Court Opinion

ID: 4226260
Source: CourtListenerOpinion
Date Created: 2017-12-06 20:00:17.680954+00
Date Added: 2024-06-11T07:47:54.497189
License: Public Domain

PUBLISHED

                           UNITED STATES COURT OF APPEALS
                               FOR THE FOURTH CIRCUIT

                                       No. 16-2037

In re: BATE LAND & TIMBER LLC,

               Debtor,

------------------------------

BATE LAND COMPANY LP,

               Creditor – Appellant,

v.

BATE LAND & TIMBER LLC,

               Debtor – Appellee.

Appeal from the United States District Court for the Eastern District of North Carolina, at
Wilmington. Terrence W. Boyle, District Judge. (7:16-cv-00023-BO)

Argued: September 12, 2017                                   Decided: December 6, 2017

Before NIEMEYER, DUNCAN, and FLOYD, Circuit Judges.

District court dismissal reversed; bankruptcy court judgment affirmed by published
opinion. Judge Duncan wrote the opinion, in which Judge Niemeyer and Judge Floyd
joined.
ARGUED: Matthew Nis Leerberg, SMITH MOORE LEATHERWOOD LLP, Raleigh,
North Carolina; Laurie Beth Biggs, STUBBS & PERDUE, PA, Raleigh, North Carolina,
for Appellant. George Mason Oliver, THE LAW OFFICES OF OLIVER & CHEEK,
P.A., New Bern, North Carolina, for Appellee. ON BRIEF: Kip D. Nelson, SMITH
MOORE LEATHERWOOD LLP, Raleigh, North Carolina; Trawick H. Stubbs, Jr.,
Joseph Z. Frost, STUBBS & PERDUE, PA, Raleigh, North Carolina, for Appellant.
Amy M. Currin, THE LAW OFFICES OF OLIVER & CHEEK, P.A., New Bern, North
Carolina; Mark R. Sigmon, SIGMON LAW, PLLC, Raleigh, North Carolina, for
Appellee.

                                       2
DUNCAN, Circuit Judge:

       Bate Land Company LLC (“BLC”) challenges the district court’s dismissal of

BLC’s appeal of the bankruptcy court’s confirmed reorganization plan (the “Confirmed

Plan”) for Bate Land & Timber LP (the “Debtor”). In addition to appealing the district

court’s conclusion that the appeal was equitably moot, BLC further urges us to hold that

the bankruptcy court both failed to provide BLC with the indubitable equivalent of its

secured claim and erred in reducing the amount of post-petition interest awarded. For the

following reasons, we reverse the district court’s dismissal of BLC’s appeal and affirm

the bankruptcy court.

                                             I.

       The complexity of the proceedings below mirrors the parties’ contentious

relationship. Because we reach the merits of BLC’s appeal, and because indubitable

equivalence is an inherently fact-bound inquiry, we first consider with particular attention

the bankruptcy court’s detailed findings of fact.

                                             A.

       In 2006, BLC sold the Debtor seventy-nine tracts of land in eastern North Carolina

for $65 million. 1 Of this amount, the Debtor paid $9 million in cash and financed the

       1
         The Debtor was organized on July 31, 2006, and took on the purchase contract as
a successor to the original debtor, Southeastern Timberlands Co., LLC. For the sake of
clarity, we use “the Debtor” to refer to both the original and successor organization.

                                             3
remaining $56 million through a purchase money promissory note secured through a

purchase money deed of trust encumbering the property.

       In the years that followed, the Debtor paid BLC over $60 million. However, the

Debtor failed to repay its debt in full by the maturation date. The parties negotiated new

deadlines, but the Debtor failed to meet the revised deadlines as well. The Debtor

attempted to convey two tracts of land back to BLC to satisfy its debt, but BLC rejected

this proffer.

                                             B.

       The Debtor filed for Chapter 11 bankruptcy in 2013, and BLC filed a secured

claim in the Debtor’s bankruptcy proceeding for approximately $13 million.               The

Debtor’s proposed reorganization plan (the “Proposed Plan”) included several other

creditors, but BLC accounted for the vast majority of all debts owed. 2

       With regard to BLC, the Debtor submitted a partial dirt-for-debt provision in its

Proposed Plan, by which the Debtor offered to satisfy BLC’s secured claim through

conveyance of the two tracts of property described above. In a dirt-for-debt plan, a

creditor accepts all of its real-property collateral in satisfaction of its bankruptcy claim.

