                                                           FILED
                                                            DEC 05 2014
 1                         NOT FOR PUBLICATION
                                                        SUSAN M. SPRAUL, CLERK
 2                                                        U.S. BKCY. APP. PANEL
                                                          OF THE NINTH CIRCUIT
 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )        BAP No. AZ-14-1172-JuKiD
                                   )
 6   DUNLAP OIL COMPANY, INC.;     )        Bk. No. AZ-12-23252-BMW
     QUAIL HOLLOW INN, LLC,        )        Bk. No. AZ-12-23256-BMW
 7                                 )        (jointly administered)
                    Debtors.       )
 8   ______________________________)
                                   )
 9   PINEDA GRANTOR TRUST II;      )
     PINEDA REO, LLC,              )
10                                 )
                    Appellants,    )
11                                 )
     v.                            )        M E M O R A N D U M*
12                                 )
     DUNLAP OIL COMPANY, INC.;     )
13   QUAIL HOLLOW INN, LLC,        )
                                   )
14                  Appellees.     )
     ______________________________)
15
                 Argued and Submitted on November 20, 2014
16                          at Phoenix, Arizona
17                          Filed - December 5, 2014
18             Appeal from the United States Bankruptcy Court
                         for the District of Arizona
19
       Honorable Brenda Moody Whinery, Bankruptcy Judge, Presiding
20                      _________________________
21   Appearances:     Bradley D. Pack of Engelman Berger, P.C. argued
                      for appellants Pineda Grantor Trust II and Pineda
22                    REO, LLC; Lindsi M. Weber of Gallagher & Kennedy,
                      P.A., argued for appellees Dunlap Oil Company,
23                    Inc. and Quail Hollow Inn, LLC.
                           ________________________
24
     Before:   JURY, KIRSCHER, and DUNN, Bankruptcy Judges.
25
26       *
          This disposition is not appropriate for publication.
27 Although it may be cited for whatever persuasive value it may
   have (see Fed. R. App. P. 32.1), it has no precedential value.
28 See 9th Cir. BAP Rule 8013-1.

                                      -1-
 1            Appellants Pineda Grantor Trust II and Pineda REO, LLC
 2   (collectively, Pineda) appeal from the bankruptcy court’s order
 3   confirming the second amended joint plan (SAJP) filed by
 4   chapter 111 debtors, Dunlap Oil Company, Inc. (DOC) and Quail
 5   Hollow Inn, LLC (QHI).        We AFFIRM.
 6                                    I.   FACTS
 7   A.       Prepetition Events
 8            DOC was founded in 1959.     It owned, operated, and leased
 9   gas stations and convenience stores throughout Arizona, owned
10   and operated a shopping center known as Dunlap Plaza, and owned
11   vacant land.      Kenneth and Carol Dunlap, their two trusts,2 and
12   their son Theodore (Ted) Dunlap are shareholders of DOC.
13            The Dunlap Revocable Trust owned and operated an 83-room
14   hotel in Wilcox, Arizona, under the Best Western brand.         The
15   trust conveyed the hotel to QHI in June 2012.
16            Financing for the acquisition, development, and operation
17   of debtors’ businesses was primarily provided by Canyon
18   Community Bank (CCB) and Compass Bank (Compass).         CCB loaned DOC
19   in excess of $8 million which was secured by four properties
20   owned by DOC.      Compass also made a series of loans to DOC which
21   were evidenced by promissory notes and secured by seven
22
          1
23        Unless otherwise indicated, all chapter and section
   references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
24 “Rule” references are to the Federal Rules of Bankruptcy
   Procedure and “Civil Rule” references are the Federal Rules of
25 Civil Procedure.
26      2
          The two trusts were The Kenneth T. Dunlap and Carol A.
27 Dunlap Revocable Trust (Dunlap Revocable Trust) and The Kenneth
   T. Dunlap and Carol A. Dunlap Irrevocable Trust (Dunlap
28 Irrevocable Trust).

                                           -2-
 1   properties owned by DOC and certain assets owned by QHI.    Ken
 2   and Carol Dunlap, the Dunlap Revocable Trust, and Ted Dunlap
 3   were guarantors on the Compass loans.
 4        Each of the Compass notes matured by their terms and DOC
 5   did not pay them off.    Following DOC’s default, the notes were
 6   modified through a series of modification and forbearance
 7   agreements whereby Compass agreed to forebear from taking any
 8   action to enforce the notes provided debtors remained in
 9   compliance with certain payment terms and other conditions.     The
10   forbearance obligation terminated on November 25, 2009.    Debtors
11   made no payments on the notes for several years.   In October
12   2012, Compass sought to have a receiver appointed in the state
13   court.
14   B.   Bankruptcy Events
15        Before Compass could post the bond required for the
16   receivership to take effect, DOC and QHI each filed a chapter 11
17   petition on October 24, 2012.   The bankruptcy court ordered the
18   cases jointly administered.
19        Compass and CCB were debtors’ primary secured creditors.
20   Debtors also were delinquent on their real property taxes for
21   most, if not all, of their properties.   At the time of the
22   filing, debtors owed Compass approximately seven million
23   dollars.
24        1.    The Cash Collateral Orders
25         Early on, the bankruptcy court entered an interim order
26   authorizing debtors to use cash collateral to pay ordinary and
27   necessary postpetition expenses consistent with the attached
28   budgets for each debtor.   In November 2012, the bankruptcy court

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 1   entered a final order approving debtors’ use of cash collateral
 2   as set forth in the interim order and attached budgets.    The
 3   final cash collateral order stated that it was entered “without
 4   prejudice to any creditor seeking further relief upon motion for
 5   good cause shown.”
 6        Around this same time, Compass sold its interest in the
 7   notes to Pineda.   As a result, Pineda maintained that it was the
 8   successor-in-interest to Compass, having received an assignment
 9   of all of Compass’ right, title and interest in and to Compass’
10   loans to DOC, and all loan agreements, promissory notes,
11   security agreements, deeds of trust, guarantees and all other
12   documents and agreements relating to or evidencing such loans.
13   Pineda then challenged debtors’ authority to use its cash
14   collateral.
15        Pineda required, as a condition to use of its cash
16   collateral, additional adequate protection, including monthly
17   adequate protection payments and debtors’ agreement to maintain
18   a level of inventory consistent with its pre-petition inventory
19   levels.   As a result of these demands, Pineda and debtors
20   entered into a stipulation regarding use of Pineda’s cash
21   collateral.   Pineda agreed not to challenge debtors’ use of cash
22   collateral and, in exchange, debtors agreed to (1) maintain a
23   level of inventory that was reasonably consistent with the
24   inventory maintained prior to the petition date; (2) provide
25   Pineda’s counsel with a monthly report detailing the amount of
26   the inventory; and (3) remain in compliance with the terms of
27   the final cash collateral order and budgets.
28        The bankruptcy court approved the continued use of cash

                                    -4-
 1   collateral several times.
 2        2.     Debtors’ Joint Plan Of Reorganization
 3        Debtors reached stipulated valuations with Pineda and CCB
 4   for purposes of § 506(a) in connection with some of the real
 5   properties for purposes of plan confirmation.    Debtors and
 6   Pineda stipulated that the liquidation value of the QHI hotel
 7   was $1.9 million.
 8        Debtors filed a joint plan of reorganization on December
 9   28, 2012.    The plan proposed a partial dirt-for-debt swap,
10   whereby DOC would deed certain collateral to CCB and Pineda for
11   a credit against the secured debt and retain the remaining
12   collateral.    Debtors proposed to transfer the Benson Chevron,
13   Benson Little General, QHI, and Sierra Vista Chevron to Pineda
14   in exchange for a credit in the total amount of $4,361,758,
15   after accounting for the outstanding taxes relating to these
16   properties.
17        The secured creditors would have secured claims equal to
18   the value of the retained collateral, the balance of their
19   claims would be classified as unsecured, and the secured claims
20   would be paid on the basis of a twenty-five year amortization
21   with interest at 5%.    Debtors would make balloon payments to the
22   secured creditors after five years.
23        Debtors proposed to fund the plan through revenue from
24   continued operation of the retained properties and a $150,000
25   new value contribution.    Unsecured creditors would be paid from
26   debtors’ net revenue, if any, remaining after payment of
27   operating expenses and installment payments to secured
28   creditors.    Shareholders would retain their equity interest in

                                     -5-
 1   DOC and QHI would transfer the hotel to Pineda.3
 2           Pineda, CCB, and others objected to debtors’ plan.   Pineda
 3   argued that (1) the plan was not fair and equitable under
 4   § 1129(b)(1); (2) debtors’ proposed interest rate of 5% failed
 5   the fair and equitable test; (3) the plan was not fair and
 6   equitable because it violated the absolute priority rule and the
 7   proposed new value contribution failed as a matter of law;
 8   (4) the plan was not feasible under § 1129(a)(11) because the
 9   projections were unreliable; and (5) the plan was not filed in
10   good faith under § 1129(a)(3).     Pineda also objected to the
11   proposed return of the Benson Chevron in exchange for a credit
12   because this property did not secure Pineda’s claim.     Pineda
13   maintained that it could not be compelled to accept title to
14   this property in satisfaction of any part of its claim.
15           Debtors subsequently filed a first amended joint plan
16   (FAJP) that provided for debtors to retain the Benson Chevron as
17   well as the QHI hotel.
18           In support of confirmation, debtors submitted the
19   declaration of Steven Odenkirk, a member of Peritus Commercial
20   Finance (Peritus), who had assisted debtors in reaching workout
21   solutions with various creditors for three years prior to the
22   bankruptcy filing.     Mr. Odenkirk opined that the plan was
23   feasible based on historical projections and that a 5% cramdown
24
         3
          Meanwhile, Pineda moved for relief from stay with respect
25 to the hotel and real property collateral owned by DOC. Pineda
26 maintained that stay relief was appropriate due to a lack of
   adequate protection, lack of equity in the properties, and the
27 properties were not necessary for effective reorganization. The
   bankruptcy court set the final relief from stay hearings
28 concurrently with the hearing on confirmation.

