Thomas Frances Young and Consuelo Angelina Young

UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: THOMAS FRANCIS YOUNG
and CONSUELA ANGELINA YOUNG, 	No. 7-11-12554 JS
Debtors.
MEMORANDUM OPINION
THIS MATTER is before the Court on the Motion for Relief from Stay by BANK’34,
filed June 7, 2011 (“Motion for Relief From Stay”) (Docket No. 12), the Emergency Motion to
Prohibit Use of Cash Collateral, filed June 24, 2011 (“Motion to Prohibit Use of Cash
Collateral”) (Docket No. 29), and the Debtors’ objections thereto. See Docket Nos. 24 and 45. 1
BANK’34 seeks relief from the automatic stay to permit it to foreclose its liens against certain
real and personal property that is property, and seeks an order prohibiting the Debtors from
using cash collateral pledged to BANK’34. The Court held a final evidentiary hearing on the
Motion for Relief From Stay and the Motion to Prohibit Use of Cash Collateral on August 5,
2011 and took the matters under advisement.
Based on the evidence presented at the final hearing, the relevant case law, and
arguments of counsel, and being otherwise sufficiently informed, the Court will deny
BANK’34’s Motion for Relief From Stay and Motion to Prohibit Use of Cash Collateral but
will order adequate protection for BANK’34 consistent with this memorandum opinion.
PROCEDURAL BACKGROUND
The Debtors, Tom F. Young Sr. and Consuelo A. Young (known as Connie Young),
commenced their chapter 11 case pro se on May 31, 2011 (the “Petition Date”). On June 23,
1 First American Bank filed a joinder in a motion to dismiss or convert filed by the United States Trustee. First
American Bank’s joinder in the United States Trustee’s motion was also set for hearing on August 5, 2011. The
United States Trustee withdrew its motion to dismiss or convert prior to the hearing. First American Bank failed to
appear at the hearing. Therefore, the Court denied First American Bank’s request to dismiss or convert.
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2011, the United States Trustee filed a motion to dismiss or convert this chapter 11 case, and
withdrew the motion on July 28, 2011. On July 5, 2011, William F. Davis & Assoc., P.C. filed
an application to represent the Debtors in this bankruptcy case. An order granting the
application was entered August 3, 2011. The Debtors filed their Statement of Financial Affairs
and Schedules on July 18, 2011. The Section 341(a) creditors meeting was held and concluded
on July 21, 2011.
FACTS
The Debtors are the sole members of Laguna LLC, a New Mexico limited liability
company that owns and operates a health club business in Las Cruces, New Mexico known as
Tom Young’s Fitness Center. Only one of those units is currntly rented. The Debtors
commenced their chapter 11 case as result of declining revenues of Laguna LLC and the high
vacancy rate of the Santa Fe rental units.
At the final hearing, Mr. Young testified that Tom Young’s Fitness Center was
profitable in 2007 and 2008, and projected the business will regain profitability within a year or
two. The Debtors’ exit strategy for their chapter 11 case is to increase revenues at the Tom
Young’s Fitness Center and to lower their required debt service by selling or surrendering the
Santa Fe rental units.
Some years ago, following the Debtors’ retirement from the Tom Young’s Fitness
Center business, one of their sons, Tom Young Jr., and a business partner, were in charge of
operating the business. The business partner withdrew from the business in February 2008.
The Debtors formed Laguna LLC the next month and again became active in the business.
They transferred the Tom Young’s Fitness Center business to Laguna LLC, and leased to
Laguna LLC, under a Commercial Lease, the land and buildings in Las Cruces (the “Real
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Property”) where the business operates. The Commercial Lease, made as of April 1, 2008
between the Debtors and Laguna LLC (the “Commercial Lease”), provides for the Debtors’
lease of the Real Property and equipment 2 to Laguna LLC for the sum of $12,000 per month.
The lease term commenced April 1, 2008 and expires April 5, 2018, subject to a 5-year renewal
option at a lease rate of $15,000 per month.
After the formation of Laguna LLC, the Debtors began managing the Tom Young’s
Fitness Center business along with their son, Tom Young Jr. Since approximately March 2008,
the Debtors each have worked at the Tom Young’s Fitness Center in Las Cruces, often ten
hours per day and generally for at least five consecutive days at a time. They commute between
Santa Fe, where they reside, and Las Cruces where the Tom Young’s Fitness Center business is
located. At times Laguna LLC has had an arrangement with a local hotel to trade fitness center
passes for hotel employees for nights the Debtors would stay at the hotel while in Las Cruces.
At other times the Debtors lease an apartment in Las Cruces at Laguna LLC’s expense, and stay
there when working at the fitness center. Laguna LLC also pays the Debtors’ food expenses
while they stay in Las Cruces. The Debtors use the Debtors’ personal vehicles for the commute
between Santa Fe and Las Cruces. Laguna LLC makes the lease payments on one of their
personal vehicles. Laguna LLC books those lease payments as member withdrawals.
On or about August 30, 2008, BANK’34 made two loans to the Debtors: 1) a term loan
in the amount of $1,217,041.38; and 2) a line of credit loan in the amount of up to $199,081.40.
The term loan refinanced a loan from a different lender. As collateral for the loans, the Debtors
granted BANK’34 a mortgage against the Real Property. At the time the loans were made,
2 It is not clear from the evidence before the Court what equipment used in the Tom Young’s Fitness Center
business is owned by Laguna LLC and what equipment is owned by the Debtors and leased to Laguna LLC. As a
result, no ruling is made regarding the nature or extent of any equipment pledged to BANK’34. Any equipment
collateral is disregarded in connection with BANK 34’s motion for relief from the stay.
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BANK’34 was aware that the Debtors had formed Laguna LLC, and that Laguna LLC owned
and operated the Tom Young’s Fitness Center business. No property of Laguna LLC was
pledged to BANK’34 as collateral for the loans. The amount of monthly rent payable by
Laguna LLC to the Debtors under the Commercial Lease approximately equaled the amount of
monthly debt service to be made by the Debtors to BANK’34.
In 2010, at the Debtors’ request, BANK’34 agreed to reduce the payments under both
loans to monthly installments of interest only for the months of July 2010 through December
2010. The Debtors requested the loan concession as a result of decreased revenue of the Tom
Young’s Fitness Center business. In exchange, on or about August 20, 2010, the Debtors
granted BANK’34 a security interest in, among other things, all of their inventory, equipment,
accounts, money, rights to payment and performance, and general intangibles. BANK’34
perfected the security interests by filing a financing statement on September 9, 2010 in the
records of the New Mexico Secretary of State.
