In re NRS Props., LLC

Full title: IN RE: NRS PROPERTIES, LLC, Debtor.

Court: United States Bankruptcy Court, D. Colorado.

Date published: Nov 22, 2021

634 B.R. 395 (Bankr. D. Colo. 2021)

Opinion

Bankruptcy Case No. 21-10744 TBM

2021-11-22

IN RE: NRS PROPERTIES, LLC, Debtor.

Daniel A. Hepner, Daniel A. Hepner, Trustee, Broomfield, CO, Trustee, Pro Se. Robert J. Shilliday, III, Shilliday Law, P.C., Christopher Duncan Yost, Cohen, LLC, Denver, CO, for Debtor.

Thomas B. McNamara, United States Bankruptcy Judge

Daniel A. Hepner, Daniel A. Hepner, Trustee, Broomfield, CO, Trustee, Pro Se.

Robert J. Shilliday, III, Shilliday Law, P.C., Christopher Duncan Yost, Cohen, LLC, Denver, CO, for Debtor.

ORDER DENYING CONFIRMATION OF AMENDED CHAPTER 12 PLAN AND DISMISSING BANKRUPTCY CASE

Thomas B. McNamara, United States Bankruptcy Judge

I. Introduction.

Chapter 12 of the Bankruptcy Code¹ establishes a specialized process for reorganization of family farmers. The Debtor, NRS Properties, LLC (the "Debtor"), filed for protection under Chapter 12 to stave off a foreclosure on its Colorado farm and ranch land initiated by its only creditor, MM Opportunity Fund, LLC ("MMOF"). MMOF has a lien on all of the Debtor's land. Eventually, the Debtor filed a Chapter 12 plan of reorganization proposing to transfer some of its real property (and other consideration) to MMOF. The Chapter 12 Trustee and MMOF both objected to the Debtor's plan on numerous grounds, including lack of eligibility and failure to meet various Chapter 12 confirmation requirements under Section 1225(a). MMOF also requested that the bankruptcy case be dismissed per Section 1208(c). The Court conducted a trial on the confirmation and dismissal disputes.

1 All references to the "Bankruptcy Code" are to the United States Bankruptcy Code, 11 U.S.C. § 101 et seq. Unless otherwise indicated, all references to "Section" are to sections of the Bankruptcy Code.

Regarding eligibility, "only a family farmer ... with regular annual income may be a debtor under Chapter 12." 11 U.S.C. § 109(f). Although the Debtor is a corporate entity (a limited liability company) the broad definition of "family farmer" encompasses closely-held companies owned by one family, provided that such family conducts the farming operation. 11 U.S.C. § 101(18)(B). And, under the Bankruptcy Code, farming encompasses both growing crops and ranching. 11 U.S.C. § 101(21). Trenton M. Lund, the Debtor's Manager, owns all of the equity of the Debtor and conducts the farming operation, which includes cultivation of some crops and livestock ranching on dry land in the San Luis Valley. More than eighty percent (80%) of the Debtor's assets "consists of assets related to the farming operation." 11 U.S.C. § 101(18)(B). The Debtor's aggregate debts are less than $10 million and all of the debt stems from farming operations. Id . So, although the Debtor's actual farming operations are somewhat nominal, the Debtor is eligible to seek bankruptcy protection under Chapter 12. 11 U.S.C. §§ 101(18), 101(19) and 109(f).

But being eligible for bankruptcy relief is only a threshold step in the bankruptcy process. The real objective is reorganization. Every Chapter 12 debtor must propose a plan of reorganization within a short time. Furthermore, to be confirmed, every Chapter 12 plan must meet a series of statutory requirements set forth in Section 1225. After hearing all the evidence, the Court concludes that the Debtor failed to meet its confirmation burden. The Debtor's proposed plan is so contradictory and unclear (especially in its treatment of MMOF) that it simply cannot be administered. Furthermore, since MMOF objected, the Debtor was required to meet a set of cram down mandates under Section 1225(a)(5). But, given a host of valuation problems — for example, the Debtor's dry land is worth much less than the Debtor thinks — the Debtor was unable to prove that "the value ... of property to be distributed ... under the plan on account of [MMOF's Claim] is not less than the allowed amount of such claim." 11 U.S.C. § 1225(a)(5)(B)(ii). The Debtor's plan also was deficient in other ways. So, the Court concludes that confirmation of the Debtor's proposal must be denied.

MMOF also asked for dismissal. If this case was still in its early stages and the Debtor had only had one opportunity to reorganize, dismissal might not warranted. However, this bankruptcy (which is the Debtor's second recent attempt at reorganization) is almost a year old already. And, nothing much has been accomplished. The Debtor's first plan was facially unconfirmable and was withdrawn by the Debtor. Now, the Court has rejected confirmation of another plan. Meanwhile, the Debtor has engaged in both "unreasonable delay" and "gross mismanagement" prejudicing the Debtor's sole creditor. The Debtor's "gross mismanagement" is not trivial. The Debtor has failed to comply with basic requirements of the Bankruptcy Code (including monthly financial reporting obligations and advance approval for the retention and payment of professionals) and has transferred almost all of its income to a related third-party for no consideration, thus violating its duty of financial transparency. Meanwhile, the Debtor has not made a profit and seems unable to be able to rehabilitate itself. So, dismissal is warranted. In the end, this is a two-party dispute (between the Debtor and its secured creditor, MMOF) which can and should be resolved outside of bankruptcy.

II. Jurisdiction and Venue.

The Court has jurisdiction over the matters in dispute in this bankruptcy case pursuant to 28 U.S.C. § 1334. The Chapter 12 eligibility, confirmation, and dismissal issues are core proceedings under 28 U.S.C. §§ 157(b)(2)(A) (matters concerning administration of the estate), 157(b)(2)(K) (determinations of the validity, extent or priority of liens); (L) (confirmations of plans), and 157(b)(2)(O) (other proceedings affecting the liquidation of the assets of the estate or the adjustment of the debtor-creditor relationship). Venue is proper in this Court pursuant to 28 U.S.C. §§ 1408 and 1409. No party has contested this Court's jurisdiction or venue.

III. Procedural Background.

The Debtor filed for bankruptcy protection under Chapter 12 on February 17, 2021.² A few weeks later, the Debtor submitted its Statement of Financial Affairs and Schedules.³ Four months into the bankruptcy proceedings, the Debtor filed an initial Chapter 12 Plan; however, the Debtor voluntarily withdrew it.⁴ Then, prompted by the seeming lack of progress in reorganization, MMOF filed the Motion to Dismiss on July 27, 2021.⁵ In the Motion to Dismiss, MMOF contended that the Debtor was ineligible for Chapter 12 relief per Section 109(f). MMOF also argued that the Debtor's bankruptcy case should be dismissed under Section 1208(c) for: "unreasonable delay, or gross mismanagement, by the debtor that is prejudicial to creditors"; "continuing loss to or diminution of the estate and absence of a reasonable likelihood of rehabilitation"; and lack of "good faith." Subsequently, the Debtor opposed the Motion to Dismiss contending that the Debtor was eligible to file for protection under Section 109(f) and that dismissal was unwarranted.⁶

2 Ex. A; Docket No. 1. Unless otherwise indicated, the Court will refer to particular documents contained in the CM/ECF docket for this Bankruptcy Case using the convention: "Docket No. ___." The Court will cite Debtor's exhibits as "Ex. [letter]," the Chapter 12 Trustee's exhibits as "Tr. Ex. [number]," MMOF's exhibits as "MMOF Ex. [number]."

3 Ex. B, C and D; Tr. Ex. 3; Docket Nos. 13-18.

4 Docket Nos. 28 and 37.

5 Docket No. 39.

6 Docket No. 44.

On August 17, 2021, the Debtor filed its "Amended Chapter 12 Plan of Reorganization" (the "Amended Chapter 12 Plan") and "Motion to Confirm Chapter 12 Plan (the "Motion to Confirm").⁷ Subsequently, both the Chapter 12 Trustee and MMOF objected to confirmation of the Amended Chapter 12 Plan on a myriad of grounds.⁸ The Court set the disputes for trial. Thereafter, the Debtor, the Chapter 12 Trustee, and MMOF presented a "Stipulation of Agreed Facts"⁹ (identifying 11 agreed material facts) (the "Stipulated Facts") and submitted legal briefs on the disputed dismissal and confirmation issues.¹⁰

7 Docket No. 62 and 63; Ex. E.

8 Docket Nos. 73 and 74.

9 Docket No. 82. Hereinafter, the Court will refer to each individual fact set forth in the Stipulation of Agreed Facts as "Stip. Fact No. ___").

10 Docket Nos. 81 and 83-85.

The Court conducted an evidentiary hearing on the Motion to Confirm, the Amended Chapter 12 Plan, the Motion to Dismiss, and the various objections on October 29, 2021. Only two witnesses testified. The Debtor presented testimony from Trenton N. Lund, the Managing Member and sole owner of the Debtor. MMOF called Clark Oman, an expert on agricultural real estate valuation. During the trial, the Court admitted into evidence: Exhibits A-B, E, and K-M tendered by the Debtor; Exhibits 3 and 10-16 offered by the Chapter 12 Trustee; and Exhibits MMOF 1-5 presented by MMOF. After the close of evidence, the Court received Closing Arguments from counsel for the Debtor, MMOF, and the Chapter 12 Trustee. Thereafter, the Court took the matter under advisement. In the interim, the Court has reviewed all of the admitted exhibits, considered the testimony of the witnesses, and evaluated the legal arguments. The disputed issues are ripe for decision.

IV. Factual Findings.

A. The Debtor and the Bankruptcy Filing.

The Debtor is an Arizona limited liability company wholly owned and managed by Trenton N. Lund ("Mr. Lund"). The Debtor has no employees. Historically, the Debtor has engaged in farming and ranching operations. On its 2020 Federal Income Tax Return, the Debtor asserted a "net farm loss" from "farming."¹¹ Currently, according to Mr. Lund, the Debtor is more focused on ranching than on cultivation, albeit that the Debtor has recently harvested some alfalfa and oats. The Debtor and MMOF have stipulated that "Debtor conducts farming operations in Saguache County, Colorado"¹² and "Debtor is a corporation in which more than 50 percent of the outstanding stock or equity is held by one family and more than 80 percent of the value of its assets consists of assets related to the farming operation."¹³ The Debtor filed for bankruptcy protection under Chapter 12 on February 17, 2021, to stop a foreclosure of its real property initiated by MMOF.¹⁴ This bankruptcy case is the Debtor's second insolvency filing in recent years submitted on the eve of foreclosure on the Debtor's real property.¹⁵

11 Ex. M.

12 Stip. Fact No. 1.

13 Stip. Fact No. 2.

14 Ex. A.

15 Id . at 2 (referencing the Debtor's prior case, Case No. 16-10989 TBM filed on February 9, 2016).

B. The Debtor's Assets and Liabilities.

1. The Debtor's Assets.

In its Schedule A/B, the Debtor listed a total of $2,775,977 in assets.¹⁶ The asset mix includes the following categories:

16 Ex. B (amounts identified in this decision are rounded to nearest dollar).

(1) cash ($7,421);

(2) crops ($8,000);

(3) farm animals ($169,840);

(4) farming equipment ($48,100);

(5) vehicles ($5,500);

(6) real property ($1,350,000); and

(7) "Note receivable from D/S Farms Ltd." ($1,187,116).

Most of the foregoing categories of assets pertain to farming or ranching operations. With respect to crops, the Debtor did not assert that it had any planted or harvested crops when it filed for bankruptcy. Instead, the crops category included a relatively small amount of alfalfa and hay seed in the Debtor's possession. Regarding farm animals, as of the petition date, the Debtor had 23 head of cattle, 35 head of bison, 54 head of yaks, a few horses, and a donkey (together, the "Livestock"). Since then, a few of the Livestock have died, a few have been added, and four head of cattle have been sold. With respect to farming equipment and vehicles, the Debtor owns an assortment of farming and ranching equipment, including: trucks; tractors; trailers; swathers; a mower; a row disc; a row creaser; a rototiller; a row marker; a row cutter; a scraper; a fertilizer spreader; a grain drill; a baler; a rotary hoe; a potato harvester; a generator; and other associated equipment (including cattle guards, panels, pumps, and tanks). The Debtor uses the foregoing equipment in its farming and ranching activities.

The Debtor's two largest assets are real property and a note receivable. As explained in far more detail later, the Debtor owns 3,025 acres of dry grazing land in Saguache County, Colorado (defined more specifically later as the "Dry Land"). The real property is used as grazing range for the Debtor's Livestock. Recently, the Debtor also harvested a small amount of alfalfa and oats (growing together) on the Dry Land.

