h f industries this is it this case is about the interpretation and application of this particular document i have my eye and it was an added to the addendum on page forty five corporation the of apple a in this case and agriprocessors nk the debtor in a different bankruptcy case at the top of this document it reads deep water well lease dash water line and access easements the purpose of this combined agreement was to allow agriprocessors to build an operate a deep water well to supply essential water to the water treatment facility and the meat processing plant in postville iowa the well throughout the case is typically referred to as well number three the central issue i want to discuss this morning is whether all of the property rights to well number three granite agriprocessors in this combined agreement were stripped away during the agriprocessor bankruptcy not the novel bankruptcy that this case is captioned as to the operation of banks pick code section three sixty five before because this document combines easement rights and lease rights to well number three i'm asking at this court role at both the banks because and the district court were wrong when they held that three sixty five stripped this agreement from the agriprocessors before the trustee could sell those rights to my client agora star briefly no agger star sh with a party to the agreement excuse me was your client a party to this lease agreement they were not a party and they have learned their rival say rights from us at where does your client derive its rights from they derive their rights through the dragnet clause and i can skip down here and two thousand and on july twentieth two thousand and nine the court approved the sale of assets of agriprocessors to the holding company that included executor of contracts also included believe the wording is the acquired from the bankruptcy court through the bankruptcy sale yes well the agreement the order says all other rights and assets related to the use in the connection with the conduct of the business that are subject to the loan security interest and collateral assignment subject to the first bank assignment and the m l i c assignment and then there was a as i said there was a definition of assets which specifically included easements also included tenements which will include the well why can't we infer from the correspondence the e mail correspondence that there was a conscious decision not to sell this because there's e mail correspond specifically ask the question what property is there that's that's outside the plant itself that's not owned by agriprocessors and there were two items essentially the the wastewater lagoon and the well and they in the agreement specifically talks about acquiring the wastewater lagoon but but even after being advised that there's this while nothing was done about it there was no attempt to assume the lease it wasn't described in the agreement why can't we why problem i mean you know you have two companies but obvious sudden ones in bankruptcy and want to isn't now you've got to start to fall formalities and and if if agriprocessors hadn't paid the the rant for years they would have had to bring that current and maybe that's why they didn't want to do it with you i mean i guess you could ask whether there's an inference i would say that what we need to go back to us and look at the species of the document whether three sixty five d four even captures it  if it's a separate issue i believe not before this court whether the agriprocessors bankruptcy adequately set forth in the dragnet clause and all the other provisions that are something these be collaterally attacked some other  the key issue in this case is whether this document which has both attributes of an easement analise was even clot in section three sixty five d for it's our position that it was not well counseling on its face it is right it says if you look at the three feet three sixty five for a it says at lease of nonresidential real property this is a lease of nonresidential robert let me ask is not are this out as an example facility with a lamb on one leash and a pig on the other no i'm not coming and have to celebrate i'll probably be met with violence if i try to take that pig in there this document has two species it has an easement and a lease if you try to take both of these in to what i would call the three sixty five d four grindr it has stopped at the door it doesn't go in that what's not unless you believe instead of taking into animals you're taking in one inseparable animal if i brought out in a hybrid of a lamb on a pig out there you go i can guarantee that the kosher rabbis  i can pick some animals that would come in so what we're really talking about is you say is it mostly a lease or not mostly a lease i don't think that's the proper way to get to one on one document both now counsel they begin and end at the same time right these men does not last forever it terminates the end of the lease and they're inseparable the operation to functionally there ends there and second one function without the other i think that you if you look at the last page which is the map you'll note that the easement covers the well area it be extra area around this i'm sure why they have a lease for that land we have enough to operate this with just the i also asked the court to look at the two primary purposes that are listen in paragraph two of the agreement it says the primary purposes of this agreement are one a lease and t easements i believe that they are both listed as two separate interests well counsel the the only problem with that is to says to grant easements necessary for access to the premises do number one i think i think wanted to tie them together again i think they both support each other the one thing about this this is not your classic elise that you know the courts have talked about and the bonafide least cases without believe this circus adopted yet but if you look at the functional attributes of the particular islam here this is more like a conveyance of water from point a to point b the