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`SO ORDERED.
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`SIGNED this 22nd day of October, 2021.
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`____________________________________________________________________________
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`Designated for print publication
`IN THE UNITED STATES BANKRUPTCY COURT
`FOR THE DISTRICT OF KANSAS
`
`
`
`
`
`
`In re:
`
`David L. Mongeau
`Jennifer L. Mongeau,
`
`
`
`
`
`
`Case No. 21-40055
`Chapter 12
`
`Debtors.
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`
`
`Memorandum Opinion
`Denying American AgCredit’s Motion to Dismiss
`
`
`
`
`
`Unsecured creditor American AgCredit (“AgCredit”) moves to dismiss
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`this Chapter 12 case,1 contending that Debtors David and Jennifer Mongeau2
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`are not eligible for Chapter 12 relief because when they filed their petition
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`they were not “engaged in a farming operation,” as required by the definition
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`
`1 Doc. 51. AgCredit appears by W. Thomas Gilman.
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`Case 21-40055 Doc# 107 Filed 10/22/21 Page 1 of 21
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`of “family farmer” in 11 U.S.C. ' 101(18).3 Debtors acknowledge that they
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`ceased growing crops and liquidated most of their farming assets in late 2020,
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`before filing their Chapter 12 petition in early 2021. They contend they are
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`nevertheless eligible to file under Chapter 12 because some of their farming
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`related financial affairs were not resolved on the filing date and are being
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`administered during the Chapter 12 case, they are still minimally involved in
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`cattle operations and have some equipment, and because they intend to
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`return to farming by raising livestock.
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`Trial was held on August 11, 2021. After considering Debtors=
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`testimony, the parties’ briefs, and the arguments of counsel, the Court finds
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`Debtors met their burden of proof to show they are family farmers as defined
`
`by the Bankruptcy Code. The Court denies the motion to dismiss.
`
`
`
`
`2 Debtors appear by Tom R. Barnes, II.
`3 All future references to Title 11 in the text shall be to the section number only.
`This Court has jurisdiction pursuant to 28 U.S.C. ' 157(a) and '' 1334(a) and (b)
`and the Amended Standing Order of Reference of the United States District Court
`for the District of Kansas that exercised authority conferred by ' 157(a) to refer to
`the District=s Bankruptcy judges all matters under the Bankruptcy Code and all
`proceedings arising under the Code or arising in or related to a case under the Code,
`effective June 24, 2013. D. Kan. Standing Order No. 13-1, printed in D. Kan. Rules
`of Practice and Procedure at 168 (March 2014). A motion to dismiss for a debtor’s
`lack of eligibility to file under a particular chapter of Title 11 is a matter concerning
`administration of the estate and a core proceeding which this Court may hear and
`determine as provided in 28 U.S.C. ' 157(b)(2)(A). There is no objection to venue or
`jurisdiction over the parties.
`
`
`
`2
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`I.
`
`Findings of Fact
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`Debtors reside in Holcomb, Kansas. David has always maintained
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`off-farm employment in banking. He has been employed as a bank loan officer
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`at his current bank for the last four years and worked for several other large
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`farm lending institutions prior to that, with his main focus being agricultural
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`lending. Jennifer is an accountant who has operated her own CPA firm for
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`several years and works with a lot of farmers, and prior to that worked in
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`other CPA firms.
`
`There is no doubt Debtors consider themselves to be farmers. Both
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`David and Jennifer were raised on farms, both sets of their parents continue
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`to operate large family farms, and their siblings operate farms. Debtors
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`themselves ran their own farm through an entity called Mongeau
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`Enterprises, LLC, owned 50% by David and 50% by Jennifer. It is undisputed
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`that Debtors ran a large farming operation in the years leading up to their
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`Chapter 12 petition: Debtors raised corn, wheat, milo, and soybeans on owned
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`and leased acres, and at one point had over a thousand head of cattle. In each
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`calendar year 2018, 2019, and 2020, Debtors had income of more than $1
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`million dollars.
