Alaska Bankruptcy Reports - Digest Volume 10

Menu    10 ABR 1: Ch. 11, ACD's motion to compel payment of taxes granted; court found 50 year ground lease between ACD and the debtor was a true lease within the meaning of 11 U.S.C. 365(a) and 365(d)(3) required the payment of taxes (Bankruptcy Court, MacDonald).

Anchorage Community Development (ACD) moved to compel chapter 11 debtor Sportsplex to pay real property taxes due on a 50 year ground lease. U.S. Bank alleged the ground lease was not a true lease within the meaning of 365. Court found that cases cited by U.S. Bank were distinguishable from the case at bar. The economic substance of the Sportsplex ground lease was that of a true lease. Testimony to the contrary from the bank's expert witness lacked credibility. ACD provided evidence of numerous ground leases in the Anchorage area similar to the Sportsplex lease. Its motion to compel payment of real property taxes would be granted.

In re Anchorage Sportsplex, Inc., 12/13/10.

David Bundy, Anchorage, for the debtor; John Seimers (Burr, Pease & Kurtz, P.C.), Anchorage, and Eric Schaffer (Reed Smith LLP), Pittsburg, for U.S. Bank National Association as Indenture Trustee; Kathryn Black and Stan Lewis (Birch Horton Bittner & Cherot), Anchorage, for Grace Alaska, ChangePoint, and Anchorage Community Development, LLC.

Menu    10 ABR 23: Ch. 7, fisherman's lien in disputed fish sale proceeds is superior to city tax lien (Bankruptcy Court, MacDonald).

Debtor Adak Fisheries was a shore-based fish processor located on Adak Island. While in chapter 11, most of its assets were sold for $488,000. After the case converted to chapter 7, fish sale proceeds of $117,250 were recovered from litigation with a Korean fish buyer. Both the City of Adak and Muir Milach Management LLC claimed a first priority lien against the funds. The City claimed a sales tax lien and Muir claimed it held a fisherman's lien. Muir initiated an adversary proceeding against the chapter 7 trustee and the City. Both Muir and the City sought summary judgment in the issue of lien priority.

Fisherman's liens are remedial legislation that should be liberally construed, while tax liens are strictly construed against the taxing entity and in favor of the taxpayer. The City's tax lien was recorded after Muir delivered fish to the debtor and received fish tickets for their delivery. By statute, Muir's fisherman's liens arose when it delivered fish to Adak and received fish tickets. Although the City recorded its tax lien before Muir recorded a claim of lien, Muir's recording related back to the deliveries of the fish. Muir's liens arose upon delivery of the fish and predated the perfection of the City's tax lien. The fisherman's liens were superior to the City's tax liens under Alaska law.

Muir Milach Management, LLC v. Battley and City of Adak (In re Adak Fisheries, LLC), 12/30/10.

David Bundy, Anchorage, for Muir Milach Management, LLC; Eric LeRoy, Anchorage, for Kenneth Battley, Trustee; Brooks Chandler (Boyd, Chandler & Falconer, LLP), Anchorage, for the City of Adak.

Menu    10 ABR 35: Ch. 13, debtor's motion to modify plan to permit surrender of secured vehicle was allowable, but other deficiencies required correction before modified plan could be confirmed (Bankruptcy Court, MacDonald).

Debtors financed a 2008 Ford Pick-Up truck with Alaska USA. The total loan amount of $48,111 included negative equity of $12,786, representing the outstanding loan balance on a trade-in vehicle. The hanging paragraph in 1325(a) prevented cramdown of Alaska USA's secured claim and debtors' confirmed plan required payment of the loan in full. Five months after confirmation, debtors moved to modify the plan so that they could surrender the vehicle and treat any deficiency as a general unsecured claim. Alaska USA objected to this treatment, contending the debtors could only modify the amount or timing of payments, but could not modify the plan to surrender the vehicle.

There is a split in the circuits on this issue. Court found that the better reasoned decisions allow a plan to be modified to surrender the vehicle. However, debtors' modified plan could not be confirmed for other reasons. It failed to account for prior plan payments made by the debtors and the trustee's payments under the plan to Alaska USA. Also, the debtors had to cure arrears on plan payments. These deficiencies needed to be corrected before a modified plan could be confirmed.

In re Williams, 1/31/11.

Chris Johansen, Anchorage, for the debtors; Wayne Dawson (Coryell Dawson LLC), Anchorage, for Alaska USA Federal Credit Union.