In connection with the Debtors’ request to pay interest only to BANK’34, the Debtors
submitted a personal financial statement to BANK’34 dated August 3, 2010. The personal
financial statement reflected that Connie Young’s monthly average income in the form of
commissions from the sale of real estate was $8,000 for the “last tax year.” The Debtors listed
no other income on the financial statement except for social security income. The Debtors’
federal income tax return for tax year 2009 reflects to receipts by Connie Young from real estate
sales and service in the amount of $31,692, or approximately $3,000 per month.
The Debtors made the interest only payments to BANK’34 for the months of July 2010
through December 2010 from rent paid them by Laguna LLC under the Commercial Lease for
the Real Property. BANK’34 declined the Debtors’ request to extend the interest only period
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beyond December 31, 2010 because the Debtors failed to provide BANK’34 with a business
plan showing how they would be able to pay the loans on a current basis after the requested
extended interest only period would expire. After December 2010, the Debtors made two
principal and interests payments to BANK’34, and then stopped making payments. The last
payment the Debtors made to BANK’34 was in April 2011, which represented the amount due
under the loans in February 2011. By a letter dated March 30, 2011, BANK’34 gave the
Debtors notice of default and a 10-day opportunity to cure.
Laguna LLC’s compiled financial statements for the eleven month period ending
November 30, 2010 reflects revenue in the amount of $483,189.01, or a monthly average of
about $44,925. In recent years the Debtors generally have taken less than $1,000 per month as
member withdrawals from Laguna LLC. Laguna LLC’s general ledger for the six month period
ending June 30, 2011 reflects the following pre-petition member withdrawals: 1) $400.00 by
Connie Young in May 2011; 2) $5,526.73 by Tom Young Sr. in January 2011; and 3) an
average of $699.80 per month for the months of February through May 2011 by Tom Young Sr.
During this period, the Debtors had other sources of income to pay their living expenses,
including rental income and income from the sale of property. The general ledger shows post-
petition withdrawals in June 2011 by Connie Young in the amount of $700.00 and by Tom
Young Sr. in the amount of $5,480.06.
Tom Young Jr. is paid $4,000 per month for his services as general manager of the Tom
Young’s Fitness Center business. He works full time in exchange for the compensation Laguna
LLC pays him. After commencement of this chapter 11 case, Laguna LLC has been paying the
Debtors in the form of membership withdrawals a total of approximately $3,000 to $5,000 per
month in exchange for their services. Tom Young Sr. testified that the Debtors no longer have
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the same access to funds from other sources to pay their living expenses and are now more
dependent on taking draws from Laguna LLC in exchange for services.
Laguna LLC, which owns and operates the Tom Young’s Fitness Center business,
maintains its own books and records of account, has its own bank accounts, files its own tax
returns, has employees, issues its own financial statements, and retains its own professionals.
Laguna LLC paid the Debtors pre-petition rent in the amount of $45,930.90 for the
period from January 2011 through May 2011. Laguna LCC’s general ledger reflects that
Laguna LLC paid the Debtors post-petition rent on June 11, 2011 in the amount of $2,000.00. 3
Laguna LLC has paid no other rent to the Debtors post-petition. The Debtors have not made
any post-petition efforts to enforce the terms of the Commercial Lease between them and
Laguna LLC.
Laguna LLC has paid certain expenses incurred by the Debtors personally. Those
expenses include $91.57 on May 5, 2011 to Break Masters; $145.70 on May 31, 2011 to the
City of Santa Fe; $80.00 on June 2, 2011 to a medical doctor; and $124.74 on July 12, 2011 to
AutoZone. Laguna LLC booked the disbursements to Brake Masters and the City of
Albuquerque as member withdrawals.4 In addition, on July 5, 2011 Laguna LLC loaned $2,475
to Diocenes LLC, an entity in which one of the Debtors’ sons, Kirk Young, has an interest.
Kirk Young signed the check for the loan to Diocenes LLC without the knowledge or consent of
the Debtors. When Tom Young Sr. learned of the check, he admonished his son, and Diocenes
LLC returned the funds to Laguna LLC.
3 Tom Young Sr. testified that Laguna LLC booked the $2,000 as rent in error because the rent mistakenly was
specified on the check by which the payment was made. Tom Young Sr. testified that the payment actually was a
member draw.
4 The evidence before the Court does not reflect how Laguna LLC booked the June 2, 2011 disbursement to a
medical doctor or the July 12, 2011 disbursement to AutoZone.
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BANK’34’s appraiser, Karen Mundy, testified that the fair market value of the Real
Property was $1,860,000 as of April 18, 2011. The Debtors did not contest that opinion of value
for purposes of the Court’s rulings on BANK’34’s two pending motions. Ms. Mundy testified
that as of the date of the August 5, 2011 hearing on BANK’34’s motions, the value of the Real
Property had not changed.
As of the Petition Date, the Debtors were indebted to BANK’34 in the total amount of
$1,455,489.14, including principal, interest, late fees and an appraisal fee but excluding accrued
interest calculated at the difference between the non-default and default rates and further
excluding attorney’s fees.5 As of the Petition Date, the Debtors were also in arrears on 2009
and 2010 property taxes against the Real Property in the amount of $21,266.69, excluding
interest and penalties. As of July 19, 2011, post-petition interest at the non-default rate had
accrued on the two loans in the amount of $14,855.82. Daily interest accrual at the non-default
rate is $303.18.
BANK’34’s appraiser testified that the estimated marketing period to sell the Real
Property is “up to” 12 months. She opined that a sale likely would occur closer to the end of the
12-month period because of the special use nature of the Real Property.
If BANK’34 were to sell the Real Property at its appraised value on the date that is 12
months after July 19, 2011 as part of the Bank’s real estate owned, and the Debtors made no
further payments to BANK’34 and no further property taxes were paid in relation to the Real
Property prior to the date of sale, the estimated net sale proceeds after payment to BANK’34 in
full would be approximately $30,000 to $60,000, calculated as follows:
Sale proceeds 	$1,860,000
5 The amount of accrued but unpaid pre-petition interest calculated at difference between the non-default and
default interest rates, and the amount of BANK’s 34’s attorney’s fees incurred in connection with a default under
the loans, are not before the Court.
