EDWARD J. COLEMAN, III, Bankruptcy Judge.
Pending before the Court is approval of the Disclosure Statement (dckt. 173) filed by the individual Chapter 11 debtors, Grant and Allisen Rogers (the "Debtors"). The Debtors are the sole members
This matter came before the Court on February 25, 2016 upon objections raised by the main creditor in this case, Belle Resources, Ltd. ("Belle"), which holds a first-in-priority lien on the Inn, and the United States Trustee ("UST"). Belle and the UST objected to the Disclosure Statement on several grounds, including violation of the absolute priority rule and the Debtors' valuation of their ownership interests in Wetdog at $-0-.
The principal issue before the Court is the Debtors' ability to confirm their Amended Plan of Reorganization filed on December 20, 2015 (the "Plan") (dckt. 172) by means of cramdown under 11 U.S.C. § 1129(b). Belle and the UST contend that the Debtors' Plan cannot be confirmed because it violates the absolute priority rule set forth in § 1129(b)(2)(B)(ii), and thus approval of the Disclosure Statement is inappropriate. In addition, Belle contends that if the Debtors seek to satisfy the "new value" exception to the absolute priority rule, the Court must hold an auction to determine the value of the Debtors' ownership interest in Wetdog. However, the Debtors argue that after BAPCPA
For the reasons set forth below, the Court holds that the absolute priority rule still applies to individual Chapter 11 cases post-BAPCPA. In addition, the Court holds that the "new value" exception to the absolute priority rule is also applicable in individual Chapter 11 cases. Because the Court finds that the Debtors' Plan, as proposed, violates the absolute priority rule, the Court will enter an order denying approval of the Disclosure Statement.
This Court has subject-matter jurisdiction pursuant to 28 U.S.C. § 1334(a), 28 U.S.C. § 157(a), and the Standing Order of Reference signed by then Chief Judge Anthony A. Alaimo on July 13, 1984. This is a "core proceeding" within the meaning of 28 U.S.C. § 157(b)(2)(L). In accordance with Bankruptcy Rule 7052, the Court makes the following findings of fact and conclusions of law.
Wetdog was established by the Debtors in September 2001 for the sole purpose of purchasing a bed and breakfast in Borrego Springs, California. In April 2006, Wetdog sold the California inn and used the proceeds to make a sizeable down payment on the purchase of the Foley House Inn (the "Inn"). Wetdog financed the remaining balance of the purchase price with a loan from the Sterling Bank. The loan is evidenced by a certain promissory note (the "Wetdog Note") dated September 15, 2006 in the original principal amount of $1,940,000.00. As collateral, Wetdog granted Sterling Bank a first-in-priority lien on the Inn and the Debtors both executed an unconditional personal guaranty. Wetdog also obtained a $1,361,000.00 loan from the Small Business Administration. To secure this loan, Wetdog executed a promissory note in favor of the SBA (the "SBA Note") and granted SBA a second-in-priority lien on the Inn. As additional collateral, the Debtors also personally guaranteed the SBA Note.
Beginning in 2012, Wetdog fell behind on its monthly payments required under the Wetdog Note. Accordingly, on March 26, 2013, Comerica Bank (as successor in interest to Sterling Bank) notified Wetdog that it was in default and demanded full repayment within ten days. On April 5, 2013, in response to Comerica's demand, Wetdog filed a voluntary Chapter 11 petition, designated as case number 13-40601-EJC. (Wetdog Dckt. 1).
Wetdog's two largest creditors, Belle
As a result of Wetdog's default on the Wetdog Note, the Debtors, as personal guarantors, became liable for the monthly payments. When the Debtors were unable to make such payments, Belle filed a state court lawsuit on November 21, 2013 against the Debtors in the District Court of Harris County (Texas) to recover the amounts owed on the Wetdog Note. On February 5, 2014, while the state court action was still pending, the Debtors filed for Chapter 13 bankruptcy protection
The Debtors Chapter 13 plan, as originally filed, proposed monthly payments of $1,350.00 for sixty months. (Dckt. 7). On March 24, 2014, the Debtors' largest creditor, Belle, filed its Objection to Confirmation of Chapter 13 Plan of Reorganization (dckt. 24), which raised a number of issues with the proposed plan but did not assert that the Debtors were ineligible for Chapter 13 relief. On April 8, 2014, the Debtors filed their Amended Chapter 13 Plan and Motion (dckt. 36), in which they added the following treatment of Belle's claim:
Id.