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`
`
`
`3
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`Case 21-40055 Doc# 107 Filed 10/22/21 Page 3 of 21
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`At some point, farming for Debtors became unprofitable. Throughout
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`2020, Debtors undertook an orderly liquidation of their farm assets. By
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`December 31, 2020, all crop and livestock activities in Debtors’ (or their
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`LLC’s) name had ceased, land leases were terminated, grain was sold and the
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`proceeds paid to creditors, and substantially all equipment was sold at
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`auction or turned over to creditors. Much of Debtors’ real property and
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`equipment was purchased by family members for its use in the family’s
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`farms. Many of their leases were taken over by family members.
`
`About one month later, on February 1, 2021, Debtors filed a Chapter 12
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`bankruptcy petition. Debtors’ schedules show real property of $267,000
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`(Debtors’ residence); total personal property of approximately $1,220,000,
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`comprised primarily of exempt financial assets; secured liabilities of
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`approximately $78,000; and unsecured liabilities of approximately
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`$6,000,000, comprised primarily of agricultural debt.
`
`It is undisputed that on the petition date, neither Debtors nor their
`
`LLC owned any growing crops, stored crops, chemicals, or tractors. Debtors
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`owned one Deere Flex King Blade Plow, which was being held in anticipation
`
`of being picked up by the secured creditor John Deere Financial. Debtors also
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`owned one pickup that Debtors use when working on their family’s farms.
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`(Debtors drive separate/different vehicles to commute to work.) And Debtors’
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`
`
`4
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`Case 21-40055 Doc# 107 Filed 10/22/21 Page 4 of 21
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`minor daughter owns cattle that the family runs with Jennifer’s brother’s
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`cattle. Finally, Jennifer’s brother purchased some cattle equipment, and the
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`family consider Debtors part-owners of that equipment because of the sweat
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`equity Debtors put into making the equipment usable.
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`Debtors regularly assist on their family’s farms. Jennifer helps with
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`David’s family farm’s paperwork. Jennifer gets paid for doing that farm’s
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`taxes each year, but then also provides unpaid assistance with other
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`paperwork. Both Debtors help with manual labor, both on their parents’
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`farms and on Jennifer’s brother’s farm. Debtors assist with cattle on
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`Jennifer’s brother’s farm because, as mentioned, they keep their daughter’s
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`cattle with his herd.
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`In addition to their physical presence on their family’s farms, Debtors
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`both testified that they are active in wrapping up their LLC’s farm operation.
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`There are a handful of items that have come in as 2021 income, stemming
`
`from 2020 activities, that have required post-petition work on the
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`business-side of farming. David testified that he does this work from his home
`
`in Holcomb, as he has always done. Post-petition, Debtors have received and
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`distributed the following: (1) a USDA payment of $128,829.93, which on April
`
`7, 2021, was distributed to creditors; (2) an AgCredit patronage dividend of
`
`$6,942.70, which was set off after AgCredit obtained relief from stay; (3) an
`
`
`
`5
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`Case 21-40055 Doc# 107 Filed 10/22/21 Page 5 of 21
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`FSA payment of $5623 relating to livestock; (4) a USDA payment of $831
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`under the 2013 Livestock Forage Disaster program; and (5) a cooperative
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`patronage refund of $249.29 for year 2020. In addition, Mongeau Enterprises,
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`LLC, Debtors, and others are defendants in litigation brought by First
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`National Bank of Syracuse pending in the District Court of Rooks County,
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`Kansas, and there have been at least some hearings in that case concerning
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`the distribution of certain funds held in trust by the bank that stem from the
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`sale of equipment and crops. And finally, Jennifer testified concerning some
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`farm expenses for custom cutting work that they are still paying and other
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`general clean up to do. David testified that he has “spent a lot of time” on the
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`clean-up work for Debtors’ farming operation post-petition: keeping track of
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`income, getting assets and government payments collected, and
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`communicating with creditors.
