Bowman v. Bond, 100200 FED8, 00-6019
|Party Name:||Bowman v. Bond|
|Case Date:||July 13, 2000|
|Court:||United States Courts of Appeals, Court of Appeals for the Eighth Circuit|
Appeal from the United States Bankruptcy Court for the District of Nebraska
Before Koger, Chief Judge, Hill, and Dreher, Bankruptcy Judges.
Dreher, Bankruptcy Judge
Appellants Michael Aaron Bowmanand Debra Jo Bowman ("Debtors") appeal the December 1, 1999 order of the bankruptcy court (FN1) granting Appellee Jack Bond ("Appellee") relief from the automatic stay to foreclose on certain real property in Dundy County, Nebraska owned by the Debtors ("Dundy property") and the February 17, 2000 order of the bankruptcy court denying Debtors' motion for reconsideration. We affirm.
The Debtors in this case are Michael and Debra Bowman. Mr. Bowman is employed full-time by a radio station equipment company in Ogallala, Nebraska, approximately 60 miles from the Dundy property which is the subject of this appeal. Ms. Bowman is employed full-time as a clerk at a lumber company. The Debtors' combined yearly income is approximately $60,000.
On April 23, 1999, the Debtors filed a chapter 11 bankruptcy petition. The filing of that petition stayed a foreclosure action on the Debtors' 1,400 acre Dundy property. Metropolitan Life Insurance Company of Kansas City originally held the first mortgage on the Dundy property. Prior to the Debtors' bankruptcy filing, however, Metropolitan had assigned its mortgage interest to the Appellee. When the bankruptcy petition was filed, the Dundy property was subject to numerous liens and mortgages totaling over $4 million, including Appellee's claim for around $600,000.
Upon filing for bankruptcy, the Debtors indicated that they intended to reorganize (FN2) their farming operations. So, throughout the summer of 1999, the Debtors requested approval from the bankruptcy court to undertake certain farming operations. On one occasion, the Debtors proposed to lease farmlands from a large produce company to plant pumpkins. Several creditors objected to the Debtors' plans, and the bankruptcy court denied the Debtors' motion on grounds that it was too late in the summer to plant pumpkins. On another occasion, the Debtors proposed to plant organic crops and lease 300 acres of farmland in Hays County, Nebraska. Based on objections from creditors, the bankruptcy court disapproved that proposal as well.
On August 2, 1999, the Debtors filed a plan of reorganization and a disclosure statement. Under that plan, the Debtors indicated that they would not only continue their farming operations but also that they would undertake organic farming. Specifically, the plan provided that the Debtors would retain their interest in the Dundy property and make substantial annual payments. Profits from the farming operations would be used to pay the secured creditors' claims in installments over twenty-five years. Unsecured creditors would receive a pro-rata share of any remaining profits over a seven-year period. In addition, the plan provided that the Debtors would maintain their full-time jobs as a sales associate and a clerk, using this employment income to cover their living expenses. The appendix to the plan indicated that the Debtors believed the Dundy property was worth $700,000. Several creditors objected to this low valuation. One lien holder hired an appraiser to value the Dundy property.
Appellee claimed that a successful reorganization was not possible given the Debtors' proposed plan. On September 17, 1999, Appellee sought relief from the automatic stay to initiate foreclosure proceedings, asserting both that the Debtors lacked equity in the Dundy property and that the Dundy property was not necessary for an effective reorganization. Alternatively, the Appellee argued that his interest in the Dundy property was not adequately protected.
During the next several months, the Debtors sought to continue the hearing on Appellee's motion for relief from the automatic stay. On October 12, 1999, the bankruptcy court held a preliminary hearing. The Debtors subsequently offered Appellee several different payment plans to adequately protect his secured interest and requested that the bankruptcy court delay or cancel the upcoming evidentiary hearing. The bankruptcy court denied the Debtors' requests.
On November 3, 1999, the bankruptcy court held an evidentiary hearing on Appellee's motion for relief from the automatic stay. At the hearing, the Debtors' counsel acknowledged that the Debtors had no equity in the Dundy property and that the plan of reorganization proposed in August was not...
To continue readingFREE SIGN UP