Opinion
Case No. 99-80991-SSM Chapter 13
July 5, 2000.
Klinette H. Kindred, Esquire, Law Offices of Robert Ross Weed, Alexandria, VA, Counsel for the Debtors.
Brian M. O'Connor, Esquire, Reston, VA, Counsel for Craig and Margaret Fletcher.
Gerald M. O'Donnell, Esquire, Alexandria, VA, Chapter 13 Trustee.
MEMORANDUM OPINION
A hearing was held in open court on June 13, 2000, on the objections of the chapter 13 trustee and of secured creditors Craig and Margaret Fletcher to confirmation of the debtors' modified plan.
The debtors were present in person and were represented by counsel. Mr. Fletcher was present in person, and he and Mrs. Fletcher were represented by counsel. Gerald M. O'Donnell, the chapter 13 trustee, was present in person. The dispositive issues are whether the proposed plan is feasible and whether the debtors may, over the objection of Mr. and Mrs. Fletcher, subdivide and sell the real estate that is the security for their claim.
Background
The facts giving rise to the present controversy are set forth at length in this court's prior memorandum opinion of January 31, 2000, and will be summarized only to the extent needed to place the present ruling in context. Kim David Alford and Lisa A. Alford ("the debtors") are husband and wife. After an unsuccessful attempt at a chapter 11 reorganization that was then converted to chapter 7, they filed a voluntary chapter 13 petition in this court on November 6, 1999, three days prior to a scheduled foreclosure sale by Mr. and Mrs. Fletcher.
The amended schedules filed by the debtors in the present case reflect that Mr. Alford is disabled and receiving $1,035 per month in Social Security disability payments. Mrs. Alford is employed as a shop manager and takes home $2,165.59 a month. Their monthly expenses, exclusive of the deeds of trust on their residence, total $1,470.00 a month.
The debtors' major asset consists of a house and approximately 11.44 acres located in Loudoun County, Virginia, at 39288 Irene Road, Hamilton. The property is bisected by a bicycle trail owned by the Northern Virginia Regional Park Authority. The front portion of the property, which consists of approximately 1.4 acres, fronts on a public highway. The back 10 acres, on which the house is located, can be reached from the highway only by crossing over the bicycle path. Mr. and Mrs. Fletcher are the holders of three promissory notes secured by two deeds of trust against the property. The court has previously determined, in the context of a motion brought by Mr. and Mrs. Fletcher for relief from the automatic stay, that the property has a fair market value, as is, of $162,500.00 and that the notes, as modified by a "Mortgagee Agreement," had a balance, as of the filing date, of $174,230.09, and an effective interest rate of 8.956%.
Mr. and Mrs. Fletcher correctly point out that this figure understates by $80.00 the amounts the court found due for principal, interest, late charges, attorneys' fees, and foreclosure costs. The court agrees that a simple computational error of the type present here may properly be corrected under Rule 60(a), Fed.R.Civ.P., as incorporated by Fed.R.Bankr.P. 9024. Accordingly, the order previously entered on January 31, 2000, fixing the amount of Mr. and Mrs. Fletcher's claim will be amended to show the correct amount as $174,310.19.
Two previous plans proposed by the debtors have been denied confirmation. The current plan, which is dated April 20, 2000, requires the debtors to pay the chapter 13 trustee $100 per month for five months, followed by $1,500 for 24 months. It nominally projects a dividend to unsecured creditors of 100 cents on the dollar, although the schedules reflect that there are actually no unsecured creditors — presumably as a result of the discharge that was granted in the chapter 7 case — other than a student loan debt. With respect to that debt, the plan essentially proposes a quasi-moratorium in the form of token ($20.00 per year) payments while the plan is pending. The plan provides for payment of priority taxes owed Loudoun County in the amount of $4,806.00 and for the direct payment by the debtors of an automobile loan. The plan provides for the secured claim of Mr. and Mrs. Fletcher to be paid with interest at the rate of 8.956% by monthly payments through the trustee of $1,300.00 per month for 24 months and by sale of the property and payment of the proceeds into the plan. Specifically, the debtors propose to subdivide the 11.44 acre tract into two lots under the Loudoun County Family Subdivision Ordinance: an approximately 3-acre front lot and an approximately 8-acre back lot. All of the proceeds from the front lot, less the administrative expenses of sale, would go to Loudoun County for back real estate taxes and to Mr. and Mrs. Fletcher in partial payment of their claim. The proceeds from the back lot — which under the Family Subdivision Ordinance could not be sold outside the debtors' immediate family for a year from recordation of the subdivision plat — would be paid into the plan and would be used to pay the balance of Mr. and Mrs. Fletcher's claim.