       2
        The Proposed Plan provided for payments to be made to the Debtor’s attorney
(amount to be determined), various county tax collectors (approximately $30,000),
Revels Turf and Tractor, LLC (approximately $30,000), Northen Blue, LLP
(approximately $12,000), and a class of other unsecured claimants (approximately
$90,000). BLC’s claim of approximately $13 million represented by far the largest
secured claim before the bankruptcy court.

                                             4
In a partial dirt-for-debt plan, a debtor may transfer part of the collateral to satisfy the

bankruptcy claim. See, e.g., In re SUD Props., Inc., No. 11-03833-8-RDD, 2011 WL
5909648, at *2–3 (Bankr. E.D.N.C. Aug. 23, 2011) (defining partial dirt-for-debt). The

Proposed Plan estimated that the combined worth of these two tracts of land was

approximately $13.5 million. After this transfer of collateral, the Debtor proposed that it

would retain the remaining tracts of land free and clear of any liens. The bankruptcy

court circulated the Proposed Plan to its creditors on August 30, 2013. Most of the

Debtor’s other creditors accepted the Proposed Plan. BLC objected, however, arguing

that it would not provide full compensation. 3

       A bankruptcy court has the authority to “cram down” a plan over a creditor’s

objections under certain circumstances.      11 U.S.C. § 1129(b)(2)(A)(iii).     One such

circumstance exists when the plan provides the creditor with the “indubitable equivalent”

of its claim. Id. Bankruptcy courts purport to consider the plain meaning of this term.

See In re SUD Props., Inc., 2011 WL 5909648, at *5. However, application of the

indubitable equivalence standard involves more flexibility than the term suggests. In the

bankruptcy context, “[t]he phrase ‘indubitable equivalent’ . . . means in essence, that the

treatment afforded the secured creditor must be adequate to both compensate the secured

creditor for the value of its secured claim, and also insure the integrity of the creditor’s

collateral position.” 4-506 Collier on Bankruptcy § 506.03 (16th ed. 2017).

       3
        Revels Turf and Tractor, LLC, initially objected to the Proposed Plan, but in
December 2013 it withdrew its objection. Thus, by December 2013, BLC was the only
remaining objector.

                                             5
       In response to BLC’s objections, the bankruptcy court initiated “cramdown”

proceedings and conducted several hearings to ensure that the final reorganization plan

would provide BLC with the “indubitable equivalent” of its claim.             During these

proceedings, the bankruptcy court valued the land that the Debtor proposed to transfer to

BLC in satisfaction of BLC’s claim.

       As the bankruptcy court noted, valuing the property is the most challenging aspect

of a dirt-for-debt scenario.    The bankruptcy court therefore heard extensive expert

testimony regarding the properties’ value.       The ultimate determination is significant

because the higher the valuation, the less the Debtor would have to pay in cash to satisfy

BLC’s claim.

       In valuing property, a bankruptcy court may choose to consider a property’s

“highest and best use” instead of its current physical condition. See In re Thoburn Ltd.

P’ship, 513 B.R. 887, 888 (Bankr. E.D. Va. 2013). Courts have favored this approach in

a dirt-for-debt setting. See, e.g., In re Sailboat Props., LLC, No. 10-03718-8-SWH,

2011 WL 1299301, at *2 (Bankr. E.D.N.C. Mar. 31, 2011). The bankruptcy court thus

decided to consider the property’s highest and best use.

       Here, the parties vigorously disagreed about the highest and best use of the subject

parcels. BLC contended that their highest and best use was for the production and

harvesting of timber. The Debtor, on the other hand, argued that at least some of the

parcels had a highest and best use as residential property and were thus more valuable.

The experts’ respective opinions led to significantly different valuations.

                                             6
                                             1.

