Hosain Azizian and Fatemeh H Azizian

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UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re
HOSAIN and FATEMEH AZIZIAN, 	No. 09-13181
Debtor(s).
______________________________________/
Memorandum re Plan Confirmation
_________________
Chapter 11 debtors Hosian and Fatemeh Azizian own and operate a small gas station and
convenience store in Vallejo, California. Prior to bankruptcy, their business suffered due to re-routing
of the local highway resulting in more difficult access by motorists.
The Azizian’s Second Amended Plan meets all the requirements of § 1129(a) of the
Bankruptcy Code except § 1129(a)(8) because the Class 10 claimant, Golden Security Bank, has
rejected the plan. The issue before the court is whether the plan is fair and equitable to the Bank so
that it may be confirmed notwithstanding the Bank’s rejection pursuant to § 1129(b)(2)(A).
The Plan calls for the Bank to retain its lien on the gas station premises to the extent it is
secured. It is to receive monthly payments of principal and interest at the rate of 7%, amortized over a
30-year period and all due an payable ten years after confirmation. The Bank objects that the debtors
undervalue its security and that the interest rate is too low.
Based on a sound appraisal and testimony by a broker with a great deal of experience in
valuing and marketing gas stations, the Azizians value the gas station at $200,000.00 to $250,000.00 .
Entered on Docket
September 22, 2010
GLORIA L. FRANKLIN, CLERK
U.S BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
Case: 09-13181 Doc# 79 Filed: 09/22/10 Entered: 09/22/10 17:31:39 Page 1 of 2

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These experts held up well during cross-examination, and the court found them forthright as
persuasive. They justified the value based on the condition of the property, the current income being
generated by the property and the need for remediation of environmental contamination.
The Bank produced an expert who valued the gas station at $880,000.00. While the court
found him highly qualified to appraise gas stations, his value was based on general market data rather
than actual information regarding this particular property. He was hired by the Bank because the Bank
did not like the results of an earlier appraisal it had commissioned. He also did not take into account
the environmental contamination. Based on all of the evidence presented, the court finds that the value
of the gas station is $250,000.00.
With scant evidence on the issue, the Azizians urge an interest rate of 7%, based on the rate the
Small Business Administration would charge. The Bank urges a rate of about 9.5%, based on the
current prime rate plus appropriate risk factors. However, since then the Azizians have amended the
plan to call for full payment in ten years instead of thirty years as originally proposed. After
considering the testimony of the Bank’s expert and the appropriate risk factors, including the risks
associated with the contamination problems and the lack of any equity, the court finds that an interest
rate of 8.75% is necessary to make the plan fair and equitable to the Bank.
For the foregoing reasons, the court finds that the plan will be confirmed if amended to provide
that the Bank will have a secured claim of $250,000.00 and shall be paid interest at the rate of 8.75%.
If the Azizians so amend their plan within 10 days after entry of this Memorandum, maintaining the
other provisions of their second amendment, they may submit an order confirming the plan as
amended.
Dated: September 22, 2010
SAlan Jaroslovsky
U.S. Bankruptcy Judge
Case: 09-13181 Doc# 79 Filed: 09/22/10 Entered: 09/22/10 17:31:39 Page 2 of 2