The note receivable stems from the Debtor's sale of 480 acres of irrigated land (defined more specifically later as the "Irrigated Land") to DS Farms Ltd., a Nevada corporation ("DS Farms"), on September 30, 2019 for $1,512,000. DS Farms paid $300,000 in cash plus provided the Debtor with a Promissory Note in the principal amount of $1,212,000 (the "DS Farms Note").¹⁷ Under the DS Farms Note, DS Farms is obligated to pay the Debtor monthly interest-only payments of $7,135 until September 30, 2022. The DS Farms Note matures on September 30, 2022, at which time DS Farms is obligated to pay the Debtor a balloon payment of $1,187,116. The DS Farms Note is secured by the 480 acres of Irrigated Land sold by the Debtor to DS Farms.¹⁸ The DS Farms Note contains the following additional provision:

17 Ex. L.

18 Stip. Fact No. 8.

At any time the balance of the within note [DS Farms Note] shall be an amount equal to, or less than, the balance due on the Note Holder's [Debtor's] note to MM Opportunity Funds, LLC ..., the Borrower [DS Farms] herein may apply such entire balance of its payments on this note [DS Farms Note] on such MM Opportunity Fund, LLC ... obligation and in full payment thereof. Note Holders [Debtor] herein agree that they [Debtor] will not exercise any rights in connection with the promissory note and deed of trust securing MM Opportunity Fund, LLC ..., or in any way change the terms and conditions of such promissory note [MMOF Note] without the written authorization of maker [DS Farms] herein.¹⁹

19 Id .

At the trial, the Debtor introduced no evidence concerning DS Farms, DS Farms’ assets, DS Farms’ liabilities, DS Farms’ ownership, or the likelihood that DS Farms will be able to make the $1,187,116 balloon payment to the Debtor due on September 30, 2022. Mr. Lund merely testified that he had "no reason to believe that [the DS Farms Note] won't be paid but [Mr. Lund] does not control their [DS Farms’] business."

2. The Debtor's Liabilities.

On the liabilities side, the Debtor has just one principal creditor: MMOF. MMOF filed a secured Proof of Claim (Claim No. 2-1)²⁰ against the Debtor in the amount of $1,872,572 (the "MMOF Claim"). The Debtor has not objected to the MMOF Claim. In its Schedule E/F, the Debtor identified the Saguache County Treasurer as holding a $1,491 claim which is not listed as contingent, unliquidated, or disputed.²¹ The Internal Revenue Service (the "IRS") also filed a Proof of Claim (Claim No. 1-1) for $600 (the "IRS Claim") based upon estimated taxes for 2016-2021. The taxes were estimated by the IRS because the Debtor has neglected to file any federal income tax returns for the last five years. In any event, the Debtor now contends that "no taxes are due to the IRS [Internal Revenue Service] the Colorado Department of Revenue, or [any] other taxing authorities."²² The Court accepts such assertion. Thus, for all intents and purposes, this bankruptcy case is a two-party dispute between the Debtor and MMOF.

20 Ex. K.

21 Tr. Ex. 3.

22 Am. Chap. 12 Plan at 2.

MMOF's claim against the Debtor is based upon a Promissory Note, dated September 1, 2017, made by the Debtor in the original principal amount of $1,400,000 (the "MMOF Note").²³ The MMOF Note bears interest at the non-default rate of 12 percent (12%) per annum. Upon default, the MMOF Note bears default interest at the rate of 18 percent (18%) per annum, plus additional late charges. Under the MMOF Note, the Debtor was obligated to make interest-only payments of $5,833 per month through August 2019. The MMOF Note matured on September 1, 2019. The obligations under the MMOF Note are secured by a "Deed of Trust, Assignment of Leases and Rents, Security Agreement, Fixture Filing and Financing Statement" (the "MMOF Deed of Trust").²⁴ As set forth in more detail in the MMOF Deed of Trust, the principal collateral pledged by the Debtor to secure repayment of the obligations under the MMOF Note was all of the Debtor's real property, consisting of 3,505 acres of irrigated and dry land in Saguache County, Colorado (defined more specifically later as the "Combined Property" which consists of both the "Irrigated Land" and the "Dry Land"), along with all improvements and water rights.

23 Ex. MMOF 1.

24 Ex. MMOF 2; see also Stip. Fact No. 6.

In 2019, the Debtor defaulted on the MMOF Note by failing to make all required payments. As a result, the Debtor and MMOF entered into a "Settlement and Forbearance Agreement," dated August 14, 2019 (the "Forbearance Agreement").²⁵ Under the Forbearance Agreement, the Debtor and MMOF agreed that the outstanding balance owing under the MMOF Note was $1,885,344 and also agreed to decrease the non-default interest rate under the MMOF Note to seven percent (7%) per annum. Further, the Debtor committed to pay $300,000 to MMOF by September 30, 2019 along with monthly payments thereafter of $9,245 with the entire balance due by November 1, 2022. Thereafter, the Debtor obtained $300,000 from the sale of the 480 acres of Irrigated Land to DS Farms and paid such $300,000 to MMOF.²⁶ However, per the agreement of the Debtor, MMOF and DS Farms, MMOF did not release the Irrigated Land from the MMOF Deed of Trust. Instead, such real property was sold to DS Farms subject to the MMOF Deed of Trust.

25 Ex MMOF 3; see also Stip. Fact No. 7.

26 Stip. Fact No. 9.

Subsequently, the Debtor defaulted on the terms of the Forbearance Agreement by failing to pay MMOF the amounts due by April 1, 2020.²⁷ Thereafter, MMOF commenced foreclosure proceedings in Saguache County, Colorado, against the Dry Land owned by the Debtor. The Debtor filed bankruptcy to stop such foreclosure action. The Debtor has not disputed that it is indebted to MMOF in the amount of $1,872,572 as of the petition date and as reflected in the MMOF Proof of Claim.

27 Stip. Fact No. 7.

C. The Dry Land.

The Debtor's single largest asset is real property. For many years prior to the Debtor's most recent Chapter 12 bankruptcy petition, the Debtor owned 28 parcels of rural real property, totaling 3,505 acres, in Saguache County, Colorado (the "Combined Property").²⁸ The Combined Property consisted of various Sections all in Township 44 North and Range 9 East in the northern part of a high mountain valley: the San Luis Valley.²⁹ The general location of the Combined Property is approximately 125 miles southwest of Denver, Colorado.³⁰ The small towns of Saguache and Moffat, Colorado, are to the northwest and southeast, respectively, of the Combined Property.³¹ The Combined Property sits at approximately 7,650 feet above sea level with the majestic Sangre de Christo mountain range nearby.³²

28 MMOF Ex. 4 at 6-11.

29 Id.

30 Id.

31 Id.

32 Id .

The Debtor retained a Certified General Appraiser, Edd Gillespie ("Mr. Gillespie"), to appraise the Combined Property as of December 19, 2016. A copy of the "Real Estate Appraisal of NRS LLC Real Property in Saguache County, Colorado" was admitted into evidence as MMOF Ex. 4 (the "2016 Appraisal"). According to Mr. Gillespie:

There are two categories of agricultural land within the subject [Combined Property], irrigated and dry land, that are appraised separately due to the market.

...

The report includes properties that are somewhat diverse due to the availability of irrigation water .... Specifically, there are three crop circles which cover about 480 irrigated acres and 3,025 +- acres of dry grazing land.³³

33 Id . at 5.

Consistent with the 2016 Appraisal, the Court refers to the 480 acres of irrigated land as the "Irrigated Land" and the 3,025 acres of unirrigated land as the "Dry Land."

The Irrigated Land is serviced by water infrastructure including five large permitted agricultural water wells and three pivot sprinkler systems. A pivot sprinkler system is a method of overhead irrigation — quite common in the relatively arid West — whereby sprinklers are attached to segments of pipe mounted on wheels. The sprinkler-mounted pipe segments rotate as a radius from a central pivot point thus forming irrigated circles for growing crops. On the Irrigated Land, the crop circles are about 160 acres or a ¼ Section of land each (minus the dry corners which are not irrigated). In the past, the Debtor grew various crops on the irrigated crop circles. However, on September 30, 2019, the Debtor sold the entirety of the Irrigated Land (480 acres) along with all the water infrastructure to DS Farms for $1,512,000 (which amount is about $3,150 per acre).³⁴ So, when the Debtor filed for bankruptcy more than a year later (on February 17, 2021), the Debtor no longer owned the Irrigated Land.

34 Ex. L.

Instead, as of the bankruptcy petition date, the only real estate that the Debtor owned was the Dry Land. The Dry Land consists of 3,025 acres of mostly-contiguous land generally surrounding the Irrigated Land. The Court received no evidence from the Debtor regarding any other improvements to the Dry Land (such as buildings, barns, utilities, or the like). In the 2016 Appraisal, Mr. Gillespie characterized the Dry Land as "dry grazing land."³⁵ The soils are predominantly Alamosa clay loam, Hagga loam, Laney, and Space City-Hooper.³⁶ Such soils are generally considered poor quality Class 6 or Class 7 soils (based upon the Land Capability Classification System) with severe use limitations. Such land is generally unsuitable for cultivation and, instead, is mainly used as livestock range. According to an expert witness on land valuation, Clark Orman ("Mr. Orman"), unirrigated land in the upper San Luis Valley is "basically a high-altitude desert." Mr. Orman testified that the 3,025 acres of Dry Land can support only a "small number" of livestock: "not more than 100 head of cattle." The Debtor's usage of the Dry Land has been consistent with the foregoing. The Debtor utilizes the Dry Land as grazing range for about 23 head of cattle, 35 head of bison, 54 head of yaks, and a couple horses.³⁷

35 MMOF Ex. 4 at 5.

36 Id . at 11.

37 Ex. B at 2.

Although the Court uses the phrase "Dry Land," according to the 2016 Appraisal, the Dry Land does have some minor water resources, including stock ponds, artesian wells, and abandoned agricultural wells.³⁸ Mr. Lund testified that he has been recently working to re-establish some water producing wells on the Dry Land including through "subdistrict 4 and subdistrict 5." He seemed to imply that the Dry Land was becoming irrigated. He testified that there are three "small, permitted wells" on the Dry Land some of which are pumping water and some not. However, later in cross-examination, he acknowledged that he "do[es] not know which water wells [on the Dry Land] will be available." Currently, there are no sprinkler or pivot irrigation systems to distribute water on the Dry Land. The Debtor has no funds to buy such water distribution systems. And there are no crop circles (which would indicate crop cultivation) on the Dry Land either. The Court determines that Mr. Lund's testimony concerning water on the Dry Land was mostly future-oriented speculation and not supported by any specific evidence. Although there are nominal water resources (including stock ponds, artesian wells, and abandoned agricultural wells) on the Dry Land, the Dry Land is best characterized simply as "dry grazing land." The Debtor's own appraiser, Mr. Gillespie, used that exact terminology in the 2016 Appraisal. And, on October 25, 2021, the Debtor itself stipulated: "The Debtor's property currently includes 3,025 acres of dry land ...."³⁹ So, the Dry Land is indeed dry land.

38 MMOF Ex. 4 at 24.

39 Stip. Fact No. 5 (emphasis added).

D. Value of the Dry Land.

1. The Debtor's Evidence of Value of the Dry Land.

The Debtor presented five types of valuation evidence of the Dry Land at trial: (1) the Debtor's Schedule A/B ($1,350,000); (2) the Debtor's Schedule D ($1,350,000); (3) the Debtor's 2016 Appraisal ($1,350,000) (although the Debtor is no longer relying on the 2016 Appraisal); (4) the Debtor's Balance Sheets ($386,000); and (5) Mr. Lund's new estimate ($3,000,000).

On March 3, 2021, the Debtor filed its Schedule A/B identifying the "Current Market Value of the Debtor's Interest" in the Dry Land as "$1,350,000" based upon an "Appraisal."⁴⁰ That aggregate value is based upon $450 per acre. The Debtor's Schedule D reconfirmed such valuation by identifying the "Value of Collateral" that supports MMOF's Claim as "$1,350,000." The Debtor's Manager, Mr. Lund, affirmed the Schedule A/B and D information, including the value of the Dry Land, under oath.

40 Ex. B at 3-4. The Debtor's Schedule A/B lists the Debtor's real property as "3,505 acres of Farm/Ranch land." However, that description is erroneous. In cross examination, the Debtor's principal, Mr. Lund, confirmed that the Debtor only owns 3,025 acres of land; not 3,505 acres of land. Furthermore Stip. Fact No. 5 confirms that the Debtor's property consists of "3,025 acres of dry land ...."