       The bankruptcy court first evaluated evidence related to the two tracts of land that

the Debtor initially offered BLC in satisfaction of its secured claim. The bankruptcy

court determined that these two tracts featured desirable waterfront property with

“navigable depths and lacking vertical hindrances” situated in a location “ideal” for

watersports. Order at 32, In re Bate Land & Timber, LLC, No. 13-04665-8-SWH (Bankr.

E.D.N.C. Jan. 15, 2015). The properties were also located in an area with a growing

population and a “rebounding” residential housing market.           Id.   Accordingly, the

bankruptcy court determined that the highest and best use of these two tracts was

residential development. In its January 15, 2015, order, the bankruptcy court determined

that the combined value of these two tracts was approximately $8.8 million.

                                             2.

       The bankruptcy court held subsequent proceedings and conducted valuations of

the six additional properties that the Debtor offered in satisfaction of BLC’s claim. With

respect to the first of these six tracts, BLC’s expert witness, Charles Moody, testified that

the tract’s highest and best use was for timber production. However, the bankruptcy

court noted that the tract contained no mature timber and “would have to be replanted,

with harvesting occurring in twenty-five to thirty years.” Order at 2, In re Bate Land &

Timber, LLC, No. 13-04665-8-SWH (Bankr. E.D.N.C. Jan. 5, 2015). Furthermore, the

bankruptcy court also found that, the tract was located near “other successful residential

subdivisions,” had favorable topography for residential development, and was in a

                                             7
housing market that “Moody conceded . . . was on the rise.” Id. at 2–3. In fact, Moody’s

previous appraisal had found that the tract’s highest and best use was for residential

development. Id. at 2. Thus, the bankruptcy court found that the highest and best use for

this tract would be for residential development. Based on this finding, the bankruptcy

court valued the tract at $3.8 million.

       The court then considered the next five tracts, all of which had been used

previously for timber production. The Debtor’s expert witness, Karen Cross, testified

that the properties’ highest and best use would be for agriculture. In contrast, Moody

testified that the tracts had a highest and best use for timber management and recreation.

However, Moody acknowledged that he “never even considered conversion of the tracts

to agricultural purposes,” which the bankruptcy court considered “a somewhat

questionable omission in light of his own admission that there has been a recent

resurgence in conversion from timber to agriculture” in the relevant area. Id. at 4. The

bankruptcy court noted that these properties, too, would “not yield marketable timber for

years,” but they could be converted to agricultural use in about one year at a quantifiable

cost. Id. at 5. Accordingly, the bankruptcy court determined that these properties had a

highest and best use as agricultural lands and that the combined value of the five

properties was just under $1.1 million.

       After combining the two tracts originally proffered and the six additional tracts,

the bankruptcy court determined that all eight properties that the Debtor offered in

fulfillment of BLC’s claim represented a total value of approximately $13.7 million.

                                            8
                                            3.

       With regard to the interest owed to BLC and the resulting final amount of its

claim, the bankruptcy court acknowledged that BLC was entitled to both pre- and post-

petition interest, as well as attorney’s fees. However, the bankruptcy court noted that its

own heavy workload, in combination with certain actions taken by BLC, had caused

unreasonable delays in the proceedings. For each day beyond thirty days that the court

took to issue a ruling, it tolled the running of post-petition interest. As a result, it

subtracted 266 days from the total days for which the Debtor was accountable. It allotted

BLC over $1.356 million in post-petition interest. Accounting for all resulting interest

and fees, the court determined that BLC’s secured claim had a total value of just over

$14.6 million.

                                            4.

       BLC’s total secured claim was $14.6 million, and the eight tracts of land offered to

fulfill the claim had a value of $13.7 million. The bankruptcy court therefore concluded

that conveyance of these eight tracts of land, along with cash payments totaling

approximately $1 million, served as the indubitable equivalent of BLC’s claim. The

bankruptcy court issued its Confirmed Plan and an associated final order on February 3,

2016. The Confirmed Plan set conditions for the Debtor’s cash payments and noted that

the $1 million in cash would be fully secured by the Debtor’s remaining tracts of land.

       BLC appealed five of the bankruptcy court’s orders to the district court, including

the bankruptcy court’s final order. All were consolidated into a single appeal.

