DocketNumber: No. 10-42617-MSH
Citation Numbers: 475 B.R. 299
Judges: Hoffman
Filed Date: 7/20/2012
Status: Precedential
Modified Date: 11/22/2022
This matter came before me for hearing on the chapter 11 trustee’s motion to convert this case from chapter 11 to chapter 7 on the grounds that the debtor has no business to reorganize and that the principals of the debtor have hindered and interfered with the trustee’s performance of his duties. Helen Tashjian and Robert Tashjian, the debtor’s principals, objected to conversion.
The assertion that § 1112(c) applies in this case is based on the following statements in the Tashjians’ opposition to the motion to convert:
“In addition to being a veterinarian, no one can challenge my capabilities and credentials of being a farmer.
1. I have lived my life on Maiden Brook Farm. The farm excelled in many ways including having an outstanding nationally recognized herd of Ayshire dairy cattle.
*302 2. I worked the fields in the market gardening programs which included high quality fruits and vegetables. While I was the Director of the Animal Center in New York City, III was also responsible for the agricultural and EIA programs on Duke Farms, Somerville, New Jersey. I had a total staff responsibility between the Animal Medical Center, New York City, and Duke Farms of approximately 500 staff.
3. At Duke Farms in Somerville, New Jersey, I had the Administrative [sic] responsibility over about 300 purebred dairy cows, 100 horses, and a large grain crop program of corn, soybeans, and rice, harvesting about 70,000 bales of hay annually on the 3000 acre estate and farm.
4. Later at Maiden Brook Farm, I was instrumental in adding the 405 and 152 Prospect Street units in addition to the 77 Lee Street unit to the base 378 Prospect Street unit of Maiden Brook Farm. The base unit was established in 1894.
5. Under my direction, Maiden Brook Farm received recognition in the year 2000 as a Century Massachusetts Family Farm by the MDAR.[2 ]
6. I founded the American Veterinary Medical Frontiers, Inc., a 501(c)(3) public operating foundation as the organization to continue the mission of a Century Family Farm in these critical times with a vision and immortality for decades to come. I have lived and seen agriculture on New England farms dating back to pre World War II, and then past World War II to the present time.
7. It is an absolute disgrace that [the chapter 11 trustee] sold the Century Family Farm to a Police Chief of very little knowledge of agriculture. The MDAR chose to break up the farm units of a Century Family Farm.
8. I have a strong feeling and love for all animals and the land and the environment on which these domestic and wildlife can live together in peace.... ”
While Dr. Tashjian’s resume is indeed impressive, the difficulty with the foregoing statements is that they speak to Dr. Tashjian’s prior experience and to a farm called Maiden Brook Farm. They fail to address the issue of whether the debtor, Maiden Brook Farms LLC, is or was on the petition date a farm or a corporation that is not a moneyed, business or commercial entity.
Shortly after the chapter 11 case was commenced on May 24, 2010 to avoid an imminent foreclosure sale, the debtor filed a motion to reject the purchase and sale agreement that Dr. Robert Tashjian had executed on behalf of the debtor to sell certain real estate to Dennis Minnich, the police chief for the Town of West Boylston, Massachusetts.
The debtor’s schedule of assets and liabilities, signed under penalty of perjury by Dr. Tashjian, lists several parcels of real estate which the debtor valued at $4,148,700. Schedule B, however, lists no personalty. The box labeled “none” is checked for the following types of personal property specifically itemized on schedule B: 31 (“Animals”), 32 (“Crops-growing or harvested”), 33 (“Farming equipment and implements”) and 34 (“Farm supplies, chemicals, and feed”). It is hard to imagine how the debtor could function as a farming operation without owning at least some of these items. A page entitled “Business Income and Expenses” lists the debtor’s income for the twelve months pri- or to its bankruptcy filing as $0.00. According to that same statement, the debtor had no employees and no expenses. The statement of financial affairs confirms that the debtor had no income for 2008, 2009 and 2010.
On or about June 5, 2012 Dr. Tash-jian filed an affidavit in support of his attempt to obtain an order vacating the sale of the debtor’s property. Although the recitation of the facts in the affidavit is far from clear, the affidavit indicates, as do other pleadings filed by Dr. Tashjian, that he is or hopes to be involved in research regarding certain equine illnesses and vaccines and that at some point horses were kept at the debtor’s property. Veterinary or medical research is not farming activity and in any event is not the debtor’s activity. Nor is the fact that horses have been kept on the property farming activity. In re Poe, 2009 WL 2357160 (Bankr.N.D.W.Va. July 29, 2009) (boarding and training horses is not farming operation). I note that some of the land is occupied with personal residences and offices of Dr. Tashjian’s other ventures. Under a totality of the circumstances approach, which courts have employed in determining whether a debtor is engaged in a farming operation, In re Wolline, 74 B.R. 208 (Bankr.E.D.Wis.1987), I find that the debt- or is not engaged in farming operations within the meaning of the Bankruptcy Code.
Finally, as Dr. Tashjian has noted in several pleadings, it is American Veterinary Medical Frontiers, Inc. which is a charitable corporation with tax exempt status under 26 U.S.C. § 501(c)(3). There is nothing in the record to indicate that the debtor is recognized by the Internal Revenue Service or any other authority as a charitable entity. Dr. Tashjian’s argument that the debtor is not a moneyed corporation exhibits a misunderstanding of the term. While the debtor may indeed have no source of income and no assets beyond the real estate, the fact that the debtor has no money is not determinative of whether it is not a moneyed corporation. Instead “the test for whether a debtor is a moneyed, business, or commercial corporation is determined by a consideration of ‘the classification of the corporation by the state; the powers conferred upon it; and the character and extent of its main activities.’ ” Yehud-Monosson USA v. Fokkena (In re Yehud-Monosson USA, Inc.), 458 B.R. 750, 755 (8th Cir. BAP 2011) (quoting Missco Homestead Ass’n v. U.S., 185 F.2d 280, 282 (8th Cir.1950), which interpreted the identical language in the Bankruptcy Act of 1898). Under this test the debtor does not qualify as a non-moneyed company.
. The opposition is signed by both Robert Tashjian and Helen Tashjian as “co-managers” and “equity shareholders” of the debtor. It appears, however, that Robert Tashjian, who is not an attorney, drafted the pleading and I understand the use of the pronoun "I” in the pleading to refer to Robert Tashjian and not his sister, Helen.
. I understand “MDAR” to be a reference to the Massachusetts Department of Agricultural Resources.
. The debtor is a limited liability company and thus falls within the definition of a corporation for purposes of § 1112(c).
.I may take judicial notice of the docket and pleadings in this case.