                         RECOMMENDED FOR FULL-TEXT PUBLICATION
                                    File Name: 18b0002p.06

                    BANKRUPTCY APPELLATE PANEL
                                 OF THE SIXTH CIRCUIT



 In re: TONY DIAN PERKINS,                             ┐
                                            Debtor.    │
                                                        >    Nos. 17-8001/8008
                                                       │
                                                       ┘

                     On Appeal from the United States Bankruptcy Court
                   for the Western District of Kentucky at Bowling Green.
                            No. 16-10383—Joan A. Lloyd, Judge.

                                Argued: November 14, 2017

                             Decided and Filed: March 13, 2018

     Before: DELK, HARRISON and HUMPHREY, Bankruptcy Appellate Panel Judges.

                                   _________________

                                        COUNSEL

ARGUED: Brian R. Pollock, STITES & HARBISON PLLC, Louisville, Kentucky, for
Appellant. Sandra D. Freeburger, DEITZ, SHIELDS & FREEBURGER, LLP, Henderson,
Kentucky, for Appellee. ON BRIEF: Brian R. Pollock, STITES & HARBISON PLLC,
Louisville, Kentucky, for Appellant.   Sandra D. Freeburger, DEITZ, SHIELDS &
FREEBURGER, LLP, Henderson, Kentucky, for Appellee.
                                   _________________

                                         OPINION
                                   _________________

      GUY R. HUMPHREY, Bankruptcy Appellate Panel Judge.               In these consolidated
appeals, SummitBridge National Investments V LLC (“SummitBridge”) appeals the Bankruptcy
Court for the Western District of Kentucky’s Memorandum-Opinion overruling Branch Banking
 Nos. 17-8001/8008                                In re Perkins                               Page 2


& Trust Co.’s (“BB&T”)1 objection to the confirmation of Tony Dian Perkins’ (“Perkins”)
Chapter 12 plan, and the subsequent order confirming that plan.

       Chapter 12 relief is only available to family farmers or family fisherman. 11 U.S.C.
§ 109(f). A family farmer is an “individual . . . engaged in a farming operation whose aggregate
debts do not exceed $4,153,150,”2 and who receives more than half of her gross income from
“such farming operation.” 11 U.S.C. § 101(18)(A). SummitBridge contends that the bankruptcy
court improperly found Perkins to be a family farmer, arguing that Perkins both exceeded the
“aggregate debt” limit and did not receive more than half of her income from her farming
operation. In the alternative, SummitBridge argues that even if Perkins qualified for Chapter 12
relief, Perkins’ plan should not have been confirmed because it was not feasible, provided
improper treatment to BB&T’s secured claim, and failed to meet the best interests of creditors
test. We reject SummitBridge’s arguments and affirm the bankruptcy court.

                                            ISSUES ON APPEAL

       1. How is “aggregate debt” calculated in determining a farmer’s eligibility for Chapter
              12 relief?

       2. In determining a farmer’s eligibility for Chapter 12 relief, can partnership income
              received by the individual debtor from the liquidation of separate farming
              partnerships and from an S corporation constitute income from “such farming
              operation” when the partnerships and S corporation are not being reorganized in the
              Chapter 12 case?

       3. Did the bankruptcy court err by confirming the Chapter 12 plan in finding the plan
              was feasible, met the best interest of creditors test, and provided appropriate treatment
              to the BB&T secured claim?




       1
        BB&T was the original appellant. However before briefing commenced, BB&T assigned its claims to
SummitBridge, who has been substituted as the appellant.
       2
           This statutory amount became effective April 1, 2016, per § 104(a).
 Nos. 17-8001/8008                        In re Perkins                                    Page 3


                                        JURISDICTION

       The Bankruptcy Appellate Panel of the Sixth Circuit has jurisdiction to decide this
appeal. The United States District Court for the Western District of Kentucky has authorized
appeals to the Panel, and neither party has timely elected to have this appeal heard by the district
court. 28 U.S.C. §§ 158(b)(6), (c)(1). A final order of the bankruptcy court may be appealed as
of right pursuant to 28 U.S.C. § 158(a)(1). For purposes of appeal, a final order “ends the
litigation on the merits and leaves nothing for the court to do but execute the judgment.”
Midland Asphalt Corp. v. United States, 489 U.S. 794, 798, 109 S. Ct. 1494, 1497 (1989)
(citations omitted). An order confirming a plan is a final order. Bullard v. Blue Hills Bank,
135 S. Ct. 1686, 1692 (2015) (citing 11 U.S.C. § 1327(a); United Student Aid Funds, Inc. v.
Espinosa, 559 U.S. 260, 275, 130 S. Ct. 1367 (2010)); Burden v. Seafort (In re Seafort),
437 B.R. 204, 206 (B.A.P. 6th Cir. 2010) (citing Gen. Elec. Credit Equities, Inc. v. Brice Rd.
Devs., LLC (In re Brice Rd. Devs., LLC), 392 B.R. 274, 278 (B.A.P. 6th Cir. 2008)).

                                   STANDARD OF REVIEW

       Conclusions of law are reviewed de novo. Mediofactoring v. McDermott (In re Connolly
N. Am., LLC), 802 F.3d 810, 814 (6th Cir. 2015) (citations omitted); Isaacs v. DBI-ASG
Coinvester Fund III, LLC (In re Isaacs), 569 B.R. 135, 139 (B.A.P. 6th Cir. 2017) (citation
omitted).   “Under a de novo standard of review, the reviewing court decides an issue
independently of, and without deference to, the trial court’s determination.” Matteson v. Bank of
Am., N.A. (In re Matteson), 535 B.R. 156, 159 (B.A.P. 6th Cir. 2015) (citation omitted).

       On the other hand, “[f]indings of fact . . . must not be set aside unless clearly erroneous,
and the reviewing court must give due regard to the trial court’s opportunity to judge the
witnesses’ credibility.” Fed. R. Civ. P. 52(a)(6); see Sutter v. U.S. Nat’l Bank (In re Sutter),
665 F.3d 722, 728 (6th Cir. 2012); In re Aubiel, 534 B.R. 300, 302 (B.A.P. 6th Cir. 2015)
(quoting Lester v. Storey (In re Lester), 141 B.R. 157, 160 (S.D. Ohio 1991)).

       “Factual findings are clearly erroneous only when the reviewing court ‘is left with the
definite and firm conviction that a mistake has been committed.’” United States v. Ray, 803 F.3d
244, 265 (6th Cir. 2015) (quoting United States v. Navarro-Camacho, 186 F.3d 701, 705 (6th
 Nos. 17-8001/8008                        In re Perkins                                    Page 4


Cir. 1999)). A finding of fact “is clearly erroneous when although there is evidence to support it,
the reviewing court on the entire evidence is left with the definite and firm conviction that a
mistake has been committed.” Anderson v. City of Bessemer City, 470 U.S. 564, 573, 105 S. Ct.
1504, 1511 (1985) (quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395, 68 S. Ct. 525,
542 (1948)). “Inconsistencies alone do not demonstrate clearly erroneous findings.” Q.W. ex rel.
M.W. v. Bd. of Educ. of Fayette Cty., Ky., 630 F. App’x 580, 583 (6th Cir. 2015). “Where there
are two permissible views of the evidence, the factfinder’s choice between them cannot be
clearly erroneous.” Anderson v. City of Bessemer City, 470 U.S. 564, 574, 105 S. Ct. 1504, 1511
(1985) (citations omitted). Findings of good faith and feasibility are factual determinations,
which we review for clear error. See In re Gentry, 807 F.3d 1222, 1225 (10th Cir. 2015)
(“Because a plan’s feasibility is a question of fact, we review for clear error. . . .”); Lexon Ins.
Co. v. Naser, 781 F.3d 335, 342 (6th Cir. 2015).