                                      -6-
 1   interest rate was appropriate.       Debtors also submitted the
 2   declaration of Ted Dunlap, the president of DOC.        He too opined
 3   that the plan was feasible and confirmed the new value
 4   contribution from the equity holders in the amount of $150,000.
 5           Pineda did not submit a declaration of its own expert, but
 6   CCB submitted the declaration of Mark A. Farr in opposition.
 7   Mr. Farr, the vice president of CCB, concluded that debtors’
 8   plan was not feasible.       He opined that Mr. Odenkirk’s analysis
 9   was flawed because he used only favorable historical information
10   from a five-year period to validate the income projection.
11   Mr. Farr also pointed out other discrepancies with
12   Mr. Odenkirk’s analysis.
13           On June 12 and July 11, 2013, the bankruptcy court held
14   hearings on confirmation.       At the first hearing, debtors agreed
15   to stay relief with respect to the properties they proposed to
16   give back to Pineda and CCB, which were their most unprofitable
17   locations.4       After the second hearing, the bankruptcy court took
18   the matter under advisement.       The parties completed post-trial
19   briefing by August 13, 2013.
20           3.     Debtors Fail To File Operating Reports
21           Debtors failed to file operating reports for June and July
22   2013.        In August 2013, CCB filed a motion to compel debtors to
23   provide monthly operating reports for those months.       After
24   receiving those reports only from DOC, CCB filed a second motion
25   in late September to compel debtors to provide the operating
26
27
         4
          The bankruptcy court subsequently entered stipulated
28 orders for relief from stay on these properties.

                                         -7-
 1   report for August 2013.      Pineda joined in that motion, noting
 2   that QHI had failed to file operating reports for the months of
 3   May, June, July, and August 2013.        Pineda argued that debtors’
 4   failure to file the operating reports constituted cause for the
 5   conversion or dismissal of the case.        Pineda further asserted
 6   that the bankruptcy court could consider these reports, which
 7   showed continuing losses, when weighing the feasibility of
 8   debtors’ plan.
 9            The bankruptcy court heard the motions to compel on
10   October 17, 2013, and ordered debtors to file the operating
11   reports by the following Friday.        Debtors complied.   QHI’s June
12   2013 operating report showed an unauthorized transfer of
13   $177,000 of cash, reflected only as a disbursement to “other.”5
14            After receiving the late-filed reports, Pineda filed a
15   motion for immediate stay relief and termination of cash
16   collateral authority or, alternatively, a motion to convert the
17   case to chapter 7.      Pineda argued that QHI’s undisclosed and
18   unauthorized transfer of $177,000 was a serious violation of the
19   bankruptcy court’s cash collateral orders and its duties as a
20   debtor-in-possession.      On the same day, CCB filed a motion to
21   convert debtors’ case to chapter 7 based on, among other things,
22   QHI’s unauthorized use of cash collateral.
23
          5
24          As further explained below, these funds were transferred
     to an entity by the name of KT Market which was formed and owned
25   by the Dunlaps. KT Market, a grocery store, subleased space in
26   the Dunlap Plaza shopping center from an anchor tenant that had
     gone out of business. Ted Dunlap explained that the money was
27   used for tenant improvements and that without an anchor tenant
     such as the grocery store, the shopping center would lack
28   corresponding revenue.

                                       -8-
 1        4.   The Bankruptcy Court Denies Confirmation Of Debtors’
               FAJP.
 2
 3        On November 18, 2013, the bankruptcy court orally recited
 4   its findings of fact and conclusions of law on the record,
 5   denying confirmation of debtors’ FAJP plan and granting the
 6   motions for relief from stay previously filed by CCB and Pineda.
 7   The bankruptcy court observed that debtors made the unauthorized
 8   intercompany loan of $177,000 in direct violation of the cash
 9   collateral orders.   Due to this violation, the bankruptcy court
10   concluded that debtors violated § 1129(a)(2), which requires the
11   plan proponent to comply with all applicable provisions of
12   Title 11, and also failed to act in good faith pursuant to
13   § 1129(a)(3).
14        Next, the bankruptcy court found that the feasibility
15   requirement was not met under § 1129(a)(11) because debtors
16   provided no evidence that there was a reasonable likelihood that
17   they could obtain future financing to make the balloon payment.
18   The court also noted that debtors had suffered, and continued to
19   suffer, increasing operating losses and a severe depletion of
20   inventory and available cash, even after they ceased operations
21   at the four locations on which stay relief was granted.
22   Additionally, the court found that debtors’ operating reports
23   showed that they did not have sufficient cash to meet the
24   effective date payments, the remaining administrative claims,
25   and the monthly payments to secured creditors, which would be
26   required to commence under the plan.
27        In the end, since the provisions of § 1129(a)(2), (3), and
28   (11) were not met, the bankruptcy court denied confirmation of

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 1   debtors’ FAJP.      The bankruptcy court entered the order, which
 2   incorporated its oral ruling denying confirmation of debtors’
 3   FAJP, on November 19, 2013.
 4           5.    Debtors’ Motion For Reconsideration
 5           Debtors moved for reconsideration of the bankruptcy court’s
 6   order.       At the December 17, 2013 hearing on the matter, debtors’
 7   counsel argued that feasibility was no longer an issue because
 8   (1) the equity holders would contribute an additional $100,000
 9   in new value; (2) Mr. Martin6 and Ted Dunlap agreed to a
10   combined $50,000 salary deferral which would free up additional
11   cash; and (3) DOC’s fuel supplier, Jackson Oil, would provide a
12   $200,000 fuel credit which would allow DOC to “fill its tanks.”
13           In support, debtors filed the declarations of Ted Dunlap,
14   who confirmed the additional new value contribution, and
15   Mr. Odenkirk, who concluded that with these new developments the
16   income and expense projections would support feasibility.
17           The bankruptcy court found that debtors’ arguments did not
18   meet the requirements for reconsideration under Rule 9024, but
19   essentially suggested a revised plan.      Accordingly, the court
20   denied debtors’ motion, but noted that its ruling did not
21   preclude debtors from filing an amended plan to address the
22   issues that they raised concerning the additional funding and
23   feasibility.      The bankruptcy court also decided that it would
24   enter the orders granting Pineda’s and CCB’s motions for relief
25   from stay, but that it would not rule on their motions to
26   convert or dismiss at that time.
27
28       6
             Mr. Martin is debtors’ comptroller.

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 1        6.   The Bankruptcy Court Confirms Debtors’ SAJP.
 2        On December 27, 2013, debtors filed the SAJP.   The SAJP
 3   differed from the FAJP in that, among other things, it provided
 4   for the sale of the QHI hotel.    Upon the closing of the sale and
 5   payment of the outstanding secured real property taxes, Pineda
 6   would receive the stipulated value of the hotel, and the excess
 7   proceeds would be transferred to DOC.   The SAJP further provided
 8   that the proposed sale would close within six months of the
 9   effective date of the plan.
10        The amended plan also stated that the new value
11   contribution from equity holders would be increased from
12   $150,000 provided in the initial plan to $250,000.   In addition,
13   the equity holders agreed to a real property new value
14   contribution consisting of a fee simple interest in two
15   properties known as Benson Little General and Benson Chevron.
16   The Dunlap Revocable Trust owned the Benson Little General,
17   which is a gas station/convenience store located in Benson,
18   Arizona, and the Dunlap Irrevocable Trust owned Benson Chevron.
19   Debtors reported that (1) they had received favorable credit
20   terms from certain suppliers which were projected to realize
21   between $30,000 to $45,000 in additional cash on an annual
22   basis; (2) Jackson Oil committed a $200,000 line of credit for
23   fuel purchases; (3) additional cash would also be freed up due
24   to salary deferrals in the annual amount of $50,000; and
25   (4) cashing in a $100,000 key man insurance policy would also
26   provide liquidity for the plan.
27        Pineda moved to vacate the confirmation hearing scheduled
28   for January 28, 2014, on the grounds that debtors could not

                                      -11-
 1   proceed to confirmation without a newly approved disclosure
 2   statement and re-solicitation of votes.   In the alternative,
 3   Pineda requested the court to continue the confirmation hearing
 4   so that it could conduct discovery.
 5        Debtors filed an emergency motion seeking to extend the
 6   stay of the orders granting Pineda and CCB relief from stay.
 7        The bankruptcy court heard Pineda’s motion to vacate and
 8   debtors’ motion to extend the stay on January 13, 2014.    The
 9   court concluded that debtors should be given the opportunity to
10   amend their plan.   The court stated, however, that the
11   confirmation hearing on the SAJP was not open-ended.    Rather,
12   debtors would be allowed to address the issues which caused the
13   prior denial of confirmation.   The bankruptcy court also decided
14   that no new disclosure statement or balloting was necessary, and
15   it extended the stay on the relief from stay orders until the
16   confirmation hearing was completed.    The court rescheduled the
17   confirmation hearing for February 7, 2013.
18        Pineda and debtors thereafter entered into a stipulated
19   order incorporating the bankruptcy court’s ruling as well as
20   establishing certain procedural matters agreed to by the
21   parties.   The order provided that at the evidentiary hearing on
22   confirmation, the bankruptcy court would consider evidence
23   relating to feasibility, debtors’ compliance with § 1129(a)(2),
24   debtors’ good faith, debtors’ ability to make plan payments
25   required under § 1129(a)(9) (secured tax claims), and
26   satisfaction of the new value exception to the absolute priority
27   rule, as well as evidence relating to the value of the QHI
28   hotel.   In addition, the bankruptcy court would consider the

