                                                           FILED
                                                            FEB 01 2012
 1
                                                        SUSAN M SPRAUL, CLERK
                                                          U.S. BKCY. APP. PANEL
 2                                                        OF THE NINTH CIRCUIT


 3                  UNITED STATES BANKRUPTCY APPELLATE PANEL
 4                            OF THE NINTH CIRCUIT
 5   In re:                        )        BAP No.   AZ-11-1326-JuKiCl
                                   )
 6   SUNNYSLOPE HOUSING LIMITED    )        Bk. No.   11-02441
     PARTNERSHIP,                  )
 7                                 )
                    Debtor.        )
 8   ______________________________)
     FIRST SOUTHERN NATIONAL BANK, )
 9                                 )
                    Appellant,     )
10                                 )
     v.                            )        M E M O R A N D U M*
11                                 )
     SUNNYSLOPE HOUSING LIMITED    )
12   PARTNERSHIP,                  )
                                   )
13                  Appellee.      )
     ______________________________)
14
                    Argued and Submitted on January 18, 2012
15                             at Phoenix, Arizona
16                          Filed - February 1, 2012
17            Appeal from the United States Bankruptcy Court
                        for the District of Arizona
18
         Honorable Randolph J. Haines, Bankruptcy Judge, Presiding
19                      ____________________________
20   Appearances:     Dale C. Schian, Esq. of Schian Walker, P.L.C.
                      argued for appellant First Southern National
21                    Bank; Bradley Pack, Esq. of Engleman Berger, P.C.
                      argued for appellee Sunnyslope Housing Limited
22                    Partnership.
                         _____________________________
23
24
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   Before:      JURY, KIRSCHER, and CLARKSON,** Bankruptcy Judges.
 2            Appellant, First Southern National Bank (“FSNB”), appeals
 3   the bankruptcy court’s order denying its motion for relief from
 4   stay (the “MRS”).1     We AFFIRM.
 5                                   I. FACTS
 6            Chapter 112 debtor, Sunnyslope Housing Limited Partnership,
 7   is an Arizona limited partnership.        Sunnyslope Housing, LLC
 8   (“SH,LLC”) is debtor’s general partner and is owned by Reid
 9   Butler (“Butler”).      RBC Tax Credit Equity, LLC and RBC tax
10   Credit Manager II, Inc. (affiliates of the Royal Bank of Canada)
11   are debtor’s limited partner and special limited partner
12   (collectively, the “Limited Partners”).
13            Debtor’s sole asset is an apartment project in Phoenix,
14   Arizona, which it operated as an affordable housing community.
15   The affordable housing restrictions recorded against the
16   property gave debtor tax credits in the amount of $539,973 per
17   year.
18            Butler owns Butler Housing Company, which acted as the
19
20        **
            Hon. Scott C. Clarkson, Bankruptcy Judge for the Central
     District of California, sitting by designation.
21
          1
22          FSNB also appealed the bankruptcy court’s order denying
     its motion for summary judgment on dismissal of the bankruptcy
23   case. Appellee-debtor moved to dismiss this portion of the
     appeal as untimely. The Panel granted debtor’s motion on
24   December 9, 2011. Therefore, this appeal addresses only the MRS
     order.
25
          2
26          Unless otherwise indicated, all chapter and section
     references are to the Bankruptcy Code, 11 U.S.C. §§ 101-1532.
27   “Rule” references are to the Federal Rules of Bankruptcy
     Procedure and “Civil Rule” references are to the Federal Rules of
28   Civil Procedure.

