Wednesday, February 18, 2015

In Re Davis (9th Cir. - Feb. 17, 2015)

I'm not a bankruptcy guy, but I'm nonetheless generally familiar with Chapter 7, as well as Chapter 13, bankruptcies.  Even Chapter 11 (for businesses) rings a bell in my head.  Indeed, I can honestly say that I even know what Chapter 9's about:  municipal bankruptcies.  All of this having never taken the class in law school.

Mind you, I may well have just exhausted in three sentences everything I know about the subject.  But I have still heard of the stuff.

I'll nonetheless forthrightly admit that until I read this opinion, I'd never heard about Chapter 12.  Did not ring even the most subtle of bells.

But now I know.

It's about bankruptcies for farmers.  Presumably giving them an even more favorable break than other types of bankruptcies.

Carolyn Davis gives Chapter 12 a shot in this case after already getting a discharge under Chapter 7.  She's looking for more favorable treatment, but her petition doesn't exactly capture one's heart, since the "family farm" at issue is an 110-acre vineyard in Paso Robles.

The legal problem she has is that her "aggregate debts" exceed the approximately $3.5 million cap that is in Chapter 12.  At least when you count the total amount of her debt that had been previously wiped away under Chapter 7.

So the question for the Ninth Circuit is:  Do those debts count against the cap?

The answer is:  Yes.  Debts are debts.  Even when they've been wiped out in another petition.

So now I know two things about Chapter 12 bankruptcies.

And will almost assuredly die before I know three.