Menu    10 ABR 43: Ch. 13, bank established its standing to seek relief from stay when it finally produced the original mortgage note; bank's motion for relief from stay granted and debtor's objection to bank's claim based on lack of standing overruled (Bankruptcy Court, MacDonald).

Debtor objected to Deutsche Bank's motion for relief from stay and its proof of claim based on lack of standing. Documentation bank provided with its motion and claim were insufficient to establish that bank was the note holder. Bank was not original lender and neither the debtor nor the court could determine the chain of title from the copy of the note and the other documentation that it produced. Bank's efforts to buttress its documents with declarations and copies of filings with the SEC were unsuccessful. Court would not take judicial notice of the SEC filings to establish a disputed fact. Although stay litigation is to be handled in a summary fashion, the bank still had to establish that it was a real party in interest.

Three months after its original motion for relief from stay was filed, bank produced the original note, which established both chain of title and the bank's possession. The bank had standing because it was a holder under Alaska law. It would not be required to also establish the capacity of the individuals who executed the assignments on the note. Relief from stay was granted and debtor's objections to bank's claim were overruled. However, court cautioned bank and its counsel that it would deny, without prejudice, any future motion for relief from stay that did not establish, on its face, the movant's standing as a party in interest.

In re Waters, 3/15/2011.

Eric LeRoy, Anchorage, for the debtor; Josephine Piranio (Pite Duncan LLP), San Diego, for Deutsche Bank Trust Company Americas; Kay Hill, Anchorage, for the United States Trustee.

Menu    10 ABR 65: Ch. 7, bank's administrative hold on debtor's accounts following chapter 7 filing did not violate the automatic stay; sanctions against the bank were not warranted (Bankruptcy Court, MacDonald).

After the debtors filed their chapter 7 petition, Wells Fargo placed an administrative hold on their accounts and promptly sent a letter to the trustee requesting instructions as to the funds in the account. The bank also sent a letter to the debtors' counsel notifying him of the hold. The bank then released account funds to the trustee and the debtors in accordance with the trustee's faxed directions. The debtors' counsel demanded a turnover of all funds in the accounts and moved for sanctions against the bank for violation of the stay.

Wells Fargo has an automated computer program that determines whether account holders have filed for chapter 7 relief. If the program reveals such a filing, bank policy directs that it follow the steps that were taken in this case. Many lower courts considering the bank's policy have found that the hold does not violate the stay or give rise to a claim for sanctions. While the Ninth Circuit BAP has ruled otherwise, here the court found the rationale of the other courts to be more persuasive. Debtors' motion for sanctions was denied.

In re Lee, 3/15/2011.

Chris Johansen, Anchorage, for the debtors; Michelle Boutin (Jermain, Dunnagan & Owens, P.C.), Anchorage, for Wells Fargo Bank.

Menu    10 ABR 68: Ch. 7, Barstow, as trustee of Mark Avery bankruptcy estate and as successor in interest to related debtor Security Aviation, sought recovery of $150,000 retainer from Ingaldson Maasen & Fitzgerald (IMF) on a complex set of theories. IMF had represented both Avery and Robert Kane prepetition. Plaintiffs contended the retainer was property of Security Aviation. On cross-motions for summary judgment, plaintiffs prevailed on this issue. Court ruled against plaintiffs on their claims for breach of fiduciary duty and unjust enrichment, and found that material factual issues existed on their constructive fraudulent conveyance count. Plaintiffs were awarded $69,764.42 on their count for conversion and $35,764.42 on their count for breach of the automatic stay and unlawful post-petition transfers.

Mark Avery defrauded the May Smith Trust out of $52 million. He used the proceeds to buy airplanes, toys and various entities, including Security Aviation. Robert Kane provided services for Avery and his related entities. After some fighter planes and rocket launchers were purchased, criminal charges were filed against Security Aviation and Kane for possession of unregistered destructive devices. IMF was retained to represent Kane in the criminal trial and received a $150,000 retainer. Both Kane and Security Aviation were acquitted of all charges. IMF continued to represent Kane afterwards and also briefly represented Avery in connection with the May Smith Trust's efforts to obtain an accounting and recover trust assets.

After Avery filed for chapter 7 relief, trustee Barstow, as successor in interest, placed Security Aviation in chapter 11. Barstow contended the $150,000 retainer was property of Security Aviation. IMF said it was Kane's money. Barstow initiated an adversary action, in his capacity as Avery's chapter 7 trustee and as Security Aviation's successor in interest, to recover the funds from IMF. The complaint contained nine counts.

