Summary of a Recent
Judicial
Development in
Bankruptcy
Peanut Quota Payments Property of the
Estate But Not Transitional Producer Payments
Jeffrey A. PetersonNational AgLaw Center Graduate Assistant
In In re Evans, 337 B.R. 551 (Bankr. E.D. N.C. 2005), debtors Joseph S. Evans and Linda B. Evans ("Debtors") were tobacco farmers who filed a Chapter 11 bankruptcy petition in April of 2004. See id. at 554. In October of 2004 the Fair and Equitable Tobacco Reform Act of 2004, 7 C.F.R. §§ 723, 1463-1464 ("FETRA"), was enacted, allowing the Debtors to be eligible for both transitional tobacco quota holder payments ("Quota Payments") and transitional producer payments ("Producer Payments"). See id. at 553. The Debtors asserted that the payments were not property of the bankruptcy estate. See id. at 553.
The Bankruptcy Court reasoned that if FETRA provided an identifiable property interest to the Debtors on or before the bankruptcy filing date under 11 U.S.C. § 341(a)(1), then any payments flowing from FETRA would also be property of the estate under § 341(a)(6). See id. at 555. The court held the Producer Payments were not property of the estate because they were based on a risk of production standard for calculating payments that were not identifiable property interests under § 341(a)(6). See id. at 556.
The court further stated, however, that the Quota Payments were based on compensation for the actual lost value of tobacco quotas, which were identifiable property interest under § 341(a)(1). Thus, the court held that the payments flowing from the lost compensation were included in the estate under § 341(a)(6). See id. at 555.
The case was decided on April 15, 2005; this summary was posted Nov. 6, 2006.