The Debtor's reference to "Appraisal" in Schedule A/B refers to the 2016 Appraisal of the Combined Property performed by Mr. Gillespie for the Debtor. In the 2016 Appraisal, Mr. Gillespie separately valued the Dry Land using a sales comparison approach based upon analysis of nine land comparables.⁴¹ In the end, Mr. Gillespie determined that the Dry Land was worth $450 per acre.⁴² He rounded the resulting calculation (3,025 acres X $450 per acre = $1,361,250) down to $1,350,000.⁴³ Thus, the Debtor's Schedules A/B and D match the 2016 Appraisal of the value of the Dry Land exactly. The Debtor unequivocally endorsed the 2016 Appraisal thereby agreeing that the value of the Dry Land ($1,350,000) has not increased in the last several years.

41 MMOF Ex. 4 at 14-15.

42 Id .

43 Id .

In the 2016 Appraisal, Mr. Gillespie also separately valued the Irrigated Land using a sales comparison approach based upon analysis of four land comparables.⁴⁴ In the end, Mr. Gillespie determined that the Irrigated Land was worth $3,600 per acre.⁴⁵ He rounded the resulting calculation (480 acres X $3,600 per acre = $1,728,000) up to $1,730,000.⁴⁶ Then, to complete his evaluation of the Combined Property (both the Irrigated Land and the Dry Land together), Mr. Gillespie added the two values to arrive an "Aggregate Market Value" for the Combined Property of $3,100,000 as of December 6, 2016.⁴⁷

44 Id. at 16-17.

45 Id .

46 Id .

47 Id . at 18.

As set forth above, the Debtor no longer owns the Irrigated Land. However, the 2016 Appraisal establishes that dry land is worth substantially less than irrigated land in the San Luis Valley. More specifically, the 2016 Appraisal shows that the Dry Land was worth about twelve and a half percent (12.5%) of the value of the Irrigated Land (i.e. , $450 per acre / $3,600 per acre = .125).

As another measure of value of the Dry Land, during the bankruptcy process, the Debtor sporadically submitted "Chapter 12 Monthly Reports" ("Monthly Reports") to the Chapter 12 Trustee. Such Monthly Reports included "Balance Sheets" dated June 10, 2021, June 30, 2021, August 30, 2021, and August 31, 2021.⁴⁸ All of the Debtor's Balance Sheets identify the value of the Debtor's "Real Estate" as "$386,000." Since the Debtor only owns the Dry Land, that means that the Debtor valued the Dry Land as worth $386,000 on the Balance Sheets. The Debtor's Manager, Mr. Lund, ultimately is responsible for the submission and accuracy of the Monthly Reports and Balance Sheets. However, Mr. Lund seemed to have no real idea why the Debtor valued the Dry Land at $386,000 on the Balance Sheets. Instead, he appeared to blame the Debtor's unauthorized accountant⁴⁹ and suggested that the value of the Dry Land had been "depreciated." Mr. Lund's testimony was not credible since the value of raw land such as the Dry Land does not typically depreciate. However, non-public companies, like the Debtor, may sometimes elect to report real estate assets based upon an income tax basis or book value rather than current market value. Mr. Lund did not mention book value and did not explain how much the Debtor paid for the Dry Land when the Debtor originally purchased the property. However, because the extremely low value for the Dry Land listed on the Balance Sheets has not been adequately explained and is contrary to Schedules A/B and D as well as the 2016 Appraisal, the Court essentially discards the value listed on the Balance Sheets as inexplicable and unclear.

48 Tr. Exs. 10-13.

49 In the bankruptcy proceedings, the Debtor has not requested or received permission to engage or pay an accountant under 11 U.S.C. §§ 327 and 330.

Notwithstanding the foregoing, at trial, the Debtor's Manager, Mr. Lund, suddenly had a different idea of value. He stated that he "believed" that the value of the Dry Land is now "$3,000,000" and that such value is "conservative." Although the Debtor is the owner of the Dry Land, Mr. Lund provided no evidence of any specialized training in real estate valuation. Indeed, the Court received virtually no information about Mr. Lund's background at all. Mr. Lund also failed to articulate any basis for his newly-formed belief. And, he failed to explain how and why the value of the Dry Land supposedly more than doubled (to $3,000,000) in the seven months since he swore under oath on the Schedules A/B and D and that the current market value of the Dry Land was $1,350,000. Ultimately, the Court determines that Mr. Lund's testimony regarding the value of the Dry Land was not credible.

2. MMOF's Evidence of Value of the Dry Land.

MMOF presented an expert witness for agricultural real estate valuation issues: Clark Oman, a Senior Valuation Specialist with Colliers International. Mr. Oman has an impressive background relevant to agricultural land appraisal.⁵⁰ He graduated with a Bachelor of Science degree in Agricultural Economics from Colorado State University in 1992. Subsequently, he earned two post-graduate degrees both from Colorado State University: a Master of Science in Natural Resources Economics; and a Master of Science in Weed Science. Mr. Oman has spent his entire professional career in the agricultural sector. He worked for Mountain Plains Farm Credit and American AgCredit dealing with agricultural loans and real estate valuation prior to joining Collier International. Mr. Oman is a Certified General Appraiser in the State of Colorado and received the Accredited Rural Appraiser ("ARA") designation from the American Society of Farm Managers and Rural Appraisers in 2015. Mr. Oman regularly appraises rural real estate in Colorado and other States in the United States. Mr. Oman has performed appraisals in Saguache County, Colorado, for at least the last fifteen years. In the last year, he performed six to eight appraisals of agricultural land near the Dry Land in the San Luis Valley. Based upon his trial testimony, the Court determines that Mr. Oman is very qualified and capable. He was extremely credible. However, Mr. Oman did not perform a full appraisal of the Dry Land. He did not personally inspect the Dry Land (although he has driven by many times). Instead, he evaluated the 2016 Appraisal prepared by Mr. Gillespie, reviewed recent aerial imagery, communicated with other appraisers in the region, relied on his appraisals of other properties in the north San Luis Valley, and considered data from Landvision and the Multiple Listing Service. Based upon that work, Mr. Oman prepared a short report⁵¹ and reached a conclusion about the recent value of "similar" dry land properties "in the immediate area." Mr. Oman testified that values contained in the 2016 Appraisal for the Irrigated Land and the Dry Land appeared generally valid. He contended that dry land value in the upper San Luis Valley has not changed much since 2016. According to Mr. Oman, "[r]ecent sales of properties in the area that were solely dry pasture with very limited [livestock] carrying capacity sold in the range of $250 to $400 per acre."⁵² Thus, the $450 per acre valuation for the Dry Land in the Appraisal is high. Mr. Oman explained that appraisers often use a ratio valuing dry land at about ten percent (10%) of adjoining irrigated land. He also stated that separating dry land parcels from irrigated parcels generally decreases the value of the dry land parcels because nearby water resources are not available. Such testimony was uncontested and the Court finds it compelling.

50 MMOF Ex. 5 at 3-4.

51 Id . at 1.

52 Id .

In addition to the evidence from Mr. Oman, the Debtor attempted to use MMOF's valuation from its Proof of Claim (Claim No. 2-1)⁵³ against MMOF. In the MMOF Proof of Claim, MMOF asserted a claim in the amount of $1,872,572. The Debtor did not contest such amount. Then, MMOF identified the basis of the MMOF Proof of Claim as "Money Loaned, secured by Deed of Trust & Interest in Promissory Note." MMOF attached the Note and Deed of Trust which covers all of the Combined Property (not just the Dry Land). In the MMOF Proof of Claim, MMOF also asserted that the amount owed to MMOF is secured by a "Recorded Deed of Trust and Interest in DS Farm Note." And, finally, MMOF listed the "Value of Property" as $2,537,115 and the "Amount of the secured claim that is secured" as $1,872,572. The Debtor apparently contends that the foregoing demonstrates that MMOF has acknowledged that the Dry Land is worth $2,537,115 or $838 per acre. The Court finds that there is no basis for the Debtor's position. The valuation for the collateral contained in the MMOF Proof of Claim does not state that it is limited to the Dry Land. Instead, MMOF also has other collateral. The Deed of Trust still covers the Irrigated Land albeit that the Debtor sold the Irrigated Land to DS Farms. So, the proper analysis of the MMOF Proof of Claim is that MMOF valued all of its collateral (not just the Dry Land owned by the Debtor) at $2,537,115.

53 Ex. K.

3. The Court's Determination of Value of the Dry Land.

The Court finds that the current market value of the Dry Land is $450 per acre. Since the Debtor owns 3,025 acres, the aggregate value of the Dry Land is $1,361,250. In reaching such conclusion, the Court relies heavily on the Debtor's own 2016 Appraisal in which Mr. Gillespie concluded that the value of the Dry Land was $450 per acre. The 2016 Appraisal was the only comprehensive appraisal introduced into evidence. The Debtor itself endorsed such valuation in its own Schedule A/B and Schedule D, which was submitted under oath by Mr. Lund. Such valuation also was supported by Mr. Oman who testified that the 2016 Appraisal was valid.

Notwithstanding the foregoing, there is some fairly strong evidence that the current market value of the Dry Land is less than $450 per acre. Mr. Oman explained in a convincing fashion that the Debtor's sale of the Irrigated Land likely decreased the value of the Dry Land. Furthermore, it was uncontested that recent sales of dry land in the upper San Luis Valley have been in the range of $250 to $400 per acre. Ratio analysis also suggests a value lower than $450 per acre. For example, in 2019, the Debtor sold the Irrigated Land for approximately $1,512,000 (which amount is about $3,150 per acre). Mr. Gillespie valued the Dry Land at twelve and a half percent (12.5%) of the value of the Irrigated Land in 2016. If the Court utilized that approach, the recent sale of the Irrigated Land suggests that the Dry Land is worth only $394 per acre. Mr. Oman suggests that the proper ratio should be ten percent (10%). Using ten percent (10%) as a ratio of the value of the recent sale of the Irrigated Land would yield a value for the Dry Land of only $315 per acre. So, the Court's valuation of $450 per acre actually is fairly generous to the Debtor. Nevertheless, the Court has concluded that a $450 per acre valuation is appropriate given the 2016 Appraisal and the Debtor's own acknowledgements. Furthermore, MMOF seemed to endorse the $450 per acre value too.

In terms of other evidence, the Court does not consider the value listed in the Balance Sheets attached to the Debtor's Monthly Operating Reports ($386,000) as reliable. Even though that is the Debtor's own figure, Mr. Lund was unable to explain the basis of that number, which would suggest that the Dry Land is worth only $128 per acre. According to all the other evidence, the Dry Land is worth much more. So, the Court discards the value listed in the Balance Sheets attached to the Debtor's Monthly Operating Reports as an unsupported outlier or accounting error. The Court also rejects Mr. Lund's belief that the Dry Land is worth $3,000,000 or $992 per acre. Suffice to say that there is no basis for Mr. Lund's opinion. And, there is no competent or persuasive evidence suggesting that the value of the Dry Land has skyrocketed (i.e. , more than doubled) since the Debtor submitted its Schedule A/B and Schedule D in March 2021.

E. The Debtor's Post-Petition Operations, Income and Expenses.

1. The Debtor's Post-Petition Income.

Since the Debtor filed for bankruptcy on February 17, 2021, the Debtor has, ostensibly, continued to run a ranching operation with its Livestock. However, according to the Debtor's Monthly Operating Reports covering the period from February through August 2021, the Debtor has generated zero operating income from farming or ranching operations.⁵⁴ Instead, the only income received by the Debtor during such period is interest-only monthly payments made to the Debtor by DS Farms based on the DS Farms Note.

54 Tr. Exs. 10-13.

The Debtor has not submitted a Monthly Operating Report for September 2021, so such financial information is late. However, the Court accepts Mr. Lund's testimony that the Debtor sold four head of cattle in September 2021. Nevertheless, the Debtor did not specify, report, or provide any documentation showing the amount of such income. Additionally, Mr. Lund testified that the Debtor is doing "custom farming work" for DS Farms on the Irrigated Land now owned by DS Farms. Such work pertains to cultivating wheat, barley, and hemp. The Debtor provided no specifics, such as a contract identifying the work and compensation to be paid to the Debtor. However, the Monthly Operating Reports show that the Debtor has received no payments from DS Farms for whatever "custom farming work" may have been performed.

