Summary of a Recent
Judicial Development in
Bankruptcy

Denial of Confirmation and Dismissal in KChapter 12 Proceedings Affirmed

Patrick Roberts
National AgLaw Center Graduate Assistant

In In re Vincent William Michels, 305 B.R. 868 (B.A.P. 8th Cir. 2004), the Bankruptcy Appellate Panel of the Eighth Circuit held the denial of confirmation and dismissal of debtor's Chapter 12 case to be proper. Debtor Vincent William Michels was denied Chapter 13 bankruptcy protection, and immediately thereafter filed a Chapter 12 bankruptcy petition. See id. at 870. Debtor's Chapter 12 reorganization proposed to terminate Creditor Maynard Savings Bank's (MSB) lien over farming collateral and offered a balloon payment in ten years. See id. MSB and other creditors objected. See id. at 870. The bankruptcy court dismissed the case and denied confirmation because the plan erroneously proposed to avoid liens held by MSB, failed to provide MSB with the present value of its secured claim, and was not proposed in good faith. See id at 870-71. Debtor appealed the denial of confirmation and dismissal. See id. at 871. The panel held that confirmation was properly denied because the Debtor failed to propose a plan of reorganization that allowed a secured creditor to retain the lien securing it, which was required by 11 U.S.C. § 1225(a)(5)(B)(i). See id. at 872. Further, the panel held that the bankruptcy court did not abuse its discretion when it dismissed the case because the Debtor failed to comply with court's order to expeditiously confirm a reorganization plan. See id. at 872-73.

The case was decided on March 16, 2004; this summary was posted Dec. 2, 2005.