       For bankruptcy issues implicating both factual findings and legal holdings, reviewing
courts “must break it down into its constituent parts and apply the appropriate standard of review
for each part.”   Bank of Montreal v. Official Comm. of Unsecured Creditors (In re Am.
HomePatient, Inc.), 420 F.3d 559, 563 (6th Cir. 2005), reh’g. denied (citations and internal
quotation marks omitted). “A mixed question asks whether ‘the historical facts . . . satisfy the
statutory standard, or to put it another way, whether the rule of law as applied to the established
facts is or is not violated.’” U.S. Bank Nat. Ass’n ex rel. CWCaptial Asset Mgmt. LLC v. Vill. at
Lakeridge, LLC, No. 15-1509, 2018 WL 1143822, at *5 (U.S. Mar. 5, 2018) (quoting Pullman–
Standard v. Swint, 456 U.S. 273, 289, n.19, 102 S.Ct. 1781 (1982)). “When an ‘issue falls
somewhere between a pristine legal standard and a simple historical fact,’ the standard of review
often reflects which ‘judicial actor is better positioned’ to make the decision.” Id. (quoting
Miller v. Fenton, 474 U.S. 104, 114, 106 S.Ct. 445 (1985)). “[T]he standard of review for a
mixed question all depends—on whether answering it entails primarily legal or factual work.”
Id.

                                             FACTS

       Perkins operates a farm on 200 acres of prime land in southern Kentucky first purchased
by her grandparents in 1948. She has played an active role in farming this land since 1970, when
 Nos. 17-8001/8008                                   In re Perkins                                              Page 5


she married and the couple began farming the land in partnership with her parents. In the
intervening years, the farming operation expanded to cultivate approximately 9,500 acres in
various partnerships with their son. Perkins’ husband retired from farming operations after
becoming seriously ill in 2008. Perkins and her husband lived on the farm until their home was
destroyed by a tornado in 2013.

        Perkins encountered financial trouble in 2014 when high input prices and low crop prices
combined to force the partnerships to begin talks with BB&T concerning the downsizing of their
operation.       These circumstances eventually led to the partnerships’ filing of Chapter 11
bankruptcy cases.3 In 2015, in the midst of this restructuring, Perkins retired from her job as a
teacher to run the farm and care for her husband. The Chapter 11 bankruptcies were dismissed
after liquidating substantially all of the partnerships’ assets and making over four million dollars
of payments to BB&T.4

        On April 25, 2016 Perkins filed for Chapter 12 bankruptcy protection,5 listing a total of
$3,513,803.72 of secured and unsecured debts in Schedule E/F.6                              As of the date of the
confirmation hearing, proofs of claim filed by creditors totaled $4,012,908.79 for debts owed on
the petition date. In the preceding tax year, Perkins received $279,000 of gross income from her
own farm, $764,472 from her farm partnerships with her son,7 $161,571 of capital gains from the
sale of farm equipment, and $132,360 from wages, a pension, and social security.

        Perkins filed her Chapter 12 plan, and BB&T objected to confirmation of the plan, as
later amended. The bankruptcy court held the confirmation hearing on October 19, 2016, with
BB&T being the only party contesting confirmation of the plan.                              Perkins’ amended plan

        3
          Both partnership cases were filed in the Bankruptcy Court for the Western District of Kentucky on April
16, 2015, In re Perkins and Perkins Farms, Case No. 15-10383, and In re Rolling Ridge Farms, Case No. 15-10384.
        4
         In re Perkins and Perkins Farms was dismissed January 12, 2016, and In re Rolling Ridge Farms was
dismissed on May 10, 2016.
        5
            Debtor’s son filed a separate Chapter 12 case to address his liability for the partnership debts.
        6
         Perkins initially scheduled $3,476,854.01 of debts. However, she later amended Schedule F to include
$36,949.71 owed to the Internal Revenue Service.
        7
         This income includes $100,234 from Whitlock Farms Inc., an S corporation owned by Perkins and her
son, whose sole source of income is its one third partnership share in Perkins and Perkins Farms.
 Nos. 17-8001/8008                       In re Perkins                                    Page 6


projected gross income of $784,137 from corn and a double crop of wheat and soy as well as rent
from leasing land, a drying barn, and other outbuildings to her son’s tobacco growing operation.
Perkins’ farm income is supplemented by $84,000 of retirement income.            After deducting
operating and living expenses, Perkins’ budget would pay $184,000 on secured debts each year
leaving $18,950 of disposable income to be paid to unsecured creditors each year over the plan’s
five-year life.   The liquidation analysis accompanying the plan projected that a Chapter 7
liquidation would produce no payments to general unsecured creditors. The amended plan
proposed to pay BB&T’s claim in annual instalments over 20 years at 4.5% interest, with the
first installment due January 2017.

        Perkins called two witnesses at the confirmation hearing: her son, who testified as the
farm manager regarding feasibility of the plan; and herself, testifying as to her debts and income
pertaining to eligibility for Chapter 12 relief. BB&T called no witnesses. The bankruptcy court
took the matter under advisement and on December 22, 2016, entered a Memorandum Opinion
overruling BB&T’s objection and ordering Perkins to tender an order confirming her plan. The
confirmation order was entered on February 24, 2017.

                                         DISCUSSION

        SummitBridge has asserted seven assignments of error in its appeal, which the Panel will
address in two groups—first, the arguments that Perkins is ineligible for Chapter 12 bankruptcy
relief and, second, the arguments that the plan should not have been confirmed due to lack of
feasibility, improper treatment of BB&T’s claims, and failure to meet the best interest of
creditors test.

I.      Perkins Meets the Code’s Definition of Family Farmer and Therefore Is Eligible for
        Chapter 12 Bankruptcy Relief

        Chapter 12 of the Bankruptcy Code was enacted to “give family farmers facing
bankruptcy a fighting chance to reorganize their debts and keep their land.” H.R. Conf. Rep. No.
99-958, at 48 (1986), reprinted in 1986 U.S.C.C.A.N. 5246, 5249. Prior to the enactment of
Chapter 12, family farmers could proceed under either Chapter 11 or Chapter 13 of the Code.
Unfortunately, most family farmers were burdened with too much debt to qualify for Chapter 13
 Nos. 17-8001/8008                            In re Perkins                                         Page 7


protection, and Chapter 11 was “needlessly complicated, unduly time-consuming, inordinately
expensive and, in too many cases, unworkable.” Id. To avoid Chapter 11’s needless complexity
and expense, Congress “closely modeled [Chapter 12] after existing Chapter 13,” while relaxing
the debt limits and filing deadlines that had left farmers ineligible for Chapter 13. Id. See also
In re Shannon, 100 B.R. 913, 934 (S.D. Ohio 1989).

        Section 109 of Title 118 defines who may be a debtor under the various chapters of the
Code, including Chapter 12: “[o]nly a family farmer or family fisherman with regular annual
income may be a debtor under chapter 12 of this title.” 11 U.S.C. § 109(f). Section 101(18)(A)
defines a “family farmer” as an:

        individual or individual and spouse engaged in a farming operation whose
        aggregate debts do not exceed $4,153,150 and not less than 50 percent of whose
        aggregate noncontingent, liquidated debts (excluding a debt for the principal
        residence of such individual or such individual and spouse unless such debt arises
        out of a farming operation), on the date the case is filed, arise out of a farming
        operation owned or operated by such individual or such individual and spouse,
        and such individual or such individual and spouse receive from such farming
        operation more than 50 percent of such individual’s or such individual and
        spouse’s gross income for—
            (i) the taxable year preceding; or
            (ii) each of the 2d and 3d taxable years preceding the taxable year in
            which the case concerning such individual or such individual and spouse
            was filed[.]