2. The Debtor's Post-Petition Expenses.

On the expenses side of operations, the Debtor's Monthly Operating Reports are wholly inaccurate and even deceptive. According to Mr. Lund, the Debtor established a bank account at ANB Bank (the "DIP Account"). All of the income received from DS Farms based upon monthly payments under the DS Farms Note was deposited into the DIP Account. However, from February through August 2021, the Debtor apparently elected to transfer a majority of the income received in the DIP Account by the Debtor from DS Farms (i.e. , its only source of income) to a related entity, Your Rancher, LLC ("Your Rancher"), for no consideration.⁵⁵ Your Rancher is a delinquent Colorado limited liability company⁵⁶ owned by Mr. Lund and his daughter. According to Mr. Lund, Your Rancher has taken it upon itself to pay some or all of the expenses of the Debtor.

55 See e.g. Tr. Ex. 12 at 4 (showing $6,000 transfer to Your Rancher); Tr. Ex. 13 at 4 (showing $6,500 and $6,010 transfers to Your Rancher).

56 Tr. Exs. 14-16.

Prior to filing for bankruptcy protection, the Debtor had not transferred its income to Your Rancher. Instead, the Debtor apparently elected to start such practice only post-petition. The Debtor's practice of sending most of its income to a related non-debtor entity has the effect of eliminating all financial transparency and making it impossible for the Court, the Chapter 12 Trustee, and creditors to evaluate the Debtor's operations and expenses. The Debtor's Monthly Operating Reports do contain some categories of expenses, such as bank service charges, gasoline, fuel, insurance, lodging, meals, miscellaneous, office supplies, postage, registration fees, repairs and maintenance, supplies, telephone, tires, travel, and utilities. The "Miscellaneous" category makes up the lion's share of such expense categories. However, the Debtor decided not to provide any support or documentation of expenses in such categories. And, again, Your Rancher (not the Debtor) supposedly paid for most or all of such expenses. The Debtor's expenses are so convoluted and unclear that Mr. Lund was not able to clarify whether he received any pay from the Debtor, which expenses were paid by Your Rancher, and whether Your Rancher paid expenses for DS Farms in relation to the Irrigated Land which the Debtor no longer owns. The Court found Mr. Lund's testimony on expenses unclear, contradictory, and not credible. Furthermore, Mr. Lund appeared unwilling to accept responsibility for financial reporting. Reluctantly, the Court concludes that the Debtor must have intended to use Your Rancher and obviously incomplete accounting to obfuscate the financial performance of the Debtor during the Debtor's bankruptcy case. V. Legal Conclusions.

A. The Debtor is Eligible Under Chapter 12.

Amongst the myriad of legal issues, the Court elects to start its analysis with the dispute over Chapter 12 eligibility. After all, if the Debtor is not eligible for bankruptcy protection under Chapter 12 then there would be no need to consider confirmation of the Amended Chapter 12 Plan and dismissal.

MMOF contends that the Debtor is ineligible to be a Chapter 12 debtor by reason of Section 109(f) and various Bankruptcy Code definitional provisions: Sections 101(19), 101(20) and 101(21). The basic thrust of MMOF's argument is that the Debtor allegedly does not have stable and regular income sufficient to enable the Debtor to fund a Chapter 12 reorganization plan. At trial, MMOF suggested that there was no evidence that the Debtor actually engaged in farming operations. Notably, the Chapter 12 Trustee does not contest eligibility. Countering MMOF, the Debtor asserts that its eligibility is demonstrated by the application of the Stipulated Facts. The Debtor also contends that MMOF has misinterpreted the eligibility statutes by focusing on the requirements for individuals rather than entities.

The Court begins by examining the applicable statutory framework. Chapter 12 is a part of the Bankruptcy Code governing the "Adjustment of Debts of a Family Farmer or Fisherman with Regular Annual Income." Section 109(f) sets the eligibility requirement for Chapter 12:

Only a family farmer or family fisherman with regular annual income may be a debtor under chapter 12 of this title.

The Debtor has "the burden of establishing [its] eligibility for Chapter 12 relief." First Nat'l Bank of Durango v. Woods (In re Woods) , 743 F.3d 689, 705 (10th Cir. 2014). Cf. Hamilton Creek Metro Dist v. Bondholders Colo. Bondshares (In re Hamilton Creek Metro Dist.) , 143 F.3d 1381, 1384-85 (10th Cir. 1998) (debtor bears burden to show eligibility under Chapter 9 of Bankruptcy Code); In re Ikalowych , 629 B.R. 261, 275 (Bankr. D. Colo. 2021) (debtor bears burden to prove eligibility under Chapter 11 Subchapter V of Bankruptcy Code).

The Debtor contends that it is a "family farmer" – not a "family fisherman." So, under Section 109(f) and as applied in this case, the Debtor has the obligation to establish: (1) the Debtor is a "family farmer"; and (2) the Debtor is a "family farmer with regular annual income." Both phrases are further defined in the Bankruptcy Code.

1. The Debtor is a "Family Farmer."

Section 101(18) defines the term "family farmer" separately for "individual[s]" (i.e. , natural persons) and "corporation[s]." MMOF appears to ignore the distinction.⁵⁷ However, the Debtor, an Arizona limited liability company, qualifies as a "corporation." 11 U.S.C. § 101(9)(A)(iv) ("The term ‘corporation’ — (A) includes ... (iv) unincorporated company or association ...."); In re Longview Aluminum, L.L.C. , 657 F.3d 507, 509 n.1 (7th Cir. 2011) ("the Bankruptcy Code's definition of a corporation [ Section 101(9)(A)(iv) ] includes unincorporated limited liability companies"); Koshkalda v. Seiko Epson Corp. (In re Koshkalda) , 2020 WL 2730782, at *6-7 (9th Cir. BAP May 26, 2020) (unpublished) ("we have interpreted § 101(9)(A)(iv) to include limited liability companies"). Thus, the corporate definition of "family farmer" applies. There is no "gross income test" for family farmer corporations. In re Mikkelsen Farms, Inc. , 74 B.R. 280, 284 (Bankr. D. Ore. 1987). Instead, Section 101(18)(B) provides (with respect to corporations) only:

57 In the Motion to Dismiss, MMOF cited Section 101(20) and argued that the Debtor must "receive[ ] more than 80 percent of its gross income during the preceding taxable year from farming operations." However, that contention is plainly wrong. By its own terms, Section 101(20) does not apply to the term "family farmer" under Sections 101(18), 101(19) and 109(f).

(18) The term "family farmer" means —

....

(B) corporation ... in which more than 50 percent of the outstanding stock or equity is held by one family, or by one family and the relatives of the members of such family, and such family or such relatives conduct the farming operation, and

(i) more than 80 percent of the value of its assets consists of assets related to the farming operation;

(ii) its aggregate debts do not exceed $10,000,000 and not less than 50 percent of its aggregate noncontingent, liquidated debts (excluding a debt for one dwelling which is owned by such corporation or partnership and which a shareholder or partner maintains as a principal residence, unless such debt arises out of a farming operation), on the date the case is filed, arise out of the farming operation owned or operated by such corporation or such partnership; and

(iii) if such corporation issues stock, such stock is not publicly traded.

The Debtor satisfied its obligation to prove that it is a "family farmer." It proved the requirements of Section 101(18)(B) because, per the Stipulated Facts, the Debtor, MMOF, and the Chapter 12 Trustee already agreed: "The Debtor is a corporation in which more than 50 percent of the outstanding stock or equity is held by one family."⁵⁸ The "family" is Mr. Lund who owns all of the equity in the Debtor. And, the Debtor, through Mr. Lund, conducts a "farming operation" which itself includes "farming, tillage of the soil, ... ranching, production or raising of crops, poultry, or livestock ...." 11 U.S.C. § 101(21) (defining "farming operation"). Mr. Lund testified that the Debtor is engaged in farming and ranching. On the farming side, when the Debtor filed for bankruptcy, it had some alfalfa seed. Post-petition, the Debtor planted, cultivated, and harvested the alfalfa (albeit not much). Furthermore, the evidence establishes that the Debtor has performed contract or "custom farming" for DS Farms on the Irrigated Land. In addition to farming, the Debtor also is engaged in ranching. The Debtor's Livestock includes approximately 23 head of cattle, 35 head of bison, and 54 head of yaks, all of which grazed on the Debtor's real property: the Dry Land. The Debtor recently sold some of the cattle. The Debtor's ranching activities are a form of "farming operation" under the Bankruptcy Code. And, Mr. Lund is the individual who performed all the foregoing activities.

58 Stip. Fact No. 2.

Section 101(18)(B)(i) requires that "more than 80 percent of the value of its [the Debtor's] assets consists of assets related to the farming operation." The Debtor met that element of "family farmer" through stipulation and evidence. In the Stipulated Facts, the Debtor, MMOF, and the Chapter 12 Trustee tracked the statutory language and stipulated that "more than 80 percent of the value of [the Debtor's] assets consists of assets related to the farming operation."⁵⁹ Furthermore, the Debtor's Schedule A/B proves the point. When it filed for bankruptcy protection, the Debtor had only: (1) cash ($7,421); (2) crops ($8,000); (3) farm animals ($169,840); (4) farming equipment ($48,100); (5) vehicles ($5,500); (6) the Dry Land ($1,350,000); and (7) the DS Farms Note generated from sale of the Irrigated Land ($1,187,116). Although the Court did not receive evidence concerning the origin of the cash, all the other assets are "related" to the Debtor's farming operations (i.e. , farming and ranching).

59 Id .

Section 101(18)(B)(ii) sets two debt limitations for a "family farmer." First, the Debtor's "aggregate debts [may] not exceed $10,000,000." Second, as applicable in this bankruptcy case, "not less than 50 percent of [the Debtor's] aggregate ... debts ... arise out of the farming operation owned or operated by such corporation ...." The Debtor satisfied those elements of "family farmer" through stipulation and evidence. In the Stipulated Facts, the Debtor, MMOF, and the Chapter 12 Trustee tracked the statutory language and stipulated that "not less than 50 percent of [the Debtor's aggregate noncontingent, liquidated debts, on the date the case was filed, arose out of the farming operation owned or operated by the Debtor."⁶⁰ Furthermore, the Debtor's Schedule D and Schedule E/F proves up the requirement. There is only one acknowledged creditor. The Debtor owes $1,872,572 to MMOF. The MMOF debt stems from the Dry Land (i.e., refinancing the Dry Land so that the Debtor may farm and ranch the Dry Land). And, since the Debtor conducts its farming operations on the Dry Land, the debts arose from such farming operation. See Woods, 743 F.3d at 703 ([Under Section 101(18)(A),] "an objective ‘direct-use’ test optimally fits with our direct-and-substantial-connection statutory standard. Such a test is singularly focused on whether the loan proceeds were directly applied to or used in a farming operation.").

60 Id .

Finally, Section 101(18)(B)(ii) states that "if such corporation [the Debtor] issues stock, such stock is not publicly traded." Again, the Debtor satisfied that element of the "family farmer" definition through stipulation and evidence. In the Stipulated Facts, the Debtor, MMOF, and the Chapter 12 Trustee tracked the statutory language and stipulated that: "The Debtor does not issue publicly traded stock." That is further demonstrated by the nature of the Debtor. It is an Arizona limited liability company. Limited liability companies do not issue stock. And, in any event, Mr. Lund owns all of the membership interests in the Debtor.

2. The Debtor Is a "Family Farmer with Regular Annual Income."

To be eligible for relief under Chapter 12, the Debtor must be a "family farmer with regular annual income." 11 U.S.C. § 109(f). That entire phrase is defined in Section 101(19) as follows:

The term "family farmer with regular annual income" means family farmer whose annual income is sufficiently stable and regular to enable such family farmer to make payments under a plan under chapter 12 of this title.

According to a leading bankruptcy treatise: "The definition of family farmer with regular income that is used to determine eligibility for chapter 12 [Section 101(19) ] is extremely broad and was designed to allow nearly every person who qualifies as a ‘family farmer’ to be eligible for chapter 12 relief." Richard Levin and Henry Sommer, 2 COLLIER ON BANKRUPTCY ¶ 101.19 (LexisNexis Pub. Supp. 2021); see also In re Sandifer, 448 B.R. 382, 388 (Bankr. D.S.C. 2011) (same).