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Estimated costs of sale 	(186,000)
Net Sale Proceeds 	1,674,000,000
Payment of debt to BANK’346
(Owed as of 07-19-11) 	(1,491,611.65)
12 months interest accrual 	(110,660.70)
NET before attorneys fees 	$ 	71,717.65
Estimated attorneys fees 	$10,000 to $40,000
NET SALE PROCEEDS 	$31,717.65 to $61,717.65
DISCUSSION
A. 	Relief From the Automatic Stay
BANK’34 seeks relief from the automatic stay pursuant to both 11 U.S.C. § 362(d)(1)
and 11 U.S.C. § 362(d)(2). Under 11 U.S.C. § 362(g), BANK’34 has the burden of proof on the
issue of the Debtors’ equity in the collateral pledged to BANK’34, and the Debtors have the
burden of proof on all other issues.
1. 	Stay Relief Under 11 U.S.C. § 362(d)(1)
Based On the Debtors’ Bad Faith Conduct
BANK’34 argues that cause exists for relief from the automatic stay under 11 U.S.C. §
362(d)(1) because of the Debtors’ bad faith conduct. The bad faith conduct alleged by the
BANK’34 includes that Debtors’ failure to enforce the terms of the Commercial Lease between
them and Laguna LLC to deprive BANK’34 to a claim to cash collateral in this chapter 11 case,
while at the same time the Debtors have 1) increased the amount of their personal draws from
Laguna LLC; 2) used funds of Laguna LLC to pay personal bills; and 3) caused Laguna LLC to
unnecessarily employ both the Debtors and their son Tom Young Jr. In addition, BANK’34
asserts that the Debtors issued a false financial statement to BANK’34 in August 2010 by
6 This amount includes 2009 and 2010 property taxes and excludes attorney’s fees, interest and penalties on unpaid
property taxes, and interest accrued at the difference between the default and non-default interest rates.
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overstating the amount of Connie Young’s commission income from her realtor business, and
improperly depreciated a vehicle on a 2009 tax return as an asset of the realtor business.
The Bankruptcy Code does not define “cause” under 11 U.S.C. § 362(d)(1). In re
Trident Associates Ltd. Partnership, 52 F.3d 127, 131 (6 th Cir. 1995). Bad faith can constitute
cause for relief from the stay under 11 U.S.C. § 362(d)(1). Id; In re JE Livestock, Inc., 375 B.R.
892, 897-98 (10th Cir.BAP 2007). Typically, the type of bad faith justifying relief from the stay
is the bad faith filing of the bankruptcy case.7 Because this Court finds that the Debtors have
not engaged in bad faith conduct warranting relief from the stay even if post-petition conduct
may be considered, the Court need not determine whether the only type of bad faith conduct
that may justify stay relief is the bad faith filing of a bankruptcy case.
The Court does not find bad faith on the part of the Debtors in connection with their
failure to enforce the terms of the Commercial Lease. The Debtors, as debtors-in-possession,
owe a fiduciary duty to creditors to maximize the value of the estate. 8 That duty includes the
duty to exercise reasonable business judgment with respect to enforcement of the terms of the
Commercial Lease. Because the Debtors are dealing with a lessee entity they control, their
dealings with Laguna LLC are subject to closer scrutiny by the Court.9 The amount of monthly
rent Laguna LLC owes to the Debtors approximates their monthly debt service obligations to
BANK’34 historically has served as the source of funds used to make the debt service. Post-
7 E.g. Trident Associates, 52 F.3d at 131; In re Dixie Broadcasting, Inc., 871 F.2d 1023, 1026 (11 th Cir. 1989); In
re Ramkaran, 315 B.R. 361, 365 (D.Md.2004); In re Loucheschi LLC, 2011 WL 3319891, *4 (Bankr.D.Mass.
2011); In re FRE Real Estate, Inc., 450 B.R. 619, 623 Bankr. N.D.Tex. 2011); In re 221-06 Merrick Blvd.
Associates LLC, 2010 WL 5018265, *3 Bankr.E.D.N.Y. 2010).
8 In re ASARCO, L.L.C. _ F.3d _, 2011 WL 3569285 (5 th Cir. 2011)(C.A.5 (Tex.),2011(the debtor-in-possession
has a fiduciary duty to creditors and equity holders, and must have some articulated business justification for using,
selling, or leasing the property outside the ordinary course of business); In re Reliant Energy Channelview LP 594
F.3d 200, 210 (3 rd Cir. 2010) (the debtor -in-possession has a fiduciary duty to maximize the value of the estate); In
re Scott 172 F.3d 959, 967 (7th Cir. 1999)(the debtor-in-possession owes a fiduciary duty to his creditors).
9 E.g. In re Alma Energy, LLC, 2010 WL 4736905, *5 (E.D.Ky. 2010); In re Jordan River Resources, Inc. _B.R._,
2011 WL 3625096*2 (Bankr. W.D. Mich, 2011); In reHyLoft, Inc. 451 B.R. 104, 113-114 (Bankr. D.Nev. 2011).
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petition, Laguna LLC ceased paying rent, except for $2,000 paid in June 2011. Tom Young Sr.
testified that Laguna LLC’s financial difficulties have prevented Laguna LLC from paying the
rent post-petition and keeping its other obligations current. He further testified that he and his
wife are working hard to restore Laguna LLC to profitability. Wendy Flamm, a BANK’34 loan
officer, testified that if Tom Young’s Fitness Center closed, the value of the land and building
pledged to BANK’34 would greatly decline. The Court finds that, under these circumstances,
the Debtors have not breached their fiduciary duty as debtors-in-possession by failing to take
action to collect rent from Laguna LLC or terminate the Commercial Lease.
BANK’34 questions whether Laguna LLC requires the services of both Debtors and
their son Tom Young Jr. Based on the facts in evidence, the Court finds that Laguna LLC’s
employment of Tom Young Sr., Connie Young and Tom Young Jr. is a reasonable exercise of
business judgment. The family members work long hours for below market wages in an effort
to save a family business.
BANK’34 asserts that Tom Young Sr. and Connie Young should not take draws in
excess of the approximate $1,000 month they historically withdrew from Laguna LLC in
exchange for services so additional Laguna LLC funds would be available to pay rent.
