Comerica Bank v. Red Mountain Machinery Company, et al

Filing 50

ORDER that the motion to dismiss for mootness 41 is granted as to the new value contribution claim of error, and denied as to the § 1111(b) election and interest rate claims of error. That the motion to dismiss for lack of jurisdiction as to the § 1111(b) election claim of error 23 is granted. That the decision of the Bankruptcy Court on the calculation of the interest rate is affirmed. Pursuant to Federal Rule of Bankruptcy Procedure 8016(a), the Clerk of the Court shall enter a judgment consistent with this Order. The Court reads 28 U.S.C. § 158(d) as requiring only a judgment, and not a mandate, from this Court. However, if either party disagrees, that party may move for issuance of a mandate within 21 days. Signed by Judge James A Teilborg on 3/29/12.(DMT)

1

WO

2
3
4
5
6

IN THE UNITED STATES DISTRICT COURT

7

FOR THE DISTRICT OF ARIZONA

8
9
10
11
12
13
14
15
16
17

)
)
)
Red Mountain Machinery Co.,
)
)
Debtor,
_________________________________)
)
Comerica Bank,
)
)
Appellant.
)
)
vs.
)
)
Red Mountain Machinery Co., et al.,
)
)
Appellees.
)
)
In re:

CV 11-1079-PHX-JAT
Bk No. 2:09-bk-19166-RLH
ADV. No. 2:09-ap-00941-CGC
ORDER

18

Pending before the Court is Appellees’ motion to dismiss this appeal for mootness

19

(Doc. 41). Also pending is Appellees’ motion to dismiss the appeal of the bankruptcy court’s

20

ruling on the § 1111(b) election as untimely (Doc. 23). Finally, both parties have fully

21

briefed the merits of the appeal (Docs. 21, 25, and 40).

22

I.

Motion to Dismiss for Mootness

23

A. Law Governing Equitable Mootness

24

Appellees argue this appeal should be dismissed because it is moot based on equitable

25

considerations.

26

On the issue of equitable mootness, the Ninth Circuit Court of Appeals has instructed,

27

An appeal from a bankruptcy court’s order is equitably moot “when, in the
absence of a stay, events occur that make it impossible for the appellate court
to fashion effective relief.” In re Spirtos, 992 F.2d 1004, 1006 (9th Cir. 1993)

28

1
2
3
4

(citing In re Roberts Farms, Inc., 652 F.2d 793 (9th Cir. 1981)). In Roberts
Farms, we dismissed an appeal because the appellant did not obtain a stay of
the bankruptcy court’s confirmation of a Plan of Arrangement and, as a result,
a significant portion of the plan had been carried out before the appeal could
be heard. We reasoned that overruling the bankruptcy court’s confirmation of
the plan would “create an unmanageable, uncontrollable situation for the
Bankruptcy Court” to undo the portion of the plan that had been carried out
and thus the appeal was equitably moot. See Roberts Farms, 652 F.2d at 797.

5
6
7
8
9
10
11
12

We have also held, however, that an appellant’s failure to obtain a stay
before appealing a bankruptcy court’s award of fees does not necessarily
render the appeal equitably moot. See In re Cascade Roads, Inc., 34 F.3d 756
(9th Cir. 1994); In re Spirtos, 992 F.2d 1004 (9th Cir. 1993); In re International
Envtl. Dynamics, Inc., 718 F.2d 322 (9th Cir. 1983). In International
Environmental Dynamics, even though the appellant failed to obtain a stay
before appealing the bankruptcy court’s order granting the debtor’s counsel
attorney fees, we held that the appeal was not equitably moot because the
counsel was a party before the bankruptcy court and knew the appellant
contested the fee award. See International Envtl. Dynamics, 718 F.2d at 326;
see also Cascade Roads, 34 F.3d at 761 (holding that an appeal was not
equitably moot because the person who was issued the money was a party and
was aware when the payment was made that the award would be appealed);
Spirtos, 992 F.2d at 1006-07 (same).