                                     -12-
 1   testimony and exhibits admitted at the hearings on confirmation
 2   of debtors’ FAJP.     The bankruptcy court entered the order on
 3   January 16, 2014.
 4           On January 28, 2014, debtors filed a notice of plan
 5   amendments which further modified the SAJP.       The plan was
 6   amended to allow CCB and Pineda to continue orally any trustee
 7   sales during the twelve months following the effective date and
 8   to allow such sales to proceed if a default occurred under the
 9   plan that debtors failed to cure.       Another amendment provided
10   that certain tax claims were re-amortized over forty-four months
11   rather than sixty months so debtors could complete payments
12   within sixty months of the petition date.
13           Pineda objected to confirmation of the SAJP on the grounds
14   that (1) issue preclusion7 and the law of the case doctrine
15   precluded re-litigation of the issues concerning debtors’
16   violations of the cash collateral orders, bad faith, and their
17   inability to reorganize within a reasonable period of time;
18   (2) debtors continued to make unauthorized transfers of cash
19   after the bankruptcy court denied debtors’ FAJP; (3) the
20   provisions for the sale of the hotel impermissibly stripped
21   Pineda of its right to credit bid in violation of
22   § 1129(b)(2)(A)(ii); (4) all proceeds from the sale of the hotel
23   must be paid to Pineda to be applied against its secured claim;
24   and (5) there were multiple grounds for conversion of debtors’
25
         7
26        “Issue preclusion” is the more modern nomenclature for
   “collateral estoppel.” See Paine v. Griffin (In re Paine),
27 283 B.R. 33, 38 (9th Cir. BAP 2002) (noting that “issue
   preclusion” includes the doctrines of direct estoppel and
28 collateral estoppel).

                                      -13-
 1   cases.
 2        Pineda also filed a notice of recorded judgment in the
 3   amount of $7 million dollars against Ken and Carol Dunlap, the
 4   Dunlap Revocable Trust, and Ted Dunlap based on their respective
 5   guarantees of the loans.   Due to its recorded judgment, Pineda
 6   objected to the SAJP to the extent it adversely affected its
 7   right to foreclose its judgment lien on the Benson Chevron,
 8   which the Dunlaps proposed to contribute to DOC to assist in
 9   DOC’s reorganization.
10        On February 6, 2014, debtors filed a second notice of plan
11   amendments, which provided, among other things, that if the sale
12   of the hotel did not close within six months, debtors would
13   transfer the hotel to Pineda in exchange for a credit against
14   Pineda’s secured claim in the amount of the stipulated value,
15   less secured taxes.   They also filed a memorandum in support of
16   confirmation and in response to confirmation objections.
17        On February 7, 2014, the bankruptcy court held the
18   evidentiary hearing on confirmation.   Direct testimony was
19   provided by the supplemental declarations of Mr. Odenkirk and
20   Ted Dunlap in support and Mr. Farr in opposition.   Cross
21   examination and redirect of each of the declarants was conducted
22   live.
23        At the conclusion of the hearing, the bankruptcy court
24   found that the stipulated value of the QHI hotel relied upon in
25   the context of the FAJP was not binding upon Pineda given that
26   the SAJP contemplated a sale of the hotel.   The court also gave
27   the parties the option to submit closing briefs.
28        Based upon the evidence presented at the confirmation

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 1   hearing, the bankruptcy court entered an order on February 14,
 2   2014, finding that the value of the hotel was $2.5 million for
 3   purposes of confirmation of the SAJP.
 4        After the hearing, debtors submitted a brief in support of
 5   confirmation and response to confirmation objections and a
 6   closing brief.   Pineda filed a summary of unauthorized
 7   intercompany transfers and a closing brief.    Pineda argued that
 8   debtors made intercompany transfers which were unauthorized and
 9   failed to explain how they used the $177,000 in funds.    Pineda
10   noted that the invoices debtors produced in response to Pineda’s
11   request for all documents showing how the funds were used
12   reflected purchases totaling only $35,173.75.    According to
13   Pineda, debtors provided no explanation as to how the remaining
14   $142,000 in funds were spent.    Finally, Pineda maintained that
15   the evidence did not support debtors’ argument that the
16   transferred funds were repaid.    With respect to feasibility,
17   Pineda asserted that debtors failed to demonstrate they would
18   have enough cash on the effective date to pay administrative
19   claims and there was no evidence that the new value contribution
20   would actually be funded.
21        Given the bankruptcy court’s ruling on valuation of the QHI
22   hotel, on February 14, 2014, debtors filed a third notice of
23   plan amendments whereby they proposed to transfer the hotel
24   property to Pineda on the effective date of the plan, subject to
25   secured tax claims.   According to debtors, this amendment was
26   intended to resolve any objections to the plan raised by Pineda
27   relating to its treatment with respect to the QHI hotel.
28        Shortly thereafter, the bankruptcy court entered an order

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 1   requiring debtors to strictly comply with the terms of the cash
 2   collateral orders and prohibiting any transfers of cash
 3   collateral from QHI to insiders or affiliates except for
 4   ordinary salary or payroll obligations or reimbursement to DOC
 5   for ordinary payroll expenses and tax obligations.
 6           Debtors filed a notice of funds regarding the new value
 7   contribution.     This notice stated that $139,000 had been
 8   received from the key man life insurance policy and that
 9   additional funds in the amount of $111,000 would be obtained
10   from a business acquaintance and would be available upon entry
11   of the confirmation order.8
12           On March 6, 2014, the bankruptcy court read its ruling
13   granting confirmation of the SAJP into the record.9    The
14   bankruptcy court entered the order confirming the SAJP on
15   March 12, 2014.     As a condition of confirmation, the order
16   required that all amounts owed to QHI from KT Market must be
17   repaid on or prior to the effective date.     The effective date of
18   the plan was March 28, 2014.
19           7.   Pineda’s Motion To Alter Or Amend The Confirmation
                  Order Under Rule 9024
20
21           Pineda moved to alter or amend the order pursuant to
22   Rule 9024.     Pineda maintained that (1) the confirmation order
23   should expressly provide that QHI would transfer the hotel to a
24
25       8
          It is not entirely clear from the record whether the key
26 man life insurance policy was used to credit part of the
   $250,000.
27
        9
          The bankruptcy court’s ruling is discussed in further
28 detail below in connection with Pineda’s arguments on appeal.

                                      -16-
 1   special purpose entity designated by Pineda, rather than being
 2   transferred directly to Pineda; (2) the confirmation order
 3   should require QHI to account for and immediately turn over to
 4   Pineda all accumulated cash collateral, plus all personal
 5   property; (3) the plan amendments made after confirmation
 6   required the hotel to be revalued at its liquidation value of
 7   $1.9 rather than the sale value of $2.5 million.
 8        Pineda also filed an emergency motion to prohibit Ken and
 9   Carol Dunlap and their trust from transferring to DOC the cash
10   surrender proceeds of a key man life insurance policy and the
11   fee simple interests in Benson Little General and Benson Chevron
12   to DOC.     Since Ken and Carol Dunlap had filed a bankruptcy
13   petition themselves, Pineda maintained that the proceeds from
14   the life insurance policy and the Benson properties were
15   property of the Dunlaps’ bankruptcy estate.
16        In addition, Pineda filed a motion to stay the confirmation
17   order pending resolution of the above-referenced motions and
18   sought an expedited hearing.
19        The bankruptcy court heard Pineda’s motions on March 27,
20   2014.     The court denied the stay of the effective date of the
21   plan and denied Pineda’s motion to alter or amend the
22   confirmation order.
23        8.      Pineda Appeals
24        On April 10, 2014, Pineda filed its notice of appeal of the
25   order confirming debtors’ SAJP.
26        On September 24, 2014, the Panel issued an order for
27   supplemental briefing on whether this appeal had become moot.
28   The parties subsequently submitted their supplemental briefs and

                                      -17-
 1   supplemental record on the mootness issue.
 2                             II.   JURISDICTION
 3        The bankruptcy court had jurisdiction over this proceeding
 4   under 28 U.S.C. §§ 1334 and 157(b)(2)(L).        Because the SAJP has
 5   been confirmed, distributions commenced, properties transferred,
 6   and there is no stay pending appeal of the confirmation order,
 7   the question arises whether this appeal is moot and subject to
 8   dismissal.    If an appeal is constitutionally moot, we must
 9   dismiss.    Drummond v. Urban (In re Urban), 375 B.R. 882, 887
10   (9th Cir. BAP 2007).    Moreover, we may dismiss if equitably
11   moot.     Clear Channel Outdoor, Inc. v. Knupfer (In re PW, LLC),
12   391 B.R. 25, 33–35 (9th Cir. BAP 2008).        We consider the
13   mootness question below and conclude that the appeal is not
14   constitutionally or equitably moot.        Therefore, we have
15   jurisdiction under 28 U.S.C. § 158.
16                                III.    ISSUES
17        A.     Whether this appeal is moot;
18        B.     Whether the bankruptcy court erred in finding that
19   debtors complied with § 1129(a)(2);
20        C.     Whether the bankruptcy court erred in finding that
21   debtors had satisfied the requirements for feasibility under
22   § 1129(a)(11);
23        D.     Whether the bankruptcy court erred in finding that the
24   proper cramdown interest rate was 5%; and
25        E.     Whether the bankruptcy court erred in finding that the
26   requirements for the new value exception to the absolute
27   priority rule were satisfied.
28