                                         -2-
 1   developer of the apartment complex.     Financing for the
 2   acquisition, construction and development of the project was
 3   provided by an $8.5 million loan funded from the sale of
 4   municipal bonds3 (the “Capstone Loan”), secured by a first deed
 5   of trust; a $3 million loan from the City of Phoenix (the “City
 6   Loan”), secured by a second deed of trust; a $500,000 loan from
 7   the State of Arizona (the “Arizona Loan”), secured by a third
 8   deed of trust; and equity financing provided by an affiliate of
 9   the Royal Bank of Canada (the “RBC”).
10            From the outset, debtor experienced a number of challenges,
11   which included a significant increase in construction costs and
12   the downturn of the real estate market.     To add to its troubles,
13   the RBC, which had injected millions of dollars into the
14   project, ceased funding debtor’s operations, which caused debtor
15   to default under its loan agreements.
16            In September 2010, HUD sold all right, title and interest
17   in the Capstone Loan and Capstone Deed of Trust to FSNB for just
18   over $5 million.     Thereafter, FSNB filed a complaint against
19   debtor in the Arizona state court requesting the appointment of
20   a receiver.     On October 21, 2010, the state court appointed a
21   receiver.     The receiver entered into market-rate leases that
22   moderately increased the cash flow of the property.     Also,
23   pursuant to his duties under the receiver order, the receiver
24   commenced marketing efforts to sell the property.     Because of
25   those efforts, a buyer agreed to purchase the property for
26
27
          3
            The Secretary of Housing and Urban Development (“HUD”)
28   insured the repayment of the Capstone Loan.

                                       -3-
 1   $7.65 million.
 2            On November 1, 2010, FSNB noticed a trustee’s sale of the
 3   property.
 4            On January 31, 2011, SH,LLC filed an involuntary petition
 5   for relief against debtor under chapter 11 to prevent the
 6   trustee’s sale.
 7            On February 16, 2011, FSNB filed the MRS.4   Debtor and the
 8   City of Phoenix (the “City”) filed timely objections.       The City
 9   expressed its concern that if FSNB foreclosed, the affordable
10   housing restrictions on the apartment project would be
11   extinguished to the detriment of the City’s interest and the
12   public’s interest in maintaining the supply of affordable
13   housing that was the purpose for which public funds were
14   expended to construct the Property.      The Limited Partners filed
15   a position statement supporting the MRS.
16            On March 2, 2011, the court held the initial hearing on the
17   motion.      The Minute Entry reflects that the court authorized
18   Butler to appear as debtor’s counsel at that hearing,5 scheduled
19   a final evidentiary hearing on April 20, 2011, and ordered the
20   parties to submit a joint pretrial statement by April 4, 2011
21   (which they did).
22
23
24
25        4
            The motion was actually titled as an “Emergency Motion For
26   An Order Either: (1) Dismissing Bankruptcy Case; (2) Granting
     Relief From the Automatic Stay; or (3) Excusing Turnover.”
27
          5
            Butler was a licensed attorney in Arizona and admitted to
28   practice before the bankruptcy court.

                                       -4-
 1            On March 14, 2011, FSNB filed an emergency motion6 for
 2   summary judgment seeking the dismissal of the bankruptcy case.
 3            On April 11, 2011, the bankruptcy court denied FSNB’s
 4   motion for summary judgment and treated the petition as a
 5   voluntary filing by SH,LLC on behalf of debtor.      The Minute
 6   Entry Order also reflects that the court informed Butler that
 7   debtor must be represented by counsel at the April 20, 2011
 8   evidentiary hearing on the MRS or the case would be dismissed.
 9            On April 18, 2011, debtor moved to continue the MRS
10   evidentiary hearing because of its need for funds that were held
11   by various entities.      Debtor asserted that although it had its
12   counsel in place, the funds were needed to pay administrative
13   fees.      At the April 20, 2011 evidentiary hearing on the MRS, the
14   court heard debtor’s motion for the continuance.      From what we
15   can tell, FSNB claimed an interest in a portion of the funds
16   which debtor sought to have released.      As a result, FSNB
17   requested a continuance of the MRS evidentiary hearing to
18   May 17, 2011, which the court granted.      On its own, the court
19   continued the hearing from May 17 to May 19, 2011.
20            At the May 19, 2011 evidentiary hearing,7 FSNB provided no
21   witnesses and relied on the statements set forth in the parties’
22   joint pretrial statement and its loan documents, which were
23
24        6
            Despite the “emergency” title, the court did not schedule
     the hearing on an emergency basis.
25
          7
26          At the time of the final hearing, the bankruptcy court had
     not yet determined whether debtor was a single asset real estate
27   debtor subject to the requirements under § 362(d)(3). The court
     made that determination by Minute Entry Order entered on June 27,
28   2011.

