Opinion
Bankruptcy No. 83-05019.
August 8, 1984.
Jos. A. Vogel, Jr., Mandan, N.D., for debtors.
Joseph A. Turman, Fargo, N.D., for First Nat. Bank of Oakes.
ORDER
The First National Bank of Oakes filed with the Court on December 27, 1983, a Motion to dismiss the above-entitled bankruptcy proceeding pursuant to 11 U.S.C. § 1112. The Debtors filed with the Court on January 5, 1984, an Objection to the creditor's Motion to dismiss. A hearing on the Motion to dismiss was held before the undersigned on April 11, 1984, and continued to July 10, 1984.
FINDINGS OF FACT
The Debtors filed a petition on January 17, 1983, commencing a reorganization under Chapter 11 of the Bankruptcy Code. Prior to 1983, the Debtors' business had primarily consisted of grain and livestock production on their 802-acre farm in Sargent County, North Dakota. Throughout their bankruptcy proceedings, the Debtors filed with the United States Trustee's office monthly income statements. A review of those income statements reflects that the Debtors have been unable to generate a continuing profit in their business during the pendency of their bankruptcy proceedings. Wayne Witkowski testified at the hearing on the Motion to dismiss that they had sold their livestock and turned their equipment over to those parties which held security interests in the property. The Debtors are currently cash-renting their land to other farmers. The Debtors have filed a plan of reorganization and a disclosure statement with the Court. The Debtors have been unable, however, to obtain confirmation of their plan of reorganization.
CONCLUSIONS OF LAW
The Court may convert or dismiss a bankruptcy proceeding for cause, including a continuing loss to or diminution of the estate and absence of a reasonable likelihood of rehabilitation. 11 U.S.C. § 1112(b). Generally, what constitutes cause for a dismissal of a Chapter 11 proceeding is a matter of judicial discretion under the circumstances of each case. See In re Levinsky, 23 B.R. 210, 217 (Bankr.E.D.N.Y. 1982). One court has noted that "[w]ithout a reasonable amount of assets and a feasibly operating business, there is no logic in continuing a Chapter 11." In re 312 West 91st Street Co., Inc., 35 B.R. 346 (Bankr.S.D.N.Y. 1983). In the present instance, the Debtors no longer have the tools needed to work towards the reorganization of their business. The Debtors have abandoned their farming equipment and have relinquished responsibility for the farmland to tenants under cash leases. The Debtors have sold their livestock and apparently have given up efforts to rehabilitate the farming operation. The course of events taken by the Debtors does not offer any hope to creditors for payment of their claims. No purpose will be served by continuation of the reorganization process without such a hope. During the reorganization proceedings, the Debtors had continued to experience losses from their operations and have been unable to obtain confirmation of any reorganization plan.
Accordingly, and for the reasons stated,
IT IS ORDERED:
That the above-entitled bankruptcy proceeding be dismissed ten (10) days from entry of this Order unless voluntarily converted.
Dated at Fargo, North Dakota, this 6th day of August, 1984.