The present plan, like the prior plan, ignores the proof of claim (Claim No. 1) filed by the Treasurer of Loudoun County and fails to properly treat the claim. Loudoun County filed a secured claim in the amount of $4,856.63 for unpaid 1997, 1998, and 1999 real estate taxes, as well as a priority unsecured claim in the amount of $1,415.24 for unpaid 1997, 1998, and 1999 personal property taxes on a 1987 Ford pickup truck and a 1996 Chevrolet 4-door sedan automobile. The plan fails to provide for interest on Loudoun County's secured claim. Whether the 1997 and first-half 1998 personal property taxes are entitled to priority status is an issue that the court need not reach in the absence of an objection to the claim.
From a review of the plats attached to an appraisal report and to the application submitted by the debtors for septic field site approval, it appears that the 3-acre "front lot" physically consists of two non-contiguous parcels of 1.44 and 1.56 acres, respectively, separated by the 100-foot strip belonging to the Northern Virginia Regional Park authority. Thus, approximately half of the "front" lot actually lies to the rear of the bicycle trail. For convenience, however, this opinion will refer to the combined acres as the "front" lot, particularly since the proposed house location and septic field are on the portion which physically fronts on Irene Road.
The debtors have recently entered into a contract, subject to the approval of this court, to sell the front 3 acres for $79,900. The contract is subject to a 30-day study period, as well as a contingency for financing. It is also subject to a requirement for recordation of an approved subdivision plat by August 30, 2000. The Northern Virginia Regional Park Authority has expressed a willingness, subject to review of the approved subdivision plat, to grant the debtors a 10-year license for a 10-foot wide access corridor across the bicycle trail that would permit the debtors to continue to use an existing gravel driveway to the back parcel. The license would be automatically extended for additional 10-year periods, up to a maximum of 40 years, but could be terminated by notice at any 10-year point. The debtors have recently submitted an application to Loudoun County for approval of the family subdivision. Mr. Alford testified at the hearing that he expected the back lot to sell for $165,000. He admitted that real estate taxes becoming due post-petition have not been paid.
The purchaser supplied the debtors with a "pre-qualification" letter from a bank reflecting that she and her husband appeared to meet the bank's requirements for a mortgage loan to purchase the property. The letter was not, however, a loan commitment and was expressly subject to a satisfactory appraisal and final credit review.
In connection with the hearing on Mr. and Mrs. Fletcher's objection to the prior plan, the debtors filed as exhibits recent written appraisal reports of Don Cannon, a licensed general appraiser, appraising the proposed front and back parcels at $69,900.00 and $165,900.00, respectively. Neither appraisal report was formally introduced into evidence at the prior hearing, nor were they offered into evidence, or the appraiser called to testify, at the hearing on the present objection. Absent a stipulation of admissibility, the report itself — which in any event does not specifically address the issue of access to the back parcel — would be hearsay. In connection with a hearing on a motion for relief from the automatic stay filed by Mr. and Mrs. Fletcher in the debtors' chapter 11 case, the court made a finding that the entire 11.44 acre tract had a fair market value of $162,500.00.
The proof of claim filed by Loudoun County includes the second-half 1999 real estate taxes in the amount of $879.12. The due date for the second-half taxes was apparently December 6, 1999, which was after the date the chapter 13 petition was filed (November 6, 1999). It appears that the County treated the entire 1999 obligation as having been accelerated when the debtors failed to pay the first-half taxes. Apparently, first-half 2000 taxes became due June 6, 2000. The record does not reflect the amount of those taxes, but the court assumes the amount would have been similar to that due for prior years, or approximately $880.
Discussion I.
Confirmation of a chapter 13 plan is a core proceeding over which this court has jurisdiction under 28 U.S.C. § 1334 and 157 and the general order of reference from the United States District Court for the Eastern District of Virginia dated August 15, 1984. The issues to be resolved are whether a chapter 13 plan can provide for the subdivision and sale by parcels of the real estate securing Mr. and Mrs. Fletcher's claim, and, if so, whether the debtors have met their burden of showing that the plan is feasible.
II.
The question of whether a chapter 13 plan can effect a piece-meal sale of a secured creditor's collateral free and clear of liens when the underlying security instrument does not provide for partial releases is not squarely addressed by the Bankruptcy Code and does not appear to have been specifically discussed by any reported opinion.