                                       -5-
 1   stipulated into evidence.   Because it was undisputed that debtor
 2   had no equity in the property under § 362(d)(2)(A), the focus of
 3   the hearing was on § 362(d)(2)(B) and whether the property was
 4   necessary to an effective reorganization.
 5        Butler testified about debtor’s prospects for an effective
 6   reorganization.   He testified that debtor would continue to
 7   operate the apartment project as an affordable housing community
 8   and opined that the project was worth approximately $3.5
 9   million.   Butler further testified that FSNB would receive
10   payments of interest on its secured claim and debtor would
11   negotiate for the repayment of the City Loan and the State Loan
12   over a period of forty years.   Butler explained that the funding
13   of debtor’s plan would occur through net operating income
14   (“NOI”) and a cash infusion from new investors interested in the
15   benefits of the tax credits.    Finally, Butler testified that
16   debtor already had a firm commitment from a qualified investor
17   to purchase the equity interests of debtor and obtain the
18   benefit of the tax credits for at least $1.2 million.
19        After hearing Butler’s testimony, the bankruptcy court
20   questioned Butler about certain aspects of the proposed plan:
21   namely, how the property’s NOI would improve over past
22   performance, whether the City or the State of Arizona supported
23   the project as an affordable housing for reasons other than the
24   money they loaned to it, and what Butler or his companies would
25   get out of the plan.   Butler explained that the property had
26   occupancy problems, but with marketing and the assistance of a
27   management company that had expertise in the affordable housing
28   area, the property could generate the $200,000 per year to

                                     -6-
 1   provide payments to FSNB.   Butler also explained that the City
 2   and State of Arizona had put $3.5 million of public funds in the
 3   project in order to maintain it as a long-term affordable
 4   housing project.   Finally, Butler testified that he was not
 5   looking to be repaid the monies he had put into the project.
 6   Rather, at most, his companies would receive an asset management
 7   fee.
 8          In the end, the bankruptcy court decided that debtor had
 9   met its burden of proof under § 362(d)(2)(B).   The court
10   acknowledged that the proposed plan had feasibility problems,
11   but that the standard for proving feasibility was not that high
12   for purposes of debtor’s burden of proof under § 362(d)(2)(B).
13   The court found that based on Butler’s testimony, debtor’s
14   proposed plan could likely pass the feasibility standards under
15   § 1129(a)(11).   The bankruptcy court also found that it was
16   possible debtor could meet the best interests test under
17   § 1129(a)(7) if it paid FSNB the value of the property as it
18   existed at that point in time; i.e., as an affordable housing
19   property.   Next, the court discussed whether debtor could get an
20   accepting impaired class if FSNB’s lien was stripped down and
21   its deficiency claim classified with all the other debt.
22   Relying on Heartland Fed. Savings & Loan Assoc. v. Briscoe
23   Enters., Ltd. (Matter of Briscoe Enters., Ltd., II), 994 F.2d
24   1160 (5th Cir. 1993), the court found support for the separate
25   classification of FSNB’s unsecured deficiency claim.   Last, the
26   court found there was no evidence that the value of the property
27   was declining and thus FSNB would not be harmed by the continued
28   existence of the stay.   The court denied FSNB’s motion by Minute

                                     -7-
 1   Entry Order entered on May 24, 2011.            FSNB timely appealed the
 2   order.
 3                             II.    JURISDICTION
 4        The bankruptcy court had jurisdiction over this proceeding
 5   under 28 U.S.C. §§ 1334 and 157(b)(2)(G).           We have jurisdiction
 6   under 28 U.S.C. § 158.
 7                                   III.    ISSUE
 8        Did the bankruptcy court err by denying FSNB’s MRS?
 9                      IV.    STANDARDS OF REVIEW
10        We review for abuse of discretion orders denying relief
11   from an automatic stay.    Moldo v. Matsco, Inc. (In re Cybernetic
12   Servs.), 252 F.3d 1039, 1045 (9th Cir. 2001); Sun Valley
13   Newspapers, Inc. v. Sun World Corp. (In re Sun Valley
14   Newspapers, Inc.), 171 B.R. 71, 74 (9th Cir. BAP 1994).
15        In applying our abuse of discretion test, we first
          ‘determine de novo whether the [bankruptcy] court
16        identified the correct legal rule to apply to the
          relief requested.’ If the bankruptcy court identified
17        the correct legal rule, we then determine whether its
          ‘application of the correct legal standard [to the
18        facts] was (1) illogical, (2) implausible, or
          (3) without support in inferences that may be drawn
19        from the facts in the record.’ If the bankruptcy court
          did not identify the correct legal rule, or its
20        application of the correct legal standard to the facts
          was illogical, implausible, or without support in
21        inferences that may be drawn from the facts in the
          record, then the bankruptcy court has abused its
22        discretion.
23   USAA Fed. Sav. Bank. v. Thacker (In re Taylor), 599 F.3d 880,
24   887-88 (9th Cir. 2010)(citing United States v. Hinkson, 585 F.3d
25   1247, 1261-62 (9th Cir. 2009)).
26                              V.     DISCUSSION
27        Section 362(d)(2) requires the bankruptcy court, on request
28   of a party in interest, to grant relief from the automatic stay

