Bankruptcy Case No. 01-60522United States Bankruptcy Court, S.D. Illinois
June 28, 2001
OPINION
GERALD D. FINES, United States Bankruptcy Judge.
This matter having come before the Court on a Motion to Dismiss filed by Farm Credit Services of Southeastern Illinois, FLCA and Farm Credit Services of Southeastern Illinois, PCA, as well as the Request to Reinstate Chapter 12 Status filed by the Debtors; the Court, having reviewed the written material submitted by the parties, having heard arguments of counsel, and being otherwise fully advised in the premises, makes the following findings of fact and conclusions of law pursuant to Rule 7052 of the Federal Rules of Bankruptcy Procedure.
At issue in this matter is the eligibility of the Debtors for relief under Chapter 12 of the Bankruptcy Code. In order to be eligible for Chapter 12 relief, the Debtors bear the burden to establish their eligibility as “family farmers,” under the provisions of 11 U.S.C. § 101(18) and 101(20). The Motion to Dismiss asserts that the Debtors are ineligible for Chapter 12 relief based upon their failure to qualify as “family farmers,” as a result of the farm income which was earned in the year 2000. Pursuant to 11 U.S.C. § 101(20), in order to qualify for Chapter 12 relief, an individual must have received more than 80% of such individual’s gross income from a farming operation owned or operated by the individual, during the taxable year of the individual immediately preceding the taxable year during which the case under Chapter 12 was filed. In this instance, there is no dispute that the taxable year in question is the year 2000.
As stated above, the Debtors bear the ultimate burden of proving their eligibility for relief under Chapter 12. See: In re Bircher, 241 B.R. 11
(S.D.Iowa 1999). The Seventh Circuit case of In re Wagner, 808 F.2d 542
(7th Cir. 1986), establishes the procedure under which the Court must determine whether an individual qualifies to meet the statutory definition of a “farmer.” The Court has also reviewed the cases cited by Farm Credit of In re Shepherd, 75 B.R. 501 (N.D.Ohio. 1987); In re Nelson, 73 B.R. 363 (D.Kan. 1987); and In re Grey, 145 B.R. 86 (D.Kan. 1992). The procedure used by the Courts in those cases essentially follow the procedure dictated by the Seventh Circuit Court of Appeals in In re Wagner, supra.
In those cases, when the Courts looked at the tax returns of the debtors for the year preceding their filing of Chapter 12 bankruptcy, the Courts determined that the debtors were not eligible for relief under Chapter 12 for the reason that they failed to show sufficient gross income to qualify as “farmer.”
In applying the procedure to determine whether an individual’s gross income is sufficient to meet the definition of a “farmer,” as dictated by 11 U.S.C. § 101(20), to the instant case, the Court finds that the Debtors have failed to establish that 80% of their gross income during the tax year 2000 was derived from a farming operation owned or operated by the Debtors. This being the case, the Court must conclude that the Motion to Dismiss must be allowed, and the Request to Reinstate Chapter 12 Status must be denied.
ORDER
For the reasons set forth
IT IS HEREBY ORDERED that:
A. Debtors’ Request to Reinstate Chapter 12 Status is DENIED;
B. The Motion to Dismiss filed herein by Farm Credit Services of Southeastern Illinois, FLCA and Farm Credit Services of Southeastern Illinois, PCA is ALLOWED; and,
C. This proceeding is DISMISSED with the parties to bear their own costs.