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In re Bron
Frank L. Kurtz
So Ordered.
_______________
Bankruptcy Judge
Steven H. Sackmann, #00618
Sackmann Law Office
Attorney for Debtor(s) HON. FRANK L. KURTZ
Chapter 11
FINDINGS OF FACT AND CONCLUSIONS OF LAW REGARDING CONFIRMATION OF PLAN
THIS MATTER having come on regularly for hearing via telephone conference before the Honorable Frank L. Kurtz, Chief Bankruptcy Judge for the Eastern District of Washington, on the 14th day of March, 2013, and WILLEM BRON and MARY TERESA BRON, husband and wife, d/b/a BRON DAIRY, (hereinafter "Debtor" and/or "Bron") appearing by and through their attorney of record, STEVEN H. SACKMANN, and WILLEM BRON, being sworn and testifying as Debtor, and having submitted testimony by Declaration and the Court having considered the Declaration and the testimony offered in support of confirmation of the Plan and deeming itself fully advised in the premises, now makes the following
FINDINGS OF FACT:A. Procedural Status. On September 14, 2012, Debtor filed its Plan of Reorganization and Disclosure Statement. Yakima County Treasurer, Lisa McMahon-Myhran on behalf of US Bank National Association, Jeff Simpson on behalf of AmericanWest Bank, and Daniel Radin on behalf of State of Washington filed Objections.
Debtor filed his First Amended Chapter 11 Plan of Reorganization and First Amended Chapter 11 Disclosure Statement on December 5, 2012.
On December 7, 2012, the Court entered an Order approving disclosure and setting confirmation with respect to Debtor's First Amended Chapter 11 Disclosure Statement and Debtor's First Amended Chapter 11 Plan of Reorganization.
Debtor, Internal Revenue Service, State of Washington by Daniel Radin, John Deere Credit by Josh Busey and AmericanWest Bank by Jeff Simpson have stipulated and agreed to amended provisions which should modify Debtor's First Amended Chapter 11 Plan of Reorganization.
The deadline for voting on the Plan was February 11, 2013. One Hundred Percent of all voting secured creditors and unsecured creditors voted in favor of Bron's First Amended Chapter 11 Plan of Reorganization and the Report of Balloting and Ballot Summary was filed on February 14, 2013.
The Court entered its Order granting application to approve employment of Steven H. Sackmann as attorney for the Debtor on May 31, 2011.
B. Debtor's Plan of Reorganization meets the following requirements:
a. The Plan complies with the applicable provisions of Chapter 11;
b. Debtor has complied with the applicable provisions of Chapter 11;
c. The Plan has been proposed in good faith and not by any means forbidden by law;d. The Plan provides for payment of all allowed administrative claims upon the Plan's effective date, or under such terms of payment agreed to by administrative claimants;
e. Payments to be made by the Debtor to its attorney and accountants for services, costs and expenses in connection with the case have been approved or will be submitted for approval by the Court after notice and hearing;
f. With respect to each impaired class of claims or interests, each holder of a claim or interest of such class has accepted the plan or will receive or retain under the plan, on account of such claim or interest, property of a value, as of the effective date of the plan, that is not less than the amount that such holder would so receive or retain if the Debtor were liquidated under Chapter 7 of this title on such date.
g. With respect to each class of claims or interests such class has accepted the plan.
h. Confirmation of the Plan is not likely to be followed by the liquidation or the need for further financial reorganization of the Debtor or any successor to the Debtor under the Plan;
i. The proposed Plan does not discriminate unfairly and is fair and equitable with respect to each class of claims or interests.
Having heretofore made its Findings of Fact, the Court now enters the following:
1. Debtor's First Amended Chapter 11 Plan of Reorganization as amended by the Order Confirming Plan complies in all aspects with the applicable provisions of Chapter 11 of the Code, and specifically, 11 USC §1129.
2. The Debtor has complied with the applicable provisions of Title 11 USC.
3. The Plan was proposed in good faith, does not discriminate unfairly and is fair and equitable with respect to each class of claims.
4. Paragraph captioned "Class II: Department of Labor & Industries" is modified to read as follows:
CLASS II: DEPARTMENT OF LABOR & INDUSTRIES
State of Washington Department of Labor & Industries filed its Proof of Claim on May 25, 2011, and Amended Proof of Claim on August 31, 2011, and is in the process of filing an additional amended and updated Proof of Claim.Debtors shall pay the State of Washington Department of Labor & Industries the unsecured priority indebtedness owed in the approximate sum of $11,116.70 together with interest as soon as cash surplus is available, but in not less than Thirty-eight (38) monthly payments of $360 per month including interest at Twelve Percent (12%) per annum commencing 30 days from "Date of Confirmation"
Taxes shall not be discharged until paid. In the event of default by the Debtor of any of the provisions of the Plan regarding payment of the tax claims of the State of Washington, after 15 days written notice of default and failure by the Debtor to cure, all deferred state tax liabilities shall be immediately due and payable, and the State may proceed against the assets of the reorganized Debtor using any state or federal remedies.