                                            -8-
 1   when there is no equity in a property and the property is not
 2   necessary for an effective reorganization.     According to the
 3   record, it was undisputed that debtor did not have equity in the
 4   property.   Therefore, the burden of proof shifted to debtor to
 5   show that the property was necessary for an effective
 6   reorganization.   § 362(g).
 7        Property is necessary for an effective reorganization for
 8   purposes of § 362(d)(2)(B) if “the property is essential for an
 9   effective reorganization that is in prospect.     This means . . .
10   that there must be ‘a reasonable possibility of a successful
11   reorganization within a reasonable time.’”     United Sav. Ass’n
12   Tex. v. Timbers of Inwood Forest Assoc., Ltd., 484 U.S. 365,
13   375–76 (1988) (emphasis in original) (quoting In re Timbers of
14   Inwood Forest Assoc., Ltd., 808 F.2d 363, 370–71 & nn. 12–13
15   (5th Cir. 1987) (en banc)).   In light of the standard espoused
16   in Timbers, we have interpreted the “effective reorganization”
17   requirement under § 362(d)(2)(B) as requiring the debtor to
18   prove that a proposed plan “is not patently unconfirmable and
19   has a realistic chance of being confirmed.’”    Sun Valley
20   Newspapers, Inc. v. Sun World Corp. (In re Sun Valley
21   Newspapers, Inc.), 171 B.R. 71, 75 (9th Cir. BAP 1994) (internal
22   citations omitted).   We have further acknowledged that the
23   debtor’s burden of proof under § 362(d)(2)(B) may be viewed as a
24   “moving target” — less stringent in the early stages of the case
25   and more difficult as time progresses.   Id.
26        By its citation to Timbers, it is clear that the bankruptcy
27   court identified the correct legal rule to apply in evaluating
28   debtor’s burden under § 362(d)(2)(B).    Hr’g Tr. May 19, 2011 at

                                    -9-
 1   27:10-15.     It is the court’s application of this rule that FSNB
 2   disputes in this appeal.     FSNB argues that the bankruptcy court
 3   clearly erred in reaching its decision because (1) the stay
 4   relief trial was not held until four months after the petition
 5   was filed and (2) debtor presented no evidence that a
 6   confirmable plan, i.e., one that satisfies all sections of the
 7   Code, including § 1129, was in prospect.       In effect, FSNB
 8   advocates that debtor’s burden of proof at the MRS evidentiary
 9   hearing was essentially the same as its burden would have been
10   at confirmation due to the length of time that had passed.
11            This position, however, is contrary to the rules in Timbers
12   and In re Sun Valley Newspapers.      Neither case holds that
13   debtor’s burden of proof under § 362(d)(2)(B) requires debtor to
14   show that its reorganization plan is confirmable under § 1129,
15   even in later stages of the case.        Otherwise, the relief from
16   stay hearing would be converted into a confirmation hearing,
17   which is something we warned against in In re Sun Valley
18   Newspapers, 171 B.R. at 75 (noting that a relief from stay
19   hearing should not be converted into a confirmation hearing).8
20            Focusing on the “moving target” analysis in In re Sun
21   Valley Newspapers, debtor contends that because its case was in
22   the early stages, its burden of proof under § 362(d)(2)(B) was
23   especially light.     “In the early stage of the case, ‘the burden
24   of proof . . . is satisfied if the debtor can offer sufficient
25   evidence to indicate that a successful reorganization is
26
          8
27          Indeed, the statutory requirement under § 362(d)(2)(B)
     that debtor prove the property is necessary for an effective
28   reorganization is not contained in § 1129.

