SUNNYLAND FARMS, INC.

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re:
SUNNYLAND FARMS, INC., 	Case No. 14-10231-t11
Debtor.
MEMORANDUM OPINION
Before the Court is whether to confirm the Debtor’s Fourth Amended Chapter 11 Plan
(the “Plan”). 	Dalsem Horticultural Products, B.V., Johnson & Nelson, P.C., and Nick Sauro
(together the “Objecting Creditors”) timely objected to confirmation, arguing that the Plan was
not proposed in good faith and is not feasible. 	The Objecting Creditors also argue that the
Debtor did not get the votes required for confirmation. 	After the confirmation hearing the
Debtor agreed to modify the Plan to resolve a dispute with the Internal Revenue Service (“IRS”).
For the reasons set forth below and based on the Debtor’s proposed Plan modification, the Court
concludes that the Plan meets the requirements of § 11291 and should be confirmed.
1 Unless otherwise noted, all statutory references are to 11 U.S.C.
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I. 	FACTS
The Court finds2 the following facts:3
The Debtor is a New Mexico corporation that owns a greenhouse in Grants, New Mexico
(the “Grants Greenhouse”). 	The Grants Greenhouse has not been operated for years and is in
very poor repair. It is not insured.
John Stockwell (“Stockwell”) formed the Debtor in 2003. Stockwell, a Canadian citizen,
is Debtor’s President and sole shareholder. 	Debtor then purchased the assets of Agstar of New
Mexico, Inc. (“ANM”), including the Grants Greenhouse and a 20-acre greenhouse in Estancia,
New Mexico. 	As part of the transaction Debtor assumed ANM’s obligations to Farm Credit
Services of the Mountain Plains, PCA (“Farm Credit”) under a $8,500,000 secured loan (the
“Farm Credit Loan”).
Stockwell, his wife Lynn Stockwell, and their children were substantial shareholders of
Agstar Power Incorporated (“API”), the corporate parent of ANM. 	As part of the purchase
transaction the Stockwells agreed to relinquish their API stock. 	As compensation the Debtor
issued notes to Mrs. Stockwell and the children, including a $12,797,282 note to Mrs. Stockwell.
This debt has been on the Debtor’s books since 2003.
2 In making these findings, the Court took judicial notice of the docket. See St. Louis Baptist
Temple, Inc. v. Fed. Deposit Ins. Corp., 605 F.2d 1169, 1172 (10th Cir.1979) (holding that a
court may, sua sponte, take judicial notice of its docket); LeBlanc v. Salem (In re Mailman Steam
Carpet Cleaning Corp.), 196 F.3d 1, 8 (1st Cir.1999) (citing Fed.R.Evid. 201 and concluding
that “[t]he bankruptcy court appropriately took judicial notice of its own docket”); In re Quade,
496 B.R. 520, 524 (Bankr.N.D.Ill.2013) (a “bankruptcy court [is authorized] ... to take judicial
notice of its own docket”).
3 To the extent any finding of fact is construed as a conclusion of law, it is adopted as such, and
vice versa. The Court may make additional findings of fact and conclusions of law as it deems
appropriate or as may be requested by any of the parties.
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Not long after the asset purchase closed one of Debtor’s employees inadvertently started
a fire at the Estancia greenhouse. 	Unbeknownst to Debtor, the Central New Mexico Electric
Cooperative (“CNMEC”) had shut off Debtor’s electricity at the greenhouse. Without electricity
Debtor could not pump water to fight the fire, and the Estancia greenhouse was destroyed.
Debtor 	filed 	suit 	against 	CNMEC 	in 	2005, 	alleging 	that 	CNMEC 	wrongfully
disconnected the electricity service. 	After a bench trial the state district court awarded Debtor
about $21 million in damages.4 In 2011 the New Mexico Court of Appeals reversed the
judgment in large part, effectively awarding Debtor little more than its attorney fees.5 On further
appeal, in 2013 the New Mexico Supreme Court reversed the Court of Appeals’ decision in part,
increasing Debtor’s award to about $7.4 million.6 CNMEC paid this judgment amount. 	After
attorney’s fees were deducted Debtor was left with about $5.45 million in cash (the “Funds”),
which are now held in the state court’s registry. 	Debtor’s only substantial assets are the Grants
Greenhouse and the Funds.