Thus, § 101(18)(A) provides three elements which must be met for a particular time period in
order for an individual to be considered a family farmer: first, the individual’s “aggregate debts”
(the “aggregate debt limit”) may not exceed $4,153,150; second, more than 50% of the
individual’s aggregate noncontingent, liquidated debts (excluding a debt for the principal
residence unless such debt arises out of a farming operation), must be farm debt; and third, more
than 50% of the individual’s income must be farm income. SummitBridge contends that the
bankruptcy court erred in finding that Perkins met the first and third requirements.



        8
         Unless otherwise indicated, all chapter and section references are to the Bankruptcy Code, 11 U.S.C.
§§ 101–1532.
 Nos. 17-8001/8008                        In re Perkins                                    Page 8


       A.       The Bankruptcy Court Did Not Err in Determining that
                Perkins Did Not Exceed the Aggregate Debt Limit for Family
                Farmers

       Neither the Sixth Circuit nor the Bankruptcy Appellate Panel has addressed how to
compute the aggregate debt limit under Chapter 12. The bankruptcy court applied the standard
used in In re Labig, 74 B.R. 507 (Bankr. S.D. Ohio 1987). While recognizing that the Sixth
Circuit articulated a standard to determine Chapter 13 eligibility in Comprehensive Accounting
Corp. v. Pearson (In re Pearson), 773 F.2d 751 (6th Cir. 1985), the Labig court created a
different standard for Chapter 12:

       While time is very important in chapter 12, the temporal constraints on the
       bankruptcy court are not as severe as in chapter 13. Therefore, this court believes
       sufficient time exists to conduct inquiries (upon good faith objections of
       interested parties) into the eligibility requirements of chapter 12.

              At this juncture in the development of chapter 12 case law, this court will
       view the debtors’ schedules as creating a rebuttable presumption regarding the
       amount of debt owed by the debtors.

Labig at 509.    In applying the Labig standard, the bankruptcy court took evidence at the
confirmation hearing concerning Perkins’ debts on the petition date, found Perkins filed the
schedules in good faith, and rejected BB&T’s argument that the court should consider both the
scheduled claims, even if such creditors did not file proofs of claim, and the additional claims for
which proofs of claim were filed:

               BB&T argues the Debtor’s substantial tax liability arising from the
       liquidation of her other partnerships should be taken into consideration by the
       Court. Debtor failed to schedule the tax debt but the IRS filed claims and the
       Debtor’s Amended Plan included said debt. The Amended Plan of the Debtor
       states Debtor owes $113,071 to the IRS and proposes to pay it in semi-annual
       installments with interest at the government rate. Even including the IRS liability
       of $113,071 as Debtor’s stated tax liability, Debtor is still under the eligibility
       debt limit for Chapter 12 if the Court uses the scheduled debt only. Yet, if the
       Court were to use BB&T’s analysis of including the amounts of the Proofs of
       Claim, as well as the $640,408 of unsecured debts for which no Proofs of Claim
       were filed, Debtor is over the limit.

              The Court finds it inequitable to use the amounts on the Proofs of Claim,
       as well as the scheduled amounts on which no Proofs of Claim were filed. In
       Chapter 12 cases, an unsecured creditor must file a timely proof of claim in order
 Nos. 17-8001/8008                                In re Perkins                                              Page 9


         to participate in the distributions. Congress could not have intended the debt limit
         determination to include the tortured analysis put forth by BB&T. Including
         debts scheduled but not allowed, to claims filed to determine eligibility, amounts
         to “cherry picking” to the disadvantage of the Debtor. Absent evidence of bad
         faith and clear mandatory precedent directing otherwise, the Court determines it
         has the discretion to use the Petition date to determine aggregate debt limit
         eligibility.

In re Perkins, 563 B.R. 229, 236 (Bankr. W.D. Ky. 2016) (citations omitted).

         SummitBridge argues that the bankruptcy court erred in its approach to determining
Perkins’ aggregate debt for eligibility purposes. It argues that we should apply the standard
espoused by a bankruptcy court in the 7th Circuit, counting the amount of the claims filed
against the debtor, in addition to the scheduled claims, to determine if they exceed the aggregate
debt limit. See In re Clark, 550 B.R. 429, 433 (Bankr. N.D. Ind. 2016). In holding that a court
may go beyond debtors’ scheduled debts to determine eligibility for Chapter 12, Clark relied on
In re Arcella-Coffman, another bankruptcy case within the 7th Circuit that did not follow
Pearson. Id. at 432 (citing In re Arcella-Coffman, 318 B.R. 463, 474 (Bankr. N.D. Ind. 2004)
(“This Court will not adopt the Pearson standard.”)).9 Thus, SummitBridge asserts that to
determine Chapter 12 eligibility, bankruptcy courts should reconcile the claims scheduled by the
debtor with the claims filed by creditors, adding any filed proofs of claim which were not
scheduled to the scheduled claims, while counting any claims scheduled by the debtor for which
no proofs of claim were filed. This method would result in the highest possible number for
aggregate debts of the debtor. In many cases, it would also significantly add to the time and
expense involved in determining a debtor’s eligibility by requiring the claims analysis process to
be completed before eligibility could be finally determined.10


         9
           Indeed, as explained later in this section, Arcella-Coffman’s holding seems to have been made based upon
a mischaracterization of Pearson’s holding. Moreover, this holding may not even be the law of the 7th Circuit. See
In re Lybrook, 951 F.2d 136, 139 (7th Cir. 1991) (Posner, J.) (citing Pearson, 773 F.2d at 757–758) (“Jurisdiction is
determined by good-faith allegations rather than by what the evidence eventually shows.”) (superseded by statute on
other grounds); In re Turner, 574 F.3d 349, 355 (7th Cir. 2009) (Posner, J.) (citing Pearson’s holding with approval
in dicta).
         10
            The claims allowance process entails first the scheduling of assets and debts by the debtor. Fed. R.
Bankr. P. 1007(b)(1)(A). Creditors may file proofs of claim evidencing their debts. 11 U.S.C. § 501. The deadline
in this case was 90 days following the § 341 meeting of creditors. Fed. R. Bankr. P. 3002(c) (2008) (amended 2017)
(The current bar date, with limited exceptions not relevant here, is 70 days after the petition date. Id. (eff. Dec. 1,
 Nos. 17-8001/8008                                 In re Perkins                                          Page 10


         In Pearson, the Sixth Circuit considered “the nature and scope of our judicial inquiry to
determine Chapter 13 eligibility,” 773 F.3d at 756, and held that “Chapter 13 eligibility should
normally be determined by the debtor’s schedules checking only to see if the schedules were
made in good faith.” Id. at 757. Thus, the Court of Appeals provided for a simple, economical,
and efficient approach to determining eligibility for Chapter 13 bankruptcy cases. Given the
similar eligibility requirements for Chapter 13 debtors and family farmers provided by § 109(e)
and (f), respectively,11 and the similar policy concerns arising in Chapter 13 and Chapter 12
cases, Pearson’s holding is just as relevant for Chapter 12. So as with Chapter 13 cases,
eligibility for Chapter 12 should normally be determined by the debtor’s schedules, checking
only to see if the schedules were made in good faith.

         Pearson analyzed § 109(e)’s eligibility determination for Chapter 13 eligibility, noting
that it was based on the debtor’s debts as of the petition date and “states nothing about
computing eligibility after a hearing on the merits of the claims.” 773 F.2d at 756. The court
explained § 109(e)’s debt limits as Congress’ drawing a sharp, but arbitrary line indicating a
preference for efficiency without expecting “absolute certainty.” Id. at 757. Based on these
statutory hallmarks, Pearson analogized § 109(e)’s eligibility requirements to 28 U.S.C. § 1332’s
amount in controversy requirement for diversity jurisdiction. Id. In both eligibility
determinations, “Congress intended to limit the class of persons who might avail themselves of
access to the federal forum” without allowing threshold eligibility determinations to “dominate
the proceedings themselves nor to delay them unduly.” Id. The court reasoned that an efficient
eligibility determination is more important in a Chapter 13 context because time is of the
essence, and “resources of the debtor are almost by definition limited” and therefore “an
extensive inquiry in each case would do much toward defeating the very object of the statute.”


