Opinion ID: 378899
Heading Depth: 1
Heading Rank: 4

Heading: Was the Bankruptcy Court's Evaluation of the Debtor's Hotel Clearly Erroneous?

Text: 23 The bankruptcy judge found that the hotel property was worth $10 million after hearing testimony from appraisers offered by Chase and from appraisers offered by the appellant. All the appraisers used the same method to calculate the value of the hotel. They determined what annual income the hotel could produce and what capitalization rate to use to convert that annual income figure into an estimate of value. Chase's appraisers testified that the hotel was worth $9.9 million, based on an estimated annual income of $1 million and a capitalization rate of 10.167 percent. Appellant's appraisers testified the hotel was worth $11 million, based on an estimate of $1.27 million annual income and a capitalization rate of 11.55 percent. Chase's appraisers were from the Baton Rouge area, but they had no experience in appraising highrise hotels like the Hilton. Appellant's appraisers were not from the Baton Route area, but they had experience in estimating the value of hotels like the Hilton. 24 We review the bankruptcy court's determination of the hotel value under the clearly erroneous standard. Rule 810, Rules of Bankruptcy Procedure. We cannot say that the bankruptcy judge was clearly erroneous in setting the value of the hotel at $10 million. The bankruptcy court picked a figure between the two figures offered by the opposing appraisers. Both estimates of the appraisers appear reasonable and are fairly close to each other. The Chase appraisers thought the hotel was less risky than did the appellant's appraisers. This is indicated by the lower capitalization rate used by the Chase appraisers. At the same time, however, the Chase appraisers thought the hotel would produce less income than the appellant's appraisers thought it would produce. Thus, the Chase appraisers took an entirely consistent approach to estimating the hotel's value. The fact that the Chase appraisers had no experience in appraising highrise hotels like the Hilton does not make the bankruptcy court's reliance on the Chase appraisers clearly erroneous. The Chase appraisers used the same method as did the appellant's appraisers, and the Chase appraisers were more familiar with local conditions. The bankruptcy court's determination that the debtor's hotel was worth $10 million is affirmed. 25 AFFIRMED.