Summary of a Recent
Judicial Development in
Bankruptcy

Crop Assistance Payment Not Property
of the Estate

Patrick Roberts
National AgLaw Center Graduate Assistant

In In re Bracewell, 322 B.R. 698 (M.D. Ga. 2005), the United States District Court for the Middle District of Georgia affirmed in part and reversed in part a bankruptcy court's ruling that certain crop payments were property of the Chapter 7 estate. Pre-petition, Debtor Ricky W. Bracewell planted and harvested crops that were plagued by drought. See id. at 702. After Bracewell filed a bankruptcy petition and converted his Chapter 12 petition to a Chapter 7, the President signed into law the Agricultural Assistance Act of 2003. See id. Bracewell later received payment for his loss under the Assistance Act, and the trustee argued that the payment was property of the estate. See id. at 702-03. The bankruptcy court determined that the payment was property of the estate under 11 U.S.C. § 541(a)(1) because Bracewell had a pre-petition right to the payment at the time of filing, but rejected the argument that the assistance payment was a "proceed of estate property" under 11 U.S.C. § 541(a)(6). See id. at 703. On review, the district court stated that the Assistance Act was passed post-petition and post-conversion. See id. at 704-06. It also stated that because Bracewell filed before the passage of the Assistance Act, he possessed only a mere hope for future legislation and not a legal or equitable interest in the disaster payments. See id. at 704-08. Since Bracewell lacked a legal or equitable interest in the entitlement, the court held that the payment should not be considered property of the estate under § 541(a)(1). See id. at 708. The court further held that because the payment did not arise pre-petition, the assistance payment cannot be considered a "proceed of estate property" under § 541(a)(6). See id. at 708-10.

The case was decided on March 30, 2005; this summary was posted Dec. 2, 2005.