BANK’34 further asserts that Laguna LLC should not pay for lodging or food for the Debtors
while they reside in Las Cruces while working for Laguna LLC. Taking into account the
amount Laguna LLC pays the Debtors, the amount Laguna LLC expends for lodging and food
for the Debtors, the Debtors’ explanation about their no longer having other sources of funds to
pay personal expenses, and the number of hours the Debtors work for Laguna LLC, the Court
finds that the Debtors are exercising reasonable business judgment regarding these matters and
further finds that the amount of their monthly draws is not excessive.
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BANK’34 urges that the Debtors are improperly using Laguna LLC as their “personal
piggy bank” in disregard of the separate nature of the entity, which is further evidence of bad
faith on their part. In support of its position, BANK’34 relies on four disbursements in the first
six months of 2011 totaling $350.44, at least two of which Laguna LLC booked as member
withdrawals; monthly lease payments made by Laguna LLC on one of the Debtors’ personal
vehicles, which Laguna LLC booked as member withdrawals; and an unauthorized loan made
by Laguna LLC in the amount of $2,475 where the funds were returned upon Tom Young Sr.
learning of the loan. Laguna LLC’s annual revenue exceeds $500,000. The Court finds that
this conduct, considered either alone or in conjunction with the Debtors’ other conduct, does not
constitute bad faith for which relief from the automatic stay should be granted.
2. 	Stay Relief Under 11 U.S.C. § 362(d)(1)
Based On Lack of Adequate Protection
BANK’34 asserts it is entitled to stay relief under 11 U.S.C. § 362(d)(1) because its
secured claim is not adequately protected. BANK’34 has a secured claim in the amount of
$1,491,611.65 as of July 17, 2011.10 The fair market value of its collateral as of that date is
$1,674,000.00. Based on these figures, BANK’34’s security cushion computed as a loan to
value ratio is 10.9% as of July 17, 2011. BANK’34 argues that it is entitled to adequate
protection because 1) interest will accrue during the estimated marketing period for the property
if BANK’34 were to foreclose its lien, thereby eroding its security cushion; 2) BANK’34 will
incur additional attorney’s fees to collect its claim; 3) property taxes are accruing and are not
being paid; 4) if the Bank acquired the Real Property at a foreclosure sale and resold the
property, the sale proceeds realized by the Bank will be reduced by costs of sale; and 5) a sale
by a bank from real estate owned is perceived by buyers as a distressed sale and will not yield
10 This claim amount excludes attorney’s fees, interest and penalties on unpaid property taxes, and interest accrued
at the difference between the default and non-default rates. No evidence was presented regarding these amounts.
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the appraiser’s estimate of fair market value. The Court agrees, in part, and disagrees, in part,
with BANK’34’s contentions.
The concept of adequate protection is derived from the property interest protections
found in the Fifth Amendment’s prohibition against taking private property without just
compensation.11 A secured creditor is entitled to adequate protection as condition to
continuation of the automatic stay to compensate or protect the creditor from a decrease12 or
threatened decrease 13 in the value of the estate’s interest in property that is the creditor’s
collateral as a result of the automatic stay. 	Bankruptcy Code Section 361 provides a
nonexclusive list of how adequate protection may be provided when it is required under 11
U.S.C. § 362. Such adequate protection includes “cash payment or periodic cash payments …
to the extent the stay under section 362 …. results in a decrease in the value of such entity’s
interest in such property;” and “an additional or replacement lien to the extent that such stay …
results in a decrease in the value of such entity’s interest in such property.” 11 U.S.C. § 361(1)
and (2).
11 E.g. In re Panther Mountain Land Development, LLC, 438 BR 169, 189-90 (Bankr. ED Ark. 2010)(“The
concept of adequate protection is derived from the property interest protections found in the Fifth Amendment”); In
re Cambridge Woodbridge Apartments, L.L.C., 292 B.R. 832, 841 (Bankr. N.D.Ohio,2003)(same); In re Cardell,
Inc., 2009 WL 1973551, *3 (D..N.J.,2009)(“[a]dequate protection, as derived from Fifth Amendment protection of
property interests, reconciles the competing interests of the debtor and the secured creditor, who is entitled to
constitutional protection for bargained-for property interests”).
12 In re Big3D, Inc., 438 B.R. 214, 220-21 (9th Cir.BAP 2010)(adequate protection is intended to compensate a
secured creditor whose collateral is declining); In re DB Capital Holdings, LLC, _ B.R. _, 2011 WL 2118877. *10
(Bankr. D.Colo.,2011)(same); In re SW Boston Hotel Venture LLC, 449 BR 156, 175-76 (Bankr. D. Mass.
2011)(same); In re Panther Mountain Land Development, LLC, 438 BR at 189-90 (the purposed of adequate
protection is to guard the secured creditor’s interest the declining collateral value); In re Theodore A. Thompson,
2008 WL 2157163, *2 (Bankr N.D. Ill 2008)(adequate protection is some form of assurance that the creditor will
not suffer a decline in the value of its collateral).
13 See e.g. In re Price, 370 F.3d 362, 372 (3 rd Cir. 2004)(“If the value of collateral is threatened, creditors may seek
adequate protection and relief from the automatic stay.…”); In re Panther Mountain Land Development, LLC,
438 B.R. at 190(“In order to establish a prima facie case of a lack of adequate protection, the moving party must
provide evidence that the value of the collateralized property is declining, or at least threatened, as a result of the
automatic stay.”); In re Box, 324 B.R. 290, 292 (Bankr..S.D.Tex. 2005)(“To establish a prima facie case for cause
due to a lack of adequate protection, a movant must initially demonstrate that it holds a claim, secured by a valid,
perfected lien upon estate property, and that a decline in the value of its collateral is either occurring or is
threatened.”).
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A decline in the value of the estate’s interest in property that is the creditor’s collateral,
which entitles the creditor to adequate protection, can result from such causes as a decline in the
market value of the collateral,14 non-payment of interest accruing on a senior lien, or non-
payment of property taxes having priority over the creditor’s lien.15 A threatened decline in the
value of a creditor’s collateral entitling the creditor to adequate protection can occur, for
example, from lack of insurance, failure to maintain the collateral, failure to permit periodic
inspections, or a failure to report information affecting the collateral.16 If a secured creditor has
a security cushion sufficient to protect it from the declining value of its collateral,17 then the
security cushion may provide adequate protection for the declining value.18 What constitutes
adequate protection is a question of fact to be determined on a case-by-case basis.19
14 E.g. United Savings v. Timbers of Inwood Forest, 484 U.S. 365, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988); In re
American Consolidated Transportation Companies, 2010 WL 3655485, *4 (Bankr. N.D.Ill. 2010)(the secured
creditor is entitled where the value of the collateral is declining); In re Elmira Litho, Inc., 174 B.R. 892, 902
(Bankr. S.D.N.Y.1994)(the secured creditor lacks adequate protection if the value of its collateral is declining as a
result of the stay.)
