In re Heard (21-10184)

In the Debtor’s previous Chapter 12 case, the Court valued farmland for the purpose of confirmation.  When the creditor whose claim was secured by the farmland sought to enforce a settlement agreement that had earlier been announced to support plan confirmation, the Debtor dismissed the case under 11 U.S.C. § 1208(b).  In the current case, the Debtor sought a continuance of the confirmation hearing under § 1224 to conduct a new appraisal of the farmland.  The creditor objected to the continuance and brought a motion to dismiss for “cause” under § 1112(b) due to the Debtor’s lack of good faith in filing the petition and abuse of the bankruptcy process.  The creditor argued that the value of the farmland was fixed by the Court’s valuation in the previous case under the doctrine of res judicata.  The Court found that no “cause” existed to continue the confirmation hearing.  The Court also found that “cause” existed to dismiss the case as the petition was filed in bad faith.  Although res judicata did not apply to the valuation of the farmland in the current case due to dismissal of the previous case, the Court held that the Debtor was improperly attempting to manipulate the bankruptcy code by taking action in the current case (i.e., revalue the farmland) that could not have been accomplished in the previous one.

Tuesday, October 12, 2021