Cross-motions for partial summary judgment were filed by the parties. The court found that IMF's $150,000 retainer came from the refinance of an aircraft belonging to Security Aviation. The trustee had meticulously traced the proceeds from the aircraft refinance to IMF's trust account. IMF failed to provide sufficient evidence to establish an issue of material fact as to the source of the funds.

Plaintiffs contended IMF breached its fiduciary duty by making certain disbursements from its trust fund account after the criminal trial had concluded. Under applicable state law, court found that the plaintiffs lacked standing to pursue this claim. IMF was entitled to summary judgment on this claim.

Court granted partial summary judgment to plaintiffs on their counts for conversion and unlawful post-petition transfers. It found that various transfers IMF made to itself and Kane, totaling $69,764.42, constituted conversion of the Security Aviation funds held in IMF's trust account. Court also found that IMF's disbursal of $35,764.42 from the trust account after Security Aviation had filed chapter 11 violated the automatic stay.

Summary judgment was not warranted on plaintiffs' constructive fraudulent transfer count because material factual issues existed. Court determined plaintiffs' state law unjust enrichment count lacked merit and would be dismissed.

Barstow v. Ingaldson Maasen & Fitzgerald, P.C. (In re Mark Avery), 3/31/2011.

Gary Spraker (Christianson & Spraker), Anchorage, for William M. Barstow, Trustee, and Security Aviation, Inc.; Mathew Peterson (Clapp, Peterson, Tiemessen, Thorsness & Johnson, LLC) for Ingaldson Maasen & Fitzgerald, P.C.

Menu    10 ABR 107: Ch. 11, debtor's fourth amended disclosure statement could not be approved where debtor's real estate values were overstated, details of bank litigation were not fully disclosed and further disclosures were needed on other matters; debtor's plan not confirmable because disclosure statement inadequate and plan failed to classify and treat equity interests, violated state law, was not feasible and did not meet cramdown standards; despite these problems, the debtor had the potential to propose a confirmable plan and was given 90 days to accomplish reorganization or face conversion (Bankruptcy Court, MacDonald).

Court held hearing on approval of debtor's fourth amended disclosure statement and confirmation of fourth amended plan, along with a variety of related motions. Court found that disclosure statement lacked adequate information because it contained overstated property values based upon erroneous broker's opinions and did not provide independent valuations of debtor's Skagway properties. Also, the disclosure statement omitted important details regarding the benefits, risks, and potential liabilities that might accrue from the debtor's protracted state court litigation with its major secured creditor, FNBA. Further, personal guarantees given by the debtor's principals to Export Development Canada were not disclosed.

Even if the disclosure statement were adequate, the fourth amended plan was not confirmable. It did not designate classes of interests or specify possible impairment or treatment of such interests, nor did it contain a provision against the issuance of nonvoting equity securities. The plan violated state law because it proposed transferring assets of related corporation H&A, also in bankruptcy, to the debtor for no consideration. The transfer would injure H&A's creditors and render H&A unable to pay its debts. Additionally, the plan was not feasible. The plan depended upon the sale or refinancing of certain parcels of property. While the debtors's Juneau properties appeared to be quite valuable and were projected to appreciate, the valuations and projections for debtor's other parcels were not supported by the evidence. No evidence was provided as to the debtor's ability to refinance. The debtor's projections for accumulating over $900,000 in working capital to apply to a balloon payment due in 2015 were overly optimistic because they were based on overstated property values and other inadequately supported assumptions.

The cramdown provisions in the fourth amended plan were not fair and equitable to FNBA. However, the bank would not be injured by plan's proposed use of cash collateral after confirmation to pay administrative claims and junior creditors. Bank was an oversecured creditor, its real property collateral would appreciate in value, and over plan term the principal on its loans would be paid down by 15%.

Court did not believe plan was proposed in bad faith. The court deferred ruling on its sua sponte motion, which FNBA had joined, for conversion or dismissal of the case. Although the debtor had taken a long time to get to confirmation, court found that the debtor owned valuable property that could form the basis of a feasible plan. Court concluded neither conversion or dismissal was in best interest of creditors or estate at that time. Debtor was given 90 days to accomplish confirmation or face conversion to chapter 7.

In re Alaska Fur Gallery, Inc., 4/29/11.

