Because we conclude that the bankruptcy court did not apply the proper legal standard and test in its analysis of Debtors’ eligibility for Chapter 12 relief, we deem it appropriate and prudent to remand for that court to apply the correct law to the facts of this case. Thus, we vacate the bankruptcy court’s judgment and remand the case to the bankruptcy court for further proceedings.
Debtors are a husband and wife who, in 2007, purchased farmland in southwestern Colorado on which to run their hay-farming operation. Until they filed for bankruptcy in November 2010, Debtors accumulated various debts, some of which were related to their farming operation and others of which were not. One such debt is a $480,000 loan Debtors obtained from First National Bank. Approximately $284,000 of this loan was used to pay off a loan from another bank that was obtained to purchase Debtors’ farmland. The parties do not dispute that this portion of the debt “arises out of” a farming operation; nor do they dispute that the majority of the remaining loan proceeds—what we call the “construction loan”—were used to construct Debtors’ principal residence on the farmland.
Judge(s): Jerome Holmes
Jurisdiction: U.S. Court of Appeals, Tenth Circuit
Related Categories: Bankruptcy , Finance / Banking
|Circuit Court Judge(s)|
|Appellant Lawyer(s)||Appellant Law Firm(s)|
|Garry Appel||Appel & Lucas PC|
|Appellee Lawyer(s)||Appellee Law Firm(s)|
|Daniel Lowenberg||Mountain Law Group LLC|
|Cheryl Thompson||Thompson Brownlee|