15 E.g. In re May, 2002 WL 32114562, *3 (Bankr. E.D.Ark. 2002)( a creditor is entitled to adequate protection
against factor’s jeopardizing its collateral, such as failure to maintain or insure the collateral); In re Anthem
Communities/RBG, LLC, 267 B.R. 867, 871 (Bankr. D.Colo. 2001)(a creditor is entitled to adequate protection
from a decline or threatened decline in the value of its collateral); In re Self, 239 B.R.877, 881 (Bankr.E.D.Tx
1999) (to establish a prima facie case for adequate protection, the moving party must prove that the value of its
collateral is declining or at least threatened).
16 In re Delaney-Morin, 304 B.R. 365, 370 n.3 (9th Cir.BAP 2003)(“Property insurance generally constitutes an
indispensable protection and lack of insurance jeopardizes a secured creditor’s interests in its collateral.”; In re
Graham; 2008 WL 7400623, *5 (Bankr. D.Ga.,2008)(stay modified in part because the debtor could not maintain
the collateral); In re Kiesewetter, 337 B.R. 75 79 (Bankr.W.D.Pa. 2006)(where court ordered debtors to adequately
protect the creditor by making periodic payments, providing evidence of insurance and allowing inspection of the
property); In re Steele, 182 B.R. 284, 290 (Bankr. W.D.Okl.1995)(citing In re Rogers, 1993 WL 773862, *4
(Bankr.W.D.Okla., 1993)(where Court reasons that adequate protection for creditor should include reasonable
access to the property for inspection and proof of appropriate insurance coverage.)
17 The Court uses the phrase “security cushion” to refer to the equity in the property above the amount of the
creditor’s lien, i.e. the difference between 1) the value of the property and 2) the sum of the amount of the
creditor’s lien and all liens senior in priority to the creditor’s lien. The Court uses the phrase “equity cushion” to
refer to the equity for the debtor, i.e. the difference between 1) the value of the property and 2) the sum of all liens
against the property regardless of priority.
18 E.g. Matter of Mendoza, 111 F.3d 1264, 1272 (5 th Cir. 1997)(Court finds equity cushion of one thousand percent
sufficient to provide adequate protection); In re Van Horn, 2011 WL 1900324, *4 (Bankr. M.D.Pa. 2011)(where
Court states that a substantial equity cushion can provide adequate protection); In re Franklin Equipment Co., 416
B.R. 483, 528 (Bankr. E.D.Va. 2009)(where Court agrees with case law finding that sufficient equity cushion can
provide adequate protection).
19 In re Pomodoro Restaurant, 251 B.R. 441, *4 (10th Cir.BAP 1999)(unpublished opinion)(“A bankruptcy court
has considerable discretion in balancing the factors in awarding adequate protection and any such determination is
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The evidence before the Court is that the Real Property is neither increasing nor
declining in value, that the Debtors are not paying post-petition property taxes accruing against
the Real Property, that the Debtors have collected $2,000 of post-petition rents under the
Commercial Lease, and that the Bank’s has a 10.9% security cushion. BANK’34 is entitled to
adequate protection from a decline in the value of its interest in the Real Property as a result of
the Debtors’ nonpayment of property taxes accruing from and after the date BANK’34 filed its
Motion for Relief From Stay, and with respect to the Debtors’ use of $2,000 of post-petition
rents pledged to the Bank without the consent of the Bank or an order of the Court. BANK’34
has established that its security cushion is insufficient to protect the Bank from the risk of
accruing taxes or the expenditure of its cash collateral without authority.
As adequate protection for Bank’34, the Debtors will be required to deposit in a separate
account by the 20th day of each month an amount equal to the estimated $11,000 of annual taxes
against the Real Property, prorated for the prior month (except the payment to be deposited for
taxes accruing in June 2011 will be prorated to the portion of June 2011 after the Motion for
Relief From Stay was filed). The pro-rated taxes for June 2011 and July 2011 shall be
deposited by September 20, 2011. The tax deposits may be made from rent Laguna LLC pays
the Debtors, member withdrawals or other funds. Funds on deposit in the separate account will
be earmarked to pay taxes against the Real Property, and BANK’34 will be granted a lien
against those funds regardless of the source of the funds. In addition, the Debtors shall pay
BANK’34 the sum of $2,000 within thirty days after the date of entry of the order
accompanying this Memorandum Opinion. If the Debtors fail to comply with these
to be done on a case-by-case basis.”); May, 2002 WL 32114562, *3 (“What constitutes adequate protection is a
factual issue to be decided on a case-by-case basis.”)
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requirements, the Court will consider appropriate relief on short notice on a request by
BANK’34.
BANK’34 is not entitled to adequate protection to compensate or protect it from erosion
of its security cushion caused by post-petition interest accrual. 20 In United Savings Association
of Texas v. Timbers of Inwood Forest Associates, Ltd.. 484 U.S. 365, 369-82, 108 S.Ct. 626,
629-36 (1988), the United States Supreme Court held that an under-secured creditor is entitled
to adequate protection to compensate it for a decline in the value of its collateral; but not for
delay caused by the automatic stay, such as a loss of reinvestment earnings upon foreclosure of
liens against collateral or interest to compensate the creditor for delay resulting from the
automatic stay. The Court reasoned that under 11 U.S.C. §§ 502 and 506(b) post-petition
interest accrual on a secured creditor’s allowed secured claim is paid out of the creditor’s
security cushion and is limited to the amount by which the creditor’s claim is over-secured. 21
The under-secured creditor who has no security cushion therefore is not entitled to post-petition
interest. The Court explained:
Even more important for our purposes than § 506’s use of terminology is its
substantive effect of denying undersecured creditors postpetition interest on their
claims-just as it denies over secured creditors postpetition interest to the extent
that such interest, when added to the principal amount of the claim, will exceed
the value of the collateral…. Since this provision permits postpetition interest to
be paid only out of the “security cushion,” the undersecured creditor,who has no
such cushion, falls within the general rule disallowing postpetition interest. See 11
U.S.C. § 502(b)(2).
