J. (§10.11) Relief From the Stay
As with other bankruptcy chapters, the secured creditor who wishes to proceed with foreclosure of its collateral against the debtor before the case is closed or dismissed, or before the debtor is discharged in Chapter 12—usually three to five years—will have to reckon with 11 U.S.C. § 362(d).
Two parties have the Bankruptcy Code mandated benefits of the automatic stay against any act to create, perfect, or enforce collection of a lien against property of the estate. One of these parties is naturally the debtor. As discussed in §10.3 above, 11 U.S.C. § 1201 applies the automatic stay to the benefit of certain codebtors. This is similar to the protection found in Chapter 13. 11 U.S.C. § 1301. Aside from the limited application of 11 U.S.C. § 105 to enjoin actions against third parties, little benefit from § 1201 is available to family farmers because the codebtor’s stay does not include agricultural debts.
The predominant basis for “lifting the stay” is the lack of adequate protection, which is discussed in §10.10 above. While allegations of “cause” and “not necessary to an effective reorganization” appear to be applicable, § 362(d)(2), the court in In re Lewis, 83 B.R. 682 (Bankr. W.D. Mo. 1988) (Koger, B.J.), found differently. The court held that, because a Chapter 12 debtor may “write down” secured debt to the value of the collateral and pay the balance out of future disposable income, the family farmer cannot be said to possess a lack of equity.
With the expedited procedure toward confirmation in Chapter 12 and the fundamental modification as to what is appropriate “adequate protection” in a Chapter 12 setting, stay litigation is not as frequent as that encountered in Chapter 11.
2015 SUPPLEMENT (§10.11A)
III. (§10.11A) Plan of Reorganization(New Section)
Those portions of the statutes discussed in the original deskbook in §§10.12–10.20 have not been modified since the publication of the second edition of this deskbook. Chapter 12 still follows the chapter 13 model. Because there have been no significant amendments, this supplement will consider cases that illuminate existing issues and, in some instances, clarify some comments in the original chapter.
In In re Clark, 288 B.R. 237 (Bankr. D. Kan. 2003) (Nugent, C.J.), the debtor proposed a plan in which all the income would come from enrolling all eligible acreage in the CRP (Conservation Reserve Program). The secured creditor made several objections to the debtor’s...