On April 11, 2014, O. Byron Meredith III, the Chapter 13 Trustee ("Chapter 13 Trustee") objected to the confirmation of the Debtors' plan. (Dckt. 41). The Chapter 13 Trustee's objection outlined the need for additional information, questioned the Debtors' calculation of disposable income, and asserted that the Debtors' non-exempt equity in various assets may require additional plan payments. Id. Like Belle's objection, the Chapter 13 Trustee's objection also did not assert that the Debtors were ineligible for Chapter 13 relief.
On May 2, 2014, Belle filed its Objection to Confirmation of Amended Chapter 13 Plan of Reorganization and Motion to Convert and/or Dismiss (dckt. 44). In this new objection, Belle did assert, as grounds for dismissal or conversion, the Debtors' ineligibility due to the debt limits of § 109(e). Id. At a June 17, 2014 confirmation hearing, the eligibility issue was argued at some length by the parties, and the Court took the matter under advisement. Before the Court ruled on the § 109(e) issue, on August 5, 2014, the Debtors moved to convert their case from Chapter 13 to Chapter 11. (Dckt. 63).
While in Chapter 11, the Debtors have continued to manage their property as debtors-in-possession pursuant to 11 U.S.C. §§ 1107(a) and 1108. The Debtors' principal asset is their 100% ownership interest in Wetdog, which the Debtors value at $0.00. In this case, the Debtors listed Belle as an unsecured creditor with a contingent, unliquidated, and disputed debt of $1,880,000.00. (Dckt. 1, p.23). However, Belle filed an unsecured claim in the amount of $2,058,945.19
On December 20, 2015, the Debtors filed their Disclosure Statement and Plan
On February 16, 2016, Belle filed its Objection to Disclosure Statement and Objection to Valuation of Assets of the Estate (dckt. 180). In its objection, Belle first argues that the liquidation analysis provided in the Debtors' Disclosure Statement is "incomplete, inadequate, and not instructive to the reader." Belle contends that the liquidation analysis does not provide any information regarding how the Debtors valued their personal property, including why the Wetdog ownership interest is valued at $0.00.
Second, Belle argues that the Debtors' Amended Plan cannot be confirmed, and thus the Disclosure Statement should not be approved. Belle contends that the Plan cannot be confirmed for the following reasons: 1) it is not "fair and equitable" as required by 11 U.S.C. § 1129(b)(1) because it violates the absolute priority rule; 2) it fails the best interests test under § 1129(a)(7); 3) it does not provide that the Debtors will pay all of their earnings into the plan as required by § 1129(a)(15); and 4) it lacks good faith under § 1129(a)(3).
Last, Belle argues that the Disclosure Statement provides a grossly inaccurate valuation of the Debtors' Wetdog interest. Belle contends that the Debtors' ownership interest in Wetdog is worth at least $150,000.00, based upon the following offer presented to the Debtors by Belle's counsel on January 19, 2016:
(Dckt. 194-1, p. 1).
On February 18, 2016, the UST filed its Objection to Disclosure Statement and Plan Confirmation (dckt. 181). The Trustee argues that the Debtors' Plan is not confirmable, and thus disapproval of the Disclosure Statement is appropriate, because the Plan violates the absolute priority rule and fails the best interests test under 11 U.S.C. § 1129(a)(7). In addition, the UST objected to approval of the Disclosure Statement because it fails to contain adequate information, including: no financial performance data for 2015, no notification to creditors of the rights under 11 U.S.C. § 1129(a)(15), and no report regarding the Debtors' investigation into potential avoidance actions.
On February 25, 2016, the Court held a preliminary hearing on the approval of the Debtors' Disclosure Statement. At the hearing, the Court heard arguments regarding all of the objections raised by Belle and the UST. The Debtors agreed to provide additional information to satisfy any concerns regarding the Disclosure Statement's lack of adequate information. However, the parties were unable to agree on Belle and UST's objections relating to the Plan's violation of the absolute priority rule and the Debtors' valuation of their ownership interest in Wetdog. The Debtors urged that BAPCPA eliminated the absolute priority rule in individual Chapter 11 cases. Belle and the UST, on the other hand, argued that the absolute priority rule still applies post-BAPCPA. With regard to valuation, Belle urged that the Court should use an auction process to determine the value of the Debtors' ownership interest in Wetdog. On the other hand, the Debtors argued that the submission of evidence, likely in the form of expert testimony, would be adequate. At the conclusion of the hearing, the Court requested briefs on two issues: 1) whether the absolute priority rule, after BAPCPA, still applies in individual Chapter 11 cases; and 2) whether the Court may, or must, allow an auction of the Wetdog interest to determine its value. All parties filed briefs supporting their positions on these issues.