Timbers, 484 U.S. at 372-373, 108 S.Ct. at 631.
20 See In re Westchase I Associates, L.P., 126 B.R. 692, 694 (W.D.N.C. 1991) (“[I]f the value of the property itself
is not declining, as is the case here, the creditor would not be entitled to protection of the accruing interest value of
the claim.); In re Lane, 108 B.R. 6 (Bankr.Mass.1989) (same). See also Orix Credit Alliance, Inc. v. Delta
Resources, Inc., 54 F.3d 722, 728-29 (11 th Cir. 1995)(adequate protection does not serve to protect against erosion
of an equity cushion by accruing interest but only against a decline in value of collateral).
21 See also In re Delta Resources, Inc., 54 F.3d 722, 730 (11 th Cir. 1995)( “the oversecured creditor’s allowed
secured claim for postpetition interest is limited to the amount that a creditor was oversecured at the time of
filing.”).
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The United State Supreme Court further reasoned that because a secured creditor’s claim is
limited to the value of its collateral, if an under-secured creditor were paid post-petition interest
on the value of its collateral then the amount of its secured claim would increase with the
passage of time as the stay continues, which is not what is intended under the Bankruptcy
Code.22
Applying these principles explicated in Timbers, a secured creditor is not entitled to
adequate protection under 11 U.S.C. § 362(d)(1) to compensate or protect it from erosion of its
security cushion by post-petition interest accrual for at least four reasons. First, a secured
creditor is entitled to adequate protection under 11 U.S.C. § 362(d)(1) only to compensate or
protect it from a decline or threatened decline in the value of the estate’s interest in property that
is the creditor’s collateral. Payment of post-petition interest as adequate protection to maintain
a security cushion does not serve this purpose. Second, a secured creditor is paid post-petition
interest out of its security cushion. Therefore, payment of post-petition interest necessarily
reduces the amount of the security cushion. Third, if payment of post-petition interest had no
effect on the amount of the creditor’s security cushion, then the amount of post-petition interest
accrual would not be limited by the amount of the security cushion contrary to the requirement
of 11 U.S.C. § 506(b). Finally, if a secured creditor were entitled to payment of post-petition
interest to maintain its security cushion, it would create the anomalous result that a slightly
22 In Timbers, the Court explained:
In subsection (a) of this provision the creditor's “interest in property” obviously means his security interest
without taking account of his right to immediate possession of the collateral on default. If the latter were
included, the “value of such creditor's interest” would increase, and the proportions of the claim that are
secured and unsecured would alter, as the stay continues-since the value of the entitlement to use the
collateral from the date of bankruptcy would rise with the passage of time. No one suggests this was
intended. The phrase “value of such creditor's interest” in § 506(a) means “the value of the collateral.”
H.R.Rep. No. 95-595, pp. 181, 356 (1977); see also S.Rep. No. 95-989, p. 68 (1978), U.S. Code Cong. &
Admin. News 1978, pp. 5787, 5854, 6141, 6312. We think the phrase “value of such entity's interest” in §
361(1) and (2), when applied to secured creditors, means the same.
Timbers, 484 U.S. at 372; 108 S.Ct. at 631.
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over-secured creditor could accrue post-petition interest in an amount vastly disproportionate to
its security cushion, while a slightly under-secured creditor would accrue no post-petition
interest.
Likewise, BANK’34 is not entitled to adequate protection to compensate it for erosion
of its security cushion by post-petition attorney’s fees. To the extent BANK’34 asserts a
secured claim for post-petition attorneys fees , under 11 U.S.C. § 506(b) post-petition attorneys
fees, like post-petition interest, is paid out of and is limited by the amount of the Bank’s security
cushion. Section 506(b) contains the same limitations on the amount of an allowable secured
claim for post-petition attorney’s fees as it does for post-petition interest accrual. See 11 U.S.C.
§ 506(b).
3. 	Stay Relief Under 11 U.S.C. § 362(d)(2)
BANK’34 asserts that the Court should grant stay relief under Bankruptcy Code §
362(d)(2). That section provides for relief from the automatic stay with respect to an act against
property if “(A) the debtor does not have an equity in such property; and (B) such property is
not necessary to an effective reorganization.” 11 U.S.C. § 362(d)(2). BANK’34 asserts that the
Debtors have no equity in the Real Property taking into account interest and tax accruals during
the expected marketing period following a foreclosure sale, additional attorney’s fees BANK’34
will incur to collect its claim, costs of sale, and the inherently distressed nature of a sale of real
estate owned by a financial institution. Additionally, BANK’34 asserts that the Debtors do not
have a feasible chapter 11 plan in prospect. Because the Court finds that the Debtors have
equity in the Real Property, is not necessary for the Court to reach the second prong of the
requirement for stay relief under 11 U.S.C. § 362(d)(2), that such property is not necessary to an
effective reorganization.
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Unlike the adequate protection provision of 11 U.S.C. § 362(d)(1), which focuses on
harm to a secured creditor from the decline or threatened decline in the value of the estate’s
interest in property that is its collateral, 11 U.S.C. § 362(d)(2) focuses on whether keeping the
stay in place will benefit other creditors. The debtor has equity in property pursuant to 11
U.S.C. § 362(d)(2)(A) if a comparison of the value that can be realized from the sale of the
property in the bankruptcy case with the aggregate amount of all secured claims against the
property shows that value from a sale can be realized for the benefit of unsecured creditors.23 If
there is no value to be obtained from such a sale that can benefit unsecured creditors, and there
is no confirmable plan in prospect for which the property is needed to otherwise provide a
benefit to creditors or other parties in interest, then stay relief under 11 U.S.C. § 362(d)(2) is
appropriate.24 Whether the Debtors have equity in the Real Property, thus, requires the Court to
consider two elements: 1) the value that can be realized from the sale of the Real Property in
this bankruptcy case; and 2) the aggregate amount of all secured claims against the Real
Property. The Court will consider each element separately.
23 E.g. In re Indian Palms Associates, Ltd., 61 F.3d 197, 208 (3rd Cir. 1995)(“equity analysis …focuses on the
value, above all secured claims against the property, that can be realized from the sale of the property for the
benefit of all unsecured creditors.”); Stephens Industries, Inc. v. McClung, 789 F.2d 386, 391-92 (6 th Cir.