Since the Debtor already qualifies as a "family farmer," the question then becomes whether the Debtor has "annual income" which is "sufficiently stable and regular to enable ... payments under a [Chapter 12] plan ...." Again, the test is very encompassing. Notably, the Bankruptcy Code does not require that the "annual income" come directly from farming operations. Sandifer , 448 B.R. at 388 (referring to "non-farm income" as partially satisfying "annual income" requirement); In re Sorrell , 286 B.R. 798, 804 (Bankr. D. Utah 2002) ("[T]he Court cannot conclude that Congress intended that Chapter 12 plans must be primarily or substantially funded from farming operations."); Mikkelsen , 74 B.R. at 286 ("annual income" can be "from whatever source"); In re Williams , 2016 WL 1644189, at *3 (Bankr. W.D. Ky. Apr. 22, 2016) ("The statute does not require that the regular annual income to make payments under the plan be farming generated income .... [T]he regular annual income could come from whatever source that was sufficiently stable and regular."); In re Plovish , 1992 WL 12148527, at *2 (E.D. Va. Nov. 4, 1992) (" 11 U.S.C. § 101(19) ... does not specify the source of the income nor require it to be farm-related.").⁶¹ That is important in this case because the Debtor has not shown that it received any income in the last nine months directly from farming operations (except some unknown amount of income from the sale of four head of cattle in September 2021). However, the Debtor has received regular monthly income from DS Farms (which, for whatever it matters, could be characterized as income stemming indirectly from farming operations based on the sale of farming land). DS Farms is obligated to pay the Debtor approximately $7,135 per month until September 30, 2022 when a balloon payment is due pursuant to the DS Farms Note. The Debtor proved that DS Farms is current in such monthly payments. The Debtor's Monthly Operating Reports show receipt of such income. Some portion of such income could be used to "enable ... payments under a [Chapter 12] plan ...." So, the eligibility requirement has been met even though the Debtor actually proposes to fund its Amended Chapter 12 Plan mainly by transfer of a portion of the Dry Land rather than through use of such monthly income.

61 Notwithstanding, in the Motion to Dismiss, MMOF contended that "gross income for eligibility under Chapter 12" must "come from farming operations [ ] rather [than] from the income derived from a promissory note." Toward that end, MMOF cited Matter of Armstrong , 812 F.2d 1024, 1028-29 (7th Cir. 1987). Although the citation is correct, it is outdated, stale, and no longer valid. In Armstrong , the court construed the definition of "farmer" in Section 101(19) as in effect in 1982. That definition stated: " ‘Farmer’ means person that received more than 80 percent of such person's gross income ... from a farming operation owned and operated by such person." However, Congress changed Chapter 12 requirements in the Bankruptcy Judges, U.S. Trustee's and Family Farmer Bankruptcy Act of 1986. P.L. 99-554, 100 Stat. 3114 (1986). In the current version of the Bankruptcy Code, the definition of the word "farmer" (which was in Section 101(19) but now is in Section 101(20) ) expressly excludes the phrase "family farmer." The current version of the statute states: "the term ‘farmer’ means (except when such term appears in the term ‘family farmer’) person that received more than 80 percent of such person's gross income .... from a farming operation owned or operated by such person." 11 U.S.C. § 101(20) (emphasis added). Thus, in this case, the Court must construe the phrase "family farmer" not "farmer." So, the Armstrong decision is of no moment.

B. The Amended Chapter 12 Plan Is Unconfirmable.

1. Terms of the Amended Chapter 12 Plan.

In its Amended Chapter 12 Plan, the Debtor identified a single creditor: MMOF.⁶² The Debtor correctly listed the amount of the MMOF Claim ($1,872,572) which is secured by the Combined Property. And then, the Debtor explained its proposed treatment of the MMOF Claim in a section of the Amended Chapter 12 Plan titled "Background and Overview of the Plan":

62 Am. Chap. 12 Plan at 2-3. The Debtor asserted that "no taxes are due to the IRS [Internal Revenue Service], the Colorado Department of Revenue ...., or [any] other taxing authorities." Am. Chap. 12 Plan at 2. Thus, the Debtor claimed that "MMOF's Allowed Claim in the amount of $1,1872,572" was the only claim. Id . Although the Debtor has not objected to the IRS Claim nor addressed the debt scheduled in favor of Saguache County, Colorado, such claims appear nominal and have no real bearing on the outcome of the current contested matters. Accordingly, the Court hereinafter accepts for purposes of this Order that the MMOF Claim is the only claim in this bankruptcy case.

f. Debtor's Chapter 12 Plan seeks to pay in full MMOF's Allowed Claim in the amount of $1,872,571.96....

g. To fund the Plan, Debtor shall convey 1,640 contiguous acres to MMOF with an estimated value of $1,600,000. A map of the property to be conveyed is attached hereto as Exhibit G. The Debtor believes the value of property as a whole is currently $3,000,000.00 and shall employ a certified Colorado real estate appraiser to determine the actual value of the property.

h. Any remaining amount of MMOF's Claim will be paid in full under the balloon payment from the DS Farms Note within thirty (30) days of September 30, 2022. This payment amounts to $1,165,553.59. All Administrative Claims will also be paid under the balloon payment from the DS Farms Note. In the event DS Farms fails to pay its obligations under the DS Note, Debtor shall sell, refinance, or surrender Debtor's real property and other assets to satisfy all remaining Allowed Claims within six (6) months of the default.

i. The Debtor believes the value of the collateral is currently $3,000,000. The exact value of the property is necessary to determine if MMOF is under or over-secured. Debtor will file a separate application to employ a certified real property appraiser to determine the value of the real property at issue.

j. Post-confirmation, the Debtor will continue farming and ranching operations on the remaining 1,395 acres.⁶³

63 Am. Chap. 12 Plan at 2-3.

In the next part of the Amended Chapter 12 Plan, captioned "Division of Claims and Interests," the Debtor classified the MMOF Claim as "Class III" and provided the following treatment:

This class [Class III] consists of the Allowed Claim held by MMOF in the amount of $1,872,572.

Debtor shall allow and pay MMOF $1,872,572 on its Class III Claim plus post-petition interest at the rate of 5% and costs should MMOF be determined to be over secured. MMOF shall retain its first-priority lien against Debtor's real property as described and set forth

in the MMOF Deed of Trust until the Class III Claim is paid in full. Within thirty (30) days of the Confirmation Date, the Debtor shall convey 1,640 contiguous acres to MMOF with an estimated value of $1,600,000. Debtor shall employ a certified Colorado real estate appraiser to determine the value of the property returned. Any remaining amount of MMOF's Claim will be paid in full within thirty (30) days of Debtor's receipt of the balloon payment from the DS Farms Note, which is on or before October 30, 2022. Upon full payment of the DS Note, MMOF and the Debtor shall release their deeds of trust encumbering the property described in the DS Deed of Trust.⁶⁴

64 Am. Chap. 12 Plan at 5.

In another section of the Amended Chapter 12 Plan titled "Implementation of the Plan," the Debtor explained:

Debtor shall pay all amounts owing under this Plan through the DS Note payments, and through sale or surrender of Debtor's property to pay Allowed Claims in full. In the event DS Farms fails to pay its obligations under the assigned DS Note, Debtor shall sell, refinance, or surrender Debtor's real property and other assets to satisfy MMOF's Claims [sic]. The Plan is therefore feasible.⁶⁵

65 Id .

The plural phrase "DS Note payments" in the foregoing suggests that the Debtor expects to receive multiple "note payments" from DS Farms; not just a single balloon payment on September 30, 2022. Consistent with that understanding, the Debtor actually defined the phrase "DS Note Payments" in the Amended Chapter 12 Plan as follows: "DS Farms pursuant to the Note agreed to make monthly payments to Debtor in the amount of $7,135 (‘DS Note Payments’) with the balance of any principal and interest due at the rate of 5.75% per annum on or before September 30, 2022."⁶⁶

66 Id . at 2.

In another part of the Amended Chapter 12 Plan, the Debtor compared the proposed reorganization to a Chapter 7 liquidation and presented a "Liquidation Analysis." With respect to the value of the DS Farms Note, the Debtor opined: "The DS [Farms] Note ($1,187,116) in a Chapter 7 liquidation shall have no value as MMOF will have the right to foreclose upon the real property subject to the DS Farms Deed of Trust."⁶⁷

67 Id. at 6.

Finally, in a section of the Amended Chapter 12 Plan labeled "Executory Contracts," the Debtor provided:

Debtor upon the Effective Date shall assume the DS Note to MMOF and all payments remaining due thereunder in accordance with 11 U.S.C. § 365. DS Farms is not in default under the DS Note and to date has timely made all payments. Debtor shall upon the Effective Date execute all documents as necessary to assign the DS Note to MMOF.⁶⁸

68 Id.

The term "Effective Date" means "that day which is twenty-one (21) days from entry of the Confirmation Order."⁶⁹

69 Id . at 11.

What the Debtor proposes can be characterized crudely as a sort of "dirt-for-debt" reorganization premised in part on the transfer of 1,640 acres of the Dry Land to MMOF while the Debtor retains (at least initially and perhaps for the term of the Amended Chapter 12 Plan) 1,395 acres of the Dry Land.⁷⁰ Very notably, although the Debtor states that it will "continue farming and ranching operations on the remaining 1,395 acres," the Debtor has not provided any projections concerning its farming and ranching income, expenses, and net profit. Furthermore, the Debtor seemingly does not propose to use any of its net profit (if any) to pay MMOF.

70 There is a math error. The Debtor proposes to transfer 1,640 acres of the Dry Land to MMOF and keep 3,195 acres of the Dry Land. That all adds up to 3,035 acres. However, the Dry Land is only 3,025 acres in size. So, the Debtor is off by ten acres.

2. The Objections to Confirmation of the Amended Chapter 12 Plan.

Both MMOF and the Chapter 12 Trustee objected to the Amended Chapter 12 Plan. MMOF's principal objection is that the Amended Chapter 12 Plan fails to properly provide for the MMOF Claim under Section 1225(a)(5) since, among other things, the Debtor has improperly valued the Dry Land.⁷¹ The Chapter 12 Trustee echoed that same objection and explained:

71 Docket No. 73 at 3-4.

The actual value of the Debtor's real property is a crucial element in evaluating whether the Amended Plan satisfies the requirements of 11 U.S.C. § 1225, including but not limited to, the best interests of creditors test [ 11 U.S.C. § 1225(a)(4) ], the propriety of the treatment of the MMOF secured claim [ 11 U.S.C. § 1225(a)(5) ], and the feasibility of the Amended Plan [ 11 U.S.C. § 1225(a)(6) ]. Absent documentation of the actual value of the Debtor's real property, the Trustee is unable to determine if the Amended Plan complies with the requirements of 11 U.S.C. §§ 1225(a)(4), (a)(5) and (a)(6).⁷²

72 Docket No. 74 at 2.

In addition to the foregoing, MMOF also suggests that the Amended Chapter 12 Plan is unconfirmable because it is effectively an improper modification of the MMOF Note since the Debtor proposes to pay only five percent (5%) post-petition interest even though the MMOF Note bears 12 percent (12%) non-default interest and 18 percent (18%) default interest.⁷³ Both MMOF and the Chapter 12 Trustee assert that the MMOF Note cannot be modified in such fashion and also cannot be modified without the express content of DS Farms (which consent is lacking) under the terms of the DS Farms Note.⁷⁴ Furthermore, both MMOF and the Chapter 12 Trustee raise feasibility concerns under Section 1225(a)(6).⁷⁵ Additionally, the Chapter 12 Trustee raised numerous "technical" objections to the form of the Amended Chapter 12 Plan including that the Amended Chapter 12 Plan "fails to specify the terms of the plan."⁷⁶

73 Docket No. 73 at 5-6.

74 Docket No. 73 at 5-6; Docket No. 74 at 9.

75 Docket No. 73 at 6; Docket No. 74 at 2.

76 Docket No. 74 at 1.

3. The Amended Chapter 12 Plan Is Unconfirmable.

a. The Amended Chapter 12 Plan Is So Internally Contradictory and Unclear that It Cannot Be Confirmed.

Since MMOF is the only creditor in this Chapter 12 case, the key topic which must be addressed in the Amended Chapter 12 Plan is the proposed treatment of the MMOF Claim. Regrettably, however, the Amended Chapter 12 Plan falls so far short of clarity on such issue that it cannot be confirmed. The Debtor proposes a series of vague provisions which cannot be properly administered. For example, as a first stage of satisfaction of the MMOF Claim, the Debtor commits that "Debtor shall convey 1,640 contiguous acres to MMOF with an estimated value of $1,600,000 .... The Debtor believes the value of property as a whole is currently $3,000,000 and shall employ a certified Colorado real estate appraiser to determine the actual value of the property."⁷⁷ However, the Debtor elected not to employ an appraiser. Even if it did employ an appraiser, the Amended Chapter 12 Plan does not detail how valuation disputes are to be decided. In any event, as set forth above and below, the Court has determined that the value of the Dry Land is $450 per acre which equates to $738,000 for 1,640 acres. But the Amended Chapter 12 Plan does not explain what happens if the Debtor's $1,600,000 estimate turns out to be wrong. Will the MMOF Claim still be deemed partially satisfied to the extent of $1,600,000? The Court does not know.

