Unpublished Disposition, 878 F.2d 1439 (9th Cir. 1986)
Annotate this CaseIn re SAWTOOTH RADIO CORP., dba KLIX and KMTW Radio, Debtor.FIRSTMARK LEASING CORPORATION, Creditor-Appellant,v.SAWTOOTH RADIO CORP., Debtor-Appellee.
No. 87-3869.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted May 5, 1989.* Decided July 7, 1989.
Before ALARCON and DAVID R. THOMPSON, Circuit Judges, and TASHIMA, District Judge.**
MEMORANDUM
Appellant Firstmark Leasing corp. ("Firstmark") appeals the district court's decision affirming the bankruptcy court's confirmation of a Chapter 11 reorganization plan in the bankruptcy of appellee Sawtooth Radio Corp. ("Sawtooth"). We affirm.
FACTS
Sawtooth, owner and operator of two radio stations in Twin Falls, Idaho, filed for bankruptcy under Chapter 11 of the Bankruptcy Code, 11 U.S.C. §§ 1101 et seq. Firstmark is Sawtooth's largest creditor and only secured creditor. Its claim of approximately $1,450,000 was secured by all of Sawtooth's assets. Based upon the bankruptcy court's determination that Sawtooth's value, as a going concern, was $1.2 million, Firstmark's secured claim became $1.2 million and the balance of its claim in the sum of $250,000 became unsecured. Sawtooth filed a disclosure statement and proposed plan for reorganization on March 17, 1986. The disclosure statement was amended and approved by the bankruptcy court on May 17, 1986, and a confirmation hearing was set for July 7, 1986. Firstmark filed a timely objection to the proposed plan, and a ballot rejecting it, on June 24, 1986. The July hearing, however, was vacated.
The proposed plan subsequently was amended on July 25, 1986. The bankruptcy court filed an order on August 8, 1986, setting a confirmation hearing on the amended plan for September 15, 1986. A notice of hearing and ballot were mailed to all creditors, including Firstmark, on August 13, 1986. The notice stated that acceptances or rejections of the amended plan had to be filed in writing with the court by September 5, 1986. The ballot provided it had to be returned to the court on or before September 10, 1986. Firstmark filed its objections and its ballot rejecting the amended plan on September 11, 1986.
The bankruptcy court confirmed the plan without making findings of fact, stating that:
This matter is before the Court on confirmation of the Debtor's Chapter 11 Plan ... and Creditor Firstmark's objection thereto. It appearing to the Court the plan is feasible and there is a reasonable chance the business will successfully reorganize and it further appearing the plan conforms with the requirements of 11 U.S.C. 1129, ... Debtor's Chapter 11 Plan of Reorganization ... is confirmed.
The district court affirmed without making independent findings.
Because we are in as good a position as the district court to review the bankruptcy court's findings, we review independently the decisions of the bankruptcy court. In re Acequia v. Clinton, 787 F.2d 1352, 1357 (9th Cir. 1986). We review findings of fact for clear error, and conclusions of law de novo. Id.
We have jurisdiction to hear this appeal pursuant to 28 U.S.C. § 158(d).
ANALYSIS
Firstmark argues the plan violates the feasibility requirement of 11 U.S.C. § 1129(a) (11). Feasibility is a question of fact, and we therefore will not overturn the findings of the bankruptcy court unless clearly erroneous. In re Acequia, 787 F.2d at 1358.
Feasibility requires a showing of only a "reasonable probability of success." Id. Factors to be considered include "the business's earning power, the sufficiency of the capital structure, economic conditions, managerial efficiency, and whether the same management will continue to run the company." In re Martin, 66 Bankr. 921, 926 (Bankr.D. Mont. 1986). Sawtooth presented evidence on all of these factors and showed it could make the required monthly payments under the plan, based on operations following the bankruptcy filing, past operating history, and projected future income.
We agree with the bankruptcy court's determination that the plan was feasible.
Firstmark further argues that the plan violates the "fair and equitable" requirements of the cramdown provisions, 11 U.S.C. § 1129(b) (1), (2). Firstmark asserts the plan inequitably extends its loan term from two to twenty years because it does not provide for a replacement lien on equipment, which will depreciate prior to the expiration of the twenty-year period.
The plan provides " [t]he mortgage lien and the lien in the equipment will stay in effect during the term of the plan, and until [Firstmark] has been paid in full as provided herein." Firstmark argues this language does not create a replacement lien, and therefore the plan does not meet the "fair and equitable" standard of section 1129(b).
Firstmark raises this argument for the first time on appeal, despite Sawtooth's statements during the confirmation hearing that equipment would have to be replaced during the twenty-year term of the plan. SER Doc. 36, p. 16, line 25; p. 19, lines 12-23. Firstmark explicitly stated during the hearing that "It's the length of the payout that we're objecting to," SER Doc. 36, p. 38, line 18; it did not address the replacement lien issue.
The confirmation of a plan of reorganization is binding on all parties and questions which could have been raised pertaining to the plan are res judicata. In re Auto West, Inc., 43 Bankr. 761, 763 (D. Utah 1984). Firstmark, therefore, is foreclosed from raising its "fair and equitable" argument for the first time before this court.
Sawtooth argues that Firstmark may not object to the plan because Firstmark failed to file its objections, and its ballots rejecting the plan, timely. We do not consider this argument. If the objections and ballots were untimely, the bankruptcy court properly confirmed the plan notwithstanding the tardy objections and ballots. If the objections and ballots against the plan were timely, still there was no error in confirmation of the plan as we have heretofore stated in this memorandum.
AFFIRMED.
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