In Re Absolute Dimensions, LLC

Designated for online publication

IN THE UNITED STATES BANKRUPTCY COURT

FOR THE DISTRICT OF KANSAS

In re:

Absolute Dimensions, LLC, Case No. 24-10392-11 Debtor.

Memorandum Opinion and Order

Denying the U.S. Trustee’s Motion to Dismiss and Overruling Objections to Confirmation of Debtor’s Third Amended Subchapter V Plan Both the U.S. Trustee and the Subchapter V Trustee object to confirmation of the third amended plan of Debtor Absolute Dimensions, LLC. The U.S. Trustee also moves to dismiss Debtor’s case under 11 U.S.C. §

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1112(b) for cause,¹based solely on Debtor’s failure to timely file monthly operating reports. After an evidentiary hearing on the matters,²the Court denies the U.S. Trustee’s motion to dismiss³and overrules the objections to confirmation of the third amended plan.⁴

Debtor filed its Chapter 11 Subchapter V case in May 2024, over eighteen months ago. And while Debtor’s first proposed plan was timely filed in August 2024, the matter was regularly continued as amended plans were filed, until the Court now considers a third amended plan in this case.⁵If any creditor, the U.S. Trustee, or the Subchapter V Trustee had asked for an earlier evidentiary hearing on the issues in this case, Debtor would have come up woefully short in gaining confirmation: Debtor rarely cash flowed, regularly failed to timely pay all obligations as they arose, and ignored issues

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and potential problems until they became major problems. But the parties at issue were willing to make agreements and delay this Court’s consideration of the evidence, and ultimately, Debtor has proposed a feasible plan to this Court. In other words, if any party had requested an earlier hearing, this case would not have survived, but because Debtor has been given significant time to right the ship, its third amended plan has satisfied the confirmation requirements and Debtor avoids dismissal.

Some would argue the delay allowed the right outcome. If the goals of the Bankruptcy Code are reorganization and the fair treatment of creditors, and not only has no creditor complained while Debtor stabilized its operations, but also all creditors accept their treatment under the plan ultimately considered, then perhaps the system has worked as intended. That said, the Court acknowledges the purpose of Subchapter V of Chapter 11 is an “accelerated process” designed “to facilitate quicker and cheaper reorganizations.”⁶That did not happen here. Likely the Court will not be willing to permit extensions for amended plans or delays in Subchapter V cases in the future, to discourage such lengthy delays.

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I. Procedural Background Debtor, a machine shop manufacturing aeronautical parts, filed a prior Chapter 11 bankruptcy case on March 29, 2019.⁷A reorganization plan was confirmed in that case in January 2020 and a final decree was entered on May 18, 2020, closing the prior case.

Debtor filed its petition for relief in this current Chapter 11 case on May 8, 2024, electing to proceed as a small business debtor under Subchapter

V. Over the course of the next year, Debtor filed four proposed repayment plans, each of which drew multiple objections to confirmation, the confirmation hearings were then continued, and each plan was subsequently amended again. The U.S. Trustee, in May 2025, then filed a motion to dismiss,⁸arguing cause existed to dismiss Debtor’s case based solely on Debtor’s failure to timely file monthly operating reports. After reaching an agreement early on with its primary secured creditor Emprise Bank,⁹and resolving issues raised by the U.S. Department of

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Labor¹⁰and Debtor’s landlord,¹¹on September 23, 2025, over a year and four months post-filing, Debtor filed a third amended plan of reorganization.¹² Objections to confirmation of the third amended plan were filed by both the U.S. Trustee and the Subchapter V Trustee.¹³The U.S. Trustee argued the third amended plan lacked feasibility and failed to pay the required liquidation value,¹⁴and the Subchapter V Trustee’s objection also argued the third amended plan was not feasible.¹⁵

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The Court held an evidentiary hearing on both the motion to dismiss and the confirmation of the third amended plan. Debtor’s managing partner, Stephen Brittain, and its office manager, Miranda Brittain, both testified on behalf of Debtor. At the conclusion of the hearing, the Court took the pending matters under advisement.