77 Am. Chap. 12 Plan at 3. A similar provision is repeated in another part of the Amended Chapter 12 Plan. Id . at 5.

In addition to the conveyance of the 1,640 acres of Dry Land, the Debtor also proposes to satisfy the MMOF Claim by assuming the DS Farms Note and then assigning the DS Farms Note to MMOF. The Amended Chapter 12 Plan uses the language of assumption and/or assignment in three places. First, the Debtor states: "Debtor ... shall assume the DS [Farms] Note to MMOF and all payments remaining due thereunder ...."⁷⁸ This language is quite odd since a party to a contract typically cannot "assume" the contract "to" someone else. However, perhaps the Debtor means that it will "assume" the DS Farms Note and then "assign" the DS Farms Note to MMOF. That interpretation seems to be confirmed a little later in the Amended Chapter 12 Plan: "Debtor shall upon the Effective Date execute all documents ... to assign the DS [Farms] Note to MMOF."⁷⁹ Elsewhere, the Debtor talks about the "assigned DS [Farms] Note."⁸⁰ So, far so good. But, then the Debtor also provides the opposite elsewhere in the Amended Chapter 12 Plan. For example, the Debtor states that: the Debtor expects to receive multiple "note payments" from DS Farms;⁸¹ "Administrative Claims will also be paid under the balloon payment from the DS Farms Note ....";⁸² and "[a]ny remaining amount of MMOF's Claim will be paid within thirty (30) days of Debtor's receipt of the balloon payment from the DS Farms Note ...."⁸³ But, if the Debtor already assumed the DS Farms Note and assigned the DS Farms Note to MMOF (as stated in other parts of the Amended Chapter 12 Plan), then the Debtor would have no remaining right to receive any payments from DS Farms at all. So, the provisions are completely contradictory. In the end, the Court does not know whether the terms of the Amended Chapter 12 Plan would obligate the Debtor to assign the DS Farms Note to MMOF or not.⁸⁴ In a related vein, the DF Farms Note currently obligates DS Farms to pay the Debtor $7,135 per month. But what happens to that money? The Amended Chapter 12 Plan suggests that the Debtor "shall pay all amounts owing under this Plan through the DS [Farms] Note payments, and through sale or surrender of Debtor's property to pay Allowed Claims in Full."⁸⁵ Since "DS [Farms] Note Payments" is a defined term referring to the $7,135 monthly payments, the implication is that such funds will be used to pay MMOF. However, elsewhere, the Debtor states that "[p]ost-confirmation, the Debtor will continue farming and ranching operations on the remaining 1,395 acres."⁸⁶ Since the Debtor's only income is the $7,135 per month received from DS Farms, that suggests that the Debtor intends to use the $7,135 per month for the Debtor's continued operations. But, because the Debtor provided no projected income or expense information, the Court has no way of knowing what the Amended Chapter 12 Plan actually provides with respect to the $7,135 monthly payments.

78 Id . at 6.

79 Id .

80 Id. at 5.

81 Id .

82 Id. at 3.

83 Id. at 5.

84 During closing argument, counsel for the Debtor suggested that the parts of the Amended Chapter 12 Plan stating that the Debtor would assign the DS Farms Notes to MMOF are a mistake. Maybe. But the mistake was made three times and is embedded in the text of the Amended Chapter 12 Plan.

85 Am. Chap. 12 Plan at 5.

86 Id . at 2-3.

Finally, another big problem with the Amended Chapter 12 Plan is that the Debtor assumes that MMOF is over-secured and does not address the treatment of the MMOF Claim if it is determined that MMOF is under-secured. For example, the Debtor states: "Debtor shall allow and pay MMOF $1,872,572 on its Class III Claim plus post-petition interest at the rate of 5% and costs should MMOF be determined to be over secured."⁸⁷ But what happens if the MMOF Claim is under-secured? The Court does not know. The issue has some importance since the Court already determined that the value of all the Dry Land owned by the Debtor is only $1,361,250 whereas the MMOF Claim is for $1,872,572.

87 Id. at 5.

The foregoing ambiguities and inconsistencies create an intractable confirmation conundrum:

In order for a creditor to understand and have a fair opportunity to respond to the treatment of its claim [in a plan], and in order for a court to determine whether the proposed treatment of a claim complies with the Bankruptcy Code, the proposed treatment must be set forth clearly and without ambiguity.... Anything that yields multiple interpretations is not clear.

In re Pires , 2010 WL 3342013, at *2 (Bankr. D. Mass. Aug. 24, 2010) (denying confirmation since "the language of the plan is unclear and self-contradictory"). The requirement of clarity is implicit in Sections 1222 and 1225. See In re Miceli , 587 B.R. 492, 503 (Bankr. N.D. Ill. 2018) (denying confirmation of plan because, among other reasons, "the plan is confusing and ambiguous"); In re Woods , 406 B.R. 293, 298 (Bankr. N.D. Ohio 2009) ("Language in a plan, purporting to impair a creditor's claim, must be stated in clear and unambiguous terms."). The internal contradictions and ambiguities in the Amended Chapter 12 Plan are themselves so endemic that the Court cannot confirm the Amended Chapter 12 Plan. Further, the lack of clarity also makes assessment of other confirmation standards much more difficult.

b. The Amended Plan Fails to Satisfy Section 1225(a)(5) .

Section 1225(a) contains a list of confirmation requirements in Chapter 12 cases. The Debtor bears the burden of satisfying every requirement of Section 1225(a). Ames v. Sundance State Bank (In re Ames) , 973 F.2d 849, 851 (10th Cir. 1992). One of the requirements, Section 1225(a)(5), governs the treatment of secured creditors and is especially important in this bankruptcy case because there is only one creditor — MMOF — and the MMOF Claim is secured (at least to the value of the Dry Land). Section 1225(a)(5) states:

(a) Except as provided in subsection (b), the court shall confirm a plan if ...

(5) with respect to each allowed secured claim provided for by the plan —

(A) the holder of such claim has accepted the plan;

(B) (i) the plan provides that the holder of such claim retain the lien securing such claim; and

(ii) the value, as of the effective date of the plan, of property to be distributed by the trustee or the debtor under the plan on account of such claim is not less than the allowed amount of such claim; or

(C) the debtor surrenders the property securing such claim to such holder ....

As set forth by the statute, the Debtor has three potential alternatives to meet Section 1225(a)(5). Under Section 1225(a)(5)(A) the Debtor may establish that the "holder of such claim" (i.e. , MMOF) "has accepted the plan." However, MMOF has not accepted the Amended Chapter 12 Plan and objects to its treatment quite emphatically. So, the Debtor must seek solace elsewhere. Another alternative, Section 1225(a)(5)(C), works only if the Debtor "surrenders the property securing such claim to such holder." In the Amended Chapter 12 Plan, the Debtor proposed to transfer (not surrender) 1,640 acres of the Dry Land to MMOF. But 1,640 acres is only a portion of MMOF's collateral, which includes all of the Dry Land (plus the Irrigated Land now owned by DS Farms). In any event, both in its written legal briefs and at oral argument, the Debtor repeatedly reiterated that it is not relying on Section 1225(a)(5)(C) to support confirmation. The Court takes the Debtor at its word. So, that leaves only Section 1225(a)(5)(B), which is the alternative the Debtor invokes exclusively.

Section 1225(a)(5)(B) is often referred to as a "cram down" provision and contains two subparts. First, under Section 1225(a)(5)(B)(i), the Debtor must show that "the plan provides that the holder of such claim retain the lien securing such claim." That is the easy part. The Amended Chapter 12 Plan states: "MMOF shall retain its first-priority lien against the Debtor's real property as described and set forth in the MMOF Deed of Trust until the Class III Claim is paid in full."⁸⁸ So Section 1225(a)(5)(B)(i) is satisfied. And, now, the hard part starts. Under Section 1225(a)(5)(B)(ii), the Debtor still must prove that "the value [as of the confirmation date of the Amended Chapter 12 Plan] of property to be distributed ... under the plan on account of such claim is not less than the allowed amount of such claim."

88 Am. Chap. 12 Plan at 5.

Valuation is absolutely paramount to cram down under Section 1225(a)(5)(B)(ii). The Debtor repeatedly acknowledges the point in the Amended Chapter 12 Plan. But, valuation can be a difficult exercise. As Justice Brandeis observed in Missouri ex rel. Southwestern Bell Tel. Co. v. Pub. Serv. Comm'n, 262 U.S. 276, 310, 43 S.Ct. 544, 67 L.Ed. 981 (1923) : "[v]alue is a word of many meanings." Valuation issues permeate bankruptcy. In Associates Commercial Corp. v. Rash , 520 U.S. 953, 960, 117 S.Ct. 1879, 138 L.Ed.2d 148 (1997) the Supreme Court clarified the formula for value under Section 506(a) as "the price a willing buyer in the debtor's trade, business, or situation, would pay to obtain like property from a willing seller."

With respect to the valuation of real property, the Court and parties often rely on real estate appraisers. Challenges arise when the appraisals yield different results. In In re Creekside Senior Apartments, L.P., 477 B.R. 40 (6th Cir. BAP 2012), the appellate court offered some guidance in such circumstances:

"The valuation of property is an inexact science and whatever method is used will only be an approximation and variance of opinion by two individuals does not establish a mistake in either." ... "Because the valuation process often involves the analysis of conflicting appraisal testimony, a court must necessarily assign weight to the opinion testimony received based on its view of the qualifications and credibility of the parties' expert witnesses." ... In examining the valuations given to the debtors' property, the court notes that valuation is ultimately the opinion of a particular appraiser and, as such, the weight to be accorded the opinion rests upon a number of factors frequently used by courts in evaluating appraisal testimony. A nonexclusive listing of these factors includes: the appraiser's education, training, experience, familiarity with the subject of the appraisal, manner of conducting the appraisal, testimony on direct examination, testimony on cross-examination, and overall ability to substantiate the basis for the valuation presented.

Id. at 61 (internal citations omitted).

In this case, the value of the 1,640 acres of Dry Land the Debtor proposes to transfer to MMOF is important. The Court received evidence on valuation from several different sources. In its last Chapter 12 bankruptcy case, the Debtor retained an appraiser, Mr. Gillespie, who produced the 2016 Appraisal. The 2016 Appraisal is a comprehensive and competent analysis using a sales-comparison approach based upon nine land comparables. Mr. Gillespie concluded that the Dry Land was worth $450 per acre in 2016. The 2016 Appraisal is the only full appraisal presented to the Court. In the Amended Chapter 12 Plan, the Debtor repeatedly indicated that it would hire a "certified real estate appraiser in order to determine the value of the collateral."⁸⁹ However, it has not done so. Thus, there is no need to resolve divergent appraisals as is often the case in cram down contests.

89 See Am. Chap. 12 Plan at 4.

In any event, the Debtor endorsed the 2016 Appraisal valuation of the Dry Land under oath in its Schedule A/B and Schedule D as of the February 17, 2021 filing date. "Statements in bankruptcy schedules are executed under penalty of perjury and when offered against a debtor are eligible for treatment as judicial admissions. A debtor may not adopt a cavalier attitude toward the accuracy of his schedules by arguing that they are not precise and correct." In re Bohrer, 266 B.R. 200, 201 (Bankr. N.D.Cal.2001). See also Sovran Bank, N.A. v. Anderson, 743 F.2d 223, 225 (4th Cir.1984) ("the Schedules have not been corrected and are binding"); Keen v. First Sentinel Bank (In re Keen), 2014 WL 6871867 (Bankr. W.D. Va. 2014) ("it is well-established that statements contained in the schedules of a bankruptcy debtor can constitute binding admissions of the factual matters set forth in the schedules"). So, about nine months ago, the Debtor agreed that the value of the Dry Land was $450 per acre.

In addition to the valuation of the Dry Land in the 2016 Appraisal, at trial, the Court heard from an expert witness called by MMOF, Clark Orman. Mr. Orman is a Senior Valuation Specialist with Colliers International as well as an Accredited Rural Appraiser as designated by the American Society of Farm Managers and Rural Appraisers. He also is a Certified General Appraiser in the State of Colorado. Mr. Orman has strong educational and training credentials. He also has a wealth of experience including conducting appraisals in the San Luis Valley (near the Dry Land) for at least the last fifteen years. The Court determines that Mr. Oman is qualified, capable, and very credible. Although he did not conduct a full appraisal of the Dry Land, Mr. Oman did perform an analysis of the recent land value of "similar" dry land properties "in the immediate area" of the Dry Land. He effectively endorsed the 2016 Appraisal and testified that dry land values had not changed much in that part of Colorado since 2016. Notwithstanding, he concluded that the value listed in the 2016 Appraisal may actually be less since "recent [comparables] ... sold in the range of $250 to $400 per acre," the Debtor recently sold the adjacent Irrigated Land, and the sales price for the Irrigated Land suggests a lower price for the Dry Land based on the typical ten percent (10%) ratio of value commonly used in the San Luis Valley when comparing dry land to irrigated land sales.