2017). The § 341 meeting was scheduled 46 days after the petition date. Parties in interest may then object to filed
proofs of claim. § 502; Fed. R. Bankr. P. 3007. Finally, a bankruptcy court may make a determination of validity of
the claims for which objections have been filed. § 502. In addition, a party in interest may move for reconsideration
of an order allowing or disallowing a claim at any time. Fed. R. Bankr. P. 3008. When an objection to a claim is
filed, this process results in a contested matter with discovery being available to the parties in interest throughout
this process. See Fed. R. Bankr. P. 9014; Teta v. Chow (In re TWL Corp.), 712 F.3d 886, 892 (5th Cir. 2013);
Gentry v. Siegel, 668 F.3d 83, 92 (4th Cir. 2012). Needless to say, the claims allowance process can involve a
lengthy, expensive process.
         11
              And by implication § 101(18) and (19), defining “family farmer.”
 Nos. 17-8001/8008                             In re Perkins                                         Page 11


Id. Pearson held that because Chapter 13 eligibility under § 109(e) was subject to the same
policy concerns as 28 U.S.C. § 1332, “the same basic approach” used to determine the amount in
controversy would be “both workable and fair” to determine Chapter 13 eligibility. Id.

        The family farmer aggregate debt limit bears the same statutory hallmarks that make
§ 109(e) analogous to the amount in controversy determination: (1) it is based on the petition
date, In re Quintana, 107 B.R. 234, 236 n.2 (B.A.P. 9th Cir. 1989), aff’d, 915 F.2d 513 (9th Cir.
1990) (citing In re Carpenter, 79 B.R. 316, 320 (Bankr. S.D. Ohio 1987)); In re Labig, 74 B.R.
507, 509 (Bankr. S.D. Ohio 1987), (2) it “states nothing about computing eligibility after a
hearing on the merits of the claims,” Pearson, 773 F.2d at 756, and (3) it sets a sharp, but
arbitrary line for eligibility.12

        Pearson cited limited debtor resources and short deadlines for Chapter 13 filings as
important policy considerations requiring efficient Chapter 13 eligibility determinations. These
policy concerns are as relevant for Chapter 12 debtors. The resources of Chapter 12 debtors are
just as limited as those of Chapter 13 debtors—every dollar debtors spend litigating eligibility is
a dollar that can no longer be distributed to unsecured creditors. Under § 506(b), over-secured
creditors may be entitled to reasonable attorney fees to collect on their claim, further reducing
the amount available to unsecured creditors. See, e.g., Mfgs. Natl. Bank v. Auto Specialties Mfg.
Co. (In re Auto Specialties Mfg. Co.), 18 F.3d 358, 360 (6th Cir. 1994) (citation omitted).

        Federal Rule of Bankruptcy Procedure 3015 requires a Chapter 13 debtor to file a plan
within 14 days of the petition date, and § 1326 requires the debtors to commence plan payments
30 days from the earlier of the order of relief or the filing of the Chapter 13 plan. Fed. R. Bankr.
P. 3015; 11 U.S.C. § 1326(a). In contrast, § 1221 requires Chapter 12 debtors to file their plan
within 90 days after the order for relief is entered, and § 1226 contemplates, but does not require,
preconfirmation plan payments. See Stahn v. Haeckel, 920 F.2d 555, 557–58 (8th Cir. 1990)
(holding that because § 1226 contains procedures for dealing with preconfirmation payments, a

        12
           The dollar amounts set in §§ 109(e) and 101(18) are both subject to inflation adjustments every three
years under § 104. The unadjusted debt limits for Chapter 13 are $250,000 for unsecured debts, and $750,000 for
secured debts. Bankruptcy Reform Act of 1994, Pub. L. No. 103-394, § 108, 108 Stat. 4106, 4111–12. The
unadjusted family farmer debt limit is $1,500,000. Bankruptcy Judges, United States Trustees, and Family Farmer
Bankruptcy Act of 1986, PL 99–554, § 251 100 Stat. 3088, 3104.
 Nos. 17-8001/8008                                In re Perkins                                          Page 12


bankruptcy court may require a Chapter 12 debtor to make them). Despite being longer, the
timeframes involved in Chapter 12 bankruptcy are more of a concern.

        First, the time at which a debtor must commence payments is not particularly relevant.
While § 1326(a)(1) requires Chapter 13 debtors to make pre-confirmation payments,
§ 1326(a)(2) requires those funds to be returned to the debtor in the event that the plan is not
confirmed.13 Second, though Chapter 12 debtors have additional time to file their plan, their
individually-tailored plans are more complicated than the form plans required under Chapter
13.14 While plan payments can be returned, the resources spent preparing a plan cannot. Third,
while a court may continue hearings and extend deadlines and the automatic stay buys time with
creditors, there are no procedural tools to stay the changing of the seasons or extend the deadline
to sow fields. In fact, in tailoring Chapter 13 to the needs of farmers, Congress recognized both
the extra time that family farmers needed as well as the need to keep the case moving quickly.
See 132 Cong. Rec. (bound) 28,593 (Oct. 3, 1986) (Statement of Sen Grassley) (“the exclusive
period has been reduced to 90 days in the conference approved bill. . . . This will be a powerful
incentive to get these cases moving, rather than languishing in the courts.”).

        Finally, a look at the legislative history of Chapter 12 also suggests the same rule should
govern eligibility under § 109(e) and (f). Chapter 12 was closely modeled on Chapter 13, and
while not identical, their similarities are extensive. Chapter 12 and Chapter 13 are unique among
the types of petitions in that they are the only chapters to have a debt cap as an eligibility
requirement. Indeed, Chapter 12’s debt cap was greatly raised so that farmers, who tend to carry
far more debt than most individuals, could more easily avail themselves of Chapter 13-like
protections and avoid the complexity of Chapter 11. Because of the similarity and uniqueness of
§ 109(e) and (f) and congressional intent to create a more streamlined chapter of bankruptcy for
farmers, it would be inappropriate to apply a different method to determine eligibility for the two
chapters. For all these reasons, we hold that the holding in Pearson should be extended to
determinations of eligibility for Chapter 12 cases within the Sixth Circuit.

        13
             Chapter 12 also provides for the return of plan payments for unconfirmed plans. 11 U.S.C. § 1226.
        14
           Bankruptcy Rule 3015(c) requires the use of Official Bankruptcy Form B113 unless a Local Form exists
that complies with Bankruptcy Rule 3015.1. There is no equivalent form for a Chapter 12 plan.
 Nos. 17-8001/8008                              In re Perkins                                          Page 13


        Though Chapter 12 precedent is limited, we are not the first court to extend Pearson to
Chapter 12 eligibility determinations.           The 9th Circuit first adopted Pearson’s holding for
Chapter 13 cases in Scovis v. Henrichsen (In re Scovis), 249 F.3d 975, 982 (9th Cir. 2001)
(“We now simply and explicitly state the rule for determining Chapter 13 eligibility under
§ 109(e) to be that eligibility should normally be determined by the debtor’s originally filed
schedules, checking only to see if the schedules were made in good faith.”), and subsequently
extended their reasoning to Chapter 12 cases in Davis v. U.S. Bank, N.A. (In re Davis). 778 F.3d
809, 814 (9th Cir. 2015), cert. denied, 136 S. Ct. 319 (2015) (“As in Scovis, we rely on the
schedules.”). Some decisions in the 9th Circuit and elsewhere have mischaracterized Pearson’s
holding—“[c]hapter 13 eligibility should normally be determined by the debtor’s schedules
checking only to see if the schedules were made in good faith.” 773 F.2d at 757—as exclusively
limiting courts’ eligibility determination to the schedules and the good faith of debtors.15 These
decisions fail to account for the word “normally” in that holding. Pearson held:

        [I]f, from the face of the pleadings, it is apparent, to a legal certainty, that the
        plaintiff cannot recover the amount claimed, or if, from the proofs, the court is
        satisfied to a like certainty that the plaintiff never was entitled to recover that
        amount, and that his claim was therefore colorable for the purpose of conferring
        jurisdiction, the suit will be dismissed.