`
`Debtors testified at length about their plans to return to farming, but
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`on a smaller scale. Debtors do not plan to raise crops, due to a prior default in
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`crop insurance premiums, meaning Debtors would be unable to obtain crop
`
`insurance. But Debtors want to start a livestock operation. Debtors testified
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`they have family members with storage facilities that they would be
`
`permitted to use to store grain for feeding cattle. Jennifer’s uncle has also
`
`expressed his desire that Debtors get into a cattle business with him, and
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`
`
`6
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`Case 21-40055 Doc# 107 Filed 10/22/21 Page 6 of 21
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`Jennifer also testified about her hope they could get into her brother’s cattle
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`operation as they already provide labor for him. Jennifer unequivocally
`
`testified that yes, Debtors plan to start a new farming operation, but on a
`
`smaller scale, and that Debtors did not intend to abandon farming as they
`
`hope to purchase cattle and start anew. Jennifer testified that in her opinion,
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`they are part of their family’s farms, because they provide labor in an effort to
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`keep income within the family, in hope to preserve the family farms to pass
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`down to generations. David also testified that his intent is to farm, and to do
`
`something with livestock because they could become involved with family
`
`member’s operations and that is where they would find family help.
`
`II. Conclusions of Law
`
`Under § 1208(c), the Court may dismiss a Chapter 12 case for “cause.”
`
`Debtors bear the burden of proof to show eligibility for relief under Chapter
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`12.4 To make the determination of whether Debtors are eligible for Chapter
`
`
`4 In re Woods, 743 F.3d 689, 705 (10th Cir. 2014) (“Debtors had the burden of
`establishing their eligibility for Chapter 12 relief.”); In re Ollis, 609 B.R. 459, 464
`(Bankr. D.S.C. 2019) (“A debtor who files a Chapter 12 petition bears the ultimate
`burden of proving eligibility for relief under that chapter.”); In re Rosenberger, No.
`20-50093, 2020 WL 6940926, at *3 (Bankr. W.D. Va. Sept. 29, 2020) (“The debtor
`bears the burden of proving her eligibility for relief under a certain chapter of
`bankruptcy. . . . She must put forward sufficient evidence to allow the Court to find
`that she satisfies the section 109(f) eligibility requirements, including the
`definitional section 101(18) requirement that she was ‘engaged in’ a farming
`operation at the time of filing.”).
`
`
`
`7
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`12, the Court focuses on the statute’s structure, and the plain meaning of the
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`words used in the Code.5
`
`Chapter 12 was enacted because the other Chapters of the Code did not
`
`“provide effective reorganization relief to the majority of family farmers.”6
`
`The Code provides, “[o]nly a family farmer . . . with regular annual income
`
`may be a debtor under chapter 12” of Title 11.7 The phrase “family farmer” is
`
`then defined to mean an “individual or individual and spouse engaged in a
`
`farming operation” whose aggregate debt and gross income satisfy statutory
`
`requirements.8 In this case, the challenge to eligibility is limited to whether
`
`Debtors satisfy the “engaged in a farming operation” portion of the definition
`
`of “family farmer.” The Code indicates the phrase ‘“farming operation’
`
`includes farming, tillage of the soil, dairy farming, ranching, production or
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`raising of crops, poultry, or livestock, and production of poultry or livestock
`
`products in an unmanufactured state.”9 The word “farming” is not itself
`
`defined.
`
`
`5 In re Woods, 743 F.3d at 694.
`6 7 William L. Norton, Jr. and William R. Norton III, Norton Bankruptcy Law &
`Practice 3d ' 122:2 (Thompson Reuters 2021).
`7 11 U.S.C. § 109(f).
`8 11 U.S.C. § 101(18)(A). AgCredit does not challenge whether Debtors meet those
`income requirements.
`9 11 U.S.C. § 101(21). “The definition of ‘farming operation’ does not provide an
`exclusive list of all farming activities and is not limited to the specific activities
`delineated in the statute.” In re Sharp, 361 B.R. 559, 564 (10th BAP Cir. 2007).