4 See Case No. D-1333-CV-2005-00192. 	The state district court awarded Debtor $21,354,882
for breach of contract “without application of comparative fault” and “$100,000 punitive
damages for fault occurring after the breach of contract” with post-judgment interest to accrue at
8.75%. 	The court also awarded Debtor $21,354,882 for negligence with post judgment interest
to accrue at 15%. 	The court applied comparative fault principles to the negligence award and
held Debtor was 80% at fault. Finally, the court granted CNMEC a $3 million setoff.
5 See Sunnyland Farms, Inc. v. Cent. N.M. Elec. Coop., Inc., 255 P.3d 324 (N.M. App. 2013).
The New Mexico Court of Appeals reversed the breach of contract, punitive damages, and
related post-judgment interest awards. The Court of Appeals upheld Debtor’s negligence award
but also CNMEC’s right of offset. 	Debtor’s negligence award, reduced by 80% comparative
fault, totaled about $4.27 million. 	CNMEC’s setoff amount, as established by the Court of
Appeals, was $3.2 million. Before attorney’s fees were paid, Debtor’s award amounted to a little
over $1 million.
6 See Sunnyland Farms, Inc. v. Cent. N.M. Elec. Coop., Inc., 301 P.3d 387 (N.M. 2013).
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Between the two appellate court decisions Farm Credit decided to cut its losses and sell
the Farm Credit Loan for what it could get. 	Farm Credit apparently concluded it might never
collect the loan. When the loan went up for sale Stockwell became very interested in buying it.
Stockwell planned to borrow the purchase price from business acquaintances in Canada (Ernest
Mailloux and Craig Lanoue), and pledge the loan as collateral.
Days before the scheduled July, 2011 closing of the Farm Credit Loan sale to Stockwell,
Stockwell’s New Mexico counsel advised him that buying the loan might result in claims of
breach of fiduciary duty. 	Based on the advice Stockwell arranged for 1670083 Ontario, Inc., a
Canadian corporation (“Ontario”), to buy the loan instead. 	Ontario is owned by Messrs.
Mailloux and Lanoue.
Ontario paid $500,000 for the Farm Credit Loan, currently owns the loan, and is the
Debtor’s main secured lender. 	The loan balance is about $8 million. 	Ontario has first liens on
the Grants Greenhouse and the Funds, which together are worth significantly less than the loan
balance.
Even after closing Stockwell did not give up his interest in buying the Farm Credit Loan.
Several documents were drafted and circulated at about the time of the sale to Ontario that would
have given Stockwell the right to buy, directly or indirectly, the Farm Credit Loan and/or
Ontario’s stock. 	Ultimately, however, Stockwell never purchased the loan or the stock, and in
October, 2013 Stockwell, Mailloux, and Lanoue officially terminated Stockwell’s rights (to the
extent he had any) to buy either.
As part of the Plan Ontario has agreed to “carve out” a portion of the Funds (the “Carve
Out”) for use to pay creditors. All initial Plan payments would be funded by the Carve Out.
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The Plan allows unsecured creditors to choose a 1% cash dividend on their allowed claim
or one share of stock for each dollar of the claim. Cash payments would be made 30 days after
the Plan’s effective date.
The Debtor proposes in the Plan to bring the Grants Greenhouse back into operation
through post-bankruptcy loans from Ontario and Lynn Stockwell, both of whom have elected to
receive stock for the unsecured portions of their claims. Initially the reorganized Debtor would
be managed by Jack Benne. Stockwell would retain no equity interest or managerial control.
The IRS filed a proof of claim on June 17, 2014, claiming a $459,273.27 priority claim
and an $862,797.18 general unsecured claim. Debtor did not object to the IRS claim.
The Debtor objected to the claims of Jerry Capussi ($3,262,474) and JC Fresh Farms
($370,800) on September 5, 2014, and to the claims of Dalsem Horticultural Products, B.V.
