Opinion ID: 774955
Heading Depth: 2
Heading Rank: 2

Heading: Liquidation Costs

Text: 34 The trustee also argues that the bankruptcy court erred when it concluded that the trustee failed to prove liquidation costs. In the alternative, the trustee contends that the court was required to estimate liquidation costs. We disagree with both contentions. 35 As evidence of liquidation costs, the trustee presented deposition testimony by TCFC's manager of Portfolio Administration during the liquidation. The manager testified that TCFC had incurred costs in liquidating the collateral, but that he did not know the amount of the costs. He also testified that he had prepared an analysis of projected costs two months before the bankruptcy, but admitted that the numbers involved were real rough number[s] out of the air. The bankruptcy court gave no weight to this testimony, observing that the witness admitted that he did not know the actual costs and that his estimates were plucked out of the air. 36 The trustee also presented expert testimony as evidence of liquidation costs. The expert testified generally about the types of costs that arise in a liquidation. The court gave this testimony no weight because it was not probative of the actual costs of liquidation incurred by TCFC. 37 The trustee additionally presented testimony from TCFC's senior counsel that TCFC did incur some liquidation costs, and from a TCFC portfolio manager that TCFC had employed people to oversee the liquidation. The bankruptcy court did not err when it concluded that the evidence was not sufficient to prove liquidation costs. Even though the evidence demonstrates that some costs were incurred, that is not sufficient to establish the amount of those costs. 38 Neither was the court required to estimate the costs simply because the evidence established that TCFC had incurred some. Although bankruptcy courts have estimated liquidation costs, see, e.g., In re Martindale, 125 B.R. 32, 35-36 (Bankr. D. Idaho 1991), as the district court noted in this case: The evidence presented to the bankruptcy court in this case fell far short of the `precise projections' proffered in Martindale . . . . No one, much less the trustee, offered the court evidence from which a reasoned estimate could be made. Batlan, 237 B.R. at 776. Consequently, the bankruptcy court did not err when it declined to estimate liquidation costs on this record. 39 Finally, the court did not abuse its discretion when it refused to admit into evidence the trustee's proposed exhibit 54, a chart entitled Smith's that appears to show expenses for Smith's in Oregon, Washington, and Idaho during the period from August 1995 through April 1996. The trustee provided no testimony as to what the document illustrates. It is unclear whether it represents estimates of costs or actual costs. Consequently, it is not probative of the actual amount of liquidation costs incurred by TCFC.