II. Findings of Fact Debtor has been in operation for twenty-one years, starting out as a service business, where customers provided the materials and Debtor manufactured machine parts on the customer’s behalf and then shipped those parts back to the customer. As Debtor’s business grew, it began doing contract work, where Debtor bought the materials and made the parts, then stored those manufactured pieces in its inventory for sale to its customers. In 2013 to 2014, Debtor’s customer base began to include Spirit AeroSystems (Spirit), and Debtor’s business grew from about $1 million a year to $6 million a year because of contract work with that customer. Debtor’s business became largely dependent on, and intertwined with, Spirit. In 2018, prior to its first bankruptcy case, Debtor’s “vendor-owned” inventory amount with Spirit “soared”—at that point, the inventory had been delivered and was sitting on the shelves at Spirit, but Debtor would not get paid until the inventory was actually used, and Debtor had no control over

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the usage or timing of the use of the inventory. Debtor then lost its line of credit and ultimately filed its first bankruptcy case in March 2019. The confirmed plan in Debtor’s first bankruptcy case anticipated all general unsecured creditors would be paid in full. The plan was confirmed in March 2020, just before the airline industry was significantly impacted by the Covid pandemic. Throughout 2021 and 2022, Debtor attempted to survive with contract work, but not only did the cost of goods spike between 2021 and 2022,¹⁶in 2023, two additional events further impacted Debtor’s ability to operate. First, Debtor’s landlord sold the building Debtor leased and Debtor was forced to move to a new location in the summer of 2023. Second, Debtor’s contract work with Spirit was terminated by Spirit, and Debtor was left with significant inventory on the shelf.

These events forced Debtor to change its business model in late 2023, by going back to the service business in which it started. But doing so came with its own costs: the development of parts and programs requires a high startup cost, and Debtor transitioned from thirty to forty employees to five to six employees. Debtor’s current bankruptcy was filed in May 2024 because of this transition.

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Debtor acknowledges its monthly cash receipts and disbursements varied widely in the first year after the current petition was filed, and as a result, some months Debtor had net income just over $26,000 while some months Debtor had a net income as low as negative $13,500. Debtor’s postpetition monthly cash receipts have ranged from lows of about $43,000 to highs of about $95,000. The average cash receipts reported from May 2024 through September 2025 in Debtor’s Monthly Operating Reports (MORs) is $68,349.15. Debtor’s average postpetition monthly disbursements have generally fallen around those same ranges, with a monthly average disbursement reported from May 2024 through September 2025 of $63,486.69. That said, the averages do not paint the full picture. For six of the seventeen postpetition months, Debtor reported a negative monthly net income, ranging from -$4,291 to -$13,541.84.

In addition to those wide variances, however, Debtor admits its monthly operating reports were not accurate.¹⁷The only postpetition months in which Debtor fully paid all its obligations were just after the May 2024 filing of its petition in this case, in June and July 2024. Beginning in August

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2024, Debtor stopped paying its monthly lease obligations, which totaled about $10,731 each month.¹⁸A full year later, after its landlord filed a motion seeking administrative expenses and a motion seeking relief from stay in September 2025, Debtor began paying its lease obligations, and beginning in October 2025, has agreed to make catchup payments of an additional $5033.74 per month. But around the time Debtor started making those monthly lease obligations in September 2025, it stopped paying its weekly taxes on employee withholding, and Debtor has not paid its employer contributions for its employee payroll taxes for the second and third quarter of 2025. Debtor estimates the postpetition tax obligation to be about $60,000, but did not address any plan to get caught up on that postpetition delinquency.

Debtor’s third amended plan pays its secured creditors, priority creditors, and then Debtor’s projections are to pay $25,000 to general unsecured creditors. This payment to general unsecured creditors will consist of the disposable income Debtor projects from 2028, 2029, and 2030. In other words, general unsecured creditors will receive no payments until at least

2028.

