Matter of Williams, Bankruptcy No. T84-40082
| Decision Date | 26 October 1984 |
| Docket Number | Bankruptcy No. T84-40082,Adv. No. 84-4145. |
| Citation | 44 BR 422 |
| Parties | In the Matter of John A. WILLIAMS, Jr. and Deloris Williams. John A. WILLIAMS, Jr. and Deloris Williams, Plaintiffs, v. GUARANTY AGRICULTURAL CREDIT CORPORATION, Defendant. |
| Court | U.S. Bankruptcy Court — Northern District of Mississippi |
Fredrick B. Clark, Greenwood, Miss., for plaintiffs.
Douglas J. Smith, Jr., Robertshaw & Merideth, Greenville, Miss., for defendant.
CAME ON to be heard and was heard the complaint for recovery and redemption of property filed by the Plaintiffs, John A. Williams, Jr., and Deloris Williams, against the Defendant, Guaranty Agricultural Credit Corporation; answer filed by said Defendant; all parties being represented by their respective attorneys of record; on proof before the Court; and the Court having heard and considered same, finds as follows, to-wit:
I.
The Debtors filed their Chapter 13 bankruptcy case on May 2, 1984, at approximately 4:30 p.m. The Debtors are indebted to the Defendant effective October 17, 1984, in the total amount of $65,139.61, plus interest accruing thereafter at the rate of $20.50 per day. The indebtedness is secured by a first lien on certain items of farm machinery and equipment, a second lien on 80 acres of agricultural real property, and a third lien on the Debtors' residence. Although the testimony was relatively imprecise, the Debtors evaluated the Defendant's security interest as follows: farm machinery and equipment—$40,000.00; 80 acres of agricultural real property —$80,000.00, less a priority indebtedness in favor of Federal Land Bank in the sum of approximately $51,000.00, or a net security interest with a value of $39,000.00; and residential real property—$40,000.00, less two priority indebtednesses to Farmers Home Administration and Guaranty Bank and Trust Company in the total sum of approximately $29,000.00, or a net security interest evaluation of $11,000.00. According to the Debtors, therefore, the total value of the collateral securing the Defendant's indebtedness is approximately $80,000.00. The Defendant's testimony reflected a total evaluation of the collateral interest in the sum of approximately $48,000.00, i.e., farm machinery and equipment —$25,000.00; 80 acres agricultural real property—$64,000.00, less the priority indebtedness in favor of Federal Land Bank in the sum of $51,000.00, or a total security interest valuation of $13,000.00; and a security interest valuation in the residential real property in the sum of approximately $10,000.00, considering the priority obligations owed to Farmers Home Administration and Guaranty Bank and Trust Company.
II.
Several hours prior to the Debtors' filing their bankruptcy petition, on May 2, 1984, at approximately 8:30 a.m., the Defendant repossessed the aforementioned items of farm machinery and equipment. Since the actual act of repossession occurred prior to filing, there was no violation of the automatic stay provisions found in 11 USC § 362(a). However, since there was no disposition of the farm machinery and equipment prior to filing by the Debtors, the automatic stay has prohibited the Defendant from taking any further action as to this collateral. See 11 USC § 362(a)(4) and (5). The Defendant in its responsive pleading has asked this Court to lift the automatic stay so that it might pursue its remedies in this collateral. On the other hand, the Debtors seek to recover the farm machinery and equipment which they contend is necessary for their farming operations, as well as, the effective implementation of their Chapter 13 plan.
III.
The Debtor, John Williams, Jr., testified that he is currently farming approximately 340 acres of land which is fully planted with soybeans. Williams indicated that he anticipates an average yield per acre of 25 bushels and advised that the current market rate for soybeans is $6.30 per bushel. According to Williams, the crop will be ready for harvesting in the near future. Williams has never owned harvesting equipment, so annually he is required to utilize the services of custom harvesters who charge, according to the Defendant's representative, for harvesting services the sum of approximately $.75 per bushel. The items of equipment repossessed by the Defendant are not necessary to the harvesting activities, but are essential to land preparation and planting which the Debtors will undertake at the conclusion of the soybean harvest, specifically the planting of a proposed winter wheat crop. From the testimony, it is apparent that the Debtors fully intend to continue their farming activities and anticipate that the income therefrom will be utilized as an essential ingredient in their Chapter 13 plan. The testimony also revealed that for the Debtors to break even or realize a profit from the farming activities that a yield of between 25 bushels to 30 bushels per acre must be produced. The Court is of the opinion that the wisdom of the decision to continue farming will largely be dictated by the actual yields of the current soybean crop. However, at the present time, the Court is left with the inescapable conclusion that the Debtors will require the use of the repossessed farm equipment if they are to have a reasonable chance to succeed as they presently propose.
IV.
As mentioned hereinabove, although the defendant has repossessed the farm machinery and equipment, it has not disposed of same or entered into a contract for such disposition, so consequently, the Debtors retain a statutory right of redemption pursuant to § 75-9-506, Mississippi Code of 1972, as amended, which reads as follows, to-wit:
The right to redeem the farm machinery and equipment creates a property interest in favor of the Debtors as contemplated by 11 USC § 541(a)(1), which reads as follows, to-wit:
Since by virtue of the right of redemption, the Debtors own a legal interest in the repossessed collateral, the Debtors are permitted through the interaction of 11...
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