                                         -18-
 1                         IV.    STANDARDS OF REVIEW
 2        Mootness is a question of law reviewed de novo.    Nelson v.
 3   George Wong Pension Trust (In re Nelson), 391 B.R. 437, 442 (9th
 4   Cir. BAP 2008).
 5        We review the bankruptcy court’s ultimate decision to
 6   confirm a chapter 11 reorganization plan for an abuse of
 7   discretion.   Computer Task Grp., Inc. v. Brotby (In re Brotby),
 8   303 B.R. 177, 184 (9th Cir. BAP 2003).     We apply a two-part test
 9   to determine whether the bankruptcy court abused its discretion.
10   United States v. Hinkson, 585 F.3d 1247 (9th Cir. 2009) (en
11   banc).   We first determine de novo whether the bankruptcy court
12   “identified the correct legal rule to apply to the relief
13   requested.”   Id. at 1251.    If it did, we then determine “whether
14   [the bankruptcy court’s] application of the correct legal
15   standard was (1) ‘illogical,’ (2) ‘implausible,’ or (3) without
16   ‘support in inferences that may be drawn from the facts in the
17   record.’”   Id.   If any of these three determinations applies, we
18   may be left with a definite and firm conviction that the
19   bankruptcy court abused its discretion in making a clearly
20   erroneous factual finding.     Id.
21        “Of course, a determination that a plan meets the requisite
22   confirmation standards necessarily requires a bankruptcy court
23   to make certain factual findings and interpret the law.”
24   In re Brotby, 303 B.R. at 184.
25        The issue whether a plan is feasible — is not likely to be
26   followed by liquidation or further reorganization — is one of
27   fact, which we review under the clearly erroneous standard.
28   Acequia, Inc. v. Clinton (In re Acequia, Inc.), 787 F.2d 1352,

                                       -19-
 1   1358 (9th Cir. 1986).
 2        The bankruptcy court’s application of the factors under the
 3   formula approach articulated in Till v. SCS Credit Corp.,
 4   541 U.S. 465 (2004), to this case is a question of fact reviewed
 5   for clear error.    We give substantial deference to the
 6   bankruptcy court in making cramdown interest rate
 7   determinations.    In re Yett, 306 B.R. 287, 290 (9th Cir. BAP
 8   2004) (citing Farm Credit Bank v. Fowler (In re Fowler),
 9   903 F.2d 694, 696 (9th Cir. 1990)); In re Red Mountain Mach.
10   Co., 451 B.R. 897, 905-06 at n.19 (Bankr. D. Ariz. 2011).
11        “[W]hether a particular plan gives old equity a property
12   interest ‘on account of’ its old ownership interests in
13   violation of the absolute priority rule or for another,
14   permissible reason is a factual question.”    In re Red Mountain
15   Mach. Co., 451 B.R. at 905-06 n.18.
16        In reviewing factual findings, if the bankruptcy court’s
17   “account of the evidence is plausible in light of the record
18   viewed in its entirety,” the appellate court may not reverse,
19   even if it was convinced that it would have weighed the evidence
20   differently.   Anderson v. City of Bessemer City, N.C., 470 U.S.
21   564, 573-74 (1985).    “Where there are two permissible views of
22   the evidence, the factfinder’s choice between them cannot be
23   clearly erroneous.”    Id.
24        We may affirm the bankruptcy court on any basis supported
25   by the record.    Shanks v. Dressel, 540 F.3d 1082, 1086 (9th Cir.
26   2008).
27
28

                                     -20-
 1                              V.   DISCUSSION
 2   A.    Pineda’s Appeal Of The Order Confirming Debtors’ SAJP Is
           Not Moot.
 3
           In analyzing constitutional mootness, the appellate court
 4
     asks whether it can give the appellant “any effective relief in
 5
     the event that it decides the matter on the merits in [its]
 6
     favor.    If it can grant such relief, the matter is not moot.”
 7
     Felton Pilate v. Burrell (In re Burrell), 415 F.3d 994, 998 (9th
 8
     Cir. 2005).    We conclude that this appeal is not
 9
     constitutionally moot because we could reverse plan confirmation
10
     or require modification of the SAJP, thereby giving relief to
11
     Pineda.
12
           The equitable mootness question requires more analysis due
13
     to the Ninth Circuit’s “comprehensive test” for determining
14
     whether an appeal is equitably moot:
15
           We will look first at whether a stay was sought, for
16         absent that a party has not fully pursued its rights.
           If a stay was sought and not gained, we then will look
17         to whether substantial consummation of the plan has
           occurred. Next, we will look to the effect a remedy
18         may have on third parties not before the court.
           Finally, we will look at whether the bankruptcy court
19         can fashion effective and equitable relief without
           completely knocking the props out from under the plan
20         and thereby creating an uncontrollable situation for
           the bankruptcy court.
21
22   Motor Vehicle Cas. Co. v. Thorpe Insulation Co. (In re Thorpe
23   Insulation Co.), 677 F.3d 869, 881 (9th Cir. 2012).
24         In applying these factors to this case, we decline to
25   dismiss this appeal on equitable mootness grounds.10   Although
26
          10
27        Pineda’s supplemental brief on mootness mostly discussed
   debtors’ conduct after confirmation and issues which remained
28                                                    (continued...)

                                      -21-
 1   Pineda sought a stay from the bankruptcy court and did not seek
 2   one from the Panel, “failure to obtain a stay is one factor to
 3   be considered in assessing equitable mootness, but is not
 4   necessarily controlling.”   Id. at 881–82.
 5        Moreover, the plan may be substantially consummated as
 6   defined in § 1101(2):   “Substantial consummation means
 7   (A) transfer of all or substantially all of the property
 8   proposed by the plan to be transferred; (B) assumption by the
 9   debtor or by the successor to the debtor under the plan of the
10   business or of the management of all or substantially all of the
11   property dealt with by the plan; and (C) commencement of
12   distribution under the plan.”   Debtors have transferred certain
13   real property to its secured creditors, including Pineda, in
14   compliance with the plan, assumed management of the business and
15   property dealt with by the plan, and commenced distributions to
16   all classes of creditors.
17        However, even if the plan is substantially consummated, we
18   can “still assess whether effective relief might be given
19   without fully impairing the prior plan and other pertinent
20   circumstances.”   In re Thorpe Insulation Co., 677 F.3d at 882
21
          10
            (...continued)
22
     unresolved in the confirmation order. Pineda argued that debtors
23   failed to turn over Pineda’s cash collateral from the QHI hotel,
     and debtors’ distribution to unsecured creditors was not
24   authorized and insubstantial. Moreover, Pineda maintains that
     the bankruptcy court’s confirmation ruling left numerous
25   outstanding issues unresolved such as the amount of Pineda’s
26   secured and unsecured claims and whether Pineda was entitled to
     an administrative claim. Other than bearing on whether the plan
27   has been substantially consummated, these arguments, are
     irrelevant to the constitutional and equitable mootness analysis
28   under Burrell and Thorpe.

                                     -22-
 1   n.7.        We thus consider “whether modification of the plan of
 2   reorganization would bear unduly on the innocent.”        Id. at 882.
 3           Debtors point out that some of the real property
 4   transferred to its secured creditors pursuant to the SAJP has
 5   been subsequently transferred to third parties.        Debtors also
 6   maintain that other parties have acted in reliance on the plan
 7   and confirmation order.        Specifically, the equity holders have
 8   contributed $250,000 to the plan from various sources,
 9   management took a reduction in salary to fund the first
10   distribution to unsecured creditors under the plan, and third
11   party suppliers, vendors, and customers have acted in reliance
12   on the plan by extending favorable credit terms to assist with
13   post-confirmation operations.        Therefore, according to debtors,
14   reversal of confirmation would unfairly prejudice these parties
15   and would lead to an inequitable result for parties not even
16   before this court.
17           We are not persuaded.     Even if we adopted Pineda’s position
18   on appeal, debtors’ transfer of the real properties to their
19   secured creditors would not have to be modified since the
20   estates were transferring those properties in any event,11 and
21   any distributions previously made to creditors would not have to
22   be reduced.        Further, although the equity holders made the
23   required new value contribution, they do not qualify as “third
24   parties” who are not before the court.        Any adverse consequences
25   to the equity holders were foreseeable as they opted to press
26
27
            11
          What happened to the properties after the secured
28 creditors took title is not pertinent.