However, in In re Carlton, 186 B.R. 644 (Bankr.E.D.Va. 1994), Judge Tice of this court confirmed, over a secured creditor's objection, a plan that provided for the sale of lots over a four-year period. The opinion does not state whether the deed of trust included a release provision, but in any event the plan did not rely on the deed of trust but contained its own release prices based on appraisal testimony presented to the court. The secured creditor, although objecting to the time frame for sales and the lack of periodic payments pending those sales, did not object to the release prices or contest the debtor's right to sell individual lots free and clear of the lender's deed of trust.
A.
The requirements for plan confirmation are set forth in §§ 1322 and 1325, Bankruptcy Code.
Although §§ 1322(b)(2) and (b)(5) ordinarily prohibit any modification (other than the cure of payment defaults over time) of the rights of a holder of a mortgage secured by a debtor's principal residence, such a claim, although it may not be bifurcated into secured and unsecured components, may otherwise be treated like any other secured claim in those instances where the mortgage note becomes due before the last payment under the plan. § 1322(c)(2), Bankruptcy Code; Witt v. United Companies Lending Corp. (In re Witt), 113 F.3d 508 (4th Cir. 1997). In the present case, the notes held by Mr. and Mrs. Fletcher became due prior to the filing of the chapter 13 petition. Accordingly, the plan can be confirmed only if it leaves the Fletchers' claim unimpaired or if it satisfies one of the following three conditions: (A) it has been accepted by Mr. and Mrs. Fletcher; (B) it provides for Mr. and Mrs. Fletcher "to retain the lien securing [their] claim" and to receive payments or property having a present value equal to the amount of their allowed claim; or (C) it provides for the surrender of the property to Mr. and Mrs. Fletcher. § 1325(a)(5), Bankruptcy Code. Since the plan has neither been accepted by Mr. and Mrs. Fletcher nor provides for the property to be surrendered to them, the question is whether a sale by parcels, free and clear of liens, satisfies the requirement that they "retain the lien" securing their claims.
In this connection, the Bankruptcy Code expressly allows property of the bankruptcy estate to be sold free and clear of liens and other interests. § 363(f), Bankruptcy Code; 3 Lawrence P. King, Collier on Bankruptcy ¶ 363-06 at 363-42 (15th ed. rev. 2000) ("It has long been recognized that the bankruptcy court has the power to authorize the sale of property free of liens with the liens attaching to the proceeds, without the consent of the lienholder.") While § 363(f) speaks in literal terms of the "trustee" having the power to sell free and clear of liens, a chapter 13 debtor has "the rights and powers of a trustee under sections . . . 363(f)." § 1303, Bankruptcy Code.
Where property subject to a lien or other interest is to be sold, the lienholder is entitled, on request, to an order prohibiting or conditioning such sale "as is necessary to provide adequate protection of such interest." § 363(e), Bankruptcy Code. "Adequate protection" is a flexible concept and may be provided by requiring payment to the lien holder "to the extent that the . . . sale under section 363 . . . results in a decrease in the value of [the lienholder's] interest in such property;" by providing an additional or replacement lien; or by granting "such other relief . . . as will result in the realization by [the lienholder] of the indubitable equivalent" of its lien. § 361, Bankruptcy Code. In the context of a sale free and clear of liens, adequate protection is most commonly provided by a transfer of the liens to the proceeds of sale. The lienholder is protected against the possibility of judicial error in determining the adequacy of the sales price by the right to credit-bid. § 363(k), Bankruptcy Code.
Where something less than all of a lienholder's collateral is to be sold, the adequate protection requirement would appear to fully satisfied where the court makes a finding that the secured creditor will be paid an amount not less than "the decrease in the value" of its interest. Clearly, the less fungible the collateral, the harder this finding might be to make in a particular case. Where the debtor is selling one of five identical box-cars of widgets, for example, it could reasonably be assumed, even without receiving specific evidence on that issue, that the resulting decrease in the value of the collateral is one-fifth of the total. However, where the collateral — such as the rural acreage at issue here — is not fungible, it is obviously much more difficult for a court to determine whether a sale of a portion will disproportionately diminish the value of what remains. This is particularly true in the present case, where the acres that would remain have no permanent assured access to the public highway.