For the reasons set forth below, the Court first finds that BAPCPA did not eliminate the absolute priority rule in individual Chapter 11 cases. In addition, the Court finds that the "new value exception" to the absolute priority rule is applicable in individual Chapter 11 cases. As proposed, the Debtors' Plan is in violation of the absolute priority rule and does not propose to offer any "new value." However, the Court will allow the Debtors an opportunity to further amend their Disclosure Statement and Plan to either conform to the absolute priority rule or satisfy the "new value exception." As will be explained, the value of the Debtors' non-exempt property will need to be determined in order for the Court to rule on whether any proposed amendment to the Plan meets the "new value" exception. In order to make this determination, the Court will hold a valuation hearing to allow the parties to present evidence, presumably through expert testimony, of the value of the Debtors' non-exempt property. With regard to the valuation of the Debtors' ownership interest in Wetdog
In order to obtain confirmation of a Chapter 11 plan, a debtor must meet the requirements enumerated in 11 U.S.C. § 1129(a)(1)-(16). One of those subsections, § 1129(a)(8), requires that all impaired classes under the plan must vote in favor of and accept the plan. However, under § 1129(b), "if all of the applicable requirements of [§ 1129(a)] other than [§ 1129(a)(8)] are met" the Court may still confirm the plan over the objection of an impaired creditor if it is "fair and equitable." 11 U.S.C. § 1129(b).
First, a debtor may cram down a class of unsecured creditors if the plan provides that such creditors will receive "property of a value, as of the effective date of the plan, equal to the allowed amount[s] of [their] claim[s]." 11 U.S.C. § 1129(b)(2)(B)(i). Second, a debtor may cram down a class of unsecured creditors if the plan satisfies the "absolute priority rule" set forth in 11 U.S.C. § 1129(b)(2)(B)(ii). The absolute priority rule generally provides that every unsecured creditor in a dissenting impaired class must be paid in full before the debtor, who is an individual, is permitted to retain "any property" under the plan. 11 U.S.C. § 1129(b)(2)(B)(ii). Belle argues that the Debtors' Plan is not "fair and equitable" because it violates the absolute priority rule.
The absolute priority rule originated as a judicially created doctrine emerging out of the realm of corporate, as opposed to individual, bankruptcy cases. Friedman v. P+P, LLC (In re Friedman), 466 B.R. 471 (9 Cir. B.A.P. 2012). This doctrine was first developed by the Supreme Court in the late nineteenth-century in response to widespread collusion in the context of railroad reorganizations. To prevent unfair deals between senior creditors and equity holders, the Court held that "stockholders are not entitled to any share of the capital stock nor to any dividend of the profits until all the debts of the corporation are paid." Chi., Rock Island & Pac. R.R. v. Howard, 74 U.S. 392, 409-10 (1868).
The absolute priority rule evolved beyond a judicially created doctrine when Congress codified it as part of the Bankruptcy Code in 1978. See 11 U.S.C. § 1129(b)(2)(B)(ii) (1978). As the absolute priority rule continued to evolve after enactment of the code, issues surrounding the rule and its application to particular cases gradually reached the Supreme Court. In 1988, the Supreme Court unanimously held that the absolute priority rule applied in individual Chapter 11 cases. Norwest Bank Worthington v. Ahlers, 485 U.S. 197 (1988). With the enactment of BAPCPA in 2005, some courts questioned whether the absolute priority rule was still applicable in individual Chapter 11 cases.
As part of the BAPCPA amendments, language was added to § 1129(b) with regard to the application of the absolute priority rule in individual Chapter 11 cases. Specifically, § 1129(b)(2)(B)(ii) was amended as follows:
11 U.S.C. § 1129(b)(2)(B)(ii) (2005 amendment emphasized). Section 1115 itself was added to the Bankruptcy Code by BAPCPA, and provides:
11 U.S.C. § 1115.
Due to varying interpretations of these changes brought about by BAPCPA, a significant split of authorities has developed regarding the effect of these amendments on the absolute priority rule when the Chapter 11 debtor is an individual. In re Maharaj, 681 F.3d 558, 563 (4th Cir. 2012). The split of authorities involves two different interpretations, commonly referred to as the "broad" and "narrow" views. Courts adopting the "broad view" interpret the added language in § 1129(b)(2)(B)(ii) and the newly added § 1115 to mean that a Chapter 11 debtor who proposes not to pay a rejecting class of unsecured creditors in full may nonetheless retain all of the debtor's non-exempt, pre-petition property as well as all post-petition property and earnings and still obtain plan confirmation.