Id. (citing St. Paul Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288–90, 58 S. Ct. 586, 590–91
(1938)). Thus, Pearson identified two routes by which a debtor whose scheduled debts are
below the debt limit, nonetheless, may be found ineligible. First, if from the face of the
schedules it is apparent to a legal certainty that the debtor is beyond the debt limit, and second, if
evidence shows that the amounts were inaccurately scheduled in bad faith for the purpose of
making the debtor eligible for Chapter 13.

        At oral argument, SummitBridge was questioned why eligibility should not be
determined early in the case, before parties have expended significant resources pursuing
bankruptcy protection.        SummitBridge argued for the first time that § 109(f)’s eligibility
        15
           See, e.g., Slack v. Wilshire Ins. Co. (In re Slack), 187 F.3d 1070, 1073–74 (9th Cir. 1999), as amended
(Sept. 9, 1999) (applying Pearson’s schedule-only approach while allowing courts to second guess debtor’s debt
calculations if the correct amount of debt is “readily determinable.”); In re Arcella-Coffman, 318 B.R. 463, 474
(Bankr. N.D. Ind. 2004) (mis-interpreting Pearson as holding “the sole focus of the calculation is the debtor’s
schedules, so long as the schedules were filed in good faith.”).
 Nos. 17-8001/8008                             In re Perkins                                         Page 14


determination is jurisdictional in nature and therefore it was appropriate and incumbent upon the
bankruptcy court to determine Perkins’s eligibility for Chapter 12 relief at any stage of the
bankruptcy case, including after all proofs of claim were filed and the bankruptcy court
completed the claims allowance process. We disagree.

        The Sixth Circuit has already indicated that § 109(e)’s eligibility requirements are not
jurisdictional in nature. In Glance v. Carroll (In re Glance), 487 F.3d 317, 321 (6th Cir. 2007),
the Sixth Circuit cited Pearson for the proposition that “the eligibility requirements of § 109(e)
create a gateway into the bankruptcy process, not an ongoing limitation on the jurisdiction of the
bankruptcy courts.” Indeed, Pearson’s reasoning was based on the emphatically jurisdictional
amount in controversy requirement for diversity jurisdiction set by 28 U.S.C. § 1332, which
absent a showing of bad faith, is determined at the outset of a case from the allegations of the
plaintiff. As we explained earlier in this section, § 109(f) requirements are based on and similar
to § 109(e), and we see no reason why it should be treated any differently in regards to its
jurisdictional implications.

        Having decided our method of determining Perkins’ aggregate debt, we must now make a
careful determination of what “aggregate debt” means. SummitBridge asserts, without support,
that aggregate debt means the aggregate of the face value of all filed proofs of claim and
scheduled debts for which no proofs of claim were filed. Nothing in the text of § 101(18)(A)
suggests such a broad reading, and neither SummitBridge nor the Panel have been able to locate
any authority applying such a broad meaning to aggregate debt.16 And further, this goes against
our holding that Pearson’s schedules-only eligibility determination applies in Chapter 12. So, to
begin our interpretation of the Code, we shall start with the Code itself.

        Neither “aggregate” nor “aggregate debt” are defined by the Code. “When a statute does
not define a term, we typically ‘give the phrase its ordinary meaning.’” FCC v. AT & T Inc.,
562 U.S. 397, 403, 131 S. Ct. 1177, 1182 (2011) (quoting Johnson v. United States, 559 U.S.

        16
           SummitBridge cites In re Clark, 550 B.R. 429, 432 (Bankr. N.D. Ind. 2016), which held that a debtor
was not a family farmer when the total of the proof of claims filed exceed the debt limit. However, Clark cannot
support SummitBridge’s definition of aggregate debt because it neither attempted to define the term nor did it
depend on aggregating both scheduled debts and proofs of claims. Moreover, as previously explained, Clark
depended on 7th Circuit precedent which explicitly contradicts Pearson, so we are unpersuaded by it.
 Nos. 17-8001/8008                                  In re Perkins                                               Page 15


133, 138, 130 S. Ct. 1265, 1270 (2010)). The adjective form of aggregate is defined as “taking
all units as a whole: formed by adding together two or more amounts” Webster’s Third New
International Dictionary, Unabridged (2017).                   But what “two or more amounts” are to be
aggregated?

         One’s first assumption must be that the term “aggregate debt” refers to the unqualified
aggregation of all the debtor’s debts.                    However, the unqualified term “debt” already
accomplishes that meaning.17 Aggregate could merely be a superfluous modifier, intensifying the
implied inclusiveness of debt, but that would lead to an oxymoron since § 101(18) also refers to
the rather less inclusive “aggregate noncontingent, liquidated debts.” Another possibility is that
the debt limit is aggregating the debts of the “individual and spouse,” filing jointly. However,
§ 101(18)(B), which provides the requirements for a corporation to be a family farmer, does not
provide a path for multiple entities to file jointly, but does contain the phrase “aggregate debts.”

         The better reading is that the debt limit aggregates the debtor’s non-farm and farm debts.
Without this reading, the aggregate debt limit of § 101(18)—“individual . . . engaged in a
farming operation whose aggregate debts do not exceed $4,153,150”—is ambiguous as to
whether it applies to the individual or just the farming operation in which the individual engages.
Moreover, it is necessary to specify aggregate debts in the aggregate debt limit since the 50%
farm debt requirement disaggregates farm debt in order to compare farm debt with non-farm
debt.




         17
            While the Code does not define “aggregate” or “aggregate debt,” it defines “debt” as a “liability on a
claim,” § 101(12), and “claim” as a “right to payment, whether or not such right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or
right to an equitable remedy . . . .” 11 U.S.C. §101(5). The Ninth Circuit B.A.P. emphasized the broad reach of the
word “claim” when it held that “[t]he legislative history to Section 101[(5)] emphasizes the broad definition of
‘claim’ and states that ‘[b]y this broad definition . . . the bill contemplates that all legal obligations of the debtor, no
matter how remote or contingent, will be able to be dealt with in the bankruptcy case.’” Quintana v. IRS (In re
Quintana), 107 B.R. 234, 237 (B.A.P. 9th Cir. 1989), aff’d, 915 F.2d 513 (9th Cir. 1990) (quoting H.R. Rep. No.
595, 95th Cong., 1st Sess. 309 (1977); S. Rep. No. 989, 95th Cong., 2d Sess. 21–22 (1978), U.S. Code Cong.
& Admin. News 1978, pp. 5787, 5807–08, 6266.) (first alteration not in the original).
 Nos. 17-8001/8008                                In re Perkins                                            Page 16


         Next, when the Code aggregates debts for other provisions, it enumerates which debts it
aggregates;18 § 101(18) is no different. It lists the debts to be aggregated as those arising from
the individual and those arising from the farming operation the individual operates. Finally, this
meaning works equally well in the other contexts in which it is utilized by the Code.19 Therefore
we hold in the context of individuals who are family farmers that “aggregate debt” refers to the
aggregate of their farm and non-farm debts.

