In re Gough

Trayton and Dolores Gough (debtors) owned a citrus-growing operation in Florida. The Goughs and their son performed all the manual labor associated with the operation. In 1995, the Goughs filed for Chapter 12 bankruptcy. The Goughs’ proposed Chapter 12 plan estimated that their citrus production would be 6,125 boxes of fruit in the 1995–96 growing season, 9,465 boxes in 1996–97, and 11,815 boxes in 1997–98. However, the Goughs’ groves had yielded only 3,869 boxes in the most recent growing season. Although the Goughs had planted more trees for the 1995 season, those trees were too young to produce, and the Goughs’ groves were generally in poor condition. Nonetheless, based on their projected production, the Goughs proposed funding their Chapter 12 plan with payments of $12,000 by May 1, 1996, $24,000 by May 1, 1997, and $30,000 by May 1, 1998. The Goughs anticipated that in addition to citrus income, they would receive $5,500 yearly in Social Security benefits. The Goughs also anticipated that they would incur yearly living expenses of $5,760 and crop-maintenance expenses of $12,240, $13,360, and $17,000 respectively for the next three years. The Goughs’ plan proposed paying C. Victor Butler (creditor), an allowed secured claimholder with a $132,748 claim, in full with interest at 10 percent per year. The plan provided that after a smaller payment during the first year, Butler would receive $18,144 per year until May 1, 2007, at which time Butler would receive a balloon payment for the remaining balance due. Butler objected to confirmation of the plan, asserting that he would receive less than the value of his claim under the plan, in violation of 11 U.S.C. § 1225(a)(5), and that the Goughs’ plan was not feasible, in violation of 11 U.S.C. § 1225(a)(6). After finding that Butler would be paid in full under the plan, the court analyzed whether the Goughs’ plan was feasible.