Summary of a Recent
Judicial Development in
Bankruptcy

Chapter 12 Debtors Fail to Properly Assume
Crop Share Lease

Patrick Roberts
National AgLaw Center Graduate Assistant

In In re Jamie D. Six, No. 03-74203, 2004 WL 420143 (Bankr. C.D. Ill. Mar. 1, 2004) (unreported decision) the United States Bankruptcy Court for the Central District of Illinois held that Chapter 12 debtors failed to properly assume an oral crop share lease in accordance with 11 U.S.C. § 365(d)(4). Section 365(d)(4) provides that "if the trustee does not assume or reject an unexpired lease of nonresidential real property under which the debtor is the lessee within 60 days after the date of the order for relief, . . . then such lease is deemed rejected, and the trustee shall immediately surrender such nonresidential real property to the lessor." Id. (quoting 11 U.S.C. § 365(d)(4)). Debtors Jamie and Jeffrey Six filed for Chapter 12 bankruptcy protection. See id. at *1. Over sixty days later, the debtors filed a plan of reorganization that reaffirmed all executory crop share farming contracts. See id. A pair of creditors with whom the debtors previously had an oral crop share lease objected to confirmation of the plan, asserting that the debtor's lease was deemed rejected when they failed to assume the lease within sixty days after the date of the order of relief as required by § 365(d)(4). See id. at *1-2. The bankruptcy court agreed and held that the commencement of a voluntary bankruptcy constitutes an order for relief and that the debtors failed to give notice within sixty days of filing despite their statement at the first meeting of creditors that they intended to continue farming all property currently leased, including that of the objecting creditors. See id. at *2-3. The court concluded the crop share lease was therefore rejected and that the debtors were required to immediately surrender the property to the creditors. See id.

The case was decided on March 1, 2004; this summary was posted Nov. 2, 2005.