                                         -23-
 1   forward with confirmation.    Harm to debtors’ management who
 2   agreed to reduced salaries and harm to vendors and suppliers who
 3   agreed to extend credit is lacking as well.    Debtors have not
 4   explained in any detail what inequitable result might ensue to
 5   these groups if the confirmation order were reversed.
 6          In sum, it would not be impossible for the bankruptcy court
 7   to fashion effective relief for Pineda nor has there been such a
 8   comprehensive change of circumstances to render it inequitable
 9   to consider the merits of the appeal.    Focus Media, Inc. v.
10   Nat’l Broad. Co., Inc. (In re Focus Media, Inc.), 378 F.3d 916,
11   922-23 (9th Cir. 2004) (citing Trone v. Roberts Farms, Inc.
12   (In re Roberts Farms, Inc.), 652 F.2d 793, 798 (9th Cir. 1981)).
13   “Where equitable relief, though incomplete, is available, the
14   appeal is not moot.”    In re Thorpe Insulation Co., 677 F.3d at
15   883.    As this appeal is not moot, we now turn to the merits.
16   B.     Plan Confirmation
17          Debtors had the burden of proving all the elements
18   governing plan confirmation.    Leavitt v. Soto (In re Leavitt),
19   209 B.R. 935, 940 (9th Cir. BAP 1997), aff’d, 171 F.3d 1219 (9th
20   Cir. 1999); United States v. Arnold & Baker Farms (In re Arnold
21   & Baker Farms), 177 B.R. 648, 653 (9th Cir. BAP 1994).      The
22   requirements for plan confirmation are listed in § 1129(a)
23   (stating that the court shall confirm a plan only if all the
24   following requirements have been met).    If the only condition
25   not satisfied is the eighth requirement, § 1129(a)(8), the plan
26   must satisfy the “cramdown” alternative to this condition found
27   in § 1129(b).    Cramdown requires that the plan “does not
28   discriminate unfairly” against and “is fair and equitable”

                                     -24-
 1   towards each impaired class that has not accepted the plan.
 2        1.   The Bankruptcy Court Did Not Err By Finding That
               The SAJP Complied With § 1129(a)(2).
 3
 4        Section 1129(a)(2) requires that the plan proponent comply
 5   with the applicable provisions of the Bankruptcy Code.   The
 6   section’s primary purpose is to assure that the plan proponents
 7   have complied with the disclosure and solicitation requirements
 8   of §§ 1125 and 1126.   See In re MacGibbon, 2006 WL 6810935, at
 9   *9 (9th Cir. BAP August 14, 2006) (Section 1129(a)(2) primarily
10   addresses adherence to the disclosure and solicitation
11   provisions in §§ 1125 and 1126); In re Sierra–Cal, 210 B.R. 168,
12   173 (Bankr. E.D. Cal. 1997) (Adequacy of disclosure is an
13   essential element for plan confirmation by way of § 1129(a)(2)).
14   However, bankruptcy courts have interpreted § 1129(a)(2) to
15   require the plan proponent’s compliance with court orders issued
16   in furtherance of the reorganization process.   See In re Multiut
17   Corp., 449 B.R. 323, 339 (Bankr. N.D. Ill. 2011) (citing
18   In re Greate Bay Hotel & Casino, Inc., 251 B.R. 213, 220–21
19   (Bankr. D.N.J. 2000)).
20        Some courts have strictly construed § 1129(a)(2) and denied
21   plan confirmation for any violation of the Bankruptcy Code.    See
22   In re Greate Bay Hotel, 251 B.R. at 236–37 (collecting cases).
23   Other courts have taken a more lenient approach:
24        Congress did not intend to fashion a minefield out of
          the provisions of the Bankruptcy Code. In fact, the
25        legislative history mentions the provision only in
          passing, offering as an example of compliance that the
26        debtor meet the disclosure requirements of § 1125 to
          satisfy § 1129(a)(2). Certainly, if Congress had
27        meant that any infraction, no matter how early on in
          the case, no matter how minor the breach, and
28        regardless of whether the court has remedied the

                                    -25-
 1        violations, should result in a denial of confirmation,
          Congress would have given some clearer indication in
 2        the legislative history or made the statutory
          provision far more express.
 3
 4   In re Landing Assocs., Ltd., 157 B.R. 791, 811 (Bankr. W.D. Tex.
 5   1993).   “Nonetheless, ‘serious violations of the Bankruptcy Code
 6   by a [proponent] can and should result in a denial of
 7   confirmation of a plan under § 1129(a)(2).’”    In re Greate Bay
 8   Hotel, 251 B.R. at 237 (quoting In re Landing Assocs., 157 B.R.
 9   at 810).
10        In deciding that § 1129(a)(2) did not preclude confirmation
11   of debtors’ SAJP, the bankruptcy court found:
12        [I]t is clear that the transfers between DOC and QHI
          have been occurring since the beginning of the case.
13        There does not appear to be any bad intent or improper
          use of such funds. Neither Pineda nor CCB raised any
14        objection to such practices except with respect to the
          $177,000 loan to a non-debtor entity, all but
15        [$]23,000 of which has been repaid.
16        While the court does not condone the debtors’ failure
          to seek court approval with respect to the non-debtor
17        loan, given the explanations provided, the court is
          not going to use this one issue to preclude
18        consideration of the second-amended plan . . . .
19        Pineda argues on appeal that the bankruptcy court
20   misapplied § 1129(a)(2) to the facts of this case and thus erred
21   as a matter of law in confirming the SAJP.   Pineda asserts that
22   it is undisputed that debtors made the $177,000 intercompany
23   transfer and it was not fully repaid.   Pineda further maintains
24   that § 1129(a)(2) mandates compliance with court orders
25   regardless of debtors’ intent.
26        Relying on Multiut, Pineda contends the facts in this case
27   are analogous.   There, a plan proponent professed a
28   misunderstanding of a court order requiring a deposit of

                                      -26-
 1   $100,000.   The debtor deposited just $70,000.   When the debtor
 2   failed to provide evidence that the remaining $30,000 had been
 3   deposited following the court’s clarification of this order, the
 4   court found § 1129(a)(2) was not satisfied and denied plan
 5   confirmation.    In re Multiut, 449 B.R. at 341-42.   Pineda argues
 6   that debtors’ violations of the cash collateral orders
 7   throughout this case constitute an even more serious failure to
 8   comply with court orders than the failure to comply in Multiut.
 9        Finally, Pineda asserts that it had no duty to constantly
10   monitor debtors’ conduct to determine whether they were
11   complying with their fiduciary duties, and there is no evidence
12   in the record that Pineda knew about the intercompany transfers
13   in order to object.    Pineda maintains that debtors had the
14   obligation to comply with § 1129(a)(2) whether or not creditors
15   objected to their violations of the cash collateral orders.
16        We have not had occasion to discuss the circumstances, if
17   any, under which the violation of a court order should preclude
18   confirmation under § 1129(a)(2) nor have we found Ninth Circuit
19   precedent on point.    Pineda advocates a rule that requires
20   denial of confirmation where there are “serious” violations of a
21   court’s order.    However, even if we were to adopt such a rule,
22   the bankruptcy court has broad discretion to determine whether a
23   particular violation of the court’s order is so serious as to
24   require denial of confirmation under § 1129(a)(2).12
25
         12
26        Indeed, the bankruptcy court has the tools to fashion a
   number of remedies for violations of cash collateral orders under
27 other sections of the Bankruptcy Code. See § 1112(b)(4)(D) and
   (E)(conversion or dismissal); § 1104(appointment of a chapter 11
28                                                    (continued...)

                                     -27-
 1        On this record, we cannot say the bankruptcy court abused
 2   its discretion.    The record shows that the bankruptcy court
 3   implicitly understood and applied the “serious violation” legal
 4   standard articulated in In re Greate Bay Hotel.    In reaching its
 5   decision, the court neither condoned nor minimized debtors’
 6   conduct with respect to the intercompany transfers.    Moreover,
 7   contrary to Pineda’s assertions, in deciding whether debtors’
 8   violations of the cash collateral orders were so egregious as to
 9   preclude confirmation of the SAJP, the bankruptcy court did
10   consider all relevant facts and circumstances such as debtors’
11   intent, improper use of the funds, or debtors’ failure to pay
12   the funds back.
13        Here, Ted Dunlap provided a supplemental declaration
14   regarding the $177,000 transfer from QHI to KT Market and the
15   other intercompany transfers between debtors that had occurred
16   throughout the case.    Mr. Dunlap testified that the $177,000
17   transferred from QHI to KT Market were used to pay for freezer,
18   electrical upgrades, signage, merchandise displays and other
19   tenant needs for stocking and opening a grocery store in Dunlap
20   Plaza.    Mr. Dunlap explained that the plaza needed an anchor
21   tenant after the two prior grocery store tenants vacated the
22   space.    He further testified that not a dime of the QHI loan
23   went to the principals of DOC or QHI and that the funds were
24   repaid either in full or mostly in full.
25        Finally, Mr. Dunlap explained that DOC provided payroll
26
27
          12
          (...continued)
28 trustee); § 363(e)(adequate protection).

                                     -28-
 1   functions for QHI and covered other expenses for QHI (including
 2   insurance and taxes).   The transfers between DOC and QHI were
 3   largely for reimbursements for payment of QHI expenses that were
 4   and are a part of the cash collateral budgets.    Mr. Dunlap
 5   testified that debtors did not believe the loan from QHI to
 6   KT Market or other ordinary course intercompany transfers were
 7   prohibited and that they did not intend to violate any court
 8   orders.   Pineda had the opportunity to cross examine Mr. Dunlap
 9   at the confirmation hearing.
10        Given the bankruptcy court’s findings regarding no bad
11   intent or improper use of the funds, the bankruptcy court must
12   have found Ted Dunlap’s testimony credible.    The court
13   apparently was convinced by the evidence in the record that
14   debtors repaid all but $23,000 of the funds to QHI.    Moreover,
15   as a condition of confirmation, the bankruptcy court required
16   KT Market to pay all amounts owed to QHI prior to the effective
17   date.
18        Here, the bankruptcy court’s factual findings regarding no
19   bad intent, no improper use of the funds, and substantial
20   repayment are supported by the record and not clearly erroneous.
21   Given these mitigating factors, the bankruptcy court could
22   reasonably conclude that debtors’ non-compliance with the cash
23   collateral orders was not so egregious as to preclude
24   confirmation of debtors’ SAJP.    If the bankruptcy court’s
25   “account of the evidence is plausible in light of the record
26   viewed in its entirety,” we cannot reverse even if we are
27   convinced that we would have weighed the evidence differently.
28   Anderson, 470 U.S. at 573-74.    There is thus no basis for