`
`
`
`8
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`Case 21-40055 Doc# 107 Filed 10/22/21 Page 8 of 21
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`

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`Case law establishes the test for Chapter 12 eligibility is determined at
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`the time the case is filed.10 There are two elements to determining if a debtor
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`is “engaged in a farming operation:” a temporal element (the debtor must be
`
`engaged in a farming operation on the date of filing); and a substantive
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`element (whether the debtor’s activities on that date constituted a farming
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`operation).11 Whether Debtors were “engaged in” a farming operation on the
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`petition date and whether a particular activity constitutes a “farming
`
`operation” are determined on a case-by-case basis considering the totality of
`
`the circumstances.12
`
`Both parties rely on an Eleventh Circuit Court of Appeals decision, In
`
`re Watford,13 to flesh out the definition of family farmer. The Watfords grew
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`soybeans through 1985, then in 1986 they ceased cultivation of their land and
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`stored the beans on their land and began conducting a stone crabbing
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`operation in the Gulf of Mexico. They filed for relief under Chapter 12 in
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`1987. At an initial hearing, Mr. Watford testified he had plans to use his land
`
`to develop fish ponds for recreational use, but at the final hearing testified
`
`that he would also harvest fish from the ponds. The bankruptcy court
`
`
`10 Watford v. Fed. Home Loan Bank of Columbia (In re Watford), 898 F.2d 1525,
`1527 (11th Cir. 1990).
`11 In re Rosenberger, 2020 WL 6940926, at *2.
`12 Id. at *2-3; In re Maike, 77 B.R. 832, 836 (Bankr. D. Kan. 1987) (describing the
`“totality of the circumstances” test).
`
`
`
`9
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`dismissed the case, finding the Watfords were not engaged in a farming
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`operation on the date of filing.
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`On appeal, the district court affirmed, but the court of appeals affirmed
`
`in part, vacated in part, and remanded. The appellate court affirmed that
`
`stone crabbing did not constitute a farming operation but reversed the
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`dismissal, because it concluded that the lower courts applied an incorrect
`
`legal standard with regard to the Watfords’ storage of soybeans and planning
`
`for commercial fish ponds. The Eleventh Circuit held that “a farmer who
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`harvested soybeans in 1985, ceased actively tilling of the soil, but continues to
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`plan the reorganization of his farming operation (though the development of
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`fish ponds) could depending on the circumstances be ‘engaged in a farming
`
`operation.”’14 The appellate court remanded “for a determination of whether
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`the Watfords had abandoned all farming operations at the time of filing, or
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`whether under the totality of the circumstances the Watfords had not
`
`abandoned all farming operations, but rather were planning to continue
`
`farming operations in the form of commercial fish ponds or otherwise.”15 The
`
`standard adopted by the Eleventh Circuit is “whether, in view of the totality
`
`of the circumstances, the debtor intends to continue to engage in a ‘farming
`
`
`13 898 F.2d 1525.
`14 Id. at 1528.
`15 Id. at 1529.
`
`
`
`10
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`operation’ even though he or she was not engaged in the physical activity of
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`farming at the time the petition was filed.”16
`
`
`
`Making this determination is, of course, the difficult part. The term
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`“engaged” is defined as “involved in activity: occupied, busy.”17 When
`
`determining the temporal element, whether debtors were “engaged in”
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`farming on the date of filing, one court has found relevant factors are: (1) “the
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`debtor’s daily involvement on the farm, (2) the debtor’s legal ownership
`
`interest in the farming operation and /or its assets, and (3) the debtor’s
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`physical presence on the farm.”18 As to whether a particular business
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`constitutes a farming operation, there is no widely accepted list; the factors
`
`courts have considered vary based upon the circumstances presented.19
`
`
`16 Id. The majority of cases have adopted the Eleventh Circuit’s totality of the
`circumstances approach, contrasted to a more restrictive standard from the Seventh
`Circuit, articulated in In re Armstrong, 812 F.2d 1024, 1027 (7th Cir. 1987), that
`interprets § 101(18) to apply only to farmers whose activities are “exposed to the
`inherent risks and cyclical uncertainties traditionally associated with farming.”
`17 See “engaged,” Merriam-Webster Online Dictionary, www.merriam-
`webster.com/dictionary/engaged (last visited September 28, 2021).
`18 In re Rosenberger, 2020 WL 6940926, at *3.
