors. The amended plan
proposed to pay BB&T's claim in annual instalments
over 20 years at 4.5% interest, with the first installment
due January 2017.
called two witnesses at the confirmation hearing: her son,
who testified as the farm manager regarding feasibility of
the plan; and herself, testifying as to her debts and income
pertaining to eligibility for Chapter 12 relief. BB&T
called no witnesses. The bankruptcy court took the matter
under advisement and on December 22, 2016, entered a
Memorandum Opinion overruling BB&T's objection and
ordering Perkins to tender an order confirming her plan. The
confirmation order was entered on February 24, 2017.
has asserted seven assignments of error in its appeal, which
the Panel will address in two groups-first, the arguments
that Perkins is ineligible for Chapter 12 bankruptcy relief
and, second, the arguments that the plan should not have been
confirmed due to lack of feasibility, improper treatment of
BB&T's claims, and failure to meet the best interest
of creditors test.
Perkins Meets the Code's Definition of Family
Farmer and Therefore Is Eligible for Chapter 12 Bankruptcy
12 of the Bankruptcy Code was enacted to "give family
farmers facing bankruptcy a fighting chance to reorganize
their debts and keep their land." H.R. Conf. Rep. No.
99-958, at 48 (1986), reprinted in 1986 U.S.C.C.A.N.
5246, 5249. Prior to the enactment of Chapter 12, family
farmers could proceed under either Chapter 11 or Chapter 13
of the Code. Unfortunately, most family farmers were burdened
with too much debt to qualify for Chapter 13 protection, and
Chapter 11 was "needlessly complicated, unduly
time-consuming, inordinately expensive and, in too many
cases, unworkable." Id. To avoid Chapter
11's needless complexity and expense, Congress
"closely modeled [Chapter 12] after existing Chapter 13,
" while relaxing the debt limits and filing deadlines
that had left farmers ineligible for Chapter 13. Id. See
also In re Shannon, 100 B.R. 913, 934 (S.D. Ohio 1989).
109 of Title 11 defines who may be a debtor under the
various chapters of the Code, including Chapter 12:
"[o]nly a family farmer or family fisherman with regular
annual income may be a debtor under chapter 12 of this
title." 11 U.S.C. § 109(f). Section 101(18)(A)
defines a "family farmer" as an:
individual or individual and spouse engaged in a farming
operation whose aggregate debts do not exceed $4, 153, 150
and not less than 50 percent of whose aggregate
noncontingent, liquidated debts (excluding a debt for the
principal residence of such individual or such individual and
spouse unless such debt arises out of a farming operation),
on the date the case is filed, arise out of a farming
operation owned or operated by such individual or such
individual and spouse, and such individual or such individual
and spouse receive from such farming operation more than 50
percent of such individual's or such individual and
spouse's gross income for-
(i) the taxable year preceding; or
(ii) each of the 2d and 3d taxable years preceding the
taxable year in which the case concerning such individual or