focus by the district court the bench because all about you have a lease for an area that includes the area around add a supposed to provide a well but i think you have to look at the whole thing it's not just a well a well by itself is useless to what i would spray in the air and go nowhere we have to convey that water to the plant for the out that would say that there's more things to getting the water to the plant than just taking it out of the ground you have to take it out of the ground and have been granted on a thing to transport what's he to me if you don't get have the least to get the the water out of the ground you do not have anything to transport in the pipeline for these but they're combining the happy have both of them at the same time you can't just say wow under the three sixty five d for will take will take the least part will chop that off and let the poor guy go without a way to convey it or to get the well is there is or any are you making any argument that you have to that there has to be a relative value  is example what if you had an oil lease it was the oil is worth millions of dollars but just don't need to get a pipeline you're saying that that's not a true lease because there's a pipeline there that may be worth a few thousand but if you have a commodity such as a while and you don't have a particular thing it has to go to just has to go into the system somewhere so someone can price it and buy and sell it that's one thing this stock this particular document was drafted for the specific purpose of providing water to the agriprocessors plant i think to focus on just the well taking it up out of the ground to the exclusion of the function that it provides to the whole thing is incorrect i guess to answer your question saying that the lease along with it it's kind of like my example of the pig trying to come out it doesn't matter how big the pig is the pigs not coming end of the door this you can flip it around can this lease operate without the easement now easement as a material part of the overall agreement in these would operate without the lease maybe not but i think they're both material to each other well do you think you owe any rant you have them and maybe it's not material to the issue but as i understand it you're nuts are you arguing that you don't know anything they just have to pay anything follow i can say is what the record is as no ranchman paid as to as through the period of time that the record was made  and that goes from two thousand and five all the way up which gets to my what is this creature really you know as the course you look at not just the four corners of the document but how they have this how have these two  morning thank you your honors may please the court robert gainer on behalf of happily no properties corporation asking this court to affirm the district court for the northern district of iowa which up held the bankruptcy court order confirming the bankruptcy plan and what i would like to address is on file before you is the motion to dismiss that we have filed deeming this appeal as equitably moot there are five factors that this court has to look at when examining whether an appeal on a bankruptcy reorganization plan is equitably moot i think first and foremost is was a stay filed there was no stay filed there was no bond posted and this is important on a large scale because it's a policy consideration when you look at the reliant an expectation interests of the parties to these plans particularly investors and which is present here we have investors that relied on the confirm plan to contribute additional funds to allow for effective date payments we take away that reliance interest we have a significant problem going down the line additional factors that are to be looked at are the parties that are not before this court rights that would be affected we have these investors that contribute over four hundred thousand dollars so that effective date payments can be made we have creditors who have received payments and if this court were to reverse any portion of the bankruptcy court order confirming the plan could subject those creditors to disgorge men or some kind of order requiring discordant payments that they  received on a plan that they may or may not have voted for additional factors to be looked at include would the relief requested affect the success of the confirm play well of course would you take away four hundred thousand dollars of payments needed to be made on the effective date you're going to throw a significant flags for parties moving forward as to whether this plane continues to be confirmable what's what's the i'm going to confirm plan how's the well being used the well  being marketed right now to provide a revenue stream so as of the as of this data has not confirmed it has not added they need value to the plan i would disagree with your statement there judge in the sense that it's being marketed it there's negotiations negotiations that are ongoing has it added value to the plan i mean it's a yes and no question yes there's a lot of potential value to be there has there been any realized value at this point no there has not but it would of stepping back from the value market for this while other than ag i mean is this really all there is how much you can get for the well with agriprocessors is there a market for the other than there isn't the separate there's a separate party that has approached us about purchasing the well so it is not a seeing you know two party problem here and there's other potential purchasers of the well do you actually use the water or they just take it over and they negotiate with agriprocessors i think they would actually use the water i don't know that again there are two more elements one is the public policy affording we would argue that the plan has been substantially consummated there still remains one thing to be done relative to the transfer of leases to the to this s h s party that is the sole remaining  occurrence that needs to happen for substantial consummation as it relates to and for these reasons i