UNI TED STATES BANKRUPTC COURT FOR TH DI STRI CT OF EBRAS KA

IN Ti l E MA TER OF ) )

ROBERT LEE FATT I G, )

MARLA L . FATTIG , ) CASE )

DEBTORS ) )

J AHL S R. NI SLEY, In t er i m Tr u s tee, ) )

Pl a in t i ff ) )

v s . ) )

DONi\ LD v. F.l\TTIG I ) )

De f e n d a 11t )

ND ORD ER RE COMPROM ISE

IN 'rr iE Mt- TTER OF ) )

ROBERT LEE FATTI G , )

NO.

''•

MARLA L . FATTIG, ) CASE NO.

' I )

I DEBTORS ) )

JA~!ES R. NI SLEY, Interim Trustee ) )

Plai ntiff ) ~ )

vs. ) )

DAN l!ERRON ,. ) )

D -f c nd a nt )

OPI I ON AND ORDER RE COM PROMISE

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T hi s 111a l t l~ r LOJIIC !j b !J (o re. the Cou r t o n ;1 r-t 'f\ llt· ~>L I .· 1 , ,, . l11t.•·t itt t Tt· u :; t. r•c t~nJ tl l t' d· · f c rHLllt t f o r. ~lf l l rc 1Vd l of : 1 ·, l l f11J l . lt !• >1 1 1 11

or:• [ · J·o u i.s ' ul .Jn adv ('t - ~ : , · t y proc e edi ll (j, <.1 c >1 ~tpL1 i nt l: u .t'J(Ii d il

pr •~ t · n ' rtti ~d lt- .: tl \'~ rv c 1vh i. c ll W < J ~~ fil e·.! hy t· lh' Irlt0 t- i JJJ l' r t J •-; :1 ' •' . ' !' ~ , .. [> 1.(1 : • >S t• ol \ . .' U I! I (l l'U!II \ S• .' J'l • l Vld :~; l'. ltdt t l1e dv <.' !ld u n t WI l l. ; 1 l / t· n I i t r •

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es t 1 t e a p p r o x iwa tel y 2 5% 1f 'the amo u n t of the c l a i rned preferenc e a s Cu l l s ett lement of the matter. Two c reditor s h ave o b j cted to t he c omprom i se se t tle ent . They are Bank of Br adY. and Fa.r mL:wc1 Service Coop , Inc ., the maj o r unsec ured cred itors o f t he d e btors .

A heari ng wash l d in North P l atte, Ne'bra s ka, on Septentber 26 , 198 5 , on t he proposed s tipu latio n and t he obj ections to it. Af ter a r g ument , t h e par ties were given t i me to p rov ide to t h e Cou t·t memorand a of l a• . Both the p roponent s a nd the objec tors hav •.} provided such br i efs.

Afte r consideration of the b riefs a n d the ora l a r g ume nt a t hear i ng, it i s the o pi nion of the Cou rt tha t the c~rnpromise stj ~1ula ti on sho u l d n o t be approved. Trial• s hall b e sch edu le:J on th i~ case f o r the Mar h tri a l s e t ting i n No rth P l at t , Nebraska.

Debto r s are f a r mers who allegedly rented l and fro1 n t he fathe r of u n e o f h e debtors and from a neighbor on an oral r en a l agreement wh i ch cont i nued through several years. The annua l rent al pa ymen t was due at t he e nd of the c rop yea r and·Ha s pa i d c on s i stentl y a t t h e nd of each cro p year . Debtor s fil ed th ir C! c pter 7 pet i t i o n on Februa ry 24 , 1984. The fina l r e ntal p ayment to t he fath e r and t o the n e i ghbor was made within 90 days o f the " fi ling of t h e peti t i o n. The total a mount paid to t h e ath r is $ 1 4,000 and to the ne ig hbo r is $1 0, 00 0.

Th e nterim T ustee f iled a complaint to avoid a pref re n e e and r e c o v e r t e $24, 000 . Af t er negot i a t ion between the e f e nda ts anc! c o unse l fo-r the Interim Trustee, a c ompro mi s e was reache d a nd pr ~se~ted t o the Cour t.