($3,371,130) and Johnson & Nelson, P.C. ($636,039) on October 27, 2014 (together, the
“Disputed Claims” held by the “Disputed Claimants”). 	No Disputed Claimant ever sought
temporary allowance of its Disputed Claim for voting purposes. 	If the claim objections are
sustained, the Disputed Claims will be reduced from about $7,640,443 (the claimed amount) to
about $207,098 (the amount not objected to), a reduction of about 97.3%.
Under the Plan the Debtor would have to pay about $308,600 to pre-petition creditors 30
days after the effective date, broken down as follows:
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Creditor 	Claim amount 	Plan payment
City of Grants 	$ 	101,064 	$100,000
IRS priority 	$ 	459,273 	$ 50,000
NM Tax. and Rev. Dept. (“TRD”) 	$ 	43,058 	$ 40,000
NM Dept. of Labor (“DOL”) 	$ 	41,584 	$ 50,000
Unsecured creditors 	$10,682,004 	$ 68,6187
Total 	$308,618
The Plan has five classes of claims entitled to vote: Class 3(A) (Ontario secured); Class
3E (City of Grants secured); 3(R) (TRD secured); Class 3(T) (DOL secured); and Class 5
(unsecured). Ontario, City of Grants, and DOL voted to accept the Plan. TRD did not vote.
The Class 5 creditor votes are listed below. Disputed Claims are in italics:
Creditor 	Claim Amount 	Accepted 	Rejected
Albuquerque Packaging Co. 	$ 	142,819 	$ 	142,819
Bevo Farms 	$ 	350,000 	$ 	350,000
Continental Divide Electric Coop. 	$ 	21,727 	$ 	21,727
Dalsem Horticultural Products, B.V. 	$3,371,130 	$3,371,130
J.C. Fresh Farms 	$ 	370,800 	$ 370,800
Jenna McKie 	$ 	16,400 	$ 	16,400
Jeremy Stockwell 	$ 	184,000 	$ 	184,000
Jerry Capussi 	$3,282,474 	$3,282,474
John Wright 	$ 	149,503 	$ 	149,503
Johnson & Nelson, P.C. 	$ 	636,039 	$ 636,039
Kenneth Lujan 	$ 	150,000 	$ 	150,000
Nick Sauro 	$ 	429,414 	$ 429,414
Ontario (deficiency)8 $2,802,439 	$2,802,439
Shulgan, Martini and Marusic, LLP 	$ 	35,000 	$ 	35,000
Subtotal: 	$11,941,745 	$3,851,888 	$8,089,857
7 Calculated by assuming that the Disputed Claims would be allowed at 50%. The Court has no
idea what amounts ultimately will be allowed.
8 Ontario filed a proof of claim in this case of $7,946,126.88. 	Ontario’s unsecured portion was
calculated by subtracting from this amount the Funds balance ($5,452,305.50), then adding the
estimated amount of the Carve Out ($308,617.83). The result is $2,802,439.21.
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If the Disputed Claim Votes Are Counted:
Number of Creditors Accepting Plan 	9
Number of Creditors Rejecting Plan 	5
Percentage of Creditors Voting 	64.29% 	35.71%
Percentage of Dollar Value Voting 	32.26% 	67.74%
If the Disputed Claim Votes Are Not Counted:
Number of Creditors Accepting Plan 	9
Number of Creditors Rejecting Plan 	1
Total claim amount voting on Plan 	$4,281,302 	$3,851,888 	$429,414
Percentage of Creditors Voting 	90% 	10%
Percentage of Dollar Amount Voting 	89.97% 	10.03%
II. 	DISCUSSION
A. 	Does the Plan Comply with § 1129?
1. 	Duty to Ensure Compliance. 	The Court has an “independent duty to
ensure that the requirements of 11 U.S.C. § 1129 are satisfied, even if no objections to
confirmation have been made.” 	In re Young Broadcasting Inc., 430 B.R. 99, 139 (Bankr.
S.D.N.Y. 2010); Williams v. Hibernia Nat’l Bank (In re Williams), 850 F.2d 250, 253 (5th Cir.
1988) (court “has a mandatory independent duty to determine whether the plan has met all of the
requirements necessary for confirmation”); Liberty Nat’l Enterprises. v. Ambanc La Mesa Ltd.