         Looking at the merits, the bankruptcy court reviewed Perkins’ schedules and testimony
offered by Perkins and found the schedules to have been made in good faith and in an amount
below the aggregate debt limit. BB&T argued that the filed proofs of claim showed that the
schedules were not completed in good faith. The bankruptcy court disagreed, as it had the
discretion to do. BB&T also argued that Perkins failed to schedule the $113,071 tax bill owed to
the IRS as a result of liquidating the assets of her partnerships. Even if the total amount of this
unscheduled tax bill was added to Perkins’s schedules, it would not put her over the aggregate
debt limit. Further, it does not appear that this debt should be counted towards the debt limit
calculation since it does not meet either of the exceptions that Pearson identified. From the face
of the schedules, it was not a “legal certainty” that the debt limit had been exceeded. And after
taking evidence, Perkins’ failure to schedule the full amount of the IRS claim did not equate with
bad faith since there was no “legal certainty” that Perkins owed the entire $113,071 amount to
the IRS. Pearson, 773 F.2d at 757 (citation omitted). Indeed, the IRS itself has demonstrated a
lack of certainty as to the amount of the claim by amending the amount of the claim several
times since its first proof of claim. Applying Pearson to these facts and the findings of the
bankruptcy court, we hold that the bankruptcy court did not err in finding that Perkins did not
exceed the aggregate debt limit for Chapter 12 eligibility.




         18
            See, e.g., § 109(e) (“an individual with regular income and such individual’s spouse . . . that owe, on the
date of the filing of the petition, noncontingent, liquidated, unsecured debts that aggregate less than $394,725”); and
§ 303 (“by one or more of such holders that hold in the aggregate at least $15,775 of such claims”).
         19
           Since it is unlikely that Congress would have intended “aggregate debt” to mean something different for
family fishermen than it does for family farmers, we also note that this reading clarifies the language of § 101(19A),
though we make no holding as to that section.
 Nos. 17-8001/8008                        In re Perkins                                Page 17


       B.      The Bankruptcy Court Did Not Err in Determining that
               Perkins Met the Farm Income Requirement for Family
               Farmers

       Perkins’ eligibility rests on her farm income compared with her non-farm income for
2015. In order to be eligible as a family farmer under § 101(18), more than 50% of her total
income for the particular time period must be from “such farming operation.” Her 2015 tax
return showed that she received $279,000 in farm income and $132,360 in non-farm income
from wages, pension, and social security. In addition, she earned $764,472 from her farm
partnerships and S corporation and $161,571 of capital gains from the sale of farm equipment.
Perkins’ gross income from the farm partnerships and S corporation makes up a large enough
portion of her potential income from farming operations that the income she received from
capital gains will not affect the outcome of this determination. SummitBridge argues that her
income from the partnerships and the S corporation should not be considered for eligibility
purposes because it was not generated from “such farming operation.” It contends that “such
farming operation” must refer only to the debtor’s farming operation conducted under the
Chapter 12 plan and therefore income from winding down Perkins’ partnerships and
S corporation should not be included as income from “such farming operation.” We disagree.

       At the outset, SummitBridge’s construction would be impossible to administer. The
Code defines “farming operation” as including “farming, tillage of the soil, dairy farming,
ranching, production or raising of crops, poultry, or livestock, and production of poultry or
livestock products in an unmanufactured state.” 11 U.S.C. § 101(21). This is a non-exhaustive
list intended to be read broadly. See In re Fogle, 87 B.R. 493, 494 (Bankr. N.D. Ohio 1988).
The term “farming operation” is entirely defined in terms of types of activities performed, and
noticeably absent from the definition is any way of delineating one farming operation from
another. The definition of “family farmer” provides no more guidance. Section 101(18)(A) uses
the term farming operation four times but only the last includes a qualification:

       individual or individual and spouse engaged in a farming operation whose
       aggregate debts do not exceed $4,153,150 and not less than 50 percent of whose
       aggregate noncontingent, liquidated debts (excluding a debt for the principal
       residence of such individual or such individual and spouse unless such debt arises
       out of a farming operation), on the date the case is filed, arise out of a farming
 Nos. 17-8001/8008                        In re Perkins                                    Page 18


       operation owned or operated by such individual or such individual and spouse,
       and such individual or such individual and spouse receive from such farming
       operation more than 50 percent of such individual’s or such individual and
       spouse’s gross income for. . . .

11 U.S.C. § 101(18)(A) (emphasis added). To the extent that “such farming operation” refers to
any particular farming operation, it must relate to the one in the preceding clause, i.e., “a farming
operation owned or operated by such individual.” Given the term’s silence on ownership, and
§ 101(18)’s mostly unqualified use of the term farming operation, we must conclude that the
only particular farming operation which could possibly be the subject of an individual family
farmer bankruptcy is one which is either owned or operated by the debtor.

       This makes sense given Congress’s intent to define “family farmer” and “farming
operation” so that “only family farmers-not tax shelters or large corporate entities-will benefit.”
132 Cong. Rec. (bound) 28,593 (statement of Sen. Grassley). Even if the statute did provide
some way to delineate one of a debtor’s farming operations from another, doing so would
frustrate the purpose of the limitation. The ability of a debtor to take just one farming operation
into bankruptcy would allow industrial scale farms to cabin off one section at a time allowing
them to meet Chapter 12’s demanding requirements piece by piece. Further, it would seem that
defining farming operation as a verb was intended to ensure that only individuals actually
engaged in farming, and not passive investors, could avail themselves of Chapter 12 protection.

       In re Hemann involves very similar facts. The debtor farmed in partnership with his
brother for many years, then decided to downsize, liquidating the partnership and continuing on a
smaller scale on his own. No. 11-00261, 2013 WL 1385404, at *1–2 (Bankr. N.D. Iowa Apr. 3,
2013). The IRS argued that only income from the farming operation that was being reorganized
could be considered for Chapter 12 eligibility purposes, not the income from liquidation of
preceding farm operations. Id. at *4. However, the bankruptcy court held that:

       The Knudsen definition of farming operation is broad, encompassing the whole of
       the Debtor’s farming enterprise. Since the Debtor never stopped farming, but
       rather merely changed the scope of his operation and the form of entity under
       which he chose to operate, the Debtor has only one farming operation. Even if
       the Debtor had owned multiple entities, for instance one which raised livestock
       and the other which raised crops, he would still have only one farming operation.
 Nos. 17-8001/8008                         In re Perkins                                    Page 19


Id. at *7 (citing Knudsen v. I.R.S., 581 F.3d 696, 714 (8th Cir. 2009), abrogated on other
grounds by Hall v. United States, 566 U.S. 506, 132 S. Ct. 1882 (2012)).

       SummitBridge argues that there is no evidence that Perkins was anything more than a
silent investor in the farming partnerships with her son. This ignores the findings made by the
court that Perkins has been involved in the farm since 1970, and also ignores Perkins’ and her
son’s testimony. BB&T did not offer any evidence to rebut this testimony. We therefore find no
clear error in the bankruptcy court’s finding.

       Perkins’ partnership and S corporation income arose from a farm operation owned and
operated by her, therefore it is farm income. Since Perkins’ gross income from the partnerships
was more than her income from all other sources, farm-derived or not, she meets the farm
income test of § 101(18)(A). As previously discussed, Perkins’ aggregate debt was below the
aggregate debt limit. Therefore, the bankruptcy court correctly determined that Perkins was a
family farmer eligible for Chapter 12 relief.