1986)(same); Pistole v. Mellor (In re Mellor), 734 F.2d 1396, 1400 n. 2 (9th Cir.1984)(defining equity cushion as
“the value in the property, above the amount owed to the creditor with a secured claim, that will shield that interest
from loss due to any decrease in the value of the property during time the automatic stay remains in effect”); In re
Ebersole, 440 B.R. 690, 699 (Bankr. W.D.Va. 2010)(“ equity analysis in that section [section 362(d)(2)] focuses on
the value, above all secured claims against the property, that can be realized from the sale of the property for the
benefit of all unsecured creditors.”); In re Heritage Oracle, LLC, 2010 WL 4259772, *2 (Bankr.D.Ariz.
2010)(same). Cf. In re Gindi, 642 F.3d 865, 875 (10 th Cir. 2011)(a debtor “has no equity in property ... when the
debts secured by liens on the property exceed the value of the property.”)(citation omitted).
24 Property is necessary to an effective reorganization under 11 U.S.C. § 362(d)(2)(B) if “the property is essential
for an effective reorganization that is in prospect. This means . . . that there must be “a reasonable possibility of a
successful reorganization within a reasonable time….’” And while the bankruptcy courts demand less detailed
showings during the four months in which the debtor is given the exclusive right to put together a plan, see 11
U.S.C. §§ 1121(b), (c)(2), even within that period lack of any realistic prospect of effective reorganization will
require § 362(d)(2) relief.” Timbers, 484 U.S. at 375-76, 108 S.C.t at 633.
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Value
BANK’34 argues that in considering value the Court should factor in the inherently
distressed nature of a sale of the Real Property by BANK’34 if it acquires the Real Property at a
foreclosure sale. But the appropriate measure of value under 11 U.S.C. § 362(d)(2)(A) is not
what the lender could obtain if it sold the Real Property; it is the amount that the Debtors or a
bankruptcy trustee could realize upon a sale in this bankruptcy case. BANK’34’s appraiser
testified that the fair market value of the Real Property based on a marketing period of “up to”
12 months is $1,860,000. The value that can benefit an unsecured creditor upon a sale of the
Real Property requires deduction of the estimated $186,000 of costs of sale.25 The Court finds
that $1,674.000 is the value of the Real Property for purposes of determining whether the
Debtors have equity in the Real Property under 11 U.S.C. § 362(d)(2)(A), after deducting costs
of sale.26
The Amount of Secured Claims Against the Property.
BANK’34 holds the only secured claim against the Real Property. Its claim as of the
date of the final hearing on its motion for relief from stay was $1,497,564.08, excluding certain
amounts for which no evidence was presented.27 The difference between the value of the Real
Property (after deducting estimated costs of sale) and the amount of BANK’34’s secured claim
25 E.g. In re Barnes, 2011 WL 2709240, *2 (Bankr. W.D.Mich. 2011)(citing Stephens Industries, Inc. v. McClung,
789 F.2d 386, 392 (6th Cir.1986) ( quoting In re Mellor, 734 F.2d 1396, 1400 n. 2 (9th Cir.1984))(“In bankruptcy,
“[e]quity ... is the value, above all secured claims against the property, that can be realized from the sale of the
property for the benefit of the unsecured creditors.”); In re Pineda, 2010 WL 569547, *4 Bkrtcy.W.D.Tex. 2010);
In re Wrobel, 2007 WL 7230978, *3 (Bankr.S.D.Cal. 2007); In re Steffens, 275 B.R. 570, 578 (Bankr.D.Colo.
2002).
26 The estimated sale costs include a broker’s commission. No credible evidence was presented to the Court that
the Real Property realistically could be sold without the assistance of a broker.
27 BANK’34 did not present evidence of the amount of attorney’s fees BANK’34 incurred to the date of the
hearing allowable under the applicable loan documents, or of the amount of accrued interest calculated at the
difference between the default and non-default rates. Further, no evidence was presented of the amount of accrued
2011 property taxes prorated to the date of the hearing. The Court therefore will disregard these amounts. The
Court is not deciding whether BANK’34 is entitled to post-petition interest at the default rate. The amount of
BANK 34’s claim included unpaid property taxes against the Real Property for the 2009 and 2010 tax years.
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against the Real Property as of the date of the hearing on the Bank’s stay motion is $182,435.92.
BANK’34 argues that the Debtors have no equity in the Real Property because all or
substantially all of this equity will be eroded by interest accrual and attorney’s fees incurred by
BANK’34 prior to a sale of the Real Property. The Court disagrees for two reasons. First,
BANK’34’s own calculation shows that the Debtors have equity in the Real Property.
BANK’34 projects at least $31,717.65 of net proceeds to the Debtors after a sale in twelve
months that pays the Bank’34 in full. Second, future interest accrual to secured lenders or
attorneys fees expected to be incurred in the chapter 11 case should not be included in the
amount of debt secured by property for purposes of determining equity under 11 U.S.C. §
362(d)(2)(A). Because the standard for determining value is the amount that can be realized
from the sale of the property for the benefit of the unsecured creditors, doubts as to the required
marketing period for a sale and the amount of attorney’s fees to be incurred that are allowable as
part of the secured claim should be resolved in favor of the estate.
Having determined that the Debtors have an equity in the Real Property under 11 U.S.C.
§ 362(d)(2)(A), relief from the stay under 11 U.S.C. § 362(d)(2) must be denied.
B. 	Motion to Prohibit Use of Cash Collateral
BANK’34 requests an order prohibiting the Debtors from using cash collateral resulting
from the operation of Tom Young’s Fitness Center in Las Cruces, including member payments
for use of the facilities, cash, cash equivalents, deposit accounts, and rents. See Emergency
Motion to Prohibit Use of Cash Collateral. Docket No. 29.
Bankruptcy Code §§363(c)(2) and (4) provide:
(2) The trustee may not use, sell, or lease cash collateral under paragraph (1) of this
subsection unless—
(A) each entity that has an interest in such cash collateral consents; or
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(B) the court, after notice and a hearing, authorizes such use, sale, or lease in
accordance with the provisions of this section.
(4) Except as provided in paragraph (2) of this subsection, the trustee shall segregate
and account for any cash collateral in the trustee’s possession, custody, or control.