                                      -29-
 1   reversal of the confirmation order on the grounds alleged.
 2              a.   The Bankruptcy Court Did Not Err By Finding That
                     The Law Of The Case Doctrine Was Inapplicable To
 3                   Its Earlier Ruling Denying Confirmation Of
                     Debtors’ FAJP For Violation of § 1129(a)(2).
 4
 5              Next, Pineda argues that the bankruptcy court’s prior
 6   determination that debtors’ non-compliance with the cash
 7   collateral orders warranted denial of debtors’ FAJP is the law
 8   of the case and, therefore, should be given preclusive effect in
 9   connection with the SAJP.   Pineda further maintains that the
10   bankruptcy court’s earlier ruling was not clearly erroneous and
11   nothing changed between the hearing on the FAJP and the hearing
12   on the SAJP that would justify departure from the court’s
13   previous ruling.
14        The bankruptcy court found the law of the case doctrine
15   inapplicable.   The court noted that the doctrine was not a
16   limitation on the court’s power, but expressed only the practice
17   of courts generally to refuse to reopen questions formerly
18   decided.   U.S. v. Maybusher, 735 F.2d 366, 370 (9th Cir. 1984).
19   The bankruptcy court concluded that the doctrine did not
20   preclude it from reexamining the issue of debtors’ failure to
21   comply with the court’s orders in the context of the SAJP
22   especially when its prior findings of non-compliance were made
23   in support of an interlocutory order.
24        We agree with the bankruptcy court’s ruling.   The law of
25   the case doctrine precludes a court from “reconsidering an issue
26   that has already been decided by the same court . . . in the
27   identical case.”   United States v. Alexander, 106 F.3d 874, 876
28   (9th Cir. 1997).   Application of the doctrine “is discretionary,

                                    -30-
 1   not mandatory” and is in no way “a limit on [a court’s] power.”
 2   City of L.A. v. Santa Monica Baykeeper, 254 F.3d 882, 888 (9th
 3   Cir. 2001); Maybusher, 735 F.2d at 370.   The doctrine does not
 4   effect the bankruptcy court’s power to reconsider its own
 5   interlocutory order denying confirmation of debtors’ FAJP.    A
 6   contrary conclusion would be irreconcilable with § 1127(a) which
 7   states that the plan proponent may modify a plan at any time
 8   before confirmation and Civil Rule 54(b), incorporated by
 9   Rule 7054, which states in relevant part:
10        [A]ny order or other decision, however designated,
          that adjudicates fewer than all the claims or the
11        rights and liability of fewer than all the parties
          does not end the action as to any of the claims or
12        parties and may be revised at any time before entry of
          a judgment adjudicating all the claims and all the
13        parties’ rights and liabilities.
14   Accordingly, the bankruptcy court was not bound by the law of
15   the case doctrine when it reconsidered or rescinded its prior
16   decision concerning debtors’ non-compliance with the cash
17   collateral orders as grounds for denial of confirmation under
18   § 1129(a)(2).
19             b.    The Bankruptcy Court Properly Found That The
                     Claim And Issue Preclusion Doctrines Did Not
20                   Apply To Its Earlier Ruling Denying Confirmation
                     Of Debtors’ FAJP For Violation Of § 1129(a)(2).
21
22             Pineda also relies on claim and issue preclusion to
23   support its arguments under § 1129(a)(2).
24        Federal common law determines the preclusive effect of a
25   federal judgment.   Taylor v. Sturgell, 553 U.S. 880, 891 (2008);
26   W. Sys., Inc. v. Ulloa, 958 F.2d 864, 871 n.11 (9th Cir. 1992).
27   The party asserting issue preclusion must establish that (1) the
28   issue was actually decided by a court in an earlier action,

                                    -31-
 1   (2) the issue was necessary to the judgment in that action, and
 2   (3) there was a valid and final judgment.   N.H. v. Maine,
 3   532 U.S. 742, 748 (2001).   The doctrine of claim preclusion
 4   requires: (1) the identity of claims, (2) a final judgment on
 5   the merits, and (3) privity between the parties.   Tahoe–Sierra
 6   Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 322 F.3d
 7   1064, 1077 (9th Cir. 2003).    On appeal, Pineda mentions only the
 8   finality element, which is required under either doctrine.
 9        Citing Lievsay v. W. Fin. Savings Bank (In re Lievsay),
10   118 F.3d 661, 662 (9th Cir. 1997), the bankruptcy court found
11   that neither doctrine applied because the order denying debtors’
12   FAJP was interlocutory and not final.   Pineda argues that this
13   was in error because the bankruptcy court’s orders granting it
14   relief from stay were final.   To connect the bankruptcy court’s
15   FAJP ruling with the relief from stay orders, Pineda asserts
16   that the orders granting relief from stay were predicated on the
17   same evidence the court relied upon for denial of confirmation.
18   According to Pineda, it follows that debtors’ non-compliance
19   with the cash collateral orders as a basis for denial of plan
20   confirmation was “necessarily decided” in connection with the
21   relief from stay motions.   Pineda then concludes, without
22   analysis, that “all elements of res judicata and collateral
23   estoppel were satisfied.”
24        We disagree.   Pineda did not argue before the bankruptcy
25   court that the relief from stay orders provided an independent
26   basis for application of the claim and issue preclusion
27   doctrines.   Because Pineda failed to raise this issue before the
28   bankruptcy court, it has been waived.   Consol. Mktg., Inc. v.

                                     -32-
 1   Marvin Props., Inc. (In re Marvin Props., Inc.), 854 F.2d 1183,
 2   1187 (9th Cir. 1988).    In any event, even if not waived,
 3   Pineda’s reliance on the final relief from stay orders does not
 4   aid its position.    As noted above, the bankruptcy court could
 5   revisit its findings on plan confirmation at any time before
 6   entry of the confirmation judgment under Civil Rule 54(b).
 7   Further, relief from stay proceedings are primarily procedural;
 8   they determine whether there are sufficient countervailing
 9   equities to release an individual creditor from the collective
10   stay.     Johnson v. Righetti (In re Johnson), 756 F.2d 738, 740–41
11   (9th Cir. 1985).    There is no indication that the bankruptcy
12   court’s denial of confirmation based on debtors’ non-compliance
13   with the cash collateral orders was “necessary” to the court’s
14   decision granting Pineda relief from stay.    Accordingly, there
15   is no basis for reversal of the confirmation order on claim or
16   issue preclusion grounds.
17        2.     The Bankruptcy Court Did Not Err By Finding That The
                 SAJP Complied With § 1129(a)(11).
18
19           Section 1129(a)(11) provides that a plan is confirmable
20   only if “[c]onfirmation of the plan is not likely to be followed
21   by liquidation, or the need for further financial
22   reorganization, of the debtor or any successor to the debtor
23   under the plan, unless such liquidation or reorganization is
24   proposed in the plan.”    Feasibility requires only that the
25   debtor demonstrate that the plan has a “reasonable probability
26   of success.”    In re Acequia, Inc., 787 F.2d at 1364.   “The Code
27   does not require the debtor to prove that success is inevitable
28   or assured, and a relatively low threshold of proof will satisfy

                                      -33-
 1   § 1129(a)(11) so long as adequate evidence supports a finding of
 2   feasibility.”   Wells Fargo Bank v. Loop 76, LLC (In re Loop 76,
 3   LLC), 465 B.R. 525, 544 (9th Cir. BAP 2012).
 4        “If a final payment, in the form of a ‘balloon’ payment, is
 5   proposed to come from new financing to be acquired by the
 6   [d]ebtor in the form of some new lending vehicle, then proof of
 7   feasibility is necessary.   Whether that balloon payment can
 8   likely be made, and new financing acquired, requires credible
 9   evidence proving that obtaining that future financing is a
10   reasonable likelihood.”   In re Seasons Partners, LLC, 439 B.R.
11   505, 515 (Bankr. D. Ariz. 2010).
12        In evaluating the feasibility of the SAJP, the bankruptcy
13   court recited and recognized these standards.   The court first
14   considered the SAJP’s provisions for implementing the plan.
15   Payments under the plan would be funded through cash flow
16   generated by the continued operations of the debtors’ business;
17   equity holders would infuse new capital in the amount of
18   $250,000 and contribute their fee simple interests in the Benson
19   Little General and Benson Chevron; debtors had received
20   significant support from fuel and merchandise vendors that would
21   generate an additional $30,000-$45,000 in additional cash on an
22   annual basis; Jackson Oil had committed to a $200,000 line of
23   credit available for fuel purchases upon confirmation of the
24   plan; a $100,000 cash contribution from a key man life insurance
25   policy would provide additional liquidity for the plan; and
26   salary deferrals in the amount of $50,000 for Ted Dunlap and
27   Mr. Martin would further assist with liquidity if needed.    The
28   bankruptcy court also noted that the transfer of the QHI hotel

                                    -34-
 1   to Pineda would mean that no proceeds from the hotel would be
 2   available to fund the plan, but it also meant that the secured
 3   payments to Pineda would be reduced by the value of its secured
 4   claim against the hotel, which would also improve feasibility of
 5   the plan.
 6        With respect to the witness testimony, the bankruptcy court
 7   found Mr. Odenkirk’s testimony credible.   The bankruptcy court
 8   recited portions of Mr. Odenkirk’s testimony that it found
 9   persuasive in its findings.   First, Mr. Odenkirk concluded that
10   based on the additional sources of cash and credit made
11   available to debtors, and upon review of the financial impact of
12   the updated credit offered to debtors by its vendors relating to
13   fuel and merchandise sold by DOC, there should be ample cash
14   available to purchase fuel and merchandise to meet projections.
15   Next, Mr. Odenkirk confirmed that the Jackson fuel credit of
16   $200,000 alone would allow DOC to purchase the one load of fuel
17   per day needed to hit the projected fuel sales.
18        He also described how the increase in fuel supply would
19   translate into greater sales and higher profits on the retained
20   locations.   Mr. Odenkirk explained that the debtors did not
21   require vast amounts of inventory on hand at any given time.
22   Rather debtors’ fuel and merchandise inventory rotated on a
23   daily or weekly basis, and consequently debtors would have
24   access to more than enough inventory for the plan to succeed.
25        Finally, Mr. Odenkirk opined that DOC should be able to
26   obtain financing for the balloon payments called for under the
27   plan so long as the plan payments were made.   The bankruptcy
28   court noted that on this last point, the evidence was