P’ship (In re Ambanc La Mesa Ltd. P’ship), 115 F.3d 650, 653 (9th Cir. 1997) (“The bankruptcy
court had an affirmative duty to ensure that the Plan satisfied all 11 U.S.C. § 1129 requirements
for confirmation.”); Ala. Dep’t of Econ. and Cmty. Affairs v. Ball Healthcare-Dallas, LLC (In re
Lett), 632 F.3d 1216, 1220 (11th Cir. 2011) (same). See also United Student Aid Funds, Inc. v.
Espinosa, 559 U.S. 260, 277 (2010) (in connection with a Chapter 13 case, the Supreme Court
stated 	“the 	Code 	makes 	plain 	that 	bankruptcy 	courts 	have 	the 	authority—indeed, 	the
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obligation—to direct a debtor to conform his plan to the requirements of §§ 1328(a)(2) and
523(a)(8)”).
2. 	Evidence in Support of Confirmation. 	Stockwell, the only witness,
testified at the February 11, 2015 final hearing in support of Plan confirmation. 	The Objecting
Creditors cross-examined Stockwell on the issues of good faith, feasibility, and voting. 	The
Objecting Creditors also introduced 26 exhibits into evidence.
The Objecting Creditors did not argue that the Plan violated §§ 1129(a)(1)-(a)(2), (a)(4)-
(a)(7), (a)(10),9 or (a)(12)-(a)(16), nor did they introduce evidence of such violation. The Court
therefore concludes that the Plan complies with each of these confirmation requirements, and
will focus on the remaining four subsections of § 1129(a).
B. 	§ 1129(a)(3) (Good Faith).
A plan must be proposed in good faith and not by any means prohibited by law. 	11
U.S.C. § 1129(a)(3). The Bankruptcy Code does not define “good faith.” “[W]hen considering
whether a plan satisfies the § 1129(a)(3) requirement, the focus of the court must be on the plan
itself.” 	In re Dow Corning Corp., 244 B.R. 673, 675 (Bankr. E.D. Mich. 1999). 	“In finding a
lack of good faith, courts have looked to whether the debtor intended to abuse the judicial
process and the purposes of the reorganization provisions.” 	Travelers Ins. Co. v. Pikes Peak
Water Co. (In re Pikes Peak Water Co.), 779 F.2d 1456, 1460 (10th Cir. 1985). 	Denial of
confirmation for lack of good faith is “appropriate . . . [where] it is evident that the debtor seeks
9 The Objecting Creditors argued in passing that Ontario was a de facto insider. 	There is some
basis for this position, although the Court is not prepared to so hold. 	Regardless, the Plan was
accepted by the City of Grants and the DOL, impaired, noninsider creditors, so § 1129(a)(10)
was satisfied even if the vote of Class 5 is disregarded.
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merely to delay or frustrate the legitimate efforts of secured creditors to enforce their rights.” Id.
“[P]lacing the amorphous concept of good faith outside the confines of all of the other elements
for confirmation of the plan, even outside § 1129(b)'s cramdown requirements, is intended to
allow courts to utilize their gut feeling about a plan's effects . . . .” 	In re Dow Corning Corp.,
244 B.R. at 676.
1. 	Lynn 	Stockwell’s 	Claim. 	In 	support 	of 	their 	good 	faith 	objection
Objecting Creditors argue that Lynn Stockwell does not have a valid unsecured claim, and that
allowing her to take stock in exchange for her claim is an improper way for Stockwell to
preserve his equity. 	The Objecting Creditors allege the Debtor does not, or should not, owe
money to Lynn Stockwell for her surrender of API stock, and that if a debt exists it is owed by
Stockwell rather than the Debtor.
The treatment of Lynn Stockwell’s claim does not demonstrate Debtor’s lack of good
faith. 	First, the debt to Mrs. Stockwell has been on Debtor’s books for almost 12 years. 	If the
debt is subject to attack, it should have been challenged before now. 	Second, Objecting
Creditors could object to Mrs. Stockwell’s claim. See § 502(a); Fed. R. Bankr. P. 3007. Under
the Plan, they will have until 15 days after the effective date to do so. Third, the Court does not
have enough evidence to seriously question Lynn Stockwell’s claim. The Court understands the
basic facts, and agrees with the Objecting Creditors that there could possibly be grounds to attack
Mrs. Stockwell’s claim, but the evidence before the Court is too conclusory to sustain such an
attack or prove lack of good faith.