13

In re S.S. Retail Stores, Corp., 216 F.3d 882, 884-85 (9th Cir. 2000).

14

Additionally, the Court of Appeals further explained,

15

While the doctrine of equitable mootness focuses on whether it is, for all
practical purposes, impossible to award effective relief, other equitable
considerations center on whether it would be unfair to grant the relief
requested. Therefore, even if an appeal is not equitably moot, a court may still
hold that the equities weigh in favor of dismissing the appeal. See, e.g., In re
Federated Dep’t Stores, Inc., 44. F.3d 1310, 1320 (6th Cir. 1995) (holding that
even though the appeal was not moot because effective relief was possible, it
was inequitable to require that the debtor’s counsel disgorge fees and costs
awarded by the bankruptcy court).

16
17
18
19
20

Id. at 885.

21

The first concept discussed above is also referred to as real or constitutional (Article

22

III) mootness. In re National Mass Media Telecommunication Systems Inc., 152 F.3d 1178,

23

1180 (9th Cir. 1998) (constitutional mootness “applies when an event occurs while a case is

24

pending appeal that makes it impossible for the court to grant any effectual relief.” (internal

25

quotations omitted)). Quoting Matter of UNR Indus., Inc., 20 F.3d 776, 769 (7th Cir. 1994),

26

the Court stated, “There is a big difference between inability to alter the outcome (real

27

mootness) and unwillingness to alter the outcome (‘equitable mootness’).” Id. at 1180 n. 3.

28

In this case, Appellee moved for a stay pending appeal, which this Court denied. Doc.
-2-

1

15. The Debtor moves to dismiss the appeal based on “equitable mootness” but argues

2

largely constitutional mootness, including citing extensively this Court’s decision in Coleman

3

v. ANMP (In re Dexter Distrib. Co.), 2010 WL 1052828 (D. Ariz. Mar. 18, 2010), which was

4

based, in relevant part, on constitutional mootness. Thus, the Court will analyze mootness

5

applying both constitutional mootness and equitable mootness.

6

Appellant raises three claims of error on appeal: 1) the bankruptcy court erred in

7

allowing in part and denying in part Appellant’s § 1111(b) election; 2) the bankruptcy court

8

erred in determining the adequacy of the value of the contribution by Owen and Linda

9

Cowing, and 3) whether the bankruptcy court erred in determining the interest rate Appellant

10

would be paid going forward. First, the Court will summarize the arguments as to each

11

claim.

12
13

A.

Claims of Error on Appeal
1.

1111(b) Election

14

With respect to this claim, Appellant argues that this Court can grant relief because

15

the only change would be, “[Appellant’s] claim against the Debtor would be entitled to

16

treatment under the Plan as fully secured and the Debtor’s payments to [Appellant] would

17

have to be incrementally higher over the Plan’s terms.” Doc. 45 at 5. Appellees respond and

18

argue that if this Court changed the § 1111(b) election, the lender who provided exit

19

financing and the Cowings (who provided additional equity contribution) would not get the

20

benefit of their bargain and would be entitled to a refund of their money. Doc. 46 at 3.

21

Further, Appellees argue that such a result would necessitate clawing back from creditors all

22

of this money that has already been spent. Id. Appellant concedes that giving it relief on this

23

claim would require the Debtor to make higher payments to Appellant over the next 15 years.

24

Doc. 45 at 6. However, Appellant argues that the Appellees fail to identify with specificity

25

“how incrementally higher Plan payments to [Appellant] over 15 years would imperil the

26

Debtor’s contracts with customers and vendors, the Debtor’s exit financing ..., or any facet

27

of the Debtor’s ongoing operations.” Id. (emphasis omitted).

28
-3-

1

2.