The o b jecting par ti es point o ut tha t t h ere i s no argumen~. tha t the p ayment wa s made 1i t h i n 90 days of t he fil ing of the Chapt er 7 pet it ion. The y a llege t hat i t is clear unde r th e sca n ty fact s made ava ila ble to the Cou r t that t he payme nt o rent on an an nual ren tal p rogram at the end of t he c rop year i s ~ayment f or a n a n teccd n t d e bt. They also al lege tha t such paym n t cannot b e a conte~poraneou s exchan~e wi t h new value given becouse the d eb t o r s' sch dules fi led i n February of 1 98 4 shm-1 th.:it th y ha v e no renta l ag reeme n ts or l eases ' of r eal es ta te. Finally, t he ob~1 e ctors clai m t hat since t he leases are oral, c laims about the lntentionJ of t he p a r ties at the t ime the payments w_r e made are ba·;i c a l ly sel f se rv i n g and, becau s e of the re lat i onsh i p be t wee n th•· parties, are suspec t . Therefore, the objec tors ·believ e tha t a. f i:-11.' t u a l h c d r i n g s h o u 1 d b e h c l d •

~vhi l c not ma ki n g a n y de t crminat' on upon th e n1~rits of c·ither t l 1 · c mpL 1i nt oc t!1 c COJllpro!:l ise , it aprea r s t hot t h c·t ·~ .1rc~ :; i ;11i f i. c. Ill r, C l u,J L qtJC;o·;ti o n s which Sl i U~l ld b e b r OIHjht [or•. ::Jn! a t l1 : 1 1 . T! ~t• y ar •. , f ot· cZdl ! l ~.l l e :

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1 . \·jhat was the in te n t of 't he parties and was it reas o nab l e ?

2. Wh a t was the li k el ~ hood .o f the de b tor s rema i ning in f ar mj ng for the 1984 crop s eason a s d e termined b y th e m and the creditors a s o f t he time t h e ren t pay me n t was mad e?

3. Do the a c tu a l facts of th is c a s e fit with in th e pa ratn e t er s of th e t heor y that annual r ental pa yraen ts on an oral leas•, ' are <Jct uall y pa ym e nts o n a n e xecutory c o n tract and ar e no t p <J ym .. nts f o r a n a ! teccde nt d e b t as p roponent s c l a im i s th e llo ld i nc; of I•• re ~1i nJ y's, I nc . , 5 Co lli e r Ba kr upt c y Cases , p <l <JO 1'-1 5 1 ( S .D. Oh io, 19 8 2) .

The Co urt is n o t u nmi ndful of t he pra c ti cal p rob le m of f or c i n g th e In ter i m 'T r us tee t o go to tr ia 1 o n a case i n "'hi c h h o be l ir ·ves he has ob t a ined a g ood se tt lement. Ther e fo re, t he Co urt is vil li ng t o permit th e obj e cting c redi to r s to inte rven e , a f t e r f i ling the approp r i a t e pl e ad i ng s a nd t o par ti cipa te in the tri a l.

Since the Interi m Truste e has ma de a good f a i t h effort to compr o mise a c as e i n which he apparently ques t ion s t l1e l i kel ihood of s uc ces s , a nd t he Co u r t i s r e- usi ng t o ap p r o ve such comprom i s ~ because of argume n ts mad e by o bj ec ting cred i tors , if it i1 p pear s afte r t r i a l that the na l y s i s by t r u stee was corr e c t , the Court shal l c on s i d ei a s sess ing t h e I nter im Tr ustee 's attorney fe e s and c o st s of th i s c a se ag a i ns t th e o b jec t i ng cred i t or s . Pr i o r to any such a s s e ss men t, a h ear ing wi ll be he ld at wh ich t ime a ll part ie s wi l l be p errn i t ted to p r o v ide both fact ua l and l e g al argumen t s .

DAT.ED: j._ ,; t..' 4" 7 c l S: 7 ~

BY THE COURT:

c y Judc_)e

Cor_Ji cs m<J il cd to :

Davie! Pe d erson, i\tt o rney, P.O. Box 38, 1 0 2 Ea st Thi r d S t r·e t , No1th Pl a tt e : NS 6910 3- 0038

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