Opinion ID: 609741
Heading Depth: 2
Heading Rank: 2

Heading: Property To Be Distributed Under (B)

Text: 29 While the property to be distributed referred to in (B)(ii) is undefined in the statute, the most sensible interpretation of this phrase is any property, including the collateral. Thus, a (B) distribution could include property that was part or all of the collateral so long as the property to be transferred to the creditor was valued as at least equal to the amount of the creditor's claim. See 11 U.S.C. § 1225(a)(5)(B)(ii). 30 Although the statute does not define property, the use of that term suggests an expansive understanding of what may be transferred in satisfaction of a secured creditor's claim. Bankruptcy courts considering its scope under § 1225(a)(5)(B) and its legislative model, § 1325(a)(5)(B), universally recognize that the term includes cash and all other types of property. See, e.g., In re Lairmore, 101 B.R. 681, 683 (Bankr.E.D.Okla.1988) (No legal obstacle or bar exists to the substitution of property in lieu of cash payments or in lieu of the collateral under Chapter 12.); In re Durr, 78 B.R. 221, 223 (Bankr.D.S.D.1987) (same); In re Stockwell, 33 B.R. 303, 305 (Bankr.D.Or.1983) (property under § 1325(a)(5)(B) sufficiently broad to include cash or any other type of property). 31 Further, in legal parlance property is used to denote everything which is the subject of ownership, corporeal or incorporeal, tangible or intangible, visible or invisible, real or personal and extends to every species of valuable right and interest. Black's Law Dictionary 1382 (4th ed. 1968). All indications point to the usual broad range the word property encompasses as part of the scheme under § 1225(a)(5)(B). See also Rogers & King, Collier Farm Bankruptcy Guide p 4.08[d], at 4-114 (1992) (The reference to property rather than to cash payments [in chapter 12] implies that payment may be made in kind rather than in cash.); cf. 5 King, Collier on Bankruptcy, supra, p 1325.06, at 1325-43 ( 'Property' [under identical § 1325(a)(5)(B) in chapter 13] is not a defined term, but it is altogether unrestricted in scope and unquestionably encompasses any and all kinds of property of the estate and property of the debtor 'to be distributed under the plan.' ). 32 Absent any evidence that Congress--in an otherwise flexible reorganization scheme--sought to restrict what property could be transferred under § 1225(a)(5)(B), we are unwilling to read narrowly its broad language to restrict the usual expansive understanding comprised by the term property. Congress referred simply to property, not limiting it solely to payments to be made or equipment to be distributed under the plan. Consequently, we construe property to be distributed under (B) as any property to be transferred under the plan, other than a full surrender of collateral undertaken pursuant to (C). 33 Moreover, there is no good reason to draw a fine distinction between whether or not the property distributed included the collateral. It would unnecessarily complicate the bankruptcy statutes for us to rule irrationally that a distribution of a virtually identical parcel of property could be permitted under (B) if it was not part of the collateral--for example, were Kerwin to own a similar adjoining farm that was not part of the bank's collateral--but that a transfer would not be allowed under (B) if all or part of the property to be transferred were originally part of the collateral. 34 Reading (C) as providing the alternative of permitting a debtor to surrender the entire collateral does not render the two subsections redundant. Rather, the two provisions grant a debtor several options in structuring a reorganization plan by providing different means of dealing with a secured claim when the creditor refuses to consent to the plan as provided in § 1225(a)(5)(A). Depending on the circumstances of a given case, one or the other alternative, either subsection (B) or (C), for disposing of the debtor's property doubtless will be more practical.