                                       -10-
 1   “plausible”.’”   In re Sun Valley Newspapers, 171 B.R. at 75.
 2   Plausible means “superficially reasonable, appearing worthy of
 3   belief.”   Merriam-Webster’s Dictionary, http://merriam-
 4   webster.com.
 5         In its reply brief, FSNB contends that debtor’s burden
 6   should be greater because the MRS was not resolved until 108
 7   days into the case, which was near the end of the exclusivity
 8   period.    “Near the end of exclusivity period, ‘the debtor must
 9   demonstrate that a successful reorganization within a reasonable
10   time is “probable”.’”   In re Sun Valley Newspapers, 171 B.R. at
11   75.   “Probable” means more likely than not.   Merriam-Webster’s
12   Dictionary, http://merriam-webster.com.
13         Although FSNB argues for a more stringent standard of
14   proof, other facts, besides the length of time necessary to
15   complete the MRS hearing, suggest that debtor’s case was still
16   in the early stages at the time the court made its decision to
17   deny FSNB’s motion.   After all, the bankruptcy court did not
18   enter the order for relief until April 12, 2011, and just over a
19   month later, the MRS was resolved.     The 120-day exclusivity
20   period under § 1121(c)(2) was not set to expire for another
21   three months.    Further, the facts demonstrate that during the
22   first four months of debtor’s bankruptcy, debtor was utilizing
23   the time to (1) defend the MRS which FSNB filed just two weeks
24   after the filing, (2) defend FSNB’s summary judgment motion to
25   dismiss its case, and (3) obtain counsel and the release of
26   funds.    Thus, one could conclude that even at 108 days into the
27   case, debtor’s reorganization was still in the “early stages.”
28         In any event, pinpointing the exact stage of a bankruptcy

                                     -11-
 1   proceeding is a fact intensive endeavor.     In re Ashgrove
 2   Apartments of DeKalb Cnty., Ltd., 121 B.R. 752, 756 (Bankr. S.D.
 3   Ohio 1990) (noting that each case is different and must be
 4   viewed on its own with the facts of each case being fully
 5   considered).     However, we are not fact finders and it is not
 6   crystal clear from the record as to exactly which “moving
 7   target” burden of proof the bankruptcy court applied.
 8   Nonetheless, the key point for purposes of this appeal is that
 9   the bankruptcy court explicitly recognized that debtor’s burden
10   of proof under § 362(d)(2)(B) was not as high as that for
11   confirmation at that particular stage of the case.9
12            Therefore, rather than resolving the “moving target”
13   dispute raised by the parties, we take our guidance from the
14   more general principles set forth in In re Sun Valley Newspapers
15   regarding debtor’s burden of proof.      Namely, that the debtor
16   must show that its proposed plan (1) was not patently
17   unconfirmable and (2) had a realistic chance of being confirmed.
18   171 B.R. at 75.     We next consider whether there was sufficient
19   evidence to support the bankruptcy court’s factual findings on
20   these issues.
21            “A finding is clearly erroneous when there is no evidence
22   in the record supportive of it and also, when, even though there
23   is some evidence to support the finding, the reviewing court, on
24
          9
            At the evidentiary hearing, the court stated: “I don’t
25   think the evidence today would satisfy the feasibility test if we
26   were at a confirmation hearing, but I don’t think the standard
     . . . at a stay relief stage of the case is quite that high.”
27   Hr’g Tr. May 19, 2011, at 72:6-7. “And as I suggested, the
     testimony at the confirmation hearing is going to have to be a
28   lot better than it was today.” Id., at 74:9-11.