II.    The Bankruptcy Court Did Not Err in Confirming the Plan

       Section 1225 of the Code specifies the requirements for a Chapter 12 plan to be
confirmed. “A chapter 12 debtor has the burden of proving that his bankruptcy plan meets all
confirmation requirements.” United States v. Krause (In re Krause), 261 B.R. 218, 222 (B.A.P.
8th Cir. 2001) (citing In re Sauer, 223 B.R. 715, 726 (Bankr. D.N.D. 1998)); In re Pertuset, No.
12-8014, 2012 WL 6598444, at *13, 485 B.R. 478 (B.A.P. 6th Cir. December 18, 2012) (table)
(citing In re Luchenbill, 112 B.R. 204, 208 (Bankr. E.D. Mich. 1990)). SummitBridge argues
that the bankruptcy court required it to show how it would be prejudiced if the plan were
confirmed, and by doing so, the court incorrectly placed the burden on the objecting creditor.
To the contrary, the bankruptcy court correctly placed the burden of proof on Perkins—the
bankruptcy court did not improperly apply the burden of proof merely by giving BB&T an
opportunity to provide rebuttal evidence to show that the plan did not treat its claim fairly.
 Nos. 17-8001/8008                        In re Perkins                                  Page 20


       A.      The Bankruptcy Court Did Not Err in Finding the Plan Feasible

       Confirming a Chapter 12 plan requires the debtor to prove that “the debtor will be able to
make all payments under the plan and to comply with the plan . . . .” 11 U.S.C. § 1225(a)(6).

               “Feasibility is fundamentally a factual question since it necessarily
       depends upon a determination of the reasonable probability of payment.” In re
       Howard, 212 B.R. 864, 878 (Bankr. E.D. Tenn. 1997) (citing In re Foertsch,
       167 B.R. 555, 566 (Bankr. D.N.D. 1994)). In order to be feasible pursuant to
       § 1129(a)(11), “[t]he plan does not need to guarantee success, but it must present
       reasonable assurance of success.” In re Made in Detroit, Inc., 299 B.R. 170, 176
       (Bankr. E.D. Mich. 2003) (citing Kane v. Johns-Manville Corp., 843 F.2d 636,
       649 (2nd Cir. 1988)), aff’d, 414 F.3d 576 (6th Cir. 2005). In order to sufficiently
       establish such reasonable assurance, “a plan must provide a realistic and workable
       framework for reorganization.” Id. (citing Crestar Bank v. Walker (In re Walker),
       165 B.R. 994, 1004 (E.D. Va. 1994)).

Gen. Elec. Credit Equities, Inc. v. Brice Rd. Devs. L.L.C. (In re Brice Rd. Devs., L.L.C.),
392 B.R. 274, 283 (B.A.P. 6th Cir. 2008).

       SummitBridge argues the plan is unfeasible because it depends on unsustainable yields.
The plan projects for 2016: 570 acres of corn at 185 bushels per acre to be sold at $3.75 per
bushel, 420 acres of beans at 60 bushels per acre to be sold at $9.75 per bushel, and a crop
insurance payment of $85,000 in lieu of a wheat harvest. This brings total projected proceeds
from all crops to $726,137.50. At the confirmation hearing, Andy Perkins noted that the harvest
was already underway and these numbers were based, in part, on actual results.

       SummitBridge argued the plan’s projections were “hopeless optimism” depending on
changing prices and above-average yields. SummitBridge based this assessment on the farm’s
results from the year before the bankruptcy filing. In 2015, the farm produced 370 acres of corn
at 190 bushels per acre sold at $4.00 per bushel, 380 acres of beans at 45 bushels per acre sold at
$9.00 per bushel, and no income from wheat for a total of $335,100 from crops sold in 2015 and
an operating loss of $179,000.

       The plan calls for planting 990 acres going forward, as opposed to the 750 acres planted
in 2015. Cultivating this additional acreage was evidently feasible as the harvest was underway
at the time of the confirmation hearing. Next, the plan calls for 185 bushels per acre of corn.
 Nos. 17-8001/8008                       In re Perkins                                 Page 21


On cross-examination, Andy Perkins testified that he did not doubt SummitBridge’s suggestion
that on average, farms in the county only grew 135 to 142 bushels of corn per acre, but that
according to the Perkins’ crop insurance, the farm produced 180 to 190 bushels per acre over the
previous 10 years.

        SummitBridge also questioned the assumption of 60 bushels per acre for soy beans when
in previous years, according to the crop insurance, Perkins only produced 40 to 45 bushels.
This question is intertwined with the question of the farm’s wheat production. Andy Perkins
explained that the farm typically grows a double crop of soy and wheat, with the second harvest
of wheat being planted after the soy is harvested. Soy yields are lower when the soy is grown as
a double crop with wheat. In 2015 Perkins did not have the proper equipment to sow wheat, and
so allowed a neighbor to plant her fields resulting in a reduced yield for soy and no income from
wheat. In 2016, it was too wet, so she was able to grow a full harvest of soybeans and received
an insurance payment in exchange for planting and plowing over a cover crop such as turnips in
place of the wheat. In her deposition, Dian Perkins characterized the $85,000 crop insurance as
“only a fraction” of what the wheat income would have been. Finally, Andy Perkins testified
that the prices received from 2016’s harvest met or exceeded the amounts projected by Perkins’
plan.

        SummitBridge also took issue with the amended cash flow projection for the months of
October 2016–October 2017 contained in amended exhibit 1 to the Amended Plan. The cash
flow projected an additional $120,000 for the 2017 harvest. On appeal, SummitBridge alleges
that Dian Perkins was unable to explain this extra cash flow. However, in the deposition, Dian
Perkins testified that the crop insurance payment received was only a fraction of what the wheat
harvest would have been. At the confirmation hearing Andy Perkins testified this higher amount
was due to the projected sales of wheat that would begin with the 2017 harvest. This testimony
is supported by the title on the cash flow projection, “Dian Perkins Farming Operation w/wheat.”
Regardless, the additional $120,000 was not taken into account in the amended plan, it does not
appear that the bankruptcy court depended on the additional income in its feasibility
determination, and the amended plan is feasible even without the additional income.
 Nos. 17-8001/8008                         In re Perkins                                   Page 22


       SummitBridge also argues that the plan is not feasible because it depends on oral leases
of land which are unenforceable under the statute of frauds. Perkins’ farm consists of 250 acres
plus another 805 acres that she leases from various family members for a total of $171,000, or
$212 per acre. Perkins testified that she would lease her farmland for $450 per acre and she
currently leases 50 acres and some buildings for her son’s tobacco farming. The Kentucky
statute of frauds provides that:

       No action shall be brought to charge any person:
       ****
       (6) Upon any contract for the sale of real estate, or any lease thereof for longer
       than one year;
       ****
       unless the promise, contract, agreement, representation, assurance, or ratification,
       or some memorandum or note thereof, be in writing and signed by the party to be
       charged therewith, or by his authorized agent . . . .

Ky. Rev. Stat. § 371.010; Harper v. Johnson, 294 S.W.2d 928, 930 (Ky. 1956) (tenant with oral
lease for one year acquired right to occupy land for additional year under Kentucky holdover
tenant statute). Critically, oral agreements for the lease of land are only unenforceable if they are
“for longer than one year.”        Thus, there is no indication that Perkins’ yearly leases are
unenforceable.

       SummitBridge also contends that these leases make the plan unfeasible because they are
not enforceable for the entire term of the plan and are for a below-market rate, and therefore if
either the lessors or their descendants decide not to renew the lease, Perkins would no longer be
able to sustain her payments. However, this risk is mitigated by Perkins’ relationships with the
lessors. Two of the lessors are close family relations, and the third is a family friend from whom
Perkins has been renting land for 35 years.

