Unpublished Dispositionin Re William H. Cook, Iii, Barbara A. Cook, Debtors.william H. Cook, Iii, and Barbara A. Cook, Plaintiffs-appellants, v. Society Bank, Defendant-appellee,andknickerbocker Life Insurance Company, Defendant-appellant, 940 F.2d 659 (6th Cir. 1991)Annotate this Case
Before DAVID A. NELSON and SUHRHEINRICH, Circuit Judges, and HARVEY, Senior District Judge.*
Debtors, William H. Cook, III, and Barbara A. Cook, appeal the district court's order affirming the decision of bankruptcy court to grant Trustcorp Bank, Ohio's ("Trustcorp") and Knickerbocker Life Insurance Company's motions for abandonment and relief from stay of real property, under 11 U.S.C. § 362. For the reasons stated below, we AFFIRM the district court's decision.
On October 31, 1989, debtors filed their voluntary petition for bankruptcy under Chapter 11 of the Bankruptcy Code. Debtors' estate consisted of real property, including an undivided 1/10 interest in approximately 39 acres of undeveloped real property located in Springfield Township, Ohio ("Angola Road" property), which was secured by a demand note and mortgage held by Trustcorp, now known as Society Bank & Trust. The remaining 9/10 interest in the Angola Road property is held by the estate of William H. Cook, Sr..
Debtors' Amended Plan of Reorganization proposed to develop the Angola Road property into 93 improved lots which would be sold to builders who would construct single family homes. The estate of William H. Cook, Sr. agreed to participate in the development plan and to allocate a large percentage of the profits from the sale of the improved lots to debtors. Trustcorp, which instituted foreclosure proceedings on the property on May 1, 1989, has at all times refused to consent to or join in debtors' reorganization plan.
Relief from the automatic stay in bankruptcy may be obtained by a creditor, as follows:
(d) On request of a party in interest and after notice and a hearing, the court shall grant relief from the stay provided under subsection (a) of this section, such as by terminating, annulling, modifying, or conditioning such stay--
(1) for cause, including the lack of adequate protection of an interest in property of such party in interest; or
(2) with respect to a stay of an act against property under subsection (a) of this section, if--
(A) the debtor does not have an equity in such property; and
(B) such property is not necessary to an effective reorganization.
11 U.S.C. § 362(d) (1) (2) (A) & (B). Debtors concede that they have no equity in the subject property.
Debtors' first argument on appeal is that the district court erred in holding that section 362(d) (2) (B) requires a showing that the reorganization plan is reasonably feasible within a reasonable time. We disagree. As noted by every other circuit court which has construed this provision, the reorganization plan must be "reasonably feasible" in order to be "effective." In re Timbers of Inwood Forest Assocs, Ltd., 808 F.2d 363, 373 (5th Cir. 1987) (en banc), aff'd, 484 U.S. 365 (1988); Grundy Nat'l. Bank v. Tandem Mining Corp., 754 F.2d 1436, 1440 (4th Cir. 1985); In re Ahlers, 794 F.2d 388, 398 (8th Cir. 1986), rev'd on other grounds, Northwest Bank Worthington v. Ahlers, 485 U.S. 197 (1988); In re Albany Partners, Ltd., 749 F.2d 670, 673 (11th Cir. 1984). See also Timbers of Inwood Forest Assocs. Ltd., 484 U.S. 365, 376 (1988); In re Shriver, 33 B.R. 146, 187 (N.D. Ohio 1983); In re Planned Systems, Inc., 78 B.R. 852, 865 (S.D. Ohio 1987).
In the alternative, debtors argue that the district court erred in finding that their reorganization plan was not reasonably feasible. However, debtors admitted that the plan of reorganization could not proceed without the consent of Trustcorp, which is presently attempting to foreclose on the property. Without Trustcorp's cooperation, debtors' plan was not only improbable but impossible. Thus, we can not say that the district court's finding in this regard was "clearly erroneous." See In re Planned Systems, 78 B.R. at 866-67.
The Honorable James Harvey, Senior District Judge for the Eastern District of Michigan, sitting by designation