Value of Contribution

2

Again, Appellees argue that because the Plan has been consummated, this Court

3

cannot remand to the bankruptcy court to determine anew whether the Cowings made a

4

substantial enough financial contribution for the interest they received. Specifically, the

5

Cowings contributed $480,000 in new capital in exchange for being permitted to retain all

6

of the equity interest in the Debtor. Doc. 21 at 5. Appellant argues, “How an order of this

7

Court remanding the case back to the bankruptcy court so that the Debtor can meet its

8

evidentiary burden on the new value contribution affects at all the Debtor’s post-confirmation

9

business affairs is nearly impossible even to imagine.” Doc. 45 at 6. Conversely, Appellee

10
11
12
13
14
15

argues,
...Owen Cowings and Linda Cowing made a new equity contribution of
$480,000.... Lender Arlington RMMC Investments, LLC, provided exit
financing, of which $834,591.37 had been funded.... Debtor used these funds
to pay creditor claims according to the terms of the Plan.... In all fairness, if the
Court were to vacate and or materially change the terms of the Plan (as
requested by [Appellant]), it must provide Arlington, Owen Cowing and Linda
Cowing [the] opportunity to rescind their loan and investment.... At a
minimum, the Court would have to order every claimant paid so far under the
Confirmed Plan to fully disgorge its payment. In effect, this would require
unwinding the entire plan — a plan that has been substantially consummated.

16
Doc. 46 at 3-4.
17
3.

Interest Rate

18
The parties make virtually identical arguments on the interest rate issue as the §
19
1111(b) election issue.
20
C.

Analysis

21
In general terms, Appellees argue that this Court should dismiss this appeal as moot
22
because there has been: “1) substantial infusion of new equity, 2) substantial payment of
23
taxes, 3) substantial payment to creditors, and 4) substantial implementation of new
24
financing.” Doc. 41 at 10 (citing Coleman, 2010 WL 1052828 at *3.) Appellees go on to
25
argue that an appeal is moot when the remedies sought would affect third parties who are not
26
27
28
-4-

1

participants in the appeal. Id. (citing Coleman, 2010 WL 1052828 at *4).1 Finally, Appellee

2

argues that because the plan has been substantially consummated, this Court cannot fashion

3

relief. Doc. 41 at 7 (quoting Clarke v. Duck (In re Clarke), 98 B.R. 979, 980 (9th Cir. BAP

4

1989) (“It is now well recognized that when a stay of an order confirming a reorganization

5

plan has not been obtained and the plan has been consummated, appeals seeking to attack the

6

confirmed plan may be precluded.”)). Further, quoting the Bankruptcy Court in the Southern

7

District of New York, Appellees argue that, “substantial consummation requires only that

8

there was a commencement of distribution under the plan.”). Doc. 41 at 8 (quoting In re

9

Fansal Shoe Corp., 119 B.R. 28, 30 (Bankr. S.D.N.Y. 1990)). Appellant responds and

10

argues that it is Appellees’ burden to establish that there is no effective remedy that the Court

11

can provide and that Appellees have failed to meet this burden. Doc. 45 at 4 (citing five

12

cases including In re Focus Media, Inc., 378 F.3d 916, 923 (9th Cir. 2004).
1.

13

Section 1111(b) Election and Interest Rate

14

As discussed above, if this Court granted relief on either of these claims, the Debtor

15

would be required to pay Appellant more money over the next 15 years. Because the Court

16

can imagine that a complete restructuring of the payment plan would affect a variety of

17

people who are not parties to the appeal, the Court strongly suspects that the relief sought is

18

moot. Further, neither party disputes that the plan has been substantially consummated;

19

however, Appellant argues that substantial consummation alone does not render the appeal

20

to be moot. See Doc. 45 at 7 (quoting First Fed’l Bank of California v. Weinstein (In re

21

Weinstein), 227 B.R. 284, 289 (9th Cir. BAP 1998) (“the fact that a plan is substantially

22

consummated and that the appellant failed to obtain a stay pending appeal does not, by itself,

23

render an appeal moot. The appellate court should still consider whether it can grant

24
25
26
27
28

1

And quoting Trone v. Roberts Farm, Inc. (In re Roberts Farms, Inc.), 652 F.2d 793,
797 (9 Cir. 1981) (“Certainly, reversal of the order confirming the plan of arrangement,
which would knock the props out from under the authorization for every transaction that has
taken place, would do nothing other than create an unmanageable, uncontrollable situation
for the Bankruptcy Court.”).
th

-5-

1

effective relief.”)).