`19 E.g., compare In re McLawchlin, 511 B.R. 422, 428 (Bankr. S.D. Tex. 2014
`(identifying the following factors: (i) whether the location of the operation would be
`considered a traditional farm, such as a rural area, (ii) the nature of the enterprise
`at the location, such as whether a service or product is being provided, (iii) the type
`of product and its eventual market, such as whether it is traditionally agricultural
`though this is not strictly limiting, (iv) the physical presence of family members on
`the farm, (v) ownership of traditional farm assets, (vi) whether the debtor is
`involved in the process of growing or developing crops or livestock, and (vii) perhaps
`the key factor being whether or not the practice or operation is subject to the
`inherent risks of farming) with In re Mikkelsen Farms, Inc., 74 B.R. 280, 285
`
`
`
`11
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`
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`Debtors and AgCredit each present lists of factors which courts
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`generally consider when determining whether debtors are “engaged” in a
`
`“farming operation” and therefor eligible for Chapter 12 relief. The two lists
`
`have several factors in common. The common factors are whether: (1) the
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`debtors had abandoned all farming operations at the time of filing, (2) there is
`
`a plan or intent to continue farming operations in some form, (3) the
`
`abandonment of farming was a shift to a different type of farming, and (4)
`
`debtors own farm assets such as equipment. The additional factors
`
`enumerated by Debtors include consideration of whether the activities are
`
`subject to the cyclical risks involved in farming. The Court finds the four
`
`factors listed by both parties, plus the additional factor of risk identified by
`
`the Debtors, are appropriate for consideration under the circumstances of this
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`case.
`
`Applying these factors, AgCredit argues Debtors had ceased all farming
`
`operations, had no plans to resume either growing crops or raising livestock,
`
`had not shifted to a different type of farming, had no farm assets, such as
`
`equipment and chemicals, and the winding up of financial affairs which
`
`
`(Bankr. D. Or. 1987) (“whether there is a physical presence of family members on
`the farm, whether the debtor owns traditional >farm assets,= whether leasing land is
`a form of scaling down of previous farm operations, what the form of any lease
`arrangement is and whether the debtor entity had, as of the date of filing,
`permanently ceased all of its own investment of assets and labor to produce crops or
`
`
`
`12
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`remained to be completed did not expose Debtors to any of the inherent risks
`
`of farming. Debtors see the facts differently of course. Debtors acknowledge
`
`they had ceased actively tilling the ground and raising crops, but argue they
`
`are still engaged in farming because they are winding up the affairs of their
`
`LLC postpetition, maintain active connections to farming, and because they
`
`fully intend to begin a new livestock operation once the wind-up of their
`
`former operation is complete.
`
`The Court concludes that whether the plain meaning of “engaged” is
`
`used or the totality of the circumstances test is used, Debtors were engaged in
`
`a farming operation at the time of filing their Chapter 12 petition.
`
`First, Debtors had not completely abandoned all farming operations at
`
`the time of filing. Debtors were “engaged”—they are very involved in their
`
`extended family’s farms, Debtors’ daughter has cattle that the family runs
`
`with other cattle owned by extended family, and Debtors help work those
`
`cattle. Debtors partially own cattle equipment that they have worked
`
`postpetition to make usable in a future livestock operation. To be engaged in
`
`a faming operation, a debtor need not “only use assets belonging to them.”20
`
`
`livestock”).
`20 In re Howard, 212 B.R. 864, 873 (Bankr. E.D. Tenn. 1997).
`
`
`
`13
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`And ownership in farm equipment based on a joint venture understanding
`
`with a non-debtor can be sufficient.21
`
`
`
`Yes, Debtors had ceased growing crops and had sold the majority of
`
`their equipment prior to filing. But there is a business management side to
`
`farming that cannot be overlooked. Of course, the word farming brings to
`
`mind working the ground or raising animals. But modern farming is much
`
`more: analyzing government programs; analyzing crop insurance; analyzing
`
`the various markets; determining land values; identifying and adapting the
`
`appropriate technology; proper nutrition for livestock; determining soil
`
`conditions; balancing environmental issues; determining proper veterinarian
`
`procedures for livestock; complicated reporting to various government
`
`agencies; maintaining books, creditor-relations; addressing the tax
`
`implications of farming—all constitute just a partial list. All these aspects of
`
`farming are important and managing the business elements of a farm are just
`
`as much farming as plowing the ground.22 David testified that he spent a lot
`
`of time winding up the remaining financial affairs related to Debtors= farming
`
`operations. The evidence establishes Debtors received and distributed
`
`
`21 See In re Rosenberger, 2020 WL 6940926, at *3 (noting the debtor testified as to
`“the existence of an understanding” between herself and another person concerning
`a joint venture in a farming operation).