Against the foregoing, the Debtor apparently changed its mind about the value of the Dry Land. Mr. Lund testified that he "believed" that the value of the Combined Property was $3,000,000 and the value of 1,640 acres of the Dry Land proposed to be distributed to MMOF is $1,600,000. Doing the arithmetic, Mr. Lund now seems to contend that the Dry Land is worth about $976 per acre ($1,600,000 / 1,640 acres = $976 per acre) to $992 per acre ($3,000,000 / 3,025 acres = $992 per acre). So, the Debtor apparently contends that somehow the value of the Dry Land has more than doubled since the Debtor's last bankruptcy case. Mr. Lund has no specialized training in real estate valuation and his testimony was completely unsupported.

Thus, as the Court already has stated, the Court finds that the value of the Dry Land is $450 per acre. The Debtor proposes to transfer 1,640 acres of the Dry Land to MMOF. So, the value of that proposed transfer is $738,000 (not the $1,600,000 listed in the Amended Chapter 12 Plan). Since the value of all the Dry Land owned by the Debtor and pledged as collateral to MMOF is just $1,361,250 (3,025 acres X $450 per acre = $1,361,250), the MMOF Claim is under-secured (at least vis-à-vis the property of the Debtor).⁹⁰

90 As discussed above, the Court's determination regarding the value of the Dry Land might well be too generous, as Mr. Oman offered a number of credible reasons why the Dry Land could have a much lesser value.

Since the value of the 1,640 acres of Dry Land proposed to be transferred to MMOF is substantially less than the secured portion of the MMOF Claim, and since such value is "less than the allowed amount of such claim," such transfer alone would not satisfy Section 1225(a)(5)(B)(ii). Apparently as a back-stop, the Debtor also proposed to assume the DS Farms Note and assign the DS Farms Note to MMOF as additional value. (As set forth above, the assignment is unclear since the Debtor also proposed to transfer only some portion of the anticipated balloon payment ($1,165,554) under the DS Farms Note to MMOF.) Since the Debtor apparently is relying upon the value of the DS Farms Note to satisfy the requirement of Section 1225(a)(5)(B)(ii), it was incumbent upon the Debtor to prove the value of the DS Farms Note was sufficient, when added to the value of the 1,640 acres of Dry Land, to provide MMOF with a replacement value equal to the value of its collateral. Alternatively, if the Debtor is intending to transfer only a portion of the anticipated balloon payment under the DS Farms Note to MMOF, then the Debtor was obligated to prove that the potential payment by DS Farms is reasonably likely to be made such that its ability to make payments to MMOF also was reasonably assured. See 11 U.S.C. § 1225 ((a)(6) (Chapter 12 plan shall be confirmed if "the debtor will be able to make all payments under the plan and to comply with the plan"); Ames , 973 F.2d at 851 ("Although debtors are not required to guarantee the success of the plan, they must provide ‘reasonable assurance that the plan can be effectuated.’ "); Richard Levin and Henry Sommer, 8 COLLIER ON BANKRUPTCY ¶ 1225.02[5] (LexisNexis Pub. Supp. 2021) ("To satisfy the feasibility test, it will be necessary for the debtor to submit sufficient evidence ... to enable the court to determine that the debtor can make all of the payments called for by the plan.").

However one views the ambiguities in the Amended Chapter 12 Plan in relation to the DS Farms Note, the Debtor failed to meet its evidentiary burden. The Debtor provided no evidence concerning the nature of DS Farms, its assets (other than the Irrigated Land), its liabilities (other than the DS Farms Note), its management, its income, its expenses, its cash flows, or its business operations. DS Farms is current on paying the interest-only monthly payments on the DS Farms Note (albeit such payments have sometimes been late and sometimes early). But, regarding the $1,165,554 balloon payment due on the DS Farms Note on September 22, 2021, Mr. Lund merely testified that he had "no reason to believe that [the DS Farms Note] won't be paid but [Mr. Lund] does not control their [DS Farms] business." That testimony is extremely equivocal, especially since no representative of DS Farms testified at the trial that DS Farms has the financial wherewithal to be able to make the balloon payment and intends to do so. The foregoing is troubling since DS Farms also apparently was unable to come up with enough money to pay for the Irrigated Land when it acquired the property in 2019. Instead, the Debtor was required to financially carry DS Farms by taking the DS Farms Note (a promise to pay in the future) in lieu of full payment. In the end, the Debtor simply neglected to submit competent evidence of the value of the additional property to be transferred to MMOF by virtue of the DS Farms Note.

The Debtor also proposed that if DS Farms "fails to pay its obligations under the DS [Farms] Note, the Debtor shall sell, refinance, or surrender Debtor's real property and other assets to satisfy all remaining Allowed Claims within six (6) months of the default." But again, the Debtor offered no evidence that suggests that it would be able to refinance or sell its remaining Dry Land in the future. And, proposing to possibly "surrender" the Dry Land in the future to MMOF does not satisfy Section 1225(a)(5)(B)(ii), which requires that the Debtor prove that "the value [as of the confirmation date of the Amended Chapter 12 Plan] of property to be distributed ... under the plan on account of such claim is not less than the allowed amount of such claim." See First Brandon Nat'l Bank v. Kerwin (In re Kerwin) , 996 F.2d 552, 557 (2d Cir. 1993) ("Subsection (C) [of Section 1225(a)(5) ] allows a debtor to surrender the collateral to a secured creditor and carries different implications than a distribution of property under subsection (B) [of Section 1225(a)(5) ].) (emphasis in original).

The Section 1225(a)(5)(B)(ii) analysis in this case is particularly difficult and convoluted because of the contradictory and ambiguous provisions of the Amended Chapter 12 Plan. But, based upon the foregoing, the Debtor has failed to meet its evidentiary cram down burden to show that the aggregate value of the property to be distributed to MMOF under the Amended Chapter 12 Plan "is not less than the allowed amount of" the MMOF Claim. Accordingly, the Court must deny confirmation of the Amended Chapter 12 Plan.

c. The Amended Plan Suffers from Other Defects.

Although ambiguity, Section 1225(a)(5), and the valuation problems ultimately sink the Amended Chapter 12 Plan, the Court also observes for good measure that the Amended Chapter 12 Plan is otherwise defective as noted by the Chapter 12 Trustee and MMOF.

One problem pertains to time. Section 1222(c) provides:

Except as provided in subsections (b)(5) and (b)(9), the plan may not provide for payments over a period that is longer than three years unless the court for cause approves a longer period, but the court may not approve a period that is longer than five years.

That requirement is also a confirmation mandate by virtue of Section 1225(a)(1), which mandates that the Amended Chapter 12 Plan must comply with "the provisions of this chapter [Chapter 12]." Notwithstanding, the Amended Chapter 13 Plan contains no indication of when the Amended Chapter 12 Plan will begin and when it will end. Thus, the Amended Chapter 12 Plan cannot be properly administered by the Chapter 12 Trustee and it fails per Sections 1222(c) and 1225(a)(1). (Notably, even though the Chapter 12 Trustee raised this objection with respect to the Debtor's initial Chapter 12 Plan a long time ago, the Debtor elected not to fix the problem.)⁹¹

91 Docket No. 36.

Another defect pertains to the Debtor's proposal to reduce the interest rate on the MMOF Note from the current default interest rate of 18 percent (18%) to only five percent (5%). The Debtor contends that "altering the interest rate of a loan is common practice in bankruptcy reorganizations, and the eighteen perfect default interest rate is punitive and should be reasonably reduced."⁹² But what is the standard? The Supreme Court answered the critical question of how to select an appropriate interest rate for cram down in Till v. SCS Credit Corp. , 541 U.S. 465, 476, 124 S.Ct. 1951, 158 L.Ed.2d 787 (2004), a case relied upon by the Debtor. Although Till emanated from a Chapter 13 proceeding, the Supreme Court suggested that the same analysis also should be used in Chapter 12. Id . at 474, 124 S.Ct. 1951 (listing series of similar bankruptcy provisions, including Section 1225(a)(5)(B)(ii), and observing that "Congress intended bankruptcy judges ... to follow essentially the same approach when choosing an appropriate interest rate under any of these provisions."); First Nat'l Bank of Durango v. Woods (In re Woods) , 465 B.R. 196, 206 (10th Cir. BAP 2012), vacated on other grounds , 743 F.3d 689 (10th Cir. 2014) (applying Till approach to Chapter 12 case); In re Graves Farms , 2019 WL 1422891 (Bankr. D. Kan. Mar. 28, 2019) (same). Under Till , the cram down interest rate is based upon a formulaic approach starting with the "national prime rate" and then adjusted upward based upon factors such as "the circumstances of the estate, the nature of the security, and the duration and feasibility of the reorganization plan." Id . at 479, 124 S.Ct. 1951. In this bankruptcy case, the cram down interest rate determination has been hampered since neither the Debtor nor MMOF provided the Court with any evidence concerning the current national prime rate and not much to go with on risk adjustments either.⁹³

92 Docket No. 84 at 7.

93 MMOF bore the burden to prove upward risk adjustments. Till, 541 U.S. at 479, 124 S.Ct. 1951 ; In re Rocky Mountain Land Co., LLC , 2014 WL 1338292, *6 (Bankr. D. Colo. Apr. 3, 2014) ("The evidentiary burden for establishing an appropriate interest rate under Till falls ‘squarely on the creditors.’ ").

But, leaving aside for the moment the appropriate cram down interest rate, the Debtor is effectively proposing to modify the MMOF Note. However, the Debtor committed in the DS Farms Note that it would not modify the MMOF Note without DS Farms giving permission to do so. The DS Farms Note states:

Note Holders [Debtor] herein agree that they [Debtor] will not exercise any rights in connection with the promissory note and deed of trust securing MM Opportunity Fund, LLC ..., or in any way change the terms and conditions of such promissory note [MMOF Note] without the written authorization of maker [DS Farms] herein.⁹⁴

94 Id .

The Debtor has not secured written authorization from DS Farms. The Debtor's failure to do so (even with substantial notice of the problem) suggests that the Debtor may be violating the terms of the DS Farms Note through the Amended Chapter 12 Plan. This is especially problematic in terms of feasibility under Section 1225(a)(6) because the Debtor seems to be hoping for payment from DS Farms.

One more issue deserves mention. Since the Chapter 12 Trustee objected to confirmation of the Amended Chapter 12 Plan, such objection triggered Section 1225(b) which provides:

(1) If the trustee or the holder of an allowed unsecured claim objects to the confirmation of the plan, then the court may not approve the plan unless, as of the effective date of the plan —

(A) the value of the property to be distributed under the plan on account of such claim is not less than the amount of such claim;

(B) the plan provides that all of the debtor's projected disposable income to be received in the three-year period ... beginning on the date that the first payment is due under the plan will be applied to make payments under the plan; or

(C)the value of the property to be distributed under the plan in the 3-year period ... beginning on the date that the first distribution is due under the plan is not less than the debtor's projected disposable income for such period.

(2) For purposes of this subsection, "disposable income" means income which is received by the debtor and which is not reasonably necessary to be expended —

(A) for the maintenance or support of the debtor or a dependent of the debtor or for a domestic support obligation that first becomes payable after the date of the filing of the petition; or

(B) for the payment of expenditures necessary for the continuation, preservation,

and operation of the debtor's business.

The Chapter 12 Trustee is not a creditor and has not filed a proof of claim. Thus, Section 1225(b)(1)(A) is not technically operative in respect of the Chapter 12 Trustee. Instead the Debtor must meet either Section 1225(b)(1)(B) or Section 1225(b)(1)(C). Both require the Debtor to identify the Debtor's "projected disposable income" and then either: (1) pay all of the Debtor's projected disposable income into the Amended Chapter 12 Plan; or (2) distribute property worth no less than the Debtor's projected disposable income. The phrase "disposable income" is defined in Section 1225(b)(2). For a corporate entity like the Debtor, projected disposable income means gross income received by the Debtor minus reasonably necessary expenses for the continuation, preservation, and operation of the Debtor's business — all as projected over a three year period. However, unlike virtually every other Chapter 12 Plan that the Court has ever considered, the Amended Chapter 12 Plan proposed by the Debtor contains no projections whatsoever of the Debtor's projected income or expenses for the next three years. As a result, the Debtor has not identified its projected disposable income. So, having failed to provide any information whatsoever about its projected disposable income, the Debtor failed to show that the Debtor will either: (1) pay all of the Debtor's projected disposable income into the Amended Chapter 12 Plan; or (2) distribute property worth no less than the Debtor's projected disposable income. Instead, it seems that the Debtor just intends to keep whatever disposable income, if any, it might generate during the next three years. Under such circumstances, the Amended Chapter 12 Plan is unconfirmable per Section 1225(b).