                                            9
                                               II.

       On appeal to the district court, BLC twice moved to stay the implementation of the

Confirmed Plan lest the Debtor seek to consummate the Confirmed Plan so as to render

BLC’s appeal equitably moot. 4 The district court denied both motions.

       On September 6, 2016, the district court dismissed BLC’s consolidated appeal as

equitably moot. The district court found that the Debtor had substantially consummated

the Confirmed Plan and that the appeal would have a detrimental impact on the success

of the plan, thus injuring the interests of third parties.

       BLC filed a notice of appeal to this court on September 9, 2016. BLC also filed

emergency motions to the district court and this court again requesting a stay of the

implementation of the Confirmed Plan pending appeal. The district court and this court

denied the motions.

       On appeal, BLC first argues that the district court erred in finding that its appeal

was equitably moot. On the merits, BLC challenges the bankruptcy court’s determination

of the indubitable equivalence of its claim and the bankruptcy court’s equitable tolling of

post-petition interest.

       4
       These motions to stay implementation were filed on February 18, 2016, and
March 31, 2016.

                                               10
                                              III.

          The district court dismissed BLC’s appeal as equitably moot. For the reasons that

follow, we disagree. 5

          Equitable mootness is a pragmatic doctrine “grounded in the notion that, with the

passage of time after a judgment in equity and implementation of that judgment, effective

relief on appeal becomes impractical, imprudent, and therefore inequitable.” Mac Panel

Co. v. Va. Panel Corp., 283 F.3d 622, 625 (4th Cir. 2002). It is invoked in bankruptcy

proceedings because of the equitable nature of bankruptcy judgments and is applied when

it becomes “impractical and imprudent ‘to upset the plan of reorganization at [such a] late

date.’”       Id. (quoting In re UNR Indus., Inc., 20 F.3d 766, 769 (7th Cir. 1994)).

Application of the doctrine “is based on practicality and prudence,” “does not employ

rigid rules,” and requires that a court “determine whether judicial relief on appeal can, as

a pragmatic matter, be granted.” Id. Relevant factors in this determination include:

          (1) whether the appellant sought and obtained a stay; (2) whether the
          reorganization plan or other equitable relief ordered has been substantially
          consummated; (3) the extent to which the relief requested on appeal would
          affect the success of the reorganization plan or other equitable relief
          granted; and (4) the extent to which the relief requested on appeal would
          affect the interests of third parties.

Id.

          5
        This court has declined to decide whether we review an equitable mootness
determination de novo or for abuse of discretion. See In re U.S. Airways Grp., Inc., 369
F.3d 806, 809 n.* (4th Cir. 2004). We need not resolve that question here either, because
we would reverse the district court’s dismissal of BLC’s appeal under either standard.

                                              11
       We conclude that BLC’s appeal is not equitably moot because the facts presented

do not support the conclusion that “effective judicial relief is no longer practically

available.” See Cent. States, SE & SW Areas Pension Fund v. Cent. Transp., Inc., 841
F.2d 92, 96 (4th Cir. 1988). BLC objects to the Confirmed Plan only to the extent that it

seeks to recover additional collateral from the Debtor, and the parties have offered no

reason for us to conclude that this court would be unable to order the Debtor to surrender

additional cash or tracts of land to BLC. Nor is there any reason for us to conclude that it

would be inequitable to do so. This is particularly true because the Debtor’s surrender of

additional collateral to BLC would not alter any other creditor’s recovery.

       We further conclude that the Mac Panel factors do not favor a finding of

mootness. This case essentially presents a two-party dispute because BLC is the Debtor’s

largest secured creditor and because it appears that the secured claims of other creditors

would be unaffected by the surrender of additional cash or tracts of land to BLC.

Therefore, the third and fourth factors are particularly important to determining whether

it would be impractical, imprudent, or inequitable to provide the requested relief. Both

factors weigh heavily against mootness.

       Awarding BLC its requested relief would not “affect the success of the

reorganization plan or other equitable relief.” Mac Panel, 283 F.3d at 625. BLC has, by

far, the largest claim in the Confirmed Plan and, in any event, an additional recovery by

BLC would not impact other creditors. The Confirmed Plan would not be disturbed in

any material way by allowing BLC to seek additional compensation.