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III. Conclusions of Law Core proceedings include “matters concerning the administration of the estate” and “confirmations of plans” under 28 U.S.C. § 157(b)(2)(A) and (L), over which this Court may exercise subject matter jurisdiction.¹⁹ A. Dismissal for Cause under § 1112(b)(4)(F)

The U.S. Trustee’s motion to dismiss was filed May 5, 2025, seeking dismissal for cause under § 1112(b) for Debtor’s failure to timely file Monthly Operating Reports. At the time the motion was filed, Debtor’s 2024 MORs were filed late, and Debtor had not filed any MORs—at all—in 2025. On June 2, 2025, Debtor filed a response to the U.S. Trustee’s motion, arguing cause did not exist for dismissal and noting its January, February, and March 2025 MORs had just been filed. After that, Debtor filed its May and June 2025 MORs on August 12, 2025, and the July 2025 MOR on October 22, 2025. The August and September 2025 MORs were filed just before the evidentiary hearing, on November 4, 2025, and the October 2025 MOR was filed on

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November 26, 2025. Most of the MORs that were filed in Debtor’s case were filed late.

The U.S. Trustee’s motion seeks dismissal under § 1112(b)(1), which states “the court shall convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter, whichever is in the best interests of creditors and the estate, for cause.” Section 1112(b)(4) provides several examples of cause, and the U.S. Trustee’s motion exclusively relies on subsection (b)(4)(F), the “unexcused failure to satisfy timely any filing or reporting requirement established by this title or by any rule applicable to a case under this chapter.” The burden of proof on the U.S. Trustee’s motion rests with the U.S. Trustee.²⁰

Debtor’s MORs are required by § 704(a)(8),²¹made applicable in Chapter 11 by §§ 1106(a)(1) and 1107(a),²²and by Federal Rule of Bankruptcy Procedure 2015(a)(3) which requires a debtor-in-possession to file

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periodic financial reports.²³A failure to timely file MORs can be cause for dismissal under § 1112(b).²⁴

Once a movant establishes cause under § 1112(b)(1), a court must consider subsection (b)(2) of § 1112. Under § 1112(b)(2), a debtor’s case can survive dismissal, even in the face of deficiencies that warrant it, if “the court finds and specifically identifies unusual circumstances establishing that converting or dismissing the case is not in the best interests of creditors and the estate” and the debtor can prove that: (1) there is a reasonable likelihood that a plan is confirmable and (2) there is a “reasonable justification” for the deficiency and that the deficiency will be cured within a reasonable time. At the evidentiary hearing on these matters, the U.S. Trustee did not ask questions or present documentary evidence about the status of, timing of filing, or any missing MORs. Rather, the U.S. Trustee focused on the accuracy of the MORs that were filed. In each MOR filed in this case, Debtor answered “yes” to questions asking if all bills had been paid on time and if Debtor was current on all tax obligations. But beginning in August 2024 and continuing through August 2025, Debtor did not pay its lease obligations at

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all. In September 2025, Debtor began paying its lease obligations, but stopped paying its payroll taxes, which remained delinquent at the time of the evidentiary hearing on the motion. In other words, other than the first two months postpetition, Debtor has not timely paid all its bills on time— Debtor has either not paid rent or did not pay payroll taxes—and therefore answering “yes” on the MOR was not accurate.

The Court declines to find cause based on the timely failure to file MORs – all MORs have been filed, and Debtor was caught up on its reporting requirements long before the hearing on the motion to dismiss.²⁵And while inaccuracy in a MOR can constitute cause for dismissal as it is an example of gross mismanagement,²⁶the U.S. Trustee has not sought dismissal on that

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basis. As a result, the Court denies the U.S. Trustee’s motion to dismiss made under § 1112(b)(4)(F) and instead considers the inaccuracies in the MORs as they relate to confirmation of the proposed third amended plan.²⁷ B. Objections to Confirmation of Debtor’s Third Amended Plan

1. General Standards Governing Confirmation of Subchapter V Chapter 11 Plans

Although a disclosure statement is not required in a Subchapter V case, a Subchapter V plan must include the information required by § 1190(1) and (2). Section 1190(1) provides that a plan shall include a brief history of the business operations of the debtor, a liquidation analysis, and financial projections that demonstrate the debtor’s ability to make the plan payments. Section 1190(2) provides that the plan “shall provide for the submission of all or such portion of the future earnings or other future income of the debtor to the supervision and control of the trustee as is necessary for the execution of the plan.”