2

The Court agrees with Appellant, that Appellees have failed to point out with any

3

particulars or specifics why or how the Debtor paying more to a particular creditor would

4

necessarily result in unwinding the entire plan. Certainly the Court can hypothesize that

5

changing the Debtor’s repayment obligations could potentially have a domino effect on all

6

other aspects of the Plan. If such were true, then the Court would find the appeal of these

7

claims to be moot. However, on this record, and not knowing for certain that the Debtor

8

making a higher payment would impact the Debtor’s ability to go forward, the Court does

9

not find the appeal of these claims to be constitutionally/equitably moot.

10

2.

Value of New Equity Contribution

11

As to this claim, Appellees have provided significant specifics regarding how the Plan

12

has been consummated and how a change in the value of the new equity contribution would

13

require an unwinding of the Plan. Specifically, the Cowings provided $480,000 in new

14

capital in exchange for the equity in the Debtor. If the Court changed either the amount of

15

the value the Cowings would receive or the amount of money the Cowings would have to

16

pay (assuming the Cowings could pay more), the Cowings may not desire or be able to go

17

forward with the Plan. Further, without the Cowings contribution, the Lender may not

18

choose to fund the exit financing (or financing might be moot because without the Cowings’

19

contribution the Debtor may not be able to go forward).

20

Thus, considering that both the Lender and the Cowings have already paid the money,

21

and that the money has been spent, the Court finds that the substantial consummation of the

22

Plan in this regard prevents the Court from fashioning any relief. There are a variety of

23

creditors (including taxes) that have been paid, from whom disgorgement may not be

24

possible. Further, even assuming disgorgement is available from all creditors, this would

25

create the unworkable and unmanageable situation that the Court of Appeals has cautioned

26

against. Accordingly, the Court finds that the Appellant’s appeal with respect to the value

27

of the new equity contribution is constitutionally/equitably moot and the Court will not

28

consider the merits of that claim of error.
-6-

1

II.

Motion to Dismiss Appeal on Section 1111(b) issue as untimely

2

The parties agree that the Order of the Bankruptcy Court from which this claim of

3

error arises was entered on January 6, 2011. See Doc. 23 at 2. The parties agree that

4

Appellant did not file a notice of appeal with respect to that specific order. See id. The

5

parties further agree that the Bankruptcy Court’s order confirming the Plan was entered on

6

May 24, 2011. See id. Finally, the parties agree that on June 7, 2011, Appellant timely

7

appealed the May 24, 2011, Order. See id. However, the parties dispute whether the January

8

6, 2011 order was a final order from which the June 7, 2011 appeal would be untimely.

9

The parties also agree as to the law governing appeals. Rule 8002(a) required that a

10

notice of appeal be filed within 10 days2 of the date of the entry of the judgment, order, or

11

decree appealed from. Doc. 23 at 3. The requirement of filing a timely notice of appeal is

12

jurisdictional. Id. (citing Rule 8001(a)). Additionally, appeals under 28 U.S.C. § 158(a),

13

must be file within the 10 day time frame. As Appellee quotes,

14

Section 158(a)(1) states:

15

(a) the district courts of the United States shall have jurisdiction to hear appeals –

16

(1) from final judgments, order, and decrees;

17

(2) from interlocutory orders and decrees issued under section 1121(d) of title

18

11 increasing or reducing the time periods referred to in section 1121 of such

19

title; and

20

(3) with leave of court, from other interlocutory orders and decrees.

21

Doc. 23 at 4.

22

Appellee then further states,

23

25

A bankruptcy order is final and thus appealable where it 1) resolves and
seriously affects substantive rights and 2) finally determines the discrete issue
to which it is addressed. In re Lewis, 113 F.3d 1040, 1043 (9th Cir. 1997)
(quotation marks omitted). To be appealable pursuant to § 158(a)(1),
therefore, an order must be final in substance and it must be final in form.

