Summary of a Recent
Judicial Development in
Bankruptcy

Crop Disaster Payments Not Property of Estate

Joshua T. Crain
National AgLaw Center Graduate Assistant

In In re Burgess, 392 F.3d 782 (5th Cir. 2004) the United States Court of Appeals for the Fifth Circuit held that a crop disaster payment made to a Chapter 7 debtor was not property of the estate. In so holding, the Fifth Circuit reversed the holding of the bankruptcy court and the federal district court that initially decided the matter. See id. In August of 2002, Debtor Edward Burgess filed a Chapter 7 bankruptcy petition. See id. He received a discharge in December of 2002. See id. In February of 2003, Congress enacted the Agricultural Assistance Act of 2003, which provided crop disaster payments for the 2001 and 2002 crop years. See id. The court explained that "the legislation providing for the crop disaster payment in issue did not exist at the time Burgess filed for bankruptcy" and that the hope of future legislative relief was not sufficient to make the disaster payment property of the estate. See id. at 786. Further, the court explained that "if the contingent interest in a crop disaster payment is not property of the estate, the payment itself cannot qualify as proceeds of property of the estate . . . ." Id. at 787.

The case was decided on December 6, 2004; this summary was posted Posted: July 26, 2005.