                                    -35-
 1   uncontroverted.
 2        The bankruptcy court also recited portions of Ted Dunlap’s
 3   testimony that it relied upon.    Ted Dunlap confirmed that
 4   debtors typically store approximately 50,000 to 65,000 gallons
 5   of fuel in their tanks at any given time, with the average being
 6   50,000 gallons, and that this inventory is constantly rotating
 7   and being replaced.   He further testified that the DOC stations
 8   were capable of storing and rotating approximately $200,000 in
 9   merchandise inventory, not the $800,000 suggested in Mr. Farr’s
10   analysis.
11        The bankruptcy court explained why it did not find
12   Mr. Farr’s testimony compelling.    Mr. Farr was the only witness
13   offered to controvert Mr. Odenkirk’s testimony on feasibility.
14   Mr. Farr is the vice-president of CCB, having worked as a
15   commercial loan officer for over twenty-five years.    He
16   testified that he had not operated gas stations or convenience
17   stores and had no particular expertise in this industry.      He
18   also did not prepare his own projections for DOC.    During cross
19   examination Mr. Farr admitted that there were errors in his
20   analysis and that portions of his analysis regarding loss of
21   cash and inventory at DOC since the petition date was not
22   prepared by him but by CCB’s counsel.    The court also
23   discredited Mr. Farr’s argument that the cash position on the
24   petition date and the current cash position were different
25   because testimony and evidence showed that a few days after the
26   petition date a significant payroll for both companies was paid
27   that reduced cash to approximately the exact level of cash that
28   existed as of December 31, 2013.    Given Mr. Farr’s failure to

                                      -36-
 1   prepare independent projections and the errors in his analysis,
 2   and considering his lack of independence in this matter, the
 3   bankruptcy court did not find his testimony compelling.
 4        The bankruptcy court concluded that the totality of the
 5   evidence, including the increased funding and credit terms in
 6   the SAJP and the testimony of Mr. Odenkirk, combined with the
 7   testimony of Mr. Dunlap which the court found more credible than
 8   that of Mr. Farr, showed the SAJP was feasible within the
 9   meaning of § 1129(a)(11).
10        Pineda argues that the bankruptcy court erred in its
11   feasibility analysis on several grounds.    First, debtors’ cash
12   flow projections did not account for the full amount of Pineda’s
13   allowed secured claim, which includes the value of Pineda’s lien
14   on debtors’ personal property and accumulated cash collateral.
15   Second, the cash flow projections were based on the inaccurate
16   assumption that Pineda would have no administrative claim for
17   failed adequate protection.   In this regard, Pineda maintains
18   that the bankruptcy court’s finding that sufficient funds should
19   be available to pay the administrative claims due on the
20   effective date was clearly erroneous.    Pineda also contends the
21   projections were not supported by the evidence because there was
22   a glaring discrepancy between the projections and debtors’
23   historical performance.   Pineda points out that debtors did not
24   once earn a profit during the six years prior to plan
25   confirmation and posted a loss of nearly $9 million dollars from
26   January 2008 through May 2013.    According to Pineda,
27   Mr. Odenkirk’s testimony could not cure these flaws and he
28   simply reviewed the projections debtors provided and checked

                                      -37-
 1   whether the math on the projections was correct.
 2        Finally, Pineda asserts that debtors provided no evidence
 3   of their ability to make the balloon payments.     Pineda points
 4   out that debtors will owe millions of dollars in balloon
 5   payments at the end of the five-year term and the only evidence
 6   debtors presented on this issue was Mr. Odenkirk’s statement
 7   that if DOC and QHI make the payments called for under the plan
 8   it is reasonable to expect that DOC will be able to obtain
 9   conventional bank financing or private financing for the balloon
10   payments called for under the plan.     According to Pineda, this
11   self-serving, unsupported and conclusory opinion is insufficient
12   as a matter of law to sustain a finding of feasibility.
13        We acknowledge that knowing the amount and character of
14   claims is vital to assessing feasibility.     While Pineda
15   complains that the bankruptcy court has not yet determined the
16   amount of its secured claim, the SAJP set forth stipulated
17   values of Pineda’s secured claim on the retained properties for
18   purposes of plan confirmation.    Whether or not those values will
19   turn out to be different, we cannot say.     Moreover, there was no
20   evidence in the record showing Pineda was entitled to an
21   administrative claim of over $500,000 for failed adequate
22   protection.   The bankruptcy court noted that Pineda had not
23   moved for approval of any administrative priority claim prior to
24   the confirmation hearing.
25        Because feasibility is an issue of fact, we give due regard
26   to the bankruptcy court’s evaluation of witness testimony and
27   any inferences drawn by the court.      In re Loop 76, LLC, 465 B.R.
28   at 544.   Factual issues such as how increases in fuel supply

                                      -38-
 1   will translate into greater sales and higher profits were
 2   central to the feasibility analysis.   Certainly, the judge who
 3   heard the relevant testimony was in a better position to assess
 4   the testimony than we are on a paper record.    Since
 5   Mr. Odenkirk’s testimony was consistent with the evidence, we
 6   will not disturb the bankruptcy court’s assessment of
 7   credibility on appeal.   See Anderson, 470 U.S. at 575.
 8        Finally, we are not persuaded that the bankruptcy court’s
 9   findings regarding the balloon payments are clearly erroneous.
10   Mr. Odenkirk’s opinion that the balloon payments could be made
11   if DOC made all the payments required under the SAJP was not
12   binding on the bankruptcy court even if no contradictory
13   evidence was offered by the other side.   See Ark. Natural Gas
14   Corp., 321 U.S. 620, 627–28 (1944) (it is not error for the
15   factfinder to reject expert opinion evidence, even if
16   uncontroverted).   However, the bankruptcy court had discretion
17   whether to credit Mr. Odenkirk’s opinion regarding the balloon
18   payment and afford it the appropriate weight.    Here, the
19   bankruptcy court observed that there was no evidence that the
20   real property would decline in value over the term of the plan.
21   Moreover, Mr. Odenkirk’s opinion regarding refinance was
22   conditioned on DOC’s payments under the SAJP to its secured
23   creditors.   Under these circumstances, the bankruptcy court
24   could reasonably conclude that it was conceivable DOC could
25   refinance the properties at the end of the five-year term.
26        In sum, upon our review of the record, there was adequate
27   evidence to support debtors’ relatively low threshold of proof
28   on feasibility.    Accordingly, the bankruptcy court’s finding of

                                     -39-
 1   feasibility was not clearly erroneous.
 2        3.   The Bankruptcy Court Did Not Err By Finding That The
               SAJP Complied With § 1129(b)(2)(A)(i)(II).
 3
 4        The bankruptcy court may confirm a plan without the consent
 5   of an impaired class of secured creditors if the plan meets the
 6   cramdown provisions of § 1129(b).      Varela v. Dynamic Brokers,
 7   Inc. (In re Dynamic Brokers, Inc.), 293 B.R. 489, 498 (9th Cir.
 8   BAP 2003).   A plan proposing a cramdown of a secured claim may
 9   be confirmed if the plan is fair and equitable with respect to
10   the objecting class.   § 1129(b)(1).
11        Fair and equitable treatment of a secured creditor requires
12   that the creditor retain the lien securing its claim
13   (§ 1129(b)(2)(A)(i)(I)) and that the creditor receive deferred
14   cash payments with a present value at least equal to the value
15   of its claim (§ 1129(b)(2)(A)(i)(II)).      In re Arnold & Baker
16   Farms, 85 F.3d at 1420.   Deferred cash payments to an impaired
17   class must be valued as of the effective date of the plan and
18   “consist of an appropriate interest rate and an amortization of
19   the principal which constitutes the secured claim.”      Heartland
20   Fed. Sav. & Loan Ass’n v. Briscoe Enters. (In re Briscoe
21   Enters.), 994 F.2d 1160, 1169 (5th Cir. 1993).
22        The SAJP provides that Pineda’s secured claims will be
23   amortized over twenty-five years and paid monthly with interest
24   at 5% per annum, with the remaining balance to be paid at the
25   end of year five of the plan.   In determining whether the 5%
26   cramdown interest rate was appropriate, the bankruptcy court
27   used the formula approach set forth in Till, 541 U.S. at 476.
28        In deciding on an interest rate in a chapter 11 case,

                                     -40-
 1        a bankruptcy court should apply the market rate of
          interest where there exists an efficient market. And,
 2        when no efficient market exists for a Chapter 11
          debtor, then the Bankruptcy Court should employ the
 3        formula approach endorsed by the Till plurality.
 4   In re VDG Chicken LLC, 2011 WL 3299089, at *8 (9th Cir. BAP
 5   April 11, 2011) (citing Mercury Capital Corp. v. Milford Conn.
 6   Assocs., L.P., 354 B.R. 1, 11–12 (D. Conn. 2006); Bank of
 7   Montreal v. Official Comm. of Unsecured Creditors (In re Am.
 8   Homepatient, Inc.), 420 F.3d 559 (6th Cir. 2005)(finding the
 9   bankruptcy court did not err as a matter of law when it applied
10   the Till formula to a chapter 11 cramdown)).
11        The bankruptcy court first found that it was undisputed
12   that there was no efficient market for a loan to debtors.     Next,
13   the court considered the testimony of Mr. Odenkirk, who
14   concluded that a 5% cramdown interest rate was fair and
15   equitable.   Although Mr. Odenkirk had used the 1.01% yield for a
16   five-year treasury note as the base rate and then added a 4%
17   risk factor, the bankruptcy court found that his ultimate
18   conclusion of a 5% interest rate was supported by the formula
19   approach in Till and current market lending conditions.
20        On appeal, Pineda contends that the bankruptcy court
21   misapplied the formula approach.   Pineda argues that the formula
22   approach involves a two-step process:   (1) it begins by looking
23   to the national prime rate and (2) the court then adjusts the
24   rate upward to account for various risk factors, including “the
25   circumstances of the estate, the nature of the security, and the
26   duration and feasibility of the reorganization plan.   Till,
27   541 U.S. at 479.   Following this two step approach, Pineda
28   asserts that the bankruptcy court should have added the risk