2. 	Stockwell’s Dealings with Ontario. 	Objecting Creditors also argue that
the Plan was not proposed in good faith because it is based upon an undisclosed agreement
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between Stockwell and Messrs. Mailloux and Lanoue for Stockwell to obtain the benefit of the
Farm Credit Loan purchase. 	The Court agrees that there are reasons to view the relationship
between Stockwell and Ontario with a jaundiced eye. Stockwell did want to buy the Farm Credit
Loan, for one thing, and continued that quest for some time after Ontario bought the loan. 	In
addition, the Carve Out, the Debtor’s retention of the Grants Greenhouse, and Ontario’s post-
confirmation loan all evidence significant flexibility and open-handedness on Ontario’s part. 	It
seems unlikely that a hard-nosed, arm’s length lender would agree to such terms; such a lender
would be much more likely to take its collateral and get out. Nevertheless, there is zero evidence
of any improper agreement. Ontario’s flexible, generous attitude could be nothing more than the
response of a lucky creditor in receipt of a windfall.10 The Court is not willing to find bad faith
based on inference and innuendo.
Good faith should be considered in light of the alternatives. 	Clearly, Ontario does not
have to agree to the Carve Out or the other accommodating terms; it could seek stay relief and
foreclose its liens on the Funds and the Grants Greenhouse, leaving unsecured creditors with
nothing. This would be the likely result of a plan of liquidation or conversion to Chapter 7.
During the course of this bankruptcy case the Objecting Creditors have argued that
creditors would be better served by challenging Ontario’s secured claim rather than reorganizing
the Debtor. 	To date the Objecting Creditors have not mounted such a challenge, although they
have every right to do so through the claim objection process.
There is no evidence before the Court that such an attack on Ontario’s lien position
10 Since Ontario paid $500,000 for the loan, the “windfall” was in the neighborhood of
$5,300,000, depending on the value of the Grants Greenhouse.
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would be successful. On the contrary, whatever else might be made of the facts outlined above,
Farm Credit had valid first liens on the Debtor’s assets and sold its lien position to Ontario for
valuable consideration in an arm’s length transaction. 	A Chapter 7 trustee, inheriting an estate
with no unencumbered assets, would not relish protracted, expensive, questionable litigation
against Ontario.
A 1% cash dividend (or a small interest in the reorganized debtor) is little enough, but
based on the evidence before the Court it appears better than the proposed alternative.
The Court finds that the good faith requirement of § 1129(a)(3) is met.
C. 	§ 1129(a)(8) (Acceptance of Plan).
Section 1129(a)(8) requires that “each class of claims or interests . . . has accepted the
plan; or such class is not impaired under the plan.” 	All classes of creditors are impaired under
the Plan, so Debtor needed to obtain the affirmative vote of all classes to comply with §
1129(a)(8). 	A class has accepted the plan “if such plan has been accepted by creditors . . . that
hold at least two-thirds in amount and more than one-half in number of the allowed claims of
such class held by creditors . . . that have accepted or rejected such plan.” 11 U.S.C. § 1126(c).
A class that does not vote is deemed to have accepted the Plan for § 1129(a)(8) purposes. 	See
Heins v. Ruti-Sweetwater, Inc. (In re Ruti-Sweetwater, Inc.), 836 F.2d 1263, 1266–67 (10th Cir.
1988).
All classes other than Class 5 either accepted the Plan or did not vote. Class 5 voted in
favor of the Plan only if the Disputed Claims are not counted. 	The Objecting Creditors argue
that the votes of the Disputed Claimants should be counted.
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The Bankruptcy Code provides that “[t]he holder of a claim or interest allowed under
section 502 . . . may accept or reject a plan.” 	11 U.S.C. § 1126(a). 	Section 502 states that a
claim or interest is “deemed allowed, unless a party in interest . . . objects.” 11 U.S.C. § 502(a).