Cabot Christianson (Christianson & Spraker), Anchorage, for debtor; Bruce Moore and John Beard (DeLisio Moran Geraghty & Zobel, P.C.), Anchorage, for First National Bank Alaska; Ronald Clifford (Blakely & Blakely LLP), Irvine, California, and David Bundy, Anchorage, for Export Development Canada.

Menu    10 ABR 146: Ch. 7, debtor's transfer of Seldovia property to self-settled asset protection trust avoided because court found debtor intended to hinder, delay or defraud his creditors through the transfer (Bankruptcy Court, MacDonald).

Debtor transferred recreational property near Seldovia which he owned free and clear to an asset protection trust in 2005. Debtor's mother paid him $100,000 to make the transfer. Debtor placed about $80,000 of the funds into the trust. He said these funds were a loan to the trust, to be used as "seed money" to get the trust going. The funds were invested and some profits were made. Debtor said the loan was repaid, but there was no promissory note to evidence the loan nor was there a record of repayment. After the trust was created, debtor's income was sporadic and his credit card debt ballooned. He used credit card loans and stock market investments to pay living expenses. When he filed for chapter 7 relief in 2009, his credit card debt exceeded $250,000 and he had lost money on his investments.

The trustee filed an adversary proceeding against debtor, the trustees of the trust and the debtor's mother (as "trust protector") to set aside the transfer of the Seldovia property as a fraudulent conveyance under 11 USC 548(e). This subsection, added to the Bankruptcy Code as part of BAPCPA, gives the trustee a reachback period of 10 years for self-settled trusts. Trustee was required to show that debtor made the transfer to the trust with actual intent to hinder, delay or defraud creditors.

In this case, the trust's stated purpose was to maximize the protection of trust assets from the claims of creditors. Debtor argued that Alaska statutes prohibited the use of the trust language to determine fraudulent intent. Court found that it could look to trust's expressed purpose in determining intent because 548(e), which was aimed at closing a loophole regarding self-settled trusts permitted by state law, prevailed over the state statute. Court found other evidence of intent as well. Debtor was "under water" when he made the transfer. After the transfer he shielded funds he received from his mother by placing $80,000 into the trust and speculating in the stock market. He lived off of credit card loans and investment earnings. Debtor's claims that he had lent money to the trust and that the trust had repaid him were not credible. Court found that debtor had actual intent to hinder, delay and defraud creditors. The transfer of the Seldovia property to the trust was avoided.

Battley v. Mortensen (In re Mortensen), 5/26/11.

Cabot Christianson (Christianson & Spraker), Anchorage, for Kenneth Battley, Trustee; David Bundy, Anchorage, for defendants Mortensen, Mullins, and Mortensen-Beloud.

Menu    10 ABR 162: Ch. 7, U.S. Trustee's motion to dismiss granted under totality of circumstances test where unemployed pastor and his wife had access to substantial assets through their nonprofit corporation, wife had ability to work, and the debtors failed to cooperate and furnish financial information regarding the corporation (Bankruptcy Court, Ross).

After debtors filed a chapter 7 petition, the U.S. Trustee filed a motion to dismiss for abuse under 707(b)(2) for failure to pass means test or 707(b)(3) under the totality of circumstances. Debtors were pastors on a religious mission they had pursued for more than 15 years. They controlled a nonprofit corporation with significant assets, including a second deed of trust on a church in Phoenix. The corporation received net payments of $3,000 per month on the deed of trust note, which had a balance of about $450,000. Debtors were not cooperative in disclosing assets held by the non-profit corporation.

Debtors were currently unemployed. Husband received disability payments and was unable to find work. Before filing, wife had attempted child care and catering businesses that failed. She was energetic and capable of working but preferred to work unpaid for her ministry.

Considering the income from the deed of trust note and the wife's earning potential, the debtors had the ability to fund a chapter 13 plan. Their duty to their creditors trumped their religious mission. There is no entitlement to discharge if the debtors choose to be underemployed. Under the totality of the circumstances, their case would be dismissed.

In re Bearup, 6/1/11.

Kay Hill, Anchorage, for the United States Trustee; Jennifer Sodaro, Scottsdale, Arizona, for the debtors; Diane Vallentine (Jermain, Dunnagan & Owens, P.C.), Anchorage, for Educational Credit Management Corporation.

Menu    10 ABR 174: Ch. 7, debtors' objections to trustee's request for fees of $24,560 and costs of $834.22 arising from sale of run-down trailer park were meritless; debtors' scorched earth policy caused needless time and expense for all concerned and the trustee was entitled to his full statutory commission and costs (Bankruptcy Court, Ross).