                                            12
       In addition, for similar reasons, consideration of the merits of the appeal would not

be inequitable to any third party. The Debtor has not engaged in significant transactions

with third parties who relied on the Confirmed Plan’s terms such that alteration of the

Confirmed Plan would negatively impact the Confirmed Plan and the third parties who

relied upon it. See In re U.S. Airways Grp., Inc., 369 F.3d at 810. Moreover, the fact that

BLC’s appeal would not alter the recovery of any other creditor or damage the interests

of any party who has contracted with the Debtor means that the “relief requested on

appeal” would not “affect the interests of third parties.” Mac Panel, 283 F.3d at 625.

       We conclude that the first and second Mac Panel factors present closer questions,

but our analysis makes it clear that it still would not be inequitable to consider BLC’s

appeal. As to the first factor, BLC asked the district court to stay the Confirmed Plan’s

implementation, and the district court denied BLC’s request. But because BLC merely

seeks to add to its recovery from the Debtor’s pocket without affecting the recovery of

any other creditor, we conclude that BLC’s unsuccessful attempt to obtain a stay would

not render it inequitable for this court to provide the requested relief.

       Under    the   unique    circumstances      here,   the   second     factor,   substantial

consummation, does not outweigh the other factors favoring mootness. Even if the

Confirmed Plan had been substantially consummated as defined by 11 U.S.C. § 1101,

because the relief requested does not seek to undo any aspect of the Confirmed Plan that

has been consummated, it would not be impractical, imprudent, or inequitable to allow

the appeal to proceed.

                                              13
       Accordingly, our analysis of the equities at stake and the Mac Panel factors cannot

support the conclusion that it would be impractical, imprudent, or inequitable to provide

the requested relief. We therefore reverse the district court’s dismissal of BLC’s appeal

as equitably moot.

                                           IV.

       In the interest of judicial economy, we now turn to a consideration of the merits of

BLC’s appeal, which as it acknowledged at oral argument, are properly before us. BLC

challenges: (1) the bankruptcy court’s determination of the indubitable equivalent of its

claim and (2) the amount of post-petition interest awarded. We consider each challenge

in turn.

                                            A.

       BLC challenges the bankruptcy court’s determination that the Debtor’s

conveyance of eight tracts of land and approximately $1 million in cash was the

indubitable equivalent of BLC’s secured claim on two alternative grounds. First, BLC

questions whether a partial dirt-for-debt plan can ever achieve the level of certitude

required in an indubitable equivalence calculation.

       Alternatively, BLC attacks the approval of the Confirmed Plan because it believes

that the bankruptcy court incorrectly calculated the value of the land at issue. As we have

noted, the bankruptcy court found that the highest and best use for some of the tracts at

issue was for residential development. Additionally, the bankruptcy court did not apply

                                            14
discounts for costs of sale, commissions, or loss of funds during the marketing period to

the valuation of the land, which BLC argues the bankruptcy court should have applied.

BLC seeks either additional cash payments or the surrender of additional property to

meet the standard of indubitable equivalence as it conceives it.

                                              1.

       BLC argues that partial dirt-for-debt agreements can never provide a creditor with

the indubitable equivalent of its secured claim because property valuations are inherently

uncertain. We disagree. Whether or not partial dirt-for-debt plans can provide a creditor

with the indubitable equivalent of its claim is a question of law which we review de novo.

See In re K & L Lakeland, Inc., 128 F.3d 203, 206 (4th Cir. 1997) (stating that legal

conclusions are reviewed de novo).

       That there are variations in appraisals for a parcel of land does not undercut a

court’s ability to arrive at a valuation that reflects the indubitable equivalent of a secured

claim. BLC assumes that assets for which the valuation involves some uncertainty

cannot be the indubitable equivalent of a secured creditor’s claim. This conclusion would

eviscerate the indubitable equivalence standard. There is uncertainty in all disputed

valuations. See In re Simons, 113 B.R. 942, 947 (Bankr. W.D. Tex. 1990) (“[V]aluation

is not an exact science, and the chance for error always exists.”). Indeed, uncertainty

permeates every determination of disputed facts.