There are other issues as well. First, whether the transfer of the lien from the collateral to the proceeds of sale, while satisfying the requirements of § 363, also satisfies the requirement of § 1325(a)(5)(B) that the secured creditor "retain" its lien until its claim is paid in full is at least questionable. Additionally, chapter 13, unlike chapter 11, does not expressly allow a plan to provide for sales free and clear of liens. In Matter of Milleson, 83 B.R. 696, 701 (Bankr.D.Neb. 1988), however, the court concluded, in the analogous context of a chapter 12 family farmer case, that § 363(f) did not apply solely pre-confirmation, and that a plan could authorize sales free and clear of liens, subject to the requirement of adequate protection. Nevertheless, the power in § 363(f) to sell free and clear of liens and other interests is not unlimited. Specifically, such a sale may be decreed only if one of the following conditions is met:
See § 1129(b)(2)(A)(ii), Bankruptcy Code, which provides in relevant part as follows:
(2) For the purpose of this subsection, the condition that a [chapter 11] plan be fair and equitable with respect to a class includes the following requirements:
(A) With respect to a class of secured claims, the plan provides —
* * *
(ii) for the sale, subject to section 363(k) of this title, of any property that is subject to the liens securing such claims, free and clear of such liens, with such liens to attach to the proceeds of such sale[.]
In Milleson, the collateral consisted of cattle, and the debtors planned to use the proceeds of sale in their farming operation. The court found that the proposed adequate protection — the maintenance of a 110% overcollateralization — was insufficient given the volatility of the cattle market.
(1) applicable nonbankruptcy law permits sale of such property free and clear of such interest;
(2) such entity consents;
(3) such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all liens on such property;
(4) such interest is in bona fide dispute; or
(5) such entity could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest.
§ 363(f), Bankruptcy Code.
Clearly, subsections (2) and (4) do not apply in the present case, since Mr. and Mrs. Fletcher do not consent to the sale, nor is their lien in bona fide dispute. Nor, in this case, would subsection (1) apply, since applicable nonbankruptcy law does not permit a sale free and clear of a lien without payment of the secured debt in full. The debtors point to language in the second deed of trust which they read as requiring the lienholder to consent to a partial release, but aside from the fact that there is no corresponding language in the first deed of trust, the court agrees with Mr. and Mrs. Fletcher that the cited language merely permits the debtors to convey an undivided 50% interest in the land to an approved "investor" without triggering the due-on-sale clause. Nothing in the language even remotely suggests that the lien of the deed of trust would be released from that 50% interest, and in any event, the debtors are not proposing to bring in an "investor" but rather to sell the parcel outright.
The language in question is as follows:
13. Grantor may convey up to fifty percent (50%)of its interest in the subject property, legal or equitable, to a third party investor (hereinafter "Investor") conditioned upon Grantor obtaining the written consent of the Noteholder, which consent shall not be unreasonably withheld. . . . In the event any funds are received by Grantor as a result of such a conveyance which are not directly related to making additional capital improvements to the Property for purposes of future resale, any amounts received by Grantor shall be paid over to the Noteholder as additional payments on the note. In the event Grantor conveys any interest, legal or equitable, in the Property which is in excess of fifty percent, or conveys any interest, legal or equitable, in the Property less than fifty percent (50%) without the prior written consent of the noteholder, then the entire amount of the debt remaining unpaid, and all accrued interest thereon, shall become immediately due and payable, at the option of the Noteholder.
At first blush, the test in subsection (3) would likewise not appear to be satisfied, since the amount that would be received from the sale of the 3 acres is less than the aggregate value of the liens on the property. In In re Collins, 180 B.R. 447 (Bankr.E.D.Va. 1995), however, Judge Adams of this court, after reviewing the conflicting lines of authority, held that, by definition, the "value" of a lien is limited to the fair market value of the collateral, and that, accordingly, a court could authorize a sale free and clear of liens even though the face amount of the liens exceeded the sales price, so long as the sales price equaled or exceeded the fair market value of the collateral. Here, there is no contention by Mr. and Mrs. Fletcher that $79,900 is less than the fair market value of the 3 acres, nor is there any suggestion that they would credit-bid more than that amount under § 363(k). Their argument, rather, is directed solely at the possible adverse effect of the sale on the remaining 8 acres of the property.