Trustee requested fees of $24,560.79 and costs of $834.22 in his final report. Debtors objected to the fees. Court noted that debtors had been litigious throughout the case, fighting the trustee and his attorney at every opportunity and impeding the prompt liquidation of their run-down trailer court. Court would not require trustee to submit time records to justify his fee, as he was working on a statutory commission. Debtors' claim that the trustee manipulated the case to get a fee was meritless. Debtors were not honest in their valuation of the trailer park and the trustee fulfilled his statutory duties in running and liquidating the park. Debtors' objections were overruled; fees were allowed.

In re Lashbrook, 6/3/11.

William Artus, Anchorage, for William Barstow, Trustee; Sandra Lashbrook and Michael Lashbrook, Wasilla, pro se.

Menu    10 ABR 180: Ch. 7, debtors' motion to avoid liens granted in whole as to two judgment creditors and partially as to a third judgment creditor; earlier default order as to third judgment creditor set aside (Bankruptcy Court, Ross).

Chapter 7 debtors moved to avoid three judgment liens against their home. There were two mortgages on home, and wife's fractional interest was encumbered by a $27,363 tax lien. Two creditors objected to motion. They contended there was nonexempt equity in husband's fractional interest if post-petition appreciation in property was taken into account. Creditors also argued that each debtor's interest in property should be valued separately, so that only half of the mortgage balances was deducted from each. Court used property value as of petition date to calculate husband's interest. Both mortgages were deducted from this figure to determine total equity in the property. Husband's equity was half of this balance. Deducting his half of the homestead exemption from this sum left $6,280 that could be applied to the liens. Court avoided the liens in reverse order, with result that the liens held by the objecting creditors were avoided in full, while the third creditor retained most of its lien. Further, the earlier default order avoiding third creditor's lien was set aside, under the rationale in In re Meyer, 373 BR 84 (BAP 9th Cir. 2007).

In re Chambers, 11/10/10.

David Bundy, Anchorage, for the debtors; Richard Ullstrom (Routh Crabtree Olsen, PS), Anchorage, for Makita USA, and Milwaukee Electric Tool Corporation.

Menu    10 ABR 183: Ch. 7, defendants' motion for reconsideration of decision invalidating debtor's transfer of property to self settled trust, on ground that there was no evidence of intent to defraud, denied; plaintiff's motion for reconsideration on solvency finding also denied (Bankruptcy Court, MacDonald).

Following a decision invalidating a transfer of property to a self-settled trust under 11 U.S.C. 548(e), both parties moved for reconsideration. Defendants' argument that debtor's mother had transferred the property was contradicted by the evidence. Debtor owned the parcel free and clear at time of the transfer. Notwithstanding AS 34.30.110(b)(1), court could consider trust's express purpose of protecting the property from creditors as evidence of fraudulent intent, and there was other evidence of an intent to defraud as well. Court declined to reconsider fraudulent intent finding. Plaintiff's motion to reconsider finding that debtor was solvent at time of transfer also denied. Court properly factored mother's promise to pay debtor $100,000 into solvency equation.

Battley v. Mortensen (In re Mortensen), 7/8/11.

Cabot Christianson (Christianson & Spraker), Anchorage, for Kenneth Battley, Trustee; David Bundy, Anchorage, for Mortensen, Mullins, and Mortensen-Beloud.

Menu    10 ABR 189: Ch. 7, debtor's post-discharge attempt to reimpose the automatic stay to defend against a partition action denied (Bankruptcy Court, Ross).

After her chapter 7 case was closed, the debtor filed a motion to reimpose the automatic stay in apparent attempt to derail a pending state court partition action filed by Harrison. Court found that there was no basis for re-imposing the stay. Even in an open case, party would have to file an adversary action for injunctive relief under 11 U.S.C. 105 to reimpose a stay. Based on sparse record before court, prosecution of partition case did not appear to violate discharge injunction because it was an in rem action. Discharge injunction only protected debtor from personal liability for discharged claims, not against in rem actions. Further, the fact that debtor scheduled a homestead exemption in subject property without objection from Harrison did not bar the partition action. Debtor's motion was denied.

In re Robinson, 7/11/2011.

Jeff Carney, Wasilla, for the debtor.

