T Douglas Moser and Judy L Moser

MEMORANDUM OF DECISION RE: APPROVAL OF DISCLOSURE
STATEM ENT - 1
IN THE UNITED STATES BANKRUPTCY COURT
FOR THE DISTRICT OF IDAHO
IN RE )
)
T. DOUGLAS MOSER and ) Case No. 04-20254
JUDY L. MOSER, husband and )
wife, dba MOSER FARMS, )
)
Debtors. ) MEMORANDUM OF
) DECISION RE: APPROVAL
) OF DISCLOSURE
) STATEMENT
________________________________ )
The Debtors filed a chapter 11 petition on M arch 2, 2004. See Doc. No. 1.
Presently before the Court is the question of approval of Debtors’ disclosure
statement, see § 1125, which is statutorily prerequisite to Debtors’ attempt to
solicit acceptances and confirm their plan of reorganization.
Debtors’ first disclosure statement was proposed in August, 2004. Doc. No.
103. Finally heard in October, Debtors were granted a period of time to amend
and supplement the disclosure statement to eliminate objections. That period was
extended at Debtors’ request. An amended disclosure statement was filed on
November 24, 2004. Doc. No. 174.
Creditor Carol Chipman objected to the approval of that amended
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1 Cred itors Larry and Carol Vestal objected to the A mended Disclosure Statement. See
Doc. No. 180. However, they have not filed an objection to the Second Am ended Disclosure
Statement. As the Second Amended Disclosure Statement perpetuates the classification of
Vestals as “investor creditors” to w hich they previously objected, the Co urt assumes their
objection, Doc. No. 180, is equally applicable to the Second Am ended D isclosure Statement.
However, this objection does not require disapproval of the disclosure statement. The disclosure
statement accurately described wh at Debtors propose to do. Whether they can, and V estals’
objection to the attempt, are confirmation issues. For clarity, Debtors will be required to amend
their Second Amended Disclosure Statement to note Vestals’ opposition to the classification and
plan treatment. The objection, Doc. No. 180, will otherwise be overruled.
MEMORANDUM OF DECISION RE: APPROVAL OF DISCLOSURE
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disclosure statement. See Doc. No. 176. Debtors thereafter filed on January 3,
2005, a Second Amended Disclosure Statement. Doc. No. 187. Chipman again
objects. Doc. No. 193.1
Upon review of the disclosure statement and the objection, this Court
conclusively determines that additional hearing on the approval under § 1125 is
not warranted. The matters can be, and are, addressed by this Summary Order.
Context is important. Disclosure statements are a critical part of the chapter
11 process. But they are only a part; they are not an end unto themselves. At
some point, legitimate debate over whether a proposed disclosure statement
contains “adequate information” as required by the Code can turn into quibbling
over matters that will not materially impact the evaluation of the debtor’s
reorganization proposal by the objector or any other creditor. Such a point has
been reached here.
Debtors’ Second Amended Disclosure Statement states:
5. Secured creditor. Carol Chipman, an investor, has a
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MEMORANDUM OF DECISION RE: APPROVAL OF DISCLOSURE
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judgment lien in the amount of $350,000. This is second in priority to
the liens of Zion bank on debtors’ real property and has been avoided
except to the extent that it does not impair debtors’ exemption in their
real property and covers all property of the debtors. The secured
portion of this claim is $14,646. This will be paid in ten equal
installments of $1,464 each beginning in 2005. The balance of the
claim of Chipman is unsecured. Creditor Chipman also has a
consensual security interest in all equipment and machinery which is
junior to the lien of Zions Bank. This secured creditor is impaired.
Based upon debtors’ current valuation of the equipment, Chipman is
unsecured.
Doc. No. 187 at 10.
Chipman’s objection is that the description of the balance of the claim (after
§ 522(f) avoidance) as “unsecured” is inaccurate. Doc. No. 193 at 1. Chipman
contends, in regard to the security interest in personal property:
There is no factual basis for the representation . . . that Chipman’s
claim is unsecured. Debtors have produced no current valuation
information to support their representation that Chipman is unsecured.
Id. at 2.
It is clear that Debtors’ statement in the Second Amended Disclosure
Statement regarding the unsecured status of Chipman’s personal property claim is
an assertion, allegation and belief. It is not an established fact; the Court has not
yet valued this claim under § 506 and Fed. R. Bankr. P. 3012 or otherwise. And,
fairly read, the disclosure statement does not assert an unqualified fact. Debtors
acknowledge the existence of Chipman’s secured claim in all equipment and
machinery and simply contend that “[b]ased upon debtors’ current valuation of
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2 To the extent Chipm an co mplains that Debtors’ have not pro vided suppo rt for their
allegation, discovery tools are readily available. See Fed. R. Bankr. P. 9014.
MEMORANDUM OF DECISION RE: APPROVAL OF DISCLOSURE
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the equipment, Chipman is unsecured.”
Approval of the disclosure statement will not constitute a valuation of this
claim. Nor is such approval any sort of judicial imprimatur of Debtors’ allegations
regarding it. Debtors so note. See Doc. No. 187 at 1 (stating that the court’s
approval of the statement is not an endorsement of the plan or a guarantee of the
accuracy of the information disclosed).
This matter is easily resolved. Debtors shall include a sentence
immediately following the language quoted above, stating “Chipman disputes that
this claim is unsecured.” The disclosure statement is thus made clear.2
With such an amendment, Chipman’s objection will be overruled, and the
Second Amended Disclosure Statement, with the indicated amendments, will be
approved. Debtors shall prepare an appropriate order approving the disclosure
statement, setting deadlines for ballots and objections to confirmation, and
scheduling a confirmation hearing.
DATED: January 12, 2005
TERRY L. MYERS
CHIEF U. S. BANKRUPTCY JUDGE
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MEMORANDUM OF DECISION RE: APPROVAL OF DISCLOSURE
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CERTIFICATE RE: SERVICE
A “notice of entry” of this Decision, Order and/or Judgment has been
served on Registered Participants as reflected by the Notice of Electronic Filing.
A copy of the Decision, Order and/or Judgment has also been provided to non-
registered participants by first class mail addressed to:
Kelly N Brown
POB 604
Pullman, WA 99163
Barbara K Hamilton
POB 3001
Malvern, PA 19355-0701
Bruce K Medeiros
1280 Bank of America
601 W Riverside Ave
Spokane, WA 99201
Brad L W illiams
421 W Riverside Ave Ste 906
Spokane, WA 99201
Case No. 04-20254 (T. Douglas Moser)
Dated: January 12, 2005
Jo Ann B. Canderan
Judicial Assistant to Chief Judge Myers
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