Section 1191 then governs confirmation of Subchapter V Chapter 11 plans. Under § 1191(a), the Court can confirm a plan as a consensual plan if

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all the requirements of § 1129(a) other than (a)(15) are met.²⁸Because of Debtor’s agreement with the Subchapter V Trustee regarding payment of fees, and accepting votes from the only voting classes, Debtor appropriately seeks confirmation of the third amended plan as a consensual plan. “The burden of proof is on Debtors to show they have satisfied the confirmation standards set forth in 11 U.S.C. §§ 1129 and 1191 by a preponderance of the evidence.”²⁹Debtor as plan proponent therefore has the burden of proof on each element of confirmation, by a preponderance of evidence.³⁰

2. Feasibility. The U.S. Trustee’s primary focus at the evidentiary hearing was its allegation the third amended plan lacked feasibility. The U.S. Trustee argued Debtor’s cash flow projections going forward acknowledge projected negative monthly income through June 2026, and looking backward, the MORs

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consistently showed negative net income. As noted above, the U.S. Trustee also detailed how the historical MORs are not accurate, as Debtor has incurred debt throughout this case (e.g., by not paying rent and then not paying payroll taxes).

Section 1129(a)(11) requires as a condition of confirmation that the Court find that confirmation “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, unless such liquidation or reorganization is proposed in the plan.” The shorthand for § 1129(a)(11) is feasibility: the Code’s feasibility requirement mandates a debtor must show “a realistic and workable framework for reorganization.”³¹The purpose of the feasibility requirement is “to prevent confirmation of visionary schemes which promises creditors and equity security holders more under a proposed plan than the debtor can possibly attain after confirmation.”³²

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Making a feasibility determination is fact intensive. A “bankruptcy court must carefully scrutinize the plan to determine whether it offers a reasonable prospect of success and is workable.”³³To undertake this analysis, courts should consider a debtor’s cash flow projections and ability to make plan payments and fund projected operations. The cash flow projections “must be based upon evidence of financial progress and must not be speculative, conjectural, or unrealistic.”³⁴“While courts often do not require projections for the same period over which a long-term plan spans, a debtor must still sustain its burden to somehow prove that it will be able to perform all obligations it is assuming under the plan.”³⁵A debtor carries the burden of convincing the court its cash flow projections are grounded in historical facts and reasonable assumptions about future performance.³⁶

As noted at the outset, the U.S. Trustee attacks feasibility based on both Debtor’s negative historical performance, including insufficient

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operating revenues to pay expenses and failing to pay all postpetition expenses as they came due, and Debtor’s projected negative monthly income in the cash flow projections going forward. In other words, the U.S. Trustee notes Debtor has not shown it can meet expenses in the past, and the projections attached to its third amended plan admit it will not meet expenses going forward, at least in the near-term.

The U.S. Trustee is of course correct that Debtor’s postpetition cash flow has been insufficient to meet its operating expenses. Debtor does not dispute the only time it fully met its obligations postpetition was the first two months after it filed its petition in May 2024, in June and July 2024. From that point, despite Debtor’s MORs showing a profit in July 2024 ($1656.92), October 2024 ($11,840.08), November 2024 ($5340.90), December 2024 ($24,681.45), February 2025 ($5406.32), March 2025 ($15,621.82), June 2025 ($6172.18), and July 2025 ($14,383.83), Debtor did not pay its $10,731 lease obligations those months, and so therefore the only months Debtor actually had a postpetition profit was just after filing in June and July 2024, and then in October 2024 (although just barely), December 2024, March 2025, and July

2025.