                                       -12-
 1   review of the record, is left with a definite and firm
 2   conviction that a mistake has been made in the finding.”
 3   United States v. Gypsum Co., 333 U.S. 364, 395 (1948).      We may
 4   have a definite and firm conviction that a mistake has been made
 5   if the bankruptcy court’s interpretation of the facts was
 6   illogical, implausible, or without support in the record.
 7   United States v. Hinkson, 585 F.3d 1247, 1261-62 & n. 21 (9th
 8   Cir. 2009) (en banc) (quoting Anderson v. City of Bessemer City,
 9   470 U.S. 564, 577 (1985)) (explaining that the clearly erroneous
10   standard of review is an element of the clarified abuse of
11   discretion standard).   The clearly erroneous standard does not
12   permit us to conduct a de novo review of the evidence, but it
13   does allow this Panel to consider whether there was enough
14   evidence in the record to support the factual findings of the
15   bankruptcy court.   See Civil Rule 52(a), incorporated by, Rule
16   7052(a).   Further, our review under the clearly erroneous
17   standard is more deferential with respect to determinations
18   about the credibility of witnesses.   Anderson, 470 U.S. at 575.
19         At the outset, we disagree with FSNB’s sweeping statement
20   in its opening brief that debtor provided no evidence to meet
21   its burden of proof under § 362(d)(2)(B).   Butler’s live
22   testimony was evidence.   FSNB complains that Butler’s testimony
23   consisted of unsubstantiated hopes and speculations, but this
24   assertion is based on the lack of corroborating evidence and
25   Butler’s lack of personal knowledge.10   Thus, FSNB’s claim of
26
          10
27          FSNB also complains that much of Butler’s testimony
     included hearsay or lacked foundation, but FSNB failed to
28                                                      (continued...)

                                    -13-
 1   error in this appeal actually touches on issues concerning the
 2   weight of the evidence and credibility.
 3        Although debtor presented no evidence corroborating
 4   Butler’s testimony at the hearing, FSNB fails to point to any
 5   countervailing evidence in the record that conclusively
 6   contradicted Butler’s testimony.     Rather, in its appellate
 7   brief, FSNB points only to facts in the record that may suggest
 8   another outcome; i.e., that debtor had no chance of having its
 9   proposed plan confirmed since the project was “doomed from the
10   start”.   However, “[w]here there are two permissible views of
11   the evidence, the factfinder’s choice between them cannot be
12   clearly erroneous.”   Anderson, 470 U.S. at 574.    Our role in
13   this appeal is not to reweigh the evidence presented to the
14   bankruptcy court.   Id. at 575.
15        In addition, FSNB had the opportunity to challenge Butler’s
16   credibility through cross-examination.    We must assume that its
17   efforts did not convince the bankruptcy court because, in the
18   end, the court’s decision apparently rested entirely on Butler’s
19   credibility.   The bankruptcy court accepted, as true, Butler’s
20   proffer that the NOI from the property would rise once the
21   property was properly marketed and managed.    The court also
22   accepted, as true, Butler’s proffers that the value of the
23   property was $3.5 million and that a capital contribution to
24
25        10
            (...continued)
26   identify any specific testimony that it considered inadmissible.
     Moreover, FSNB did not object to any of the testimony at the
27   hearing. We do not consider this argument raised for the first
     time on appeal. Cold Mountain v. Garber, 375 F.3d 884, 891 (9th
28   Cir. 2004).

                                       -14-
 1   debtor would be made.   “[W]hen the [bankruptcy] court’s decision
 2   is based on testimony that is coherent and plausible, not
 3   internally inconsistent and not contradicted by external
 4   evidence, there can almost never be a finding of clear error.”
 5   Anderson, 470 U.S. at 575.
 6          FNSB attempts to point out inconsistencies by comparing
 7   Butler’s testimony to the disclosure statement and plan that
 8   debtor eventually filed.   However, as noted by FSNB, those
 9   documents were filed after the MRS was resolved and therefore
10   could not have been relevant to the bankruptcy court’s
11   determination on May 19th.   Consequently, we cannot consider the
12   argument about the alleged inconsistencies in the evidence at
13   all.   We thus conclude that there was an evidentiary basis for
14   the bankruptcy court to reach the conclusions that it did
15   regarding Butler’s testimony.
16          Having accepted Butler’s testimony as true, the bankruptcy
17   court then simply used § 1129 as a guidepost to determine
18   whether debtor’s proposed plan had a realistic chance of being
19   confirmed.   Hence, the court identified the issues of
20   feasibility (§ 1129(a)(11)), the best interests test
21   (§ 1129(a)(7)(A)(ii)), whether an impaired class would accept
22   debtor’s plan (§ 1129(a)(10)), and the absolute priority rule
23   and the new value corollary (§ 1129(b)(2)(B)(ii)), as trouble
24   spots for its consideration.    However, to that end, the court
25   did not rule, as a matter of law, that debtor’s plan was
26   confirmable, as FSNB appears to suggest and argue in its brief.
27          Based on the evidence in the record, it was well within the
28   bankruptcy court’s discretion to find that debtor’s plan was