It follows that a creditor holding a disputed claim does not have an allowed claim for voting
purposes. 	See Bell Rd. Inv. Co. v. M. Long Arabians (In re M. Long Arabians), 103 B.R. 211,
215 (9th Cir. BAP 1989) (“[U]ntil a party is deemed to have an ‘allowed’ claim, or actually has
an allowed claim, it has no right to accept or reject a plan.”); In re Gardinier, Inc., 55 B.R. 601,
604 (Bankr. M.D. Fla. 1985) (“There can hardly be any doubt that a claim which is disputed [or]
on which there is any objection pending, is not yet allowed and ordinarily would not be
permitted to vote on a plan of reorganization.”).
Fed. R. Bankr. P. 3018(a) states: “[n]otwithstanding objection to a claim or interest, the
court after notice and hearing may temporarily allow the claim or interest in an amount which the
court deems proper for the purpose of accepting or rejecting a plan.” This rule gives creditors an
avenue for voting on the plan when a party has objected to their claim. 	See In re M. Long
Arabians, 103 B.R. at 215 (creditor with disputed claim “could not have voted on the plan unless
it sought a timely allowance of its claim under Bankruptcy Rule 3018”).
“The policy behind temporarily allowing claims is to prevent possible abuse by plan
proponents who might ensure acceptance of a plan by filing last minute objections to the claims
of dissenting creditors.” Armstrong v. Rushton (In re Armstrong), 294 B.R. 344, 354 (10th Cir.
BAP 2003), affirmed, 97 Fed. Appx. 285 (10 th Cir. 2004). 	In Armstrong the court held that a
creditor could request temporary allowance when an “‘objection [is] filed too late to be heard
before the confirmation hearing, when fully hearing the objection would delay administration of
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the case, or when the objection is frivolous or of questionable merit.’” 	Id. (citing 9 Collier on
Bankruptcy ¶ 3018.01[5] (Lawrence P. King, ed., 15 th ed. 2003). A debtor should not be able to
disenfranchise a creditor “merely by its unilateral act of filing an objection to the creditor’s proof
of claim.” 	In re Goldstein, 114 B.R. 430, 432 (Bankr. E.D. Pa. 1990); In re Orosco, 77 B.R.
246, 249 (Bankr. N.D. Cal. 1987) (“[A]lthough the filing of a claim objection initially operates to
preclude the claimholder from accepting or rejecting a Plan, it also triggers a right on the part of
the claimholder to request a temporary allowance for purposes of voting, and thus, to participate
in the balloting process.”); Stone Hedge Props. v. Phoenix Capital Corp. (In re Stone Hedge
Props.), 191 B.R. 59, 63 (Bankr. M.D. Pa. 1995) (“A creditor whose claim is objected to is
therefore disenfranchised from voting on the plan unless the objection is adjudicated prior to plan
voting or a mechanism, such as temporary allowance, is provided for.”).
The Disputed Claimants have never sought temporary allowance of their claims for
voting purposes, even though the claim objections, which do not appear to be frivolous, were
filed last fall. Without temporary allowance the Disputed Claimants may not vote, and without
their vote Class 5 clearly accepted the Plan. The Plan therefore satisfies § 1129(a)(8).11
D. 	§ 1129(a)(9) (Priority Claims).
In general, priority tax claims must be paid within five years from the petition date, with
interest. 	§ 1129(a)(9)(C). 	Here, the Plan allows for a single $50,000 payment to the IRS on
account of its priority claim. This amount is far short of IRS’s $459,263.27 priority claim. The
problem was fixed by a post-hearing Plan modification, under which the Debtor will pay the IRS
11 Because § 1129(a)(8) is satisfied, the Court does not need to consider the § 1129(b)
“cramdown” provisions.
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priority claim as required by § 1129(a)(9).
Pre-confirmation plan modifications are expressly permitted. 	See 11 U.S.C. § 1127(a).
Section 1127(a) is “‘designed to implement the negotiation process, which is the essence of the
formulation of any plan of reorganization.’” 	JM Convenience Corp. v. Split Second Towing &
Transp. Inc. (In re Split Second Towing & Transp. Inc.), 2010 WL 3385482, at *4 (M.D. Fla.