That said, it is also undisputed Debtor’s monthly cash receipts have increased in the last few months. In July and August 2025, Debtor reported cash receipts over $70,000 a month. In September 2025, Debtor reported cash

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receipts of $93,350.28. In October 2025, Debtor reported cash receipts of $90,491.93. The average of the July 2025 through October 2025 monthly cash receipts is $81,981.02. Importantly, the U.S. Trustee did not challenge the accuracy of Debtor’s monthly projected expenses. Debtor projects its fixed and variable monthly expenses will be $59,358.75.³⁷Debtor’s plan payments will then total $30,702.93 until it sells certain equipment to reduce the claim of Emprise Bank, at which time the plan payments will fall to $18,666.53.³⁸ With the increased cash receipts reflected in the last several months of MORs, Debtor will be able to make its monthly payment obligations. Debtor’s cash flow projections in support of its third amended plan estimate $65,000 in monthly cash receipts from November 2025 through March 2026, then increasing to $70,000 per month beginning in April 2026. After payment of fixed and variable costs and making plan payments, Debtor

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anticipates a net loss each month from January 2026 through June 2026; beginning to see a small monthly profit in July 2026 in conjunction with a reduction to its monthly plan payment to Emprise Bank as a result of the planned liquidation of a portion of the Bank’s collateral and the increase in cash receipts it expects by that point.

Debtor acknowledges its tight budget in its cash flow projections, but counters that its monthly cash flow estimates used in the projections were conservative because it used a $65,000 per month estimate rather than the average supported by its MORs.³⁹Debtor also contends it has a new project starting in the next month or so that will increase its cash flow even more, and Debtor believes once it is able to exit bankruptcy, its cash flow will increase further because it has heard from clients they are holding back because of the uncertainty with the bankruptcy, but would contract with Debtor once Debtor exits bankruptcy.

Finally, Debtor contends that its variable costs will decrease in 2026 and beyond, but the amounts were difficult to quantify. Those costs (such as

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costs of goods and shop supplies) are already decreasing from historical averages, because they are high as a new product is developed because of the inputs required for a new project (e.g., a new tool), but decrease with repeat work. And because forty percent of Debtor’s projects are currently repeat work, those variable costs are going down. Debtor’s representatives credibly testified Debtor has stabilized its operations, and its back-to-basics business model is yielding returns: as Debtor is developing new work, about forty to fifty percent has turned into repeat customers, and as it develops parts, its statement of work is becoming larger. Debtor also notes that about fifty to sixty percent of its current jobs turn into long-term programs. After weighing the evidence presented at the evidentiary hearing, the Court concludes confirmation of Debtor’s third amended 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.” As a result, the Court finds the requirements of § 1129(a)(11) are met. Debtor made significant progress in stabilizing and reorganizing its financial affairs by the time the third amended plan was considered. The cash flow projections in support of the third amended plan are conservative and reasonable, and while there is no guarantee of Debtor’s success, Debtor’s third amended plan offers a reasonable prospect of success, which is all that is required under the Code.

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3. Liquidation value. The U.S. Trustee also argued Debtor’s third amended plan fails to pay the required liquidation value to unsecured creditors. Section 1190(1)(B) requires a Subchapter V plan to include a liquidation analysis. Section 1129(a)(7) then requires that each holder of a claim or interest in an impaired class either:

(i) has accepted the plan; or

(ii) 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;

This section, the best interests test, requires a debtor to show each holder of a claim in an impaired class that does not accept the proposed plan will receive not less than they would receive if the debtor were liquidated in a Chapter 7 proceeding.⁴⁰“In determining whether the best interests standard is met, the court must measure what is to be received by rejecting creditors in the impaired classes under the plan against what would be received by them in

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the event of liquidation under chapter 7.”⁴¹“In doing so, the court must take into consideration the applicable rules of distribution of the estate under chapter 7, as well as the probable costs incident to such liquidation.”⁴² Here, the impaired class of allowed unsecured claims voted to accept Debtor’s third amended plan.⁴³The U.S. Trustee argues, however, the Liquidation Analysis attached to Debtor’s third amended plan is flawed. The Court therefore assesses whether the Liquidation Analysis attached to Debtor’s third amended plan accurately reflects what would be received by an unsecured creditor in a Chapter 7 liquidation.