All taxes accruing each year throughout the term of this Plan shall be paid in full when due.
Unsecured indebtedness owed to the State of Washington Department of Labor & Industries in the approximate sum of $1,567.55 shall be paid as provided for in Class XIV below.
5. Paragraph captioned "Class IV: Internal Revenue Service" is modified to read as follows:
Internal Revenue Service filed its Amended Proof of Claim on February 6, 2012.
Debtors shall pay the Internal Revenue Service all priority indebtedness owed believed to be the sum of $125,573.33 together with interest per IRC6621 as of "Date of Confirmation" (currently 3%) from "Date of Petition", as soon as cash funds are available but in not less than the number of equal monthly payments equivalent to the number of months remaining until May 2, 2016, i.e. 5 years from the "Date of Petition". Payments shall commence 30 days after "Date of Confirmation". The estimated payment assuming a "Confirmation Date" of December 1, 2012, including interest at 3% per annum is $3,651.82.
In addition, IRS may assess tax owed, interested accrued and penalties due by reason of non-receipt of Debtor's 2005 tax return. The tax, interest and penalties asserted by IRS and contested by Debtor is approximately $15,000. If such tax, interest and penalties are determined to be due, the tax, interest and penalties will be non-dischargeable and shall be added to the above priority taxes and paid in remaining monthly payments so that all taxes, interest and penalties will be fully paid on or before May 2, 2016.Any and all taxes which have accrued during administration of the estate and remain unpaid shall be calculated as of the "Date of Confirmation, and will be paid in Twelve (12) equal monthly payments commencing One month from the "Date of Confirmation" including any interest and/or penalties. Taxes owed will not be discharged until the Plan has been completed. Internal Revenue Service retains all right of set-off.
Debtors will file post-petition federal tax returns as they become due and shall make timely deposits of all payroll taxes. All tax returns, certification and copies of federal tax deposit receipts will be provided to the local Spokane office. Internal Revenue Service shall give written notice if Debtors are not current in plan payments or if Debtors have not paid post-confirmation tax liabilities and Debtor shall have 30 days to cure the default. If the default is not cured, Internal Revenue Service may resort to its normal, administrative collection remedies.
6. Paragraph captioned "Class VII: AmericanWest Bank" is modified to read as follows:
AmericanWest Bank filed its Proof of Claim on July 6, 2011.
1. Description of Claim
The principal indebtedness owed to AmericanWest Bank (hereinafter referred to as "AmericanWest" and/or "Lender") is approximately $2,324,096.89 as of March 5, 2013, including accruing interest, late fees, attorney fees and advances which have been agreed to. The indebtedness is secured by:
+------------------------------------------+ ¦Collateral ¦ ¦ ¦ ¦ ¦Value ¦Lien ¦ ¦Position ¦ ¦ ¦ +------------------------+----------+------¦ ¦961 Milking Cows ¦$1,345,400¦1st ¦ +------------------------+----------+------¦ ¦484 Heifers ¦$363,000 ¦1st ¦ +------------------------+----------+------¦ ¦Dairy and Two Residences¦$3,444,000¦1st ¦ +------------------------+----------+------¦ ¦Beam Road Property ¦$225,000 ¦1st ¦ +------------------------+----------+------¦ ¦5 Horses ¦$32,500 ¦1st ¦ +------------------------+----------+------¦ ¦Farm Equipment ¦$335,800 ¦1st ¦ +------------------------+----------+------¦ ¦ ¦$5,745,700¦ ¦ +------------------------------------------+
+------------------------------------------------------------------------+ ¦JD Harvester and Pickup Head Less Contract of $122,952¦$-0- ¦2nd¦ +------------------------------------------------------+-------------+---¦ ¦Curfman Property ¦ ¦ ¦ ¦ ¦$336,602.57 ¦2nd¦ ¦Less Contract of $703,397.43 ¦ ¦ ¦ +------------------------------------------------------+-------------+---¦ ¦Kleckner Property ¦ ¦ ¦ ¦ ¦$297,420.48 ¦2nd¦ ¦Less Contract of $27,579.52 ¦ ¦ ¦ +------------------------------------------------------+-------------+---¦ ¦ ¦$6,379,723.05¦ ¦ +------------------------------------------------------------------------+
2. Treatment in Plan - Operating Loan
Brons (hereinafter referred to as "Bron", "Debtor" and/or "Borrower") shall pay AmericanWest Bank the Operating Note with an unpaid balance of $609,837.75 as of March 5, 2013, including late fees, advances and attorney fees together with interest at variable rate set forth below calculated from March 5, 2013, in 72 equal monthly payments, in the sum of $9,405.46 commencing March 28, 2013, and continuing on the same date of each month thereafter until the entire balance of principal, interest, late fees, advances, attorney fees and costs are paid in full. Subject to any payment changes resulting from changes in the Index, Borrowers will pay this operating loan in 72 payments of $9,405.46 each payment. Borrowers' first payment is due March 28, 2013, and all subsequent payments are due on the 28th day of each month thereafter. Borrowers' final payment will be due 72 months after March 28, 2013, and will be for all principal, accrued interest, late fees, advances and attorney fees and costs not yet paid. Payments include principal and interest. Unless otherwise agreed or required by applicable law, payments shall be applied first to accrued interest, then to principal, then to any unpaid collection costs (including attorney fees, costs and expenses), then to any unpaid advances, and then to any unpaid late charges. Interest on this loan is computed on a 365/360 simple interest basis; that is, by applying the ratio of the annual rate over a year of 360 days, multiplied by the outstanding principal balance, multiplied by the actual number of days the principal balance is outstanding.