11 U.S.C. §363(c)(2) and (4)
Laguna LLC, not the Debtors, owns and operates the Tom Young’s Fitness Center
business. Laguna LLC did not pledge any property to BANK’34. Further, the evidence before
the Court does not establish that Laguna LLC is the alter ego of the Debtors or that Laguna
LLC’s corporate form should be disregarded.28 BANK’34 does not have a security interest in
any assets of Laguna LLC, including payments by fitness center members for use of its
facilities, or its cash, cash equivalents, deposit accounts, or rental income. Therefore, Laguna
LLC’s use of its cash and cash equivalents is outside the proscriptions of 11 U.S.C. §363(c). To
the extent BANK’34 moves for an order prohibiting Laguna LLC from using its cash the
motion will be denied.
BANK’34 has a security interest in rents paid to the Debtors by Laguna LLC for its use
of the Real Property, and in the Debtors’ cash, rights to receive payments, and general
intangibles. BANK’34 asserts that its security interest in general intangibles attaches to the
Debtors’ discretionary post petition member withdrawals from Laguna LLC. The Court
disagrees. Regardless of whether BANK’34’s security interest in general intangibles attaches to
the Debtors’ member interests in Laguna LLC, the security interest does not extend to post-
petition member withdrawals.
Bankruptcy Code §§ 506(a) and (b)(1) provide:
28 The evidence before the Court does not establish that the Debtors have so manipulated the limited liability
company to further their own individual interests that the identity of the limited liability company has merged into
its members, that the corporate veil should be pierced, or that Laguna LLC and the Debtors are alter egos. See Scott
v. AZL Resources, Inc., 107 N.M. 118, 121-122, 753 P.2d 897, 900-901 (N.M. 1988) and Scott Graphics, Inc. v.
Mahaney, 89 N.M. 208, 211, 549 P.2d 623, 626 (Ct.App.1976) regarding the standard applied in New Mexico for
disregarding a corporate entity, piecing a corporate veil or finding that an entity and its shareholders are alter egos.
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(a) Except as provided in subsection (b) of this section, property acquired by the estate
or by the debtor after the commencement of the case is not subject to any lien resulting
from any security agreement entered into by the debtor before the commencement of the
case.
(b)(1) Except as provided in sections 363, 506 (c), 522, 544, 545, 547, and 548
of this title, if the debtor and an entity entered into a security agreement before
the commencement of the case and if the security interest created by such
security agreement extends to property of the debtor acquired before the
commencement of the case and to proceeds, products, offspring, or profits of
such property, then such security interest extends to such proceeds, products,
offspring, or profits acquired by the estate after the commencement of the case to
the extent provided by such security agreement and by applicable nonbankruptcy
law, except to any extent that the court, after notice and a hearing and based on
the equities of the case, orders otherwise.
11 U.S.C. § 506(b)(1).
Under these sections, except as provided by 11 U.S.C. § 506(b)(2), which is inapplicable to
member withdrawals, BANK’34’s prepetition liens do not extend to property in which the
Debtors had no interest on the date they commenced their chapter 11 case unless the property is
proceeds, products, offspring, or profits of property in which the Debtors had an interest on that
date.29
The Tenth Circuit’s decision in In re Hastie, 2 F.3d 1042 (10th Cir. 1993) is dispositive
of BANK’34’s claim that its liens extend to post petition member withdrawals. In Hastie, the
Tenth Circuit held that “ordinary cash dividends out of capital surplus and earned income are
not proceeds of the common stock as the distribution of the dividend is not a disposition of the
stock,” Hastie, 2 F.3d. at 1046, and, therefore, under 11 U.S.C. §§ 552(a) and (b)(1) such funds
are not the cash collateral of a creditor holding a lien against the stock. Id. at 1047. Likewise,
BANK’34’s lien against the Debtors’ member interests in Laguna LLC does not extend to post
29 See e.g. Cadle Co. v. Schlichtmann, 267 F.3d 14, 19 (1 st Cir. 2001)(except as otherwise provided in 11 U.S.C. §
552, the purpose of that section is to prevent a creditor's pre-petition security interest in after-acquired property
from attaching to property acquired by the estate or debtor-in-possession after the filing of the bankruptcy petition);
In re Las Vegas Monorail Co., 429 B.R. 317, 342 (Bankr. D.Nev. 2010)(Section 552(b) is an exception to the rule
under Section 552(a) that a creditor may no longer enforce its liens in after-acquired property against the estate).
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petition member withdrawals, which are a form of distribution on account of their equity
interests in Laguna LLC.
Under 11 U.S.C. § 552(b)(2), BANK’34 does have a lien against rents the Debtors
receive from Laguna LLC post-petition for its lease of the Real Property.30 Notwithstanding
Tom Young Sr.’s testimony that Laguna LLC booked the $2,000 as rent in error because the
rent mistakenly was specified on the check by which the payment was made, the Court finds
that the funds were in fact paid by Laguna LLC as rent. However, because the Debtors believed
the rents were not BANK’34’s cash collateral, the amount of rents used was relatively small,
and the Court is ordering the Debtors to pay $2,000 to BANK’34 as part of adequate protection,
the Court finds it unnecessary to issue an order prohibiting the Debtors from using cash
collateral. Even absent an order of the Court, the Debtors are bound by the proscriptions of 11
U.S.C. §363(c)(2) and (4) regarding the use of cash collateral.
CONCLUSION
For the foregoing reasons, the Court will deny BANK’34’s Motion for Relief From Stay
and Motion to Prohibit Use of Cash Collateral but will order adequate protection for BANK’34
consistent with this memorandum opinion. An order consistent with this memorandum opinion
will be entered.
_________________________________
ROBERT H. JACOBVITZ
United States Bankruptcy Judge
30 11 U.S.C. § 552(b)(2), provides in part:
Except as provided in sections 363, 506 (c), 522, 544, 545, 547, and 548 of this title, and notwithstanding
section 546 (b) of this title, if the debtor and an entity entered into a security agreement before the
commencement of the case and if the security interest created by such security agreement extends to
property of the debtor acquired before the commencement of the case and to amounts paid as rents of such
property…, then such security interest extends to such rents…acquired by the estate after the
commencement of the case to the extent provided in such security agreement, except to any extent that the
court, after notice and a hearing and based on the equities of the case, orders otherwise.
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Date entered on docket: 	August 29, 2011
COPY TO:
James A Roggow
Martin, Lutz, Roggow & Eubanks, P.C.
PO Drawer 1837
Las Cruces, NM 88004-1837
Attorneys for BANK’34
William F. Davis
Andrea Steiling
William F. Davis & Assoc., P.C.
6709 Academy NE, Suite A
Albuquerque, NM 87109
Attorneys for Debtors
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