26

Doc. 23 at 4. Again, the parties agree that this law governs whether Appellant was required

24

27
28

2

This deadline is currently 14 days.
-7-

1

to immediately appeal the January 6, 2011 Order. Doc. 26 at 1. Where the dispute lies is

2

whether under this controlling law Appellant was required to appeal within 10 days of

3

January 6, 2011.

4

Appellees argue that this Court should, by analogy, base its decision an the

5

appealability of rulings under 11. U.S.C. § 506(a). Doc. 23 at 5. “Section 506(a) ‘operates

6

to bifurcate [an under]secured creditor’s allowed claim into secured and unsecured interests

7

based upon the bankruptcy court’s valuation of the secured property.” Id. (quoting In re

8

1441 Veteran Street Co., 144 F.3d 1288, 1291 (9th Cir. 1998)). In the Section 506(a) context,

9

factual determinations of value are not immediately appealable. Id. (quoting In re Rodriguez,

10

272 B.R. 54, 57 (D. Conn. 2002)). However, determinations of a method or formula for

11

valuation can be final prior to the plan confirmation because no future order would affect that

12

calculation (whereas the factual value might change). Id. In this case, Appellees argue that

13

the formula the Bankruptcy Court applied to the § 1111(b) election closely resembles the §

14

506(a) election, and therefore, should be governed by the same finality/appealability

15

standard.

16

Appellant argues that an analysis of the § 506(a) election is inapposite in this case

17

because typically the § 1111(b) election follows the § 506(a) election, but in this case the

18

Debtor proceeded to objecting to the § 1111(b) election first. Doc. 26 at 9. Further,

19

Appellant argues that the method of the Debtor’s objection is significant, because the

20

objection was in a disclosure statement. Id. at 9-10. Appellant argues that it is clear under

21

Ninth Circuit law that the orders of the Bankruptcy Court approving disclosure statements

22

are interlocutory and not appealable until the plan is confirmed. Id. at 9 (citing Everett v.

23

Perez (In re Perez), 30 F.3d 1209, 1217 (9th Cir. 1994)). Finally, Appellant argues that this

24

Court should apply the pragmatic approach to determining the finality of the Bankruptcy

25

Court’s order, and find the January 6, 2011 non-final. Doc. 26 at 6.

26

The Court of Appeals has explained,

27

We have adopted a “pragmatic approach” to finality in bankruptcy
because “certain proceedings in a bankruptcy case are so distinctive and
conclusive either to the rights of the individual parties or the ultimate outcome

28

-8-

1

of the case that final decisions as to them should be appealable as of right.”
[citation omitted] Our approach “emphasizes the need for immediate review,
rather than whether the order is technically interlocutory.” [citation omitted]

2
3
4
5
6

Under our pragmatic approach, a bankruptcy court order is considered
to be final and thus appealable “where it 1) resolves and seriously affects
substantive rights and 2) finally determines the discrete issue to which it is
addressed.” [citations omitted] “Although this finality rule is given additional
flexibility in the bankruptcy proceedings context, traditional finality concerns
nonetheless dictate that ‘we avoid having a case make two complete trips
through the appellate process.’” [citations omitted]
In Re Bonham, 229 F.3d 750, 761 (9th Cir. 2000).

7
Applying the pragmatic approach, this Court finds that the January 6, 2011 Order was
8
final. Specifically, it resolved the formula that Bankruptcy Court would use for purposes of
9
the § 1111(b) election. That was a final determination on how the election would be
10
calculated. Additionally, Appellant’s substantive rights were seriously effected and the
11
January 6, 2011 Order resolved how those rights would be allocated. All that remained was
12
to factually determine the dollar value of the two classes of claims, to which the parties
13
ultimately stipulated. Accordingly, Appellant was required to appeal the January 6, 2011
14
Order within the time limit of Rule 8002(a). Appellant did not appeal within that time limit;
15
thus, the motion to dismiss for lack of jurisdiction will be granted.
16
III.