The U.S. Trustee challenges three areas of Debtor’s Liquidation Analysis. First, the Liquidation Analysis includes a line item for “finished goods,” valued at $896,397.06, which represents inventory made for Spirit prior to the contract with Spirit being terminated before Debtor’s first Chapter 11 case. The value used for the property came from Debtor’s Schedules at filing, and is Debtor’s estimate of the labor, materials, and process costs incurred in building the parts. Debtor acknowledges, however, it

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would not recoup those costs if the finished products were sold on the open market—in fact, Debtor fully acknowledges there is little value to the “finished goods” on the open market because of their specialized nature. Debtor believes all hope is not lost on selling this prepetition inventory, however. A large portion of the parts could be used in the production of a new airplane that may be developed by Spirit, and if so, Spirit would be shopping for a supplier for the parts. Debtor would have an advantage over other manufacturers, because not many other companies can make these items, and a portion of the goods involved to make the parts have a one-year lead time with a substantial qualification procedure to achieve, and so Debtor would be significantly ahead of others since it already possesses the materials and is qualified. Debtor’s representatives credibly testified the likelihood of selling the parts was good. The timing of a potential sale, however, would be purely speculative, as Debtor’s representatives understand it would be dependent on multiple factors, including a merger between Spirit and another industry player⁴⁴and the development of the

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new airplane at issue.⁴⁵ The Court concludes the fair market value of the goods used for the Liquidation Analysis is grossly overstated. The cost and labor to make specialized parts is not at all reflective of fair market value for those parts many years later. Debtor’s hope to someday sell the parts to Spirit was supported by no evidence that hope was realistic. The Court therefore concludes Debtor has significantly overstated its total asset value. Debtor’s Liquidation Analysis then deducts priority claims from its total asset value, and one of those priority claims is a claim from the Internal Revenue Service, listed as $544,777.30. The U.S. Trustee’s second argument is that this priority claim is overstated, noting Debtor’s third amended plan implies the priority tax claim could be as little as $144,160.59. The evidence and testimony on the topic were minimal, and the Court was left to scour the record. The most recently amended IRS claim states the following unsecured priority claims:

2018 FICA taxes and $38,370.27

interest:⁴⁶

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The $544,777.30 figure used in the Liquidation Analysis therefore comes

from this proof of claim.

The third amended plan contains one sentence characterizing the IRS

claim as containing “estimated taxes,” and says Debtor has filed the

appropriate returns which should “substantially reduce” the claim.⁵³The

47 This figure consists of $81,325.96 for FICA tax for tax period 3/31/2019 and interest of $24,464.36. Id.

48 This figure consists of $65,495.56 for FICA tax for 6/30/2022 and $10,608.66 interest, plus $41,177.14 for FICA tax for 12/31/2022 and $4,957.33 interest. Id.

49 This figure consists of $64,378.26 FICA tax and $6,371.65 interest for 3/31/2023, $73,085.32 FICA tax and $4,523.49 interest for 6/30/2023, $50,775.34 FICA tax and $2,154.79 interest for 9/30/2023, and $38,643.30 FICA tax and $1,029.03 interest for 12/31/2023. Id.

50 This figure consists of $1046.73 FUTA tax and $26.74 interest for 12/31/2023. Id.

51 This figure consists of $29,114.20 FICA tax and $742.05 interest for 3/31/2024 and $6,058 FICA tax and $43.85 interest for 6/30/2024. Id.

52 This figure consists of an estimated FUTA claim for 12/31/2024, for the total of $385.27. Id.

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third amended plan then states Debtor “will pay the IRS on the undisputed priority tax claim for FICA taxes for the 3rd Quarter 2018, the 4th Quarter 2018, and the 1st Quarter of 2019 in the amount of $144,160.59 over 60 months at 6.84% with monthly payments of $2,843.68 beginning 30 days from the Effective Date of this 3rd Amended Plan.”⁵⁴The U.S. Trustee understandably took this provision, in conjunction with the preceding statement about the “substantially reduced” claim, to mean the priority tax claim would be reduced to $144,160.59.

