Opinion ID: 3160786
Heading Depth: 2
Heading Rank: 1

Heading: The Gentry Plan’s Feasibility

Text: Even though this appeal comes to us from the district court, we review a bankruptcy court’s decisions independently, examining legal determinations de novo and factual findings for clear error. See In re Paul, 534 F.3d 1303, 1310 (10th Cir. 2008). Because a plan’s feasibility is a question of fact, we review for clear error, 3 reversing only if we are “left with the definite and firm conviction that a mistake has been made.” See In re Inv. Co. of The Sw., Inc., 341 B.R. 298, 310 (B.A.P. 10th Cir. 2006) (quoting In re Miniscribe Corp., 309 F.3d 1234, 1240 3 FB Acquisition argues that we should review feasibility de novo because the bankruptcy court “misapplied . . . the principles of res judicata” to find the Gentry Plan was feasible. Aplt. Reply Br. at 4 (citing In re Paige, 685 F.3d 1160, 1178 (10th Cir. 2012) (ordering de novo review when the bankruptcy court relied “on improper legal standards or on proper ones improperly applied” to make a factual finding)). This argument ignores the bankruptcy court’s assurances that it did, in fact, conduct an independent review as required. While the court relied on the feasibility of the Ball Four Plan, it also relied on other facts in the record, discussed infra. The court did not apply an improper standard, and thus we review for clear error. -5- (10th Cir. 2002)). To be confirmed by the court, a Chapter 11 plan must be feasible. 11 U.S.C. § 1129(a)(11). A plan is feasible when it is not likely to be followed by liquidation or further financial reorganization. Id. Put differently, a feasible plan is not a guarantee of success but rather offers a reasonable assurance of success. In re Ames, 973 F.2d 849, 851 (10th Cir. 1992). Debtors have the burden of proof by a preponderance of the evidence. In re Paige, 685 F.3d 1160, 1177 (10th Cir. 2012). FB Acquisition argues this plan lacked even a reasonable assurance of success. Instead, FB Acquisition claims the court rested on the feasibility finding in the Ball Four Plan, erroneously conflating two separate feasibility analyses. In addition, FB Acquisition maintains that the court failed to consider other factors courts have found relevant: the value and marketability of the debtors’ assets, the debtors’ ability to liquidate personal property, valuation projections, the capital structure and earning power of a business, management ability, economic conditions, the credibility of testimony concerning the debtors’ ability to repay, and other factors affecting performance under a plan. Aplt. Br. at 15–16; see, e.g., In re Rocky Mountain Land Co. LLC, No. 12-21643-HRT, 2014 WL 1338292, at  (Bankr. D. Colo. Apr. 3, 2014). We disagree. The bankruptcy court stated that it undertook an independent review in light of the objections. Although its written disposition was brief, it -6- was not clearly erroneous. First, it is necessary to put this feasibility determination in context by looking at the terms of the Gentry Plan. The plan directed that Ball Four would pay the claim over the next twenty-five years, and only if Ball Four did not pay would the Gentrys be liable on their guaranties. The bankruptcy court had to evaluate the reasonable success of a plan given contingencies. Such uncertainty calls for flexibility. See, e.g., In re DBSD N. Am., Inc., 634 F.3d 79, 107 (2d Cir. 2011) (noting that, in a feasibility analysis, how specific the proof required of a repayment plan must be “depends on the circumstances”). So the court considered the status of Ball Four’s bankruptcy, noting that the Ball Four Plan had been confirmed and that Ball Four was not in default under its confirmed plan. Aplt. App. 225. This reliance was not unreasonable. Furthermore, it was not the only ground for a finding of feasibility. The bankruptcy court also took note of the Gentrys’ monthly salaries, id. at 217, and found that “evidence indicates the Gentrys, assuming they maintain the status quo, will likely be able to comply with the terms of the Amended Plan,” id. at 227. The court also found the creditor had two safeguards in place in the event the Ball Four Plan failed. The creditor—now FB Acquisition—retains state law remedies against the Gentrys and the Gentrys’ obligations will not be discharged until the loan indebtedness is paid in full. Id. Admittedly, the bankruptcy court did not provide a written evaluation of -7- factors that other courts have used to guide a feasibility determination. Such an evaluation, however, is not strictly required. See, e.g., In re Inv. Co. of The Sw., Inc., 341 B.R. at 311. From its review of the evidence, the court need only determine whether the plan “offers a reasonable prospect of success and is workable.” Id. The court’s feasibility finding met that standard—albeit barely. Because it was based on a permissible view of the evidence, the bankruptcy court’s finding of feasibility is not clearly erroneous.