Merits of the Appeal

17
Following the Court’s above rulings on the motions to dismiss, the only remaining
18
issue for the Court to reach on the merits of the appeal is the interest rate applied to the
19
remaining loan between the debtor and the Appellant.
20
A.

Standard of Review

21
Citing nothing, Appellant states, “the appropriate standard for determining the interest
22
rate to be applied to [Appellant’s] secured claim [is] a legal issue that this Court reviews de
23
novo.” Doc. 21 at 2. Citing two Ninth Circuit Court of Appeals cases, Appellees state that
24
this Court should review the interest rate issue as a question of fact, and give substantial
25
deference to the Bankruptcy Court’s determination of the appropriate interest rate. Doc. 25
26
at 13. Appellant did not discuss the interest rate issue in its reply brief. At oral argument,
27
Appellee conceded that deciding which method a court should use for calculating interest is
28
-9-

1

a question of law reviewed de novo.

2

In In re Fowler, 903 F.2d 694, 696 (9th Cir. 1990), the Court of Appeals stated, “A

3

bankruptcy court should be accorded substantial deference in making cramdown interest rate

4

determinations.” Thus, the Court will consider the methodology used for determining

5

interest de novo, but will give substantial deference to the factual calculation of the interest

6

rate.

7

B.

8

Both sides agree that the Bankruptcy Court’s determination of the cramdown interest

9

rate must be fair and equitable. Doc. 25 at 13; Doc. 21 at 13. In Fowler, the Court of

10

Appeals adopted the “market” approach to determining the cramdown interest rate. 903 F.2d

11

at 697. The bankruptcy court can determine the market rate of interest using one of two

12

approaches: 1) determining the market interest rate for similar loans in the region; or 2) using

13

a formula. Id.

Analysis

14

The Court of Appeals further elaborated on the two approaches as follows:

15

Under [the first] approach, the court sets the cramdown rate by taking
testimony on current market rates regarding loans for the length of time
involved secured by the type of property involved. [citation omitted]
... Under [the second] approach, the court starts with a base rate, either
the prime rate or the rate on the treasure obligations, and adds a factor based
on the risk of default and the nature of the security (the “risk factor”). [citation
omitted] We approved the use of the formula approach in Camino Real, 818
F.2d [1503] at 1508 [9th Cir. 1987].

16
17
18
19

Fowler, 903 F.2d. at 697.
20
In this case, it appears undisputed that the Bankruptcy Court used the second, formula
21
approach. Appellant argues that the Supreme Court case that approved the use of a formula
22
was a Chapter 13 case; but the formula approach is not appropriate in a Chapter 11 case, such
23
as this one. Doc. 21 at 14-15. Fowler, which clearly approved of the use of a the formula
24
approach, was a Chapter 12 case. 903 F.2d at 695. However, Camino Real, which the
25
Fowler court points to as the case that approved the formula approach, was a Chapter 11
26
case. Camino Real, 818 F.2d at 1504. Thus, considering which method to use de novo, this
27
Court finds that applying the formula approach, standing alone, is not reversible error.
28
- 10 -

1

Nonetheless, Appellant argues that “blindly” applying the formula approach is error.

2

Doc. 21 at 15. Appellant argues that there may be market methods that better reflect the

3

value of the creditor’s claim than the formula approach. Id. (quoting In re SJF Ventures,

4

LLC, 441 B.R. 248, 254 (Bankr. N.D. Tex. 2010)). Thus, Appellant appears to argue that the

5

Bankruptcy Court erred in applying the formula approach without acknowledging its option

6

to apply an alternative approach. Doc. 21 at 16 (Appellant states, “Any fair reading of the

7

Confirmation Opinion compels the conclusion that the bankruptcy court unwaveringly

8

applied the [formula] approach to analyze the appropriate interest rate to be applied to

9

[Appellant’s] secured claim under the Plan.”).