As noted above and in the IRS proof of claim, only the 2024 FUTA tax is stated as estimated, and it consists of only a small subset of the total claim:

only $385.27 of the total $544,777.30 claim. The “reduced” number of $144,160.59 is the 2018 and 2019 FICA taxes. An additional provision from the third amended plan, several paragraphs from the above details, then also says: “Any remaining priority tax claim owed to the IRS, to which [Debtor] has not objected, will be paid over 60 months with 6.84% interest through monthly payments beginning on 30th day after the Effective Date of the 3rd Amended Plan or upon the allowance of such claim until paid in full.”⁵⁵The Court concludes the 2022 FICA, 2023 FICA, 2023 FUTA, and 2024 FICA

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would be paid under this provision, if they are not objected to and resolved through the claim objection process. The IRS claim has not been objected to, and therefore Debtor’s Liquidation Analysis is currently only off by $385.27— the 2024 FUTA estimated tax amount.

But Debtor indicated at the evidentiary hearing that it may object to the IRS proof of claim, and testified that the 2022, 2023, and 2024 FICA taxes and interest had actually been paid, and only a new debt for the 2025 FICA taxes existed for the second and third quarter of 2025, not even reflected in the IRS proof of claim. In addition, Debtor’s cash flow analysis includes only a plan payment for the 2018 and 2019 priority taxes of $144,160.59, with a monthly plan payment to the IRS of $2843.68. As a result, the Court concludes Debtor has overstated its priority claims, because it acknowledges it will object to a significant portion of the IRS proof of claim and is not planning to commit funds for the full amount claimed. Finally, as pertinent herein, Debtor’s Liquidation Analysis deducts a $170,493.85 “Auctioneer Commission,” calculated as 6% of the total asset value at issue.⁵⁶The U.S. Trustee argues the Liquidation Analysis overstates

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hypothetical Chapter 7 administrative expenses, arguing a Chapter 7 trustee would abandon the fully encumbered collateral and there would be no auction expenses. But it is undisputed that all Debtor’s finished goods, machinery, and equipment are first pledged to Emprise Bank and then the SBA, and for a Chapter 7 trustee to realize any equity, the Chapter 7 trustee would need to sell the highly specialized property to attempt to realize any equity. A 6% auctioneer commission is not unreasonable, and the total asset value is highly variable and unknown. Although the total asset value is overstated due to the overstated value given the finished goods noted above, the amount is difficult to quantify.

Ultimately, Debtor’s Liquidation Analysis estimates a negative liquidation value of ($147,891.43). After reducing the total asset value by a significant amount (reducing by the $896,397.06 value given for the finished goods), but then only reducing the amount of priority claims by a much smaller amount (reducing the IRS claims from $544,777.30 to $140,160.59), then even with a reduction to the auctioneer commission due to that reduced total asset value, the Court concludes unsecured creditors would receive more through the third amended plan than under a hypothetical Chapter 7 liquidation.

the overstated value given to the “finished goods,” the Court concludes the total asset value is overstated.

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As a result, the Court finds the requirements of § 1129(a)(7) are met. “The creation of a liquidation analysis and financial projections is not an exact science,” and courts therefore typically defer to a debtor’s projections for the analysis.⁵⁷Considering no creditor rejected their treatment under Debtor’s third amended plan, this Court does the same here.⁵⁸

IV. Conclusion The Court denies the U.S. Trustee’s motion to dismiss⁵⁹and overrules the objections to confirmation of Debtor’s third amended plan.⁶⁰Debtor should upload a confirmation order reflecting the agreements made to resolve the additional challenges to confirmation raised by the U.S. Trustee and the Subchapter V Trustee and announced as resolved.

It is so Ordered.

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