believe that this appeal is equitably moot and i really drive home back that first if there's no stay that's obtained at the trial court level placed on the wild that these investors were relying upon this now equitably it stopped it would be upwards of a million dollars and that was in the plan and same i might put some money into this this was not being realized and if it is that specific number was not written million dollars was not referenced in the plan of reorganization but if one was to any forms of the discounted capital analysis that these investors perform simply taking using a discounted cash flow on the lease payments that were supposed to have been made on this well would likely put that over a million dollars but it addressing the contentions of you have before you judge collins extraordinarily well reasoned decision as it relates to confirming plan and he goes to great lengths to talk about the close relationship between novel properties corp and the predecessor an interest to  are inextricably linked and any easement created is a temporary easement based on the very nature of that document it's fifty years right that's correct yeah well that's seems to denigrate temporary what about the fact that there's a separate lump sum payment for the easement and regular rental payments for everything else i think that just had to do with creating the opportunity for these me  but they're paid for different we differently in different ways right they are correct and how much i just looked at it how much it was paid for the easement alone i don't have the lease in from now and i do the regular lease payment i'm pretty sure that that is the lease payment is ten thousand dollars per year and that was never me was a two dollars purchase price for these men per lineal foot ever made i mean more than five thousand  i might add i've just while we're on it on exhibit in savior thought several times in the description of these men it turns and goes five hundred feet here and it turns and goes twenty five thousand square feet and over there that's the whole thing or these fairy tale numbers there was no money exchanged relating to the lease ok or these myths i do not believe i do not know what is the record reflect on these but that's that's a basic fact but they paid for  i don't think any what the record reflects is that nothing was exchanged on account of that we know i thought nothing was paid for either one of them but but i don't know that i just guess that if you physically seen this area you know  addressing the contentions about these two different bankruptcy's the bankruptcy code provide specific mechanism for a trustee to reject for sume particular lease and the bankruptcy trustee in the agriprocessors bankruptcy a separate bankruptcy filed in the originally eastern district in new york and transferred to the northern district of iowa i did not assume this any lease relating to the deep this particularly said issue here was not assumed it was deemed to rejected by the expiration of the deadline in the operation of bankruptcy code section three sixty five as a result of this many of the arguments made by a appellant and as addressed at the bankruptcy court are conclusively found that they just the well least was not an asset intended to be purchased we have in the brief reply brief provided by the apple e we show the correspondence as judgment i noted relative to this contention  i think by three sixty five very operation the rejection of the lease caused no right to in your four s h f and as a result the lease was there was no it was an expired lease and with the effect of three sixty five it's kind of the end of the story you agree that it has to be a lease to get into d for a i'm looking back and looking for john's college order now i have it right here in front of me did he make a specific finding as to whether assuming that it was transferable whether this dragnet cause that's been referred to  make a finding of whether it was in fact transferred swimming what was affirmed i'm sorry what was so mean what was affirmed assuming the lease was transferred your argument is the lease is not transferrable cause it was never assume to write what's assume what was transferable ok but it's not listed as a specific transferred item right so the argument that mr prey is making is that this would have think he referred to as the dragnet clause about all the other assets then covers it and i would let me finish did judge collins make a specific finding on that point whether the dragnet cla about you know the e mail if you ask a if you look at the fact that we had a ten thousand dollar a year lease with i think it was a c p i adjustment you have a single time payment of two dollars linear foot i don't see how much is that much for that be we're dying to know what's out you know how much is that total up to how many feet are there well i was counting it using my little lines on here  got to before i had to come up here got to twenty two hundred feet might be longer but it will last as that's how many double i double this is one thousand two hundred feet you know somewhere around there but i was still marking it's just a quick thing but i would just finish with this by may what i think that mr gainers asking is that there be a windfall for under the plan a windfall given the  i guess circumstances under this case where the district court in the bankruptcy court allowed three sixty five to take in not just the lease interest but forfeiture of our clients improvement of those facilities with pipelines and wells which is a deep while i don't have property probably had cases they are very expensive that would work a windfall to neville and that should not be the purpose of the plan and reorganization and go back to mr lloyd comment i all i can say is that this bankruptcy was very  the the agriprocessors bankruptcy sale was on very quickly and mistakes were made but i'm not going to pick on the lawyers who did it because they were under a tremendous amount of pressure ok thank you very much we appreciate your arguments will be back to