Some "broad view" courts have reasoned that the plain language of §§ 1129(b)(2)(B)(ii) and 1115 eliminates the absolute priority rule as to an individual debtor's entire estate. In re Shat, 424 B.R. 854 (Bankr.D.Nev.2010); SPCP Group, LLC v. Biggins, 465 B.R. 316 (M.D.Fla.2011); In re Tegeder, 369 B.R. 477 (Bankr.D.Neb.2007). These courts hold that when § 1129(b)(2)(B)(ii) references the property "included by" § 1115, it "refer[s] to all property Section 1115 itself references." Shat, 424 B.R. at 863. In turn, these courts read § 1115 broadly, finding that an individual debtor's estate under § 1115 includes post-petition property and earnings in addition to the pre-petition property already established by § 541. Tegeder, 369 B.R. at 480. Section 1115 thus absorbs § 541 for individual Chapter 11 cases. Therefore, the absolute priority rule no longer applies to any property of an individual debtor's estate.
Other "broad view" courts have recognized the ambiguity of the language in §§ 1129(b)(2)(B)(ii) and 1115, but conclude that Congress intended for the BAPCPA amendments to allow individual Chapter 11 debtors to retain non-exempt, pre-petition property as well as all post-petition property and earnings, and still obtain plan confirmation. Roedemeier, 374 B.R. 264; In re O'Neal, 490 B.R. 837 (Bankr. W.D. Ark. 2013). The Roedemeier court reasoned that several other BAPCPA amendments to Chapter 11 demonstrate that Congress intended Chapter 11 procedures concerning individual debtors to function more like those found in Chapter 13. See 374 B.R. at 275-76. Accordingly, in its view, the Roedemeier court felt that eliminating the absolute priority rule for individual debtors would be consistent with the perceived Congressional intent to harmonize the treatment of the individual debtor under Chapter 11 with those under Chapter 13, which has no absolute priority rule. Id.
Like some "broad view" courts, a number of courts adopting the "narrow view" have also found the language of §§ 1129(b)(2)(B)(ii) and 1115 to be unambiguous. In re Draiman, 450 B.R. 777 (Bankr. N.D. Ill. 2011); In re Gbadebo, 431 B.R. 222 (Bankr. N.D. Cal. 2010); In re Steedley, No. 09-50654, 2010 WL 3528599, at *2 (Bankr.S.D.Ga. Aug. 27, 2010). However, they reach a starkly different conclusion regarding the "plain" meaning of these code sections. In contrast to the "broad view," these courts hold that § 1115 merely adds to, but does not replace, § 541's definition of estate property for individual debtors. Stephens, 704 F.3d at 1285. Section 1115 "includes" in the estate only that property which was not already included by § 541. Gbadebo, 431 B.R. at 229. In other words, § 1115 includes only post-petition property and earnings. Draiman, 450 B.R. at 821. Accordingly, these "narrow view" courts hold, based on the plain language of § 1129(b)(2)(B)(ii), that the absolute priority rule still applies to § 541's pre-petition property, but an individual debtor's post-petition property and earnings that are added by § 1115 are exempt. Stephens, 704 F.3d at 1285.
Other "narrow view" courts find the language of §§ 1129(b)(2)(B)(ii) and 1115 to be ambiguous, but nonetheless hold that if Congress intended to abrogate the absolute priority rule it would have more straight-forwardly expressed such an intention. See In re Martin, 497 B.R. 349 (Bankr. M.D. Fla. 2013); In re Lindsey, 453 B.R. 886 (Bankr. E.D. Tenn. 2011); In re Kamell, 451 B.R. 505 (Bankr. C.D. Cal. 2011). In particular, the Martin court reasoned:
497 B.R. at 357. See also, Lively, 717 F.3d at 409 ("narrow view" prevails because the opposite interpretation leads to a repeal by implication of the absolute priority rule for individual debtors).
This Court is persuaded that the decisions adopting the "narrow view" of § 1129(b)(2)(B)(ii) are better reasoned. While it may not be susceptible to a "plain" meaning interpretation, I find the most natural reading of the operative terms in §§ 1129(b)(2)(B)(ii) and 1115 to create only a limited exception to the absolute priority rule for individual Chapter 11 debtors. Further, I agree that "if Congress had intended to abrogate the absolute priority rule, it would have done so in a far less convoluted way, particularly in light of the well-established place of the absolute priority rule in bankruptcy jurisprudence." Maharaj, 681 F.3d at 565-66. Accordingly, this Court finds that the absolute priority rule still applies in individual Chapter 11 cases.