                                             15
       However, bankruptcy courts have expertise in valuing land in the bankruptcy

context. The bankruptcy court weighs the qualifications, credibility, and conclusions of

each party’s expert. In fact, in an effort to hedge the uncertainty inherent in property

valuation, about which BLC complains, courts are instructed to take a conservative

approach to determining fair market value. In re SUD Props., Inc., 2011 WL 5909648, at

*5 (“A conservative approach should . . . be taken in order to protect the secured creditor

in this regard.”) (quotation omitted). We find that, a bankruptcy court, acting as a fact-

finder with specialized expertise, is well-equipped to arrive at a valuation that represents

the indubitable equivalent of a secured creditor’s claim, in the face of disputed

valuations.

       Furthermore, BLC does not provide any binding authority that compels a

different conclusion. Although BLC contends that the Ninth Circuit’s decision in In re

Arnold & Baker Farms, 85 F.3d 1415 (9th Cir. 1996) supports its argument, this reliance

is misplaced. Arnold & Baker did not hold that a partial dirt-for-debt plan could never

satisfy the indubitable equivalence standard because land valuations are inherently

uncertain. In fact, the Ninth Circuit explained that it “[did] not hold that the indubitable

equivalent standard can never as a matter of law be satisfied when a creditor receives less

than the full amount of the collateral originally bargained for [i.e., in partial dirt-for-debt

agreements],” id. at 1423, but only that the plan at issue in that case did not satisfy the

standard. In that case, unfavorable market conditions and other factors made valuation

particularly difficult.

                                              16
       For these reasons, we decline to hold that a partial-dirt-for-debt plan can never

provide the indubitable equivalent of a secured creditor’s claim, as a matter of law.

                                             2.

        With respect to the partial dirt-for-debt plan at issue, we address the standard of

review before turning to the merits.

                                             a.

       We review the bankruptcy court’s valuation of land in its determination of the

indubitable equivalent of BLC’s secured claim for clear error.          Under a different

provision under Chapter 11, we have held that the question of indubitable equivalence is

“a question of fact rooted in measurements of value and the credibility of witnesses.” In

re Snowshoe Co., Inc., 789 F.2d 1085, 1088 (4th Cir. 1986). The indubitable equivalence

analysis under § 1129(b)(2)(A)(iii) involves the same factual findings as the one in

Snowshoe.      Accordingly, we hold that the measurements of value undergirding a

bankruptcy court’s indubitable equivalent determination are factual findings that we

review for clear error. 6

       6
         This holding departs from the Ninth Circuit’s holding that, “[a]lthough the value
of the land is a finding of fact which we review for clear error, the ultimate conclusion of
indubitable equivalence is a question of law which we review de novo because it requires
analysis of the meaning of the statutory language in the context of the Bankruptcy Code’s
‘cram down’ scheme.” In re Arnold & Baker Farms, 85 F.3d at 1421. However, we find
that the statutory language of § 1129(b)(2)(A)(iii) is clear and that the meticulous
appraisal examination required in determining indubitable equivalence is one that is
(Continued)
                                            17
       The clearly erroneous standard is a demanding one. We may not simply overturn

a lower court’s determination because we would reach a different conclusion. Anderson

v. City of Bessemer City, 470 U.S. 564, 573–74 (1985). “A finding is ‘clearly erroneous’

when although there is evidence to support it the reviewing court on the entire evidence is

left with the definite and firm conviction that a mistake has been committed.” Id. at 573

(quoting United States v. U.S. Gypsum Co., 333 U.S. 364, 395 (1948)). We now apply

that standard of review to the facts before us.

                                             b.

       BLC argues that the bankruptcy court erred by rejecting BLC’s appraiser’s

determination of the highest and best use for some tracts of land. BLC further argues that

the bankruptcy court clearly erred by not discounting the valuation for costs associated

with a sale.   In light of the bankruptcy court’s detailed and thorough findings, we

disagree.

       The fact that the bankruptcy court weighed the evidence in a way with which

BLC does not agree does not render the bankruptcy court’s analysis clearly erroneous.

