## Facts

- Trayton Junior Gough and Dolores Eve Gough owned and operated a Florida citrus-growing operation; the Goughs and their son performed all manual labor for the groves.
- The debtors’ operation included an 80-acre parcel in Marion County and a 20-acre parcel in Lake County; about 68 acres were planted and harvested.
- The groves had suffered significant freeze damage in the 1980s and again in 1989; the groves were generally in poor condition at the time of the case.
- The debtors filed a Chapter 12 petition on June 14, 1995, and later proposed a Chapter 12 plan based largely on anticipated citrus income plus approximately $5,500 per year in Social Security benefits.
- The most recent growing season produced 3,869 boxes of citrus, but the plan projected substantial increases: 6,125 boxes (1995–96), 9,465 boxes (1996–97), and 11,815 boxes (1997–98).
- Although additional trees had been planted, the new trees were too young to produce meaningful fruit during the early plan years.
- The plan assumed citrus income at about $4 per box and projected annual living expenses of about $5,760.
- The plan projected crop-maintenance expenses of approximately $12,240, $13,360, and $17,000 over the first three years, and the debtors did not carry crop insurance.
- Based on projected production, the debtors proposed plan funding payments of $12,000 by May 1, 1996; $24,000 by May 1, 1997; and $30,000 by May 1, 1998.
- Secured creditor C. Victor Butler, Jr. held an allowed secured claim of about $132,748 secured by the citrus property.
- The plan provided that Butler would retain his lien and be paid in full with interest at 10% per year; after a smaller initial payment, Butler would receive $18,144 annually until May 1, 2007, followed by a balloon payment of the remaining balance.
- Butler objected to confirmation, arguing (1) the plan did not provide him the value required for an objecting secured creditor under 11 U.S.C. § 1225(a)(5), and (2) the plan was not feasible under 11 U.S.C. § 1225(a)(6).

## Issues

1. Whether the plan satisfied 11 U.S.C. § 1225(a)(5) as to Butler’s allowed secured claim by providing lien retention and payment in full with interest, including payments extending beyond the plan term.
2. Whether the debtors proved feasibility under 11 U.S.C. § 1225(a)(6), given their historical yields, the condition of the groves, and the plan’s reliance on sharply higher projected production.

## Decision

- The court overruled Butler’s objection under § 1225(a)(5), finding the plan provided for lien retention and payment in full with interest, and that Chapter 12 permits payment terms extending beyond the plan term.
- The court sustained Butler’s objection under § 1225(a)(6), holding the debtors failed to show a reasonable probability that they could make plan payments.
- The court found the production increases assumed by the plan lacked objective support in light of recent yields, the poor condition of the groves, and the nonproductive status of newly planted trees.
- Because feasibility is required for confirmation, the court denied confirmation of the Chapter 12 plan.

## Legal Principles

- A Chapter 12 plan cannot be confirmed unless the debtor shows the ability to make all payments and comply with the plan. 11 U.S.C. § 1225(a)(6).
- Feasibility is a fact-based determination focusing on whether there is a reasonable probability of payment under the proposed plan.
- The debtor bears the burden of proving feasibility with objective facts; income and yield projections must rest on a factual basis rather than optimism.
- Courts may give family-farmer debtors some benefit of the doubt, but a plan must be practical under the facts, not merely technically possible.
- Under 11 U.S.C. § 1225(a)(5), an objecting secured creditor must retain its lien and receive the present value of its allowed secured claim; Chapter 12 may allow payment of secured claims over periods extending beyond the plan term (11 U.S.C. § 1222(c)), so long as statutory requirements are met.
- Satisfying § 1225(a)(5) does not cure a failure to satisfy § 1225(a)(6); both requirements must be met for confirmation.

## Conclusion

The bankruptcy court concluded that the Goughs’ plan provided Butler the required secured-claim treatment, including lien retention and payment in full with interest, but denied confirmation because the debtors did not prove feasibility: their projected citrus yields and resulting income were not supported by objective facts given recent production, grove conditions, and the lack of near-term production from newly planted trees.


In re Gough, 190 B.R. 455 (1995)