                                    -41-
 1   factor of 4% found by Mr. Odenkirk to the prime rate of 3.25%
 2   for a cramdown rate of 7.25%.   Pineda maintains that the
 3   bankruptcy court’s methodology was in error because the prime
 4   rate does not reflect any of the risks of lending to an
 5   insolvent chapter 11 debtor.
 6        According to Pineda, even if the interest rate is reviewed
 7   under a clearly erroneous standard, there is no evidence in the
 8   record to support the appropriate risk adjustment is 1.75% since
 9   Mr. Odenkirk’s testimony that the risk factors required a 4%
10   adjustment was the only evidence on this issue.   Pineda asserts
11   that the court thus improperly substituted its own opinion of
12   the correct risk adjustment for the evidence of record.
13        We disagree.   Pineda overlooks that the Supreme Court in
14   Till placed the evidentiary burden on the creditor to present
15   evidence of a higher interest rate (the portion associated with
16   the risk factor), reasoning that the creditors “are likelier to
17   have readier access to any information absent from the debtor's
18   filing.”   Till, 541 U.S. at 479.
19        The appropriate size of that risk adjustment depends,
          of course, on such factors as the circumstances of the
20        estate, the nature of the security, and the duration
          and feasibility of the reorganization plan. The court
21        must therefore hold a hearing at which the debtor and
          any creditors may present evidence about the
22        appropriate risk adjustment. Some of this evidence
          will be included in the debtor’s bankruptcy filings,
23        however, so the debtor and creditors may not incur
          significant additional expense. Moreover, starting
24        from a concededly low estimate and adjusting upward
          places the evidentiary burden squarely on the
25        creditors, who are likely to have readier access to
          any information absent from the debtor’s filing (such
26        as evidence about the ‘liquidity of the collateral
          market,’ . . . Finally, many of the factors relevant
27        to the adjustment fall squarely within the bankruptcy
          court’s area of expertise.
28

                                     -42-
 1        Here, the bankruptcy court did not have to accept
 2   Mr. Odenkirk’s 4% risk factor and Pineda offered no evidence of
 3   its own on the risk adjustment.    The bankruptcy court properly
 4   considered the national prime rate (3.25%), market conditions,
 5   the feasibility of the plan, and noted that there was no
 6   evidence that the real property would decline in value over the
 7   term of the plan.   In addition, the court noted that the prime
 8   rate already had a built in risk factor.    Accordingly, based on
 9   the totality of the circumstances in the case, the bankruptcy
10   court could reasonably conclude that a risk adjustment of 1.75%
11   was appropriate and thus the appropriate cramdown interest rate
12   should be 5%.   Since we give substantial deference to the
13   bankruptcy court’s cramdown interest rate determination, the
14   bankruptcy court’s finding was not clearly erroneous.
15   In re Yett, 306 B.R. at 290.
16        4.   The Bankruptcy Court Did Not Err By Finding That The
               SAJP Complied With § 1129(b)(2)(B)(ii).
17
18        Since debtors’ SAJP Plan was not accepted by every impaired
19   class of claims, it may only be confirmed pursuant to the
20   so-called cram down provisions of § 1129(b), which bring into
21   play the absolute priority rule.    The absolute priority rule,
22   which is set forth in § 1129(b)(2)(B)(ii), requires that “‘a
23   dissenting class of unsecured creditors . . . be provided for in
24   full before any junior class can receive or retain any property
25   [under a reorganization] plan.’”    Norwest Bank Worthington v.
26   Ahlers, 485 U.S. 197, 202 (1988).
27        In this case, the Dunlaps, as equity holders, are in a
28   class of creditors junior to Pineda’s unsecured claims which are

                                    -43-
 1   not being paid in full.   Thus, application of the absolute
 2   priority rule would bar the Dunlaps from retaining any property,
 3   including their ownership interest in the reorganized debtor,
 4   DOC.    However, debtors sought to utilize the new value exception
 5   to overcome the absolute priority rule.
 6          To satisfy the new value exception to the absolute priority
 7   rule, and to satisfy § 1129(b)(2)(B)(ii) notwithstanding the
 8   objection by an unsecured class that is not paid in full, former
 9   equity owners are “required to offer value that was 1) new,
10   2) substantial, 3) money or money's worth, 4) necessary for a
11   successful reorganization and 5) reasonably equivalent to the
12   value or interest received.”    In re Bonner Mall P’ship, 2 F.3d
13   at 909.    The bankruptcy court found that all these elements were
14   met.    The court found that the funds were “clearly new” and that
15   the $250,000 was substantial because it constituted in excess of
16   5% of debtors’ unsecured claims.    The bankruptcy court also
17   found the funds were money or money’s worth and were necessary
18   for an effective reorganization.    Finally, the court found that
19   the cash contribution was more than reasonably equivalent to the
20   value of the equity interest retained.
21          On appeal, Pineda challenges the bankruptcy court’s finding
22   on the substantial element.    Citing case law where the courts
23   rejected a new value contribution when the proposed new value
24   was equal to 3.7% to 4.4% of unsecured debt, Pineda contends
25   that the 5.49% which applies to this case is insufficient.
26   Next, Pineda contends that a portion of the new value
27   contribution is a transfer of the cash surrender value of a life
28   insurance policy held by a self-settled trust of Ken and Carol

                                     -44-
 1   Dunlap.    According to Pineda, because the Dunlaps are debtors in
 2   their own bankruptcy, this transfer is avoidable as a fraudulent
 3   transfer and an unauthorized post-petition transfer.
 4        The Ninth Circuit has declined to specifically adopt a
 5   particular methodology for determining whether a contribution is
 6   substantial, holding instead that a “de minimis contribution”
 7   does not satisfy the new value exception.    Liberty Nat’l Enters.
 8   v. Ambanc La Mesa Ltd. P’ship, 115 F.3d 650, 655 (9th Cir.
 9   1997).    There, the court noted that several different
10   considerations may be relevant in the analysis, including
11   comparing the amount of the contribution to total unsecured
12   claims, comparing the contribution to the amount of claims being
13   discharged, and considering the extent of the dividend being
14   paid on unsecured claims by virtue of the contribution.    Id.
15        While the bankruptcy court considered only the first
16   comparison — the amount of the contribution to total unsecured
17   claims — it implicitly concluded that the 5.49% was not so de
18   minimis as to fail the substantial contribution factor as a
19   matter of law.    Compare Matter of Woodbrook Assoc., 19 F.3d 312,
20   320 (7th Cir. 1994) ($100,000 contribution not substantial
21   because it is only 3.8% of $2.6 million unsecured debt);
22   In re Snyder, 967 F.2d 1126, 1132 (7th Cir. 1992) (“the
23   disparity between the contribution and the unsecured debt,” at
24   most $22,000 or 2.2% of approximately $1,000,000 unsecured
25   claims, was “so extreme . . . there [was] no need to proceed any
26   further . . . .”); and Travelers Ins. Co. v. Olson
27   (In re Olson), 80 B.R. 935 (Bankr. C.D. Ill. 1987) ($5,000, or
28   only 1.56% on the $320,000 due all unsecured creditors, held

                                     -45-
 1   insubstantial), aff’d, 1989 WL 330439 (C.D. Ill. Feb.8, 1989),
 2   with State St. Bank and Trust Co. v. Elmwood, Inc.
 3   (In re Elmwood, Inc.), 182 B.R. 845, 853-54 (D. Nev. 1995)
 4   (affirming bankruptcy court’s decision that $150,000
 5   contribution which was less than 4% of unsecured debt was
 6   substantial in light of other factors).
 7        Here, the 5.49% ratio is above those in the case law cited
 8   above, none of which is binding on the bankruptcy court or this
 9   Panel.   We are thus not convinced that the bankruptcy court made
10   an error in its determination that the contribution, when viewed
11   as a percentage of the unsecured claims, was substantial.
12   Furthermore, there is no indication that the parties or the
13   court took into consideration that the equity holders were
14   contributing real property.    See Matters of Treasure Bay Corp.,
15   212 B.R. 520 (Bankr. S.D. Miss. 1997) (Real property that equity
16   holders proposed to contribute in return for interest in
17   reorganized debtor qualified as “money or money’s worth,” which
18   could be counted in deciding whether equity holders’
19   contribution was sufficient to permit application of the new
20   value exception to the absolute priority rule).   Given our
21   deferential review standards, we uphold the bankruptcy court’s
22   conclusion that the requirements for the new value exception
23   have been met.
24        The bankruptcy court made no findings concerning Pineda’s
25   fraudulent transfer theory and there is no evidence in the
26   record to support such a theory.
27                            VI.   CONCLUSION
28        In sum, Pineda’s arguments do not provide a basis for

                                     -46-
 1   reversal of the confirmation order.   For the reasons stated, we
 2   AFFIRM.13
 3
 4
 5
 6
 7
 8
 9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
         13
27        In light of our conclusion, we do not address the
   bankruptcy court’s decision denying Pineda’s motion to convert or
28 dismiss.

                                   -47-