       On the whole, the plan’s projections appear to be based on average yields and obtainable
prices for the corn and soy crop, and do not take into account a possible wheat crop which has
the potential to bring in more income. While an unforeseen loss of the leased land has the
potential to put pressure on Perkins’ plan, ultimately, the plan does not need to guarantee
 Nos. 17-8001/8008                                In re Perkins                                             Page 23


success, but only to provide a reasonable assurance of success. That burden being met, we find
no clear error in the bankruptcy court’s findings of feasibility.

         B.       The Bankruptcy Court Did Not Err in Finding BB&T’s
                  Secured Claim Received Appropriate Treatment under the
                  Code

         Under § 1225(a)(5)(B), a bankruptcy court may confirm a Chapter 12 plan over the
objection of a secured creditor which provides for the debtor’s retention of the property securing
that claim as long as:

         (i) the plan provides that the holder of such claim retain the lien securing such
         claim; and
         (ii) the value, as of the effective date of the plan, of property to be distributed by
         the trustee or the debtor under the plan on account of such claim is not less than
         the allowed amount of such claim;

SummitBridge is retaining its lien under the plan so the only issue is whether its distribution
under the plan is not less than the allowed amount of its secured claim. This provision is the
same as the requirement for the cramdown of secured claims under a Chapter 11 plan. See
11 U.S.C. § 1129(b)(2)(A). It generally requires that any stream of payments to the creditor total
at least the amount of its secured claim at an appropriate rate of interest. See Bank of Montreal v.
Official Comm. of Unsecured Creditors (In re Am. HomePatient, Inc.), 420 F.3d 559, 565 (6th
Cir. 2005), cert. denied, 549 U.S. 942, 127 S. Ct. 55, 166 (2006); In re White, 41 B.R. 227, 230
(Bankr. M.D. Tenn. 1984); and In re Jones, 534 B.R. 149 (Bankr. E.D. Ky. 2015) (Chapter 13).
SummitBridge first asserts that the plan fails in this regard by failing to pay an appropriate rate
of interest.

         In determining the interest rate in this case, the bankruptcy court employed the formula
approach as endorsed by the Supreme Court in Till v. SCS Credit Corp., 541 U.S. 465, 479–80,
124 S. Ct. 1951, 1961–62 (2004).                   In Till, the Court decided that in the context of
§ 1325(a)(5)(B)(ii),20 courts should determine the discount rate by taking the national prime rate


         20
           The wording of § 1325(a)(5)(B)(ii) and § 1225(a)(5)(B)(ii) are identical. It should also be noted that
while the Sixth Circuit has held that Till does not extend to chapter 11 cases, as discussed in Section I, Chapter 12 is
more closely related to Chapter 13. Still, we make no holding that Till must be applied in Chapter 12 cases.
 Nos. 17-8001/8008                        In re Perkins                                    Page 24


and adding risk adjustment which is generally set at 1 to 3%. Id. (citations omitted). In addition
to being easy to apply, the court found this approach preferable because “starting from a
concededly low estimate and adjusting upward places the evidentiary burden squarely on the
creditors, who are likely to have readier access to any information absent from the debtor’s filing
. . . .” Id. at 479.

        SummitBridge argues that the bankruptcy court erred by failing to make factual findings
as to the appropriate risk adjustment to the interest rate and term of the loan. On the contrary,
the court found the 1% risk adjustment to be reasonable and made numerous findings as to the
risk the plan posed to SummitBridge, including: Perkins’ long history of successful farming; the
richness of the land itself; and the fact that SummitBridge is over-secured on an appreciating
asset and Perkins’ payments are reducing the principal over the life of the plan. Perkins asked
the bankruptcy court to take judicial notice that a 20-year loan at 4.5% was a typical market rate.
SummitBridge did not submit any documentary or testimonial evidence.

        SummitBridge suggests that the bankruptcy court erred by failing to take into account the
contract rate on its notes to determine an appropriate interest rate. According to SummitBridge’s
motion for post-petition interest and fees, the note with the highest balance had an interest rate of
4.25%, and the interest rate on the other two notes with unpaid principal were 5.69% and 4.75%.
Based on these rates and because the contract rate is only one piece of evidence regarding the
market rate for such a loan, the bankruptcy court’s finding 4.5% to be the appropriate interest
rate was not in clear error.

        In addition to the interest rate objection, SummitBridge further contends that it was
prejudiced by the cramdown because it would not receive its first payment until a year after the
plan was confirmed. However, the original loan called for yearly payments after the harvest, so
the bankruptcy court found this treatment was no worse than the terms of the original loan.
Based on this, we find no clear error.
 Nos. 17-8001/8008                        In re Perkins                                   Page 25


       C.      The Bankruptcy Court Did Not Err in Finding the Plan Met
               the “Best Interests of the Creditors’ Test”

       Section 1225(a)(4), otherwise known as the best interest of creditors test, requires that for
a plan to be confirmed, “the value, as of the effective date of the plan, of property to be
distributed under the plan on account of each allowed unsecured claim is not less than the
amount that would be paid on such claim if the estate of the debtor were liquidated under
Chapter 7 of this title on such date.” Simply put, a Chapter 12 plan can only be confirmed if it
provides more money to the unsecured creditors than a liquidation under Chapter 7.

       To meet her evidentiary burden, Perkins provided a liquidation analysis which projected
the proceeds which would be received from liquidating all the bankruptcy estate’s assets. The
analysis determined that after all secured, priority, and administrative claims and sales costs were
paid, there would be no funds left to pay non-priority unsecured creditors. The bankruptcy court
considered this liquidation analysis and the testimony from the confirmation hearing and found
that the plan met the best interests of creditors test. SummitBridge argues that this determination
was in error because the liquidation analysis failed to take into account the value of the crops
currently on the land. We disagree.

       As a preliminary matter, there is disagreement among the courts as to whether the
Chapter 12 liquidation analysis is based on the value of a hypothetical Chapter 7 for the debtor—
which under § 541 consists of the debtor’s property on the petition date—or the value of the
Chapter 12 estate—which under § 1207 also includes the property acquired by the debtor post-
petition. This distinction is important since crops planted post-petition would be part of the
Chapter 12 estate, but would not be part of the Chapter 7 estate. See In re Foos, 121 B.R. 778,
782 (Bankr. S.D. Ohio 1990) (liquidation analysis is based on § 541 estate). But see In re
Bremer, 104 B.R. 999, 1008 (Bankr. W.D. Mo. 1989); In re Perdue, 95 B.R. 475, 477 (Bankr.
W.D. Ky. 1988); In re Bluridg Farms, Inc., 93 B.R. 648 (Bankr. S.D. Iowa 1988). However, we
need not determine this since Perkins included the property value of the crops in her liquidation
analysis.

       The liquidation summary of Perkins’ amended plan included a total property value of
$2,728,570: $2,273,000 in real property and $455,570 in personal property. Perkins’ Amended
 Nos. 17-8001/8008                          In re Perkins                               Page 26


Schedule A/B reflected $2,137,200 in real property and $348,820 of personal property, including
$100,000 for the 2016 crops, for a total of $2,486,020. Perkins’ son testified at the hearing that
the total value of the crops in the ground was $726,000. On cross examination, he estimated that
the cost of the remaining inputs, harvest costs, transport costs, taxes, and the pay-offs of liens
secured by the crops would be between $418,000 and $600,000, meaning the net value of the
crops was between $308,000 and $126,000—less than the estimate in the liquidation analysis.
Thus, the liquidation analysis not only included $100,000 for the value of the 2016 crops, but
based on the son’s testimony, overstated the amount of assets to be liquidated. Accordingly,
there is ample evidence in the record to support the bankruptcy court’s finding that the plan met
the best interests of creditors test, and we find no clear error.

                                           CONCLUSION

        For the foregoing reasons, the Panel AFFIRMS the bankruptcy court’s order confirming
Perkins’ amended Chapter 12 plan.