`22 See, e.g., id. (describing the debtor’s “involvement on the business-management
`side of the operation,” including maintaining books and preparing tax returns).
`
`
`
`14
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`significant income from their 2020 farming activities. Income from farming
`
`does not solely consist of payments for farm outputs from a grain buyer or a
`
`cattle barn. Modern farming depends and relies on intricate relationships
`
`with large creditors and federal and state governments. Receipt, accounting,
`
`and distribution of this income is part of modern farming. AgCredit argues
`
`that any bookkeeper could do the same. But that is not the question. The
`
`question is whether handling the business of farming is part of being a
`
`farmer. The answer is: of course it is. Thus, when the Court looks to see if a
`
`debtor is engaged in a farming operation, it is looking at the totality of
`
`circumstances for the debtor’s eligibility, and this business side should not be
`
`overlooked.
`
`Second, there is an intent to continue farming operations in the future,
`
`and Debtors’ termination of their prior farm operation is part of a shift to a
`
`smaller scale cattle operation. Debtors finished liquidating their large-scale
`
`farm operation at the end of 2020. They filed their bankruptcy petition just
`
`over a month later, on February 1, 2021. Debtors repeatedly testified about
`
`their involvement in their extended family’s farm operations, and their desire
`
`and intent to leverage that involvement into a cattle operation of their own.
`
`Debtors currently run their daughter’s cattle with Jennifer’s brother’s cattle
`
`operation and have already started building back their equipment through
`
`
`
`15
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`their joint venture with their brother on the cattle equipment. The Court
`
`recognizes that a debtor cannot rely on the farming activity of others to
`
`satisfy a court that the debtor is eligible for Chapter 12 relief,23 but that is
`
`not all that is happening here. The Court relays the facts concerning Debtors’
`
`active participation in their family’s farms to indicate the likelihood and
`
`concreteness of the plans to resume farming. Debtors do not have much now,
`
`but they have lots of family help and involvement. After listening to the
`
`testimony of Debtors, the Court readily concludes Debtors intend to continue
`
`farming in the future and the liquidation of their LLC was part of a shift to a
`
`smaller scale farm endeavor.
`
`Third, Debtors do own some farm assets. Debtors have a pickup they
`
`use to physically assist in their family’s farm operations. Again, Debtors are
`
`just starting the process of building back their cattle equipment. Debtors
`
`have always managed the business side of their farm operations out of their
`
`home in Holton. At filing Debtors still had possession of the Deere Flex King
`
`Blade Plow. Debtors are also defendants in pending litigation concerning the
`
`distribution of funds that arose from their sale of equipment and crops.
`
`
`23 See, e.g., In re Buckingham, 197 B.R. 97, 103 (Bankr. D. Mont. 1996) (“the
`activity must not only be a farming activity, but it must also be one related to the
`debtor’s own farming operation and not just the farming operations of others”
`(internal quotation omitted)).
`
`
`
`16
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`

`

`Finally, the risk factor should not be discounted. Debtors are not
`
`currently growing crops. They are not currently raising a large herd of cattle.
`
`As a result, they do not have the risks associated with those farming
`
`activities. But they are winding up the results of the risks previously taken.
`
`And the definition of “farming operation” is “to be construed liberally in order
`
`to further Congress’ purpose of helping family farmers to continue farming.”24
`
`The Court recognizes Debtors were not actively engaged in working
`
`land or cattle on the petition date on a large scale. Debtors candidly testified
`
`that they liquidated their large farming operation in order to complete a
`
`structured wind-down. To be sure, ownership of farm assets and the risk
`
`associated thereon are important factors in determining who is a “family
`
`farmer.” But under the Bankruptcy Code, a Chapter 12 debtor is entitled to
`
`completely liquidate a farming operation under § 1222(b)(8).25 This Code
`
`provision “reflects a recognition by Congress that many family farm
`
`reorganizations, to be successful would involve the scaling down of the farm
`
`operation.”26 “It would make little sense to block a debtor from the relief
`
`
`24 In re Watford, 898 F.2d at 1527.