Finally, subsection (5), as noted, permits a sale free and clear of liens, if the lienholder "could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of such interest." There can be little doubt that the beneficiary of a security deed of trust in Virginia could be compelled, in a legal or equitable proceeding, to accept a money satisfaction of the lien. At the same time, the court has found no reported cases in Virginia suggesting that a lienholder could be forced to release part of the collateral upon payment of a court-determined portion of the secured debt. However, subsection (5) does not, in literal terms, require that the particular amount proposed to be paid to the lienholder be sufficient to compel release of the lien in a legal or equitable proceeding outside of bankruptcy, but only that a "money satisfaction" could be compelled. See Seidle v. Modular Paving, Inc. (In re 18th Avenue Development Corp.), 14 B.R. 862, 863-64 (Bankr.S.D.Fla. 1981) (determining that trustee's sale of individual lots free and clear of liens would bring more than sale of land in bulk and was authorized under § 363(f)(5), because the lienholders could be compelled in a legal or equitable proceeding to accept a money satisfaction of their interest).
Given the provisions of § 363(f)(3) and (5), as well as the absence of any statutory language suggesting that a sale free and clear of liens cannot take place after, as well as before, confirmation, this court concludes, as did the court in Milleson, that a chapter 13 plan may provide for sale of a secured creditor's collateral free and clear of liens, subject always to the requirement of adequate protection where the creditor does not consent to such sale. Accordingly, the relevant inquiry is whether the proposed sales provide adequate protection of Mr. and Mrs. Fletcher's lien interest.
A leading treatise suggests that a chapter 13 debtor "may also elect not to provide for an allowed secured claim under the plan so that substitute or replacement collateral may be provided as adequate protection outside the plan for collateral that the debtor will use, sell, or lease." 8 Lawrence P. King, Collier on Bankruptcy, ¶ 1325.06 at 1325-31 (15th ed. rev. 2000) (emphasis added). Under the present plan, each of the lot sales will require approval of the court by separate motion brought for that purpose. In that sense, the plan can simply be read as providing for payments to Mr. and Mrs. Fletcher of $1,300.00 per month and for the payment of the claim in full through sale of the property within the plan term. Put another way, while the plan envisions and is predicated on the lot sales, the plan itself is not the mechanism for such sales; rather the mechanism by which the property will be sold will be the motions brought for that purpose.
B.
The court notes, first, that under the proposed plan all of the proceeds from the sale of the front lot, less the costs of sale, would go either to Loudoun County for delinquent taxes on the parcel or to Mr. and Mrs. Fletcher for application to the secured debt. In short, this is not a plan in which the debtors are proposing to retain and use the proceeds of sale for their own purposes. Second, pending full payment of the claim, the debtors are proposing to pay Mr. and Mrs. Fletcher, through the plan, $1,300.00 per month, which is within a dollar of being equal to the interest on their allowed claim at the effective rate previously found by this court to be due under the notes, as modified by the "Mortgagee Agreement." In the absence of any evidence as to a more appropriate discount rate, such interest satisfies the requirement of § 1325(a)(5)(B), Bankruptcy Code, that Mr. and Mrs. Fletcher receive payments having a present value equal to the amount of their allowed claim.
The court is not advised whether any mechanism exists under applicable nonbankruptcy law for apportionment of delinquent real estate taxes among individual parcels when a tract is subdivided.
Since the issue has not been briefed, the court assumes, without deciding, that the entire amount of the delinquent taxes would be due on sale of the first parcel. While such payment would reduce the amount paid to Mr. and Mrs. Fletcher from the sale of the first lot, it would provide a compensating benefit by extinguishing a lien against the second lot that is superior to their deeds of trust.
A more accurate figure would be $1,300.94 per month.
No evidence was presented at the confirmation hearing as to the estimated costs of sale, but a rule of thumb of 10% of the sales price has traditionally been used by bankruptcy courts and trustees for analysis purposes and would appear to be reasonable here. Accordingly, if the present contract goes to settlement, the net proceeds of sale would be approximately $71,910.00. After payment of the real estate taxes — which under Virginia law are a lien against the property superior to the two deeds of trust — Mr. and Mrs. Fletcher would likely receive a lump sum in the approximate amount of $67,053.00, thereby reducing the unpaid balance of their claim to approximately $107,256.00. That claim would remain secured by the back lot. Although Mr. Alford testified that the back lot was worth $165,000, no other evidence was presented to support that figure. Given this court's earlier finding that the entire tract had a value, as is, of only $162,500, a valuation of $165,000 for the subdivided back 8 acres seems unrealistic, particularly as the back lot has no permanent assured access to the public highway. Nevertheless, it also has a habitable house in which the debtors reside and which provides value over and above the land itself. Given that the debtors have an offer of $79,900 for the front lot — which has no improvements — it is not unreasonable to expect that the back lot will bring a sufficient price to pay off the balance of Mr. and Mrs. Fletcher's claim. Accordingly, the court concludes that Mr. and Mrs. Fletcher will be adequately protected by the $1,300.00 per month periodic payments, together with the lump sum payment to them of the net proceeds from the sale of the first lot and the retention of their lien against the second lot until it is sold.