                                     -15-
 1   probably feasible, especially when the feasibility hurdle is not
 2   that high at the relief from stay stage of the proceedings.    It
 3   was also within the court’s discretion to find that debtor could
 4   likely meet the best interests test by paying FSNB the value of
 5   the property, as an affordable housing project.11   Moreover, the
 6   bankruptcy court’s conclusion that debtor may be able to get an
 7   impaired class to accept the plan by separately classifying
 8   FSNB’s deficiency claim was supported by the Fifth Circuit’s
 9   decision in Matter of Briscoe, 994 F.2d 1160.   Finally, because
10   there was some evidence of a new value contribution through
11   Butler’s testimony, which the bankruptcy court must have found
12   credible, it was within the bankruptcy court’s discretion to
13   conclude, as it did, that the absolute priority rule could be
14
15        11
            The best interests test requires that a reorganization
16   plan either garner acceptance from each holder of an impaired
     claim or interest or provide such holder with “property of a
17   value, as of the effective date of the plan, that is not less
     than the amount that such holder would so receive or retain if
18   the debtor were liquidated under chapter 7 . . . on such date.”
19   §1129(a)(7)(A)(ii). Butler testified the value was $3.5 million
     and courts generally allow an owner of property to give his
20   opinion on value. See Barry Russell, Bankruptcy Evidence Manual
     § 701:2 (2011 ed.). Butler also owned the company which
21   developed the property. Moreover, the “value” referred to under
     the best interests test is “as of the effective date of the
22
     plan.” The extent of FSNB’s allowed claim had not yet been
23   determined at the MRS evidentiary hearing, nor was such a
     valuation required at that time.
24        In December 2011, in connection with debtor’s proposed plan,
     the bankruptcy court entered a Minute Entry Order finding that
25   the value of FSNB’s secured claim was $2.6 million. FSNB has
26   appealed that order to the district court. [Bankr. Ct. Dkt. No.
     281.] See Atwood v. Chase Manhattan Mortg. Co. (In re Atwood),
27   293 B.R. 227, 233 n.9 (9th Cir. BAP 2003) (authorizing reviewing
     court to take judicial notice of pleadings docketed in the
28   bankruptcy court).

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 1   satisfied.   In sum, we conclude that the bankruptcy court’s
 2   factual findings on the § 1129 issues were supported by the
 3   evidence in the record.   Therefore, those findings are not
 4   clearly erroneous.    Having applied the correct legal standard to
 5   its factual findings, the court did not abuse its discretion in
 6   denying FSNB’s MRS.
 7        Finally, FSNB argues that the bankruptcy court erred by not
 8   granting its MRS under § 362(d)(1).    That section states that
 9   the court shall grant relief from stay “for cause, including the
10   lack of adequate protection of an interest in property of such
11   party in interest.”    FSNB argues that cause exists because
12   debtor filed its petition in bad faith and there is a lack of
13   adequate protection.   The record shows that FSNB did not argue
14   the issue of debtor’s bad faith at the evidentiary hearing.    If
15   an issue is not raised in the bankruptcy court, we will not
16   usually consider it for the first time on appeal.     Beck v. Pace
17   Int’l Union, 427 F.3d 668, 674 (9th Cir. 2005), rev’d on other
18   grounds, 127 S.Ct. 2310 (2007).    Moreover, the record shows that
19   the bankruptcy court found no evidence that the value of the
20   property was declining.   FSNB does not direct us to a part of
21   the record where evidence of deterioration in value was
22   presented.   Without evidence on the adequate protection issue,
23   we cannot possibly conclude that the court erred.12
24                             VI.   CONCLUSION
25        For the reasons stated, we AFFIRM.
26
27
         12
            As noted above, FSNB chose to present limited evidence at
28   the final evidentiary MRS hearing.

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