2010) (quoting In re Winn-Dixie Stores, Inc., 377 B.R. 322, 335 (M.D. Fla. 2007), affirmed, 286
Fed. Appx. 619 (11th Cir. 2008). 	If a modification adversely affects the interests of a creditor
who has previously accepted a plan, that creditor should have the opportunity to reconsider and
change his or her vote. 	Id. (citing In re Frontier Airlines, Inc. 93 B.R. 1014, 1023 (D. Colo.
1988)). Here, the Court concludes that the modification of the treatment of the IRS’s claim will
not have a material effect on other creditors, and therefore does not require re-voting. The Court
concludes that the Plan as modified complies with § 1129(a)(9).
E. 	§ 1129(a)(11) (“Feasibility”).
Finally, § 1129(a)(11) provides that a plan may only be confirmed if it “is not likely to be
followed by the liquidation, or the need for further financial reorganization, of the debtor . . . .”
The Objecting Creditors argue the Plan does not comply with this “feasibility” requirement.
“‘The purpose of section 1129(a)(11) is to prevent confirmation of visionary schemes
which promise[] creditors and equity security holders more under a proposed plan than the
debtor can possibly attain after confirmation.’” 	In re Pikes Peak Water Co., 779 F.2d at 1460,
quoting In re Pizza of Hawaii, Inc., 761 F.2d 1374, 1382 (9th Cir. 1985). 	“In determining
whether a plan is feasible, the bankruptcy court has an obligation to scrutinize the plan carefully
to determine whether it offers a reasonable prospect of success and is workable.” Id. (citing In re
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Monnier Bros., 755 F.2d 1336, 1341 (8th Cir. 1984)). 	See also Bank One, NA v. Blackwater
Farms, Inc. (In re Baker), 302 B.R. 112, at *2 (10th Cir. BAP 2003) (plan is feasible if it “offers
a reasonable prospect of success and is workable”). A debtor need not prove to a certainty that it
will succeed. 	Id. 	Rather, a debtor need only support its plan with “projections that have some
basis in fact and experience.” 	Id. at *3 (citing In re Snider Farms, Inc., 83 B.R. 1003, 1012
(Bankr. N.D. Ind. 1988)).
Here, the Debtor’s plan provides for cash payments from the Carve Out, to be made
within 30 days of the effective date. Payments do not rely on the future financial success of the
reorganized debtor. 	There is no risk that “cash-out” unsecured creditors (i.e., everyone except
Ontario and the Stockwell family members) would go unpaid if the reorganized debtor is
unsuccessful. 	None of the parties electing to take stock instead of the 1% dividend objected to
the plan or questioned feasibility.
The Court finds that the Debtor’s plan is workable and bears a reasonable prospect of
success. The Debtor has obtained post-confirmation financing that should allow it to rehabilitate
the Grants Greenhouse. 	The reorganized debtor will be run by a manager with significant
greenhouse experience. 	More to the point, all unsecured creditors that elected to receive cash
will be paid from the Carve Out. The Plan is feasible and complies with § 1129(a)(11).
III. 	CONCLUSION
The Debtor proposed a feasible plan, in good faith, and obtained the required votes.
Initially the Plan did not properly treat IRS’s priority tax claim, but that has been fixed. 	All
requirements 	of 	§ 	1129(a) 	have been 	met. 	While the dividend 	to 	unsecured 	creditors
unquestionably is meager, the Court does not believe that the Objecting Creditors’ proposed
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alternative (i.e., challenging Ontario’s lien) would result in more money to creditors.
The Court will enter a separate order confirming the Plan.
_______________________________________
Hon. David T. Thuma
United States Bankruptcy Judge
Entered: April 8, 2015.
Copies to:
Christopher M. Gatton
10400 Academy Rd., #350
Albuquerque, NM 87111
Robert A Johnson
P.O. Box 25547
Albuquerque, NM 87125
John Stockwell
90 Townline Road South
Leamington, Ontario N8H 4G2
Manual Lucero
P.O. Box 607
Albuquerque, NM 87103
Daniel White
320 Gold Ave., SW, #300A
Albuquerque, NM 87102
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Case 14-10231-t11 Doc 208 Filed 04/08/15 Entered 04/08/15 16:06:35 Page 16 of 16