III.
The remaining issue is feasibility. Before a plan may be confirmed, the court must find that "the debtor will be able to make all payments under the plan and to comply with the plan." § 1325(a)(6), Bankruptcy Code. From an examination of the debtors' amended schedules of monthly income and expenses, it appears that the debtors will be able to make the periodic payments to the trustee required by the terms of their plan. The real issue is whether the proposed subdivision and sale of the two lots, which is the cornerstone of the plan, at least as it affects Mr. and Mrs. Fletcher, is likely. In this connection, the court is guided by the same standard as in a chapter 11 reorganization. The feasibility test in chapter 11 requires the court "to scrutinize carefully the plan to determine whether it offers a reasonable prospect of success and is workable." 7 Lawrence P. King, Collier on Bankruptcy, ¶ 1129.03[11] at 1129-61 (15th ed. rev. 2000). Put another way, the purpose of the feasibility inquiry is to prevent confirmation of visionary or impracticable schemes for resuscitation.
As Judge Shelley of this court sagely observed in In re Adamson Co., Inc., 42 B.R. 169, 176 (Bankr.E.D.Va. 1984), "a court is never presented with a plan that is guaranteed to succeed." In any chapter 13 case, debtors may lose their jobs, die, become seriously ill, or suffer other financial calamity that prevents successful completion of a plan. The plan before the court offers additional hurdles, however, since it depends for its success on the debtors' ability to sell their land for an amount sufficient to pay the secured claim of Mr. and Mrs. Fletcher. The debtors have a contract for the sale of the first lot, which is certainly a plus. Before that lot can be conveyed, however, the debtors must complete the subdivision process. They have been working on that process for several years without any substantial progress. They have only recently submitted a proposed subdivision plan for formal approval. At the time of the hearing, they did not yet have final site approval for septic fields on the two lots. It is no secret, moreover, that the current Loudoun County Board of Supervisors includes several members who were elected on a campaign pledge of "slow growth." Whether the fallout from those campaign pledges will actually delay or torpedo the debtors' proposed family subdivision is obviously speculative, but it certainly does not increase optimism that the subdivision can be completed in short order. Finally, apart from Mr. Alford's optimistic prediction (which appears to be based solely on the Cannon appraisal report), the court has no evidence in the record that sale of the second lot will bring enough to pay the remaining balance of Mr. and Mrs. Fletcher's claim or that the second lot will sell, as anticipated, within 24 months of plan confirmation.
IV.
Although the issue of feasibility is close, the court is inclined to give the debtors the benefit of the doubt. Certainly, it would be difficult to characterize their proposal for the payment of Mr. and Mrs. Fletcher's claim as visionary or impractical. At the same time, it is beset with significant uncertainties. As noted, the court's findings in connection with the Mr. and Mrs. Fletcher's motion for relief from the automatic stay reflected that the debtors had no equity in the property in its present unsubdivided state. The debtors have had the benefit of the automatic stay for 13 months in their unsuccessful first attempt at reorganization and for 7 months in the present case. The plan, as proposed, does not set an outside date for the sale of the two lots (other than the implied outside date of 24 months from the date of plan confirmation). That is to say, while the plan provides target dates for the sale of the two lots, failure to meet those dates simply results in the property passing to the trustee for sale, with no time limit on the trustee's marketing efforts. There is no reason, however, to suppose that, if the debtors are unable to effect a sale, the trustee will be any more successful. Given the length of time the notes held by the Fletchers have been in default and the prior unsuccessful attempt at reorganization, the court will confirm the plan only if it provides for termination of the automatic stay upon the failure to record an approved subdivision plat by December 1, 2000, to sell the first lot by December 21, 2000, or to sell the second lot by December 21, 2001. The court will additionally require, as a condition both of confirmation and of continuing the automatic stay in effect, that the delinquent first-half 2000 real estate taxes be paid on or before December 6, 2000, and that post-petition real estate taxes thereafter be paid on a current basis. The order confirming the plan will further provide that interest at the statutory rate of 10% be paid on the secured portion of Loudoun County's claim.
A separate order will be entered consistent with this opinion.