10
11
12
13
14
15
16
17
18

In ruling on Appellant’s objection to using the formula or “Till”3 approach, the
Bankruptcy Court ruled as follows:
Although Till was a chapter 13 case, the Court indicated that the relevant
statutory language –“value, as of the effective date of the plan” – requires a
court to discount a st[r]eam of deferred payments back to their present dollar
value. 541 U.S. at 474 & n.10. And because this statutory language is identical
in the present §§ 1325(a)(5)(B)(ii) and 1129(b)(2)(A)(i)(II), the Court held that
“we think it likely that Congress intended bankruptcy judges and trustees to
follow essentially the same approach when choosing an appropriate interest
rate under any of these provisions.” Id. The only possible difference the Court
noted was that there might be an efficient market for financing loans to
Chapter 11 debtors, and that if such a market were available it would be
appropriate to consider what rate such an efficient market would dictate. Id. at
477 n.14. Here, however, all parties and experts agreed there is no market for
a loan equivalent to the plan’s treatment of Comerica’s secured debt, so that
possible exception to Till’s analysis in a chapter 11 case does not apply.

19
Doc. 22-2 at 12, n. 19.
20
Although on appeal Appellant argues that the Bankruptcy Court failed to consider and
21
give sufficient weight to Appellant’s expert’s testimony, this Court finds that the Bankruptcy
22
Court did consider that testimony as it related to the interest rate question. Further, the above
23
quoted language from the Bankruptcy Court’s Order makes clear that the Bankruptcy Court
24
knew it could consider an alternative market approach. Considering the law applied by the
25
Bankruptcy Court de novo, this Court finds that the Bankruptcy Court did not err in using
26
27
28

3

Till v. SCS Credit Corp., 541 U.S. 465 (2004).
- 11 -

1

the formula or Till approach to calculate the interest rate.

2

Finally, Appellant argues that even if the formula/Till approach was appropriate, the

3

Bankruptcy Court misapplied it. Doc. 21 at 16-17. Citing Till, Appellant argues that under

4

the formula approach, the bankruptcy court must consider the characteristics of the loan.

5

Doc. 21 at 17 (citing Till, 547 U.S. at 479). Appellant further notes that Till does not

6

elaborate on what constitutes the characteristics of the loan. Id. at 16. Appellant then argues

7

that the Bankruptcy Court here erred by failing to consider the loan-to-collateral-value as a

8

characteristic of the loan. Id. at 16-17.

9

Considering that Till did not mandate what constitutes the characteristics of the loan,

10

and giving substantial deference to the Bankruptcy Court’s determination of the interest rate,

11

this Court finds that the Bankruptcy Court did not err in failing to consider loan-to-collateral-

12

value as a characteristic of the loan. The Bankruptcy Court gave a detailed analysis of all the

13

facts it considered in applying the formula approach (Doc. 22-2 at 14-16) and this Court finds

14

that analysis correctly applied the Till considerations. Giving substantial deference to the

15

Bankruptcy Court’s calculation, this Court will not reverse the Bankruptcy Court’s

16

determination of the interest rate.

17

IV.

Conclusion

18

Based on the foregoing,

19

IT IS ORDERED that the motion to dismiss for mootness (Doc. 41) is granted as to

20

the new value contribution claim of error, and denied as to the § 1111(b) election and interest

21

rate claims of error.

22

IT IS FURTHER ORDERED that the motion to dismiss for lack of jurisdiction as

23

to the § 1111(b) election claim of error (Doc. 23) is granted.

24

///

25

///

26

///

27

///

28

///
- 12 -

1

IT IS FINALLY ORDERED that the decision of the Bankruptcy Court on the

2

calculation of the interest rate is affirmed. Pursuant to Federal Rule of Bankruptcy Procedure

3

8016(a), the Clerk of the Court shall enter a judgment consistent with this Order. The Court

4

reads 28 U.S.C. § 158(d) as requiring only a judgment, and not a mandate, from this Court.

5

However, if either party disagrees, that party may move for issuance of a mandate within 21

6

days.

7

DATED this 29th day of March, 2012.

8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
- 13 -