Borrowers will pay Lender at Lender's address of 110 S. Ferrall, Spokane, Washington, 99202, or at such other place as Lender designates in writing.
The operating loan or, as it is commonly referred to as the "cow loan", had an original indebtedness of 1.6 Million Dollars. The interest rate on the cow loan is subject to change from time to time based on changes in an independent index which is the One Year Fixed Advance Rate of the Federal Home Loan Bank of Seattle As Posted each Monday (the "Index"). The Index is not necessarily the lowest rate charged by Lender on its loans. If the Index becomes unavailable during the term of this loan, Lender may designate a substitute index after notifying borrowers. Lender will tell Borrowers the current Index10.3 Improper Use of Funds: If Debtors, or either of them, uses any funds received for any purpose not provided in this Plan.
11. Validity and Continuing Perfection of Security Interest and Liens
The Confirmation of this Plan shall be sufficient and conclusive evidence of the existence, validity, perfection and priority of AmericanWest Bank's security interests, real estate mortgages, assignments of rent, and lien claims against the collateral as described in those documents, without the necessity of filing or recording any financing statement or other instrument or document which may be otherwise required under the law of any jurisdiction or the taking of any other action to validate or perfect the secured interests, real estate mortgages, assignments of rent, lien claims or other interests of AmericanWest Bank in and to the collateral described in the documents, or to otherwise entitle AmericanWest Bank the position priorities granted by and in the above-described documents; PROVIDED, HOWEVER, at the sole discretion of AmericanWest Bank, the Debtors shall execute and deliver to AmericanWest Bank and AmericanWest Bank may file and record such security agreements, financing statements, real estate mortgages, assignments of rent, or other instruments, but is not required to, and PROVIDED, FURTHER that after the confirmation of this Plan, AmericanWest Bank shall be required to file and/or record any continuation statements required to continue perfection of its security interests.
12. Performance Standards
If the Debtor's dairy operation loses more money than stated in the budget for any year and if Debtor is in default of his payments to AmericanWest Bank then AmericanWest Bank shall be entitled to declare the loan(s) in default.
13. Remedy
In the event any of the defaults occur, then AmericanWest Bank may declare a default and enforce remedies provided for in the loan documents.
7. Paragraph captioned "Class IX: John Deere Credit / Deere & Company" is modified to read as follows:
John Deere / Deere & Company filed its Proof of Claim on May 26, 2011.
1. Description of Claim
The indebtedness owed to John Deere / Deere & Company is the approximate sum of $125,100 plus interest, attorney fees and costs to "Date of Confirmation." This indebtedness is secured by a purchase money security interest in the JD 7300 Forage Harvester and JD 640C Pickup Head.
2. Treatment in Plan
Brons shall pay John Deere / Deere & Company the value of its Secured Claim in the approximate sum of $125,100, attorney fees and costs plus interest at the contract rate of 2.9% in monthly payments of $2,134.16 per contract commencing 30 days from "Date of Confirmation" and continuing monthly thereafter until the entire balance of principal and interest is paid in full.
The entire balance of principal and interest may be paid in full at any time without penalty. Repayment shall be secured by the existing Security Agreement executed between Brons and John Deere / Deere & Company. All defaults under the security documents existing as of the "Date of Confirmation" of the Plan shall be deemed to have been cured or waived on the "Confirmation Date." Any notice of default or acceleration declaring the indebtedness due under the security documents shall, effective as of the "Confirmation Date," be deemed canceled, rescinded and have no further force or effect. John Deere / Deere & Company shall release its security interest in the equipment collateral when the principal sum of $125,100, attorney fees and costs plus interest is paid in full.
3. Fully Secured
John Deere / Deere & Company is a fully secured creditor.
8. Debtor's First Amended Chapter 11 Plan of Reorganization should be confirmed. ///End of Order/// Presented by: _________________
STEVEN H. SACKMANN, #00618
Attorney for Debtors
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