There are still more problems with the Amended Chapter 12 Plan advanced by the Debtor. However, given the foregoing, it is not necessary for the Court to analyze any of the additional deficiencies.

C. Dismissal Is Warranted.

Through the Motion to Dismiss, MMOF requests dismissal of this bankruptcy case pursuant to Sections 1208(c)(1) and 1208(c)(9). The Chapter 12 Trustee has not joined the Motion to Dismiss. In any event, Sections 1208(c)(1) and 1208(c)(9) state:

(c) On request of a party in interest, and after notice and a hearing, the court may dismiss a case under this chapter for cause, including —

(1) unreasonable delay, or gross mismanagement, by the debtor that is prejudicial to creditors; [or]

....

(9) continuing loss to or diminution of the estate and absence of a reasonable likelihood of rehabilitation ....

With respect to Section 1208(c)(1) unreasonable delay can be found from a debtor's failure to confirm a Chapter 12 plan on a timely basis. See Ames, 973 F.2d at 851 (holding that "dismissal of a Chapter 12 case is appropriate when debtors have failed to propose a confirmable plan" and affirming dismissal after denial of confirmation of Chapter 12 plan). In this case, the Debtor filed for bankruptcy protection about nine months ago on February 17, 2021. That is a long time ago in the world of Chapter 12. Under Section 1222, a debtor normally is required to submit a Chapter 12 plan no later than 90 days after the commencement of the bankruptcy case. The Debtor did not meet that deadline. Instead, just before the expiration of the deadline, the Debtor asked for more time based upon Mr. Lund's medical condition.⁹⁵ The Debtor explained that it "has not been able to finalize income projections and other financial information necessary for Debtor's proposed Chapter 12 plan."⁹⁶ The Court authorized the extension.⁹⁷ Then, on June 18, 2021 the Debtor finally filed its initial Chapter 12 plan.⁹⁸ Notably, the Debtor failed to provide any of the promised "income projections and other financial information necessary for Debtor's proposed Chapter 12 plan." A month later, at the confirmation hearing on the Debtor's initial Chapter 12 plan, the Debtor abruptly withdrew it.⁹⁹ At that stage:

95 Docket No. 25.

96 Id.

97 Docket No. 26.

98 Docket No. 28.

99 Docket No. 37.

The Court echoed the concerns expressed by MMOF and the Trustee that the case has been pending for a long time and there appears to be no progress being made. The Court observed that the Plan appeared facially unconfirmable and noted that the absence of operating reports leaves a void of information about whether the Debtor is conducting any farming or ranching.¹⁰⁰

100 Id .

Finally, about two months later, the Debtor submitted the Amended Chapter 12 Plan, again with no income projections or any financial information.¹⁰¹ For the reasons set forth above, the Court has determined that the Amended Chapter 12 Plan is unconfirmable. As a result, the Court further finds that the Debtor has engaged in "unreasonable delay" under Section 1208(c)(1).

101 Docket No. 62.

MMOF also asserted that the Debtor has been engaged in "gross mismanagement" justifying dismissal under Section 1208(c)(1). The evidence proves the Debtor's gross mismanagement. The main problem stems from the Debtor's disregard for the bankruptcy process and failure to submit timely, accurate financial reporting, coupled with the Debtor's decision to divert all of its income to a related entity for no consideration. Chapter 12 debtors are obligated to submit monthly financial reports detailing post-petition operations including gross income received and expenses paid. See 11 U.S.C. § 1203 (Chapter 12 debtor "shall ... perform all the functions and duties .... of a trustee serving in a case under chapter 11 ....); 11 U.S.C. § 1106(a)(1) ("A trustee shall ... perform the duties of the trustee, as specified in paragraph[ ] ... (8) ... of section 704(a) ); 11 U.S.C. § 704(a)(8) ("the trustee shall ... if the business of the debtor is authorized to be operated, file with the court [and] the United States trustee ... periodic reports and summaries of the operation of such business, including a statement of receipts and disbursements ...."). However, for the first seven months of this bankruptcy case, the Debtor elected not to file any financial reporting. Finally, on September 21, 2021, the Debtor submitted a combined Monthly Operating Report for February to May 2021, along with separate Monthly Operating Reports for June, July and August 2021.¹⁰² The Debtor declined to provide financial information for September 2021.

102 Tr. Exs. 10-13.

In any event, with respect to the Monthly Operating Reports that the Debtor eventually did submit, all of such Monthly Operating Reports are facially deficient, incomplete, and largely unsupported. By way of illustration, with respect to the Monthly Operating Report for February to May 2021, the Debtor attached only a single bank statement for May 2021, which did not provide any information pertaining to transactions in February, March, and April 2021. The Debtor also provided no detail concerning alleged expenses, only very generic categories of expenses and amounts. And, the May 2021 bank statement does not show payment of any expenses. The Debtor also attached a Balance Sheet, dated June 20, 2021 which lists $2,126 of "cash on hand." However, the evidence at trial established that the Debtor did not actually have any "cash on hand"; instead, such amount apparently was held in the separate bank account of Your Rancher. All the other Monthly Operating Reports are similarly defective. The Debtor's "inability to provide reliable financial information is evidence of gross mismanagement that is prejudicial to creditors since creditors are unable to ascertain the Debtors' financial wherewithal to repay obligations owed to creditors or determine the Debtors' prospects for future business." In re Pertuset , 492 B.R. 232, 252 (Bankr. S.D. Ohio 2012) (denying confirmation and dismissing Chapter 12 bankruptcy case under Section 1208(c)(1) ). Cf. Fid. Deposit & Discount Bank v. Domiano (In re Domiano), 442 B.R. 97, 105 (Bankr. M.D. Pa. 2010) ("Failure of a debtor to properly report income and expenses constitutes evidence of ‘gross mismanagement’ under § 1112(b)(4)(B).").

The Debtor engaged in additional gross mismanagement by ignoring requirements of the bankruptcy process. According to the testimony of Mr. Lund, the Debtor engaged and paid a professional person (i.e. , an accountant) without Court approval. Such actions violate Sections 327 and 330 governing employment and compensation of professional persons.

Finally, the Debtor demonstrated further gross mismanagement by transferring most of its income to a third party. The evidence at trial established that the only income received by the Debtor during the bankruptcy case has been interest-only monthly payments from DS Farms on the DS Farms Note of around $7,100 to $7,135.¹⁰³ Shortly after receiving such income, the Debtor elected to transfer almost all of its income from the DIP Account to a separate but related entity managed by Mr. Lund: Your Rancher.¹⁰⁴ The proof showed that such transfers were made without any consideration. So, apparently, the Debtor just gave away all its revenue. Then, supposedly, Your Rancher used some of its funds to pay some or all of the Debtor's expenses. The nature of the transactions with Your Rancher is mysterious and completely incomprehensible. It is even more troubling since the Debtor only started giving all its income to Your Rancher after the Debtor filed for bankruptcy relief. In any event, the Debtor has provided no financial information for Your Rancher, and thus has not been transparent in its financial disclosures.

103 Tr. Exs. 12-13.

104 See , e.g., Tr. Ex. 12 at (showing $6,000 transfer to Your Rancher); Ex. 13 at 4 (showing $6,500 and 6,010 transfers to Your Rancher).

Based upon the foregoing, the Court determines that the Debtor has engaged in unreasonable delay and gross mismanagement. Again, the Debtor has not proposed a confirmable plan and has made no real bankruptcy progress. So, unreasonable delay is patent. And, the lack of timely and accurate Monthly Operating Reports coupled with the Debtor's inexplicable transfer of almost all of the Debtor's income to Your Rancher shows gross mismanagement. The Court also finds that the unreasonable delay and gross mismanagement has been prejudicial to MMOF. After all, MMOF has not received any payments from the Debtor during this bankruptcy case and has been stopped from exercising its state law remedies. So, dismissal is warranted under Section 1208(c)(1).

MMOF also asked for dismissal under Section 1208(c)(9) which allows dismissal where there is "continuing loss to or diminution of the estate and absence of a reasonable likelihood of rehabilitation." Parsing the language of Section 1208(c)(9) further, in evaluating whether to dismiss a case for "cause," the Court may also consider two additional, separate factors: (1) a showing of continuing loss to or diminution of the estate; and (2) absence of a reasonable likelihood of rehabilitation. See, e.g. , In re Vaughan Co. Realtors , 2013 WL 2244285 (Bankr. N.M. 2013) (construing similar text in Section 1112(b)(4)(A)). Assessing whether the Debtor has made a profit or has suffered losses during the bankruptcy process is difficult given the abysmal Monthly Operating Reports submitted by the Debtor and the Debtor's transfer of its revenue to Your Rancher. However, one way to measure profit or loss is to evaluate the Debtor's cash position. According to the Debtor's Schedule A/B, the Debtor started with $7,421 in cash.¹⁰⁵ As of August 2021 (the last month in which the Debtor reported), the Debtor had just $5,170 in its DIP Account.¹⁰⁶ So, the Debtor lost money. And, the Debtor has not otherwise increased its assets. Furthermore, the Debtor has accrued additional administrative expenses for attorneys’ fees in the amount of approximately $40,000.¹⁰⁷ In the context of this case, such fees are the functional equivalent of further "continuing loss to or diminution of the estate." See Morreale v. 2011-SIP-1 CRE/CADC Venture, LLC , 2015 WL 429502, at *3 (D. Colo. Jan. 30, 2015) (affirming denial of stay of conversion under Section 1112(b)(4)(A) for "continuing loss to or diminution of the estate" because the Debtor was "hemorrhaging professional fees"). The foregoing demonstrates "continuing loss to or diminution" of the Debtor's bankruptcy estate.

105 Ex. B.

106 Tr. Ex. 13. In its August 2021 Monthly Operating Report, the Debtor also asserted that it had an additional $16,342 in "Cash on Hand." However, Mr. Lund testified that the Debtor did not actually have such cash. Instead, Mr. Lund indicated that Your Rancher had the $16,342 in its bank account. No documentation supported such assertion. However, Your Rancher is a separate corporate entity. So, its assets cannot be simply aggregated with the Debtor's assets.

107 Am. Chapter 12 Plan at 3.

With respect to "reasonable likelihood of rehabilitation," that phrase refers to "the debtor's ability to restore the viability of its business." Loop v. U.S. Trustee , 379 F.3d 511, 516 (8th Cir. 2004) (construing same phrase in Section 1112(b)(4)(a)); see also Richard Levin and Henry Sommer, 7 COLLIER ON BANKRUPTCY ¶ 1112.04[6][a][ii] (LexisNexis Pub. Supp. 2021) (construing Section 1112(b)(4)(A) and explaining that "[r]ehabilitation means to reestablish a business"). MMOF has proved that there is no "reasonable likelihood of rehabilitation." After all, there is not much of a business to rehabilitate. Since the bankruptcy filing, the only income generated by the Debtor and reported on the Debtor's Monthly Operating Reports is interest-only monthly payments made to the Debtor by DS Farms on the DS Farms Note. The Debtor received no income directly from farm or ranch operations with the exception of the four head of cattle Mr. Lund testified had been sold recently for an unspecified amount of money. Furthermore, the Debtor presented no financial projections for future farm or ranch operations. Although rehabilitation is not exactly the same as reorganization, since the Court has denied confirmation of the Amended Chapter 12 Plan (and a prior iteration), there is no active and reasonably viable reorganization effort underway. Thus, dismissal also is warranted under Section 1208(c)(9). See Pertuset , 492 B.R. at 252-53 (dismissing Chapter 12 case under Section 1208(c)(9) because "the Debtors' Proposed Plan in this Chapter 12 case is not confirmable and there is no indication of any change in circumstances in the foreseeable future ..., [and in] the meantime, the Debtors' estate is diminishing and their creditors' positions continue to erode based on lack of payment"); In re Butler, 101 B.R. 566, 568–69 (Bankr. E.D. Ark.1989) (dismissing Chapter 12 case per Section 1208(c)(9) because debtor had no realistic chance of reorganization and creditors had received no post-petition payments).

VI. Conclusion.

For the reasons set forth above, the Court denies the Motion to Confirm and denies confirmation of the Debtor's Amended Chapter 12 Plan under Sections 1225(a) and (b). Furthermore, given the Debtor's undue delay, gross mismanagement, and continuing losses with no reasonable likelihood of rehabilitation, the Court also dismisses this bankruptcy case under Section 1208(c).