`25 Under § 1222(b)(8) a Chapter 12 plan may “provide for the sale of all or any part
`of the property of the estate or the distribution of all or any part of the property of
`the estate among those having an interest in such property.”
`26 In re Williams, No. 15-11023, 2016 WL 1644189, at *3 (Bankr. W.D. Ky. Apr. 22,
`2016); see also In re Mikkelsen Farms, Inc., 74 B.R. 280, 285-86 (Bankr. D. Or. 1987)
`(“The provisions of § 1222(b)(8) permit a Chapter 12 plan of complete liquidation. If
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`provided by Congress under Chapter 12 simply because Debtors made a
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`reasonable financial decision to end a nonprofitable farming operation which
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`would cause the Debtors to fall deeper into debt. This seems to be contrary to
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`the goal of a Chapter 12.”27 The Court rejects the contention that the fact
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`Debtors undertook an orderly liquidation process prepetition compels the
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`conclusion that they are no longer “engaged in a farming operation.” Shifts in
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`farming, even dramatic ones, are anticipated by the Code.28 Remember, a
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`“farming operation” is defined by the Code to simply include “farming,” and as
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`this Court has repeatedly stressed, there is much more to farming than
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`planting a seed.
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`The Court concludes, weighing the factors set out above applied to the
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`facts and circumstances of this case, Debtors meet the definition of family
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`farmer in the Code. Debtors are eligible for relief because they were “engaged
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`a farm were liquidated there would be no income from farm operations to fund the
`plan if needed. An interpretation of § 101(18) to require annual income to be only
`from farm operations could, on occasion, deny a debtor the right, which it would
`otherwise have, to liquidate pursuant to § 1222(b)(8). . . . Thus, I find that a family
`farmer who otherwise qualifies under § 101(17) may be a family farmer with
`regular income within the meaning of § 101(18) if it can show it will have regular
`annual income, from whatever source, that is sufficiently stable and regular to fund
`the plan.”).
`27 In re Williams, 2016 WL 1644189, at *3.
`28 Id. (“The court’s reading of the statutory definitions and case law bearing on
`eligibility, however, confirms that Congress anticipated such changes and sought to
`permit those engaged in farming to continue the agricultural lifestyle, even in the
`face of interruptions and dramatic shifts, as the Debtor’s case illustrates.”).
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`in a farming operation” on the date they filed for relief under Chapter 12. The
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`Court analogizes this situation to cases under Subchapter V of Chapter 11. A
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`debtor is eligible for relief under Subchapter V if the debtor satisfies the
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`eligibility requirements of § 1182(1)(A). Included in those eligibility
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`requirements is that the debtor be “engaged in a commercial or business
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`activity.” Similar to the issue herein, courts have struggled with what it
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`means to be “engaged in” a business activity. Some courts have concluded
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`that winding down a business that stopped operating prepetition is sufficient
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`to be “engaged” in business activities.29 This Court finds those cases
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`
`29 E.g., In re Vertical Mac Constr., LLC, No. 6:21-bk-01520-LVV, 2021 WL 3668037,
`at *3 (Bankr. M.D. Fla. July 23, 2021) (concluding that maintenance of bank
`accounts, working with insurance adjusters and defense counsel to resolve claims,
`engaging in efforts to sell assets qualify as engagement in commercial or business
`activities); In re Port Arthur Steam Energy, L.P., 629 B.R. 233, 237 (Bankr. S.D.
`Tex. 2021) (concluding that actively pursuing litigation against a third party and
`other wind down work all qualified as “engaged in commercial or business
`activities”); In re Offer Space, LLC, 629 B.R. 299, 306 (Bankr. D. Utah 2021)
`(concluding that wind down activities of exploring counterclaims in a lawsuit and
`“taking reasonable steps to pay its creditors and realize value for its assets” was
`active engagement in a commercial or business activity”); In re Ikalowych, 629 B.R.
`261, 284 (Bankr. D. Colo. 2021) (concluding that performing wind down work of
`about twelve hours a month postpetition such as storing business records and
`dealing with tax accountants and tax issues qualified as engaged in commercial or
`business activities); In re Blanchard, No. 19-12440, 2020 WL 4032411, at *2 (Bankr.
`E.D. La. July 16, 2020) (concluding a debtor’s engagement