Menu    10 ABR 195: Ch. 7, defendant's motion for partial summary judgment based on collateral estoppel argument denied; plaintiff granted partial summary judgment that defendant's charges for services it rendered for the benefit of creditor Robert Kane provided no reasonably equivalent value to bankruptcy estate (Bankruptcy Court, MacDonald).

Parties agreed to a second round of summary judgment motions. Defendant sought summary judgement based on a collateral estoppel argument. It contended a settlement the plaintiff had reached with Richard Kane in earlier litigation barred any recovery of funds from it. Defendant had represented Kane in that litigation. Court found collateral estoppel did not apply. No issues were litigated in the prior action, which was dismissed after the settlement was approved. Further, the settlement agreement expressly preserved the plaintiff's claims as to all transferees of Security Aviation's funds except the Kanes. Defendant's motion denied and plaintiff's cross-motion that collateral estoppel did not bar its claims against defendant granted.

Plaintiff sought further partial summary judgment as to one point in his fraudulent transfer count. He argued that fees the defendant charged Kane for services unrelated to the earlier criminal trial did not provide reasonably equivalent value to the bankruptcy estate. The court agreed. The fees the defendant charged for representing Kane as a creditor in the Avery and Security Aviation bankruptcies did not benefit either estate. Partial summary judgment was granted to plaintiff on this issue, and additional damages of $8,731.15 were awarded on his fraudulent transfer count.

Barstow v. Ingaldson Maasen & Fitzgerald, P.C., 7/19/11.

Gary Spraker (Christianson & Spraker), Anchorage, for William M. Barstow, Trustee and Security Aviation, Inc.; Matthew Peterson (Clapp, Peterson, Tiemessen, Thorsness & Johnson, LLC), Anchorage, for Ingaldson Maasen & Fitzgerald, P.C.

Menu    10 ABR 207: Ch. 13, debtor's chapter 13 plan appeared to favor ACPE over other unsecured creditors; under-median debtor cannot unfairly discriminate against other classes of unsecured creditors; evidentiary hearing set to see if debtor satisfied Wolff factors (Bankruptcy Court, MacDonald).

Debtor's proposed chapter 13 plan projected a dividend of about 2.4% for unsecured claims. By stipulation, the debtor and student loan creditor ACPE agreed that ACPE would receive an additional $200 per month directly from the debtor in exchange for ACPE's agreement not to offset debtor's PFDs during the plan term. This treatment would result in ACPE receiving a dividend of about 48% on its unsecured claim. The trustee objected to the plan on the basis that it unfairly discriminated in favor of ACPE. Because the debtor was an under-median debtor, she had to satisfy the four-part test adopted by the BAP in In re Wolff before the favorable treatment to ACPE could be allowed. Court set an evidentiary hearing for this purpose.

In re Erickson, 7/21/11.

Chris Johansen, Anchorage, for the debtor; Larry Compton, Anchorage, Chapter 13 trustee.

Menu    10 ABR 209: Ch. 11, AFG's modified sixth amended chapter 11 plan designated classes of interests, amended its articles of incorporation appropriately, was proposed in good faith in accordance with state law, was feasible and met all cramdown criteria except for treatment of FNBA's litigation claim (Bankruptcy Court, MacDonald).

After court entered order confirming AFG's modified sixth amended plan, it issued a supplemental confirmation memorandum. Court found that prior confirmation issues were remedied by the modified sixth amended plan. The plan designated classes of interests and set forth their treatment. Plan satisfied good faith criteria and state law because real property held by a related entity, H&A, would pass to H&A's creditors rather than be used by AFG to fund its plan. The plan was feasible; AFG had presented persuasive evidence regarding the value of its real property holdings and its business plan. The debtor's expert, Kim Wold, was optimistic about the future of tourism in southeast Alaska. Credible evidence also indicated that the debtor's real estate holdings would appreciate substantially over the life of the plan so that, in the event refinancing was not viable, the debtor would have enough equity in its real property to satisfy all creditors within five years.

The interest rates chosen for major creditor FNBA were realistic. Court estimated FNBA's cost claim from state court litigation at $1.3 million for purposes of confirmation. However, the plan failed to provide for FNBA's cost claim liens in the event of sale. Because this did not conform to the cramdown provisions of the Code, AFG would have to modify the confirmed plan in this one aspect.

In re Alaska Fur Gallery, Inc., 7/29/11.

Cabot Christianson (Christianson & Spraker), Anchorage, for the debtor; Bruce Moore (DeLisio Moran Geraghty & Zobel, P.C.), for First National Bank Alaska.