Furthermore, the fact that the parties’ experts presented disparate appraisals of the land

does not necessarily negate the indubitableness of the bankruptcy court’s equivalence

inherently factual. Our holding is in accord with the Seventh Circuit’s view that review
of this issue should be “deferential” because the question of whether a plan provides for
the indubitable equivalent of a secured claim “is one of fact.” In re James Wilson Assocs.,
965 F.2d 160, 172 (7th Cir. 1992) (citing In re Snowshoe, 789 F.2d at 1088).

                                             18
determination. Weighing the competing evidence presented by the parties and arriving at

a conclusion is exactly the task that the bankruptcy court must carry out as a fact-finder.

Here, the bankruptcy court conducted a very detailed and exhaustive factual analysis

considering testimony from appraisers, loggers, bankers, soil analysts, and other

creditors. It held over ten hearings and the record on appeal is nearly 4,000 pages. In its

valuation of the land, including its determination of the highest and best use of the land,

the bankruptcy court weighed all of the expert testimony and made detailed findings on

topics such as topography, average days on the market of property in the area, the

economic climate of the location of the properties, and the economic history of the

particular tracts. See, e.g., Order at 1–6, In re Bate Land & Timber, LLC, No. 13-04665-

8-SWH (Bankr. E.D.N.C. Jan. 5, 2015). Further, the bankruptcy court clearly explained

that it found the Debtor’s expert testimony more credible than BLC’s expert testimony,

an assessment to which we give particular deference. See id. 2–3. The district court

found it significant that BLC’s witness, Charles Moody, made contradictory statements

about some of the tracts of land. For example, Moody’s statement that one of the tracts

had a highest and best use for timber production was directly inconsistent with his

previous appraisal of the same tract in which he concluded that the highest and best use

was for residential property. Id. at 2.

       We therefore decline to find, as BLC would have us do, that the bankruptcy

court’s failure to blindly adopt BLC’s valuation constituted clear error. Given the fact

that the bankruptcy court’s analysis was thorough and not arbitrary, we are not left with

the “definite and firm conviction that a mistake has been committed.” Anderson, 470
19
U.S. at 573 (quoting United States v. U.S. Gypsum Co., 333 U.S. at 395). We are thus

compelled to affirm the bankruptcy court’s findings.

                                            B.

       BLC argues that the bankruptcy court erred by using its equitable discretion to

disallow 266 days of post-petition interest. Again, we disagree.

       The Bankruptcy Code states that an oversecured creditor “shall be allowed” to

collect interest on its claim, 11 U.S.C. § 506(b), including post-petition interest. United

States v. Ron Pair Enters., Inc. 489 U.S. 235, 237 (1989). However, an oversecured

creditor’s right remains subject to equitable defenses. See, e.g., In re Lapiana, 909 F.2d
221, 224 (7th Cir. 1990) (“A statute that says ‘shall’ does not, by its imperative mood,

extinguish all defenses.”); In re Huhn, 145 B.R. 872, 878 (W.D. Mich. 1992) (“The

creditor’s right to post-petition interest is still subject to equitable defenses such as

estoppel.”).

       The bankruptcy court disallowed 266 days of post-petition interest because it

determined that it would be unfair for the Debtor to be responsible for interest that

accrued during periods of delay attributable to the court’s schedule or due to proceedings

initiated by BLC. The bankruptcy court did not deprive BLC of its statutory entitlement

by denying BLC post-petition interest altogether. The bankruptcy court ordered the

Debtor to pay over $1.356 million in post-petition interest.        This outcome is not

inconsistent with the statute’s mandate, which does not prevent consideration of equitable

factors in calculating the post-petition interest owed. The bankruptcy court, which was

                                            20
well-positioned to weigh the equities in this case, reasonably concluded that it would be

inequitable to allow the Debtor to pay interest that accrued through no fault of its own.

Accordingly, we affirm the bankruptcy court’s reduction of the post-petition interest

owed to BLC.

                                             V.

       For the foregoing reasons we hold that BLC’s appeal was not equitably moot.

Reaching the merits of the appeal, we hold that the bankruptcy court did not err in

calculating the indubitable equivalent of BLC’s claim or in calculating the amount of

post-petition interest due to BLC. Therefore, the district court’s dismissal of the appeal is

reversed and the judgment of the bankruptcy court is

                                                                               AFFIRMED.

                                             21