In this case, the Debtors' Plan proposes to allow the Debtors to retain their non-exempt, pre-petition property upon confirmation. Further, the Plan proposes to pay only 25% of their general, unsecured creditors' allowed claims, excluding the unsecured claims held by Belle and SBA, who will not receive anything. Therefore, the Debtors' Plan violates the absolute priority rule because it proposes to allow the Debtors to retain property of the estate that is not included in § 1115 without paying unsecured creditors in full.
Since the Plan violates the absolute priority rule, it would be appropriate for this Court to deny approval of the Debtors' Disclosure Statement. In re Gosman, 282 B.R. 45, 53 (Bankr. S.D. Fla. 2002) (denying approval of the disclosure statement because the proposed plan is not confirmable because it violates the absolute priority rule). However, courts have recognized that a plan which violates the absolute priority rule may nonetheless be confirmed if the debtor can demonstrate such plan satisfies the so-called "new value exception" or "new value corollary" to the absolute priority rule. See In re Lee Min Ho Chen, 482 B.R. 473 (Bankr. D. P.R. 2012).
In 1939, the Supreme Court espoused, in dicta, an exception to the absolute priority rule, the so-called "new value" exception. Case v. Los Angeles Lumber Products Co., 308 U.S. 106 (1939). In Los Angeles Lumber, the Supreme Court recognized that "there are circumstances under which stockholders may participate in a plan of reorganization of an insolvent debtor." 308 U.S. at 121. The circumstances justifying owner participation (even where the dissenting unsecured creditor class is not paid in full) included the "necessity" of a fresh contribution of capital to ensure the success of the debtor's bankruptcy. Id. Further, the Court stated that the owner's participation "must be based on a contribution in money or money's worth, reasonably equivalent in view of all the circumstances to the participation of the stockholder." Los Angeles Lumber, 308 U.S. at 121-22.
Although the "new value" exception was developed with the corporate debtor in mind, it has since been utilized for all forms of debtor entities. In the reorganization of a business, the "new value" exception "allows old equity to succeed in keeping hold of the corporation, partnership, LLC or presumably, the sole proprietorship." In re Henderson, 321 B.R. 550 (Bankr. M.D. Fla. 2005). These kinds of equity security holders, by providing new value in the form of money or money's worth, necessary for the Debtor to survive, and reasonably equivalent to the participation of the equity security holder's interest in the venture, may retain an interest therein. Id.
Further, courts have applied the "new value" exception to individual Chapter 11 cases, albeit somewhat inconsistently.
This Court agrees that the "new value" exception is applicable in individual Chapter 11 cases. However, as other courts have recognized, it is not an easy task for an individual debtor to satisfy the exception because the new value must typically come from a source other than the debtor.
Although it may be the rare case in which an individual Chapter 11 debtor will meet the requirements of the "new value" exception, the Court finds no reason why the Debtors should not be given the opportunity to do so. However, to apply the "new value" exception the Court must determine the value of the non-exempt property that the Debtors propose to retain. Once the value of the Debtors' non-exempt property is determined, the Debtors may file an amended disclosure statement and plan of reorganization in an effort to meet the "new value" exception.
There are no clear guidelines for determining if a debtor's contribution for purposes of the "new value exception" is reasonably equivalent to the value of the interest to be retained. "The determination is factually intense and must be made on a case-by-case basis."
Belle argues that the Supreme Court's holding in Bank of Am. Nat'l Trust & Sav. Ass'n v. 203 N. LaSalle St. P'ship requires an auction process to be implemented to establish value for purposes of the absolute priority rule. LaSalle, 526 U.S. 434. In LaSalle, certain former partners of the debtor, pursuant to its Chapter 11 plan, were to contribute new capital to the debtor over a five year period in exchange for entire ownership of the newly reorganized debtor. Only old equity holders were permitted to contribute this new capital. The bank, as the sole member of an impaired class of creditors, objected to the plan, and debtor sought to cramdown the plan.
In order to satisfy the "new value" exception, the Court found that it was necessary for the old equity holders to demonstrate that they were paying the full value of their equity interest. Id. at 457. The Court opined that the best way to determine the "top dollar" value of such equity interest is exposure to a market. Id. Because the debtor's plan failed to provide for a market valuation of its equity interests, the Court concluded that the new value proposed by the old equity holders was insufficient.
Id. at 458.
This Court declines to extend the competitive bidding requirement of LaSalle to this case. As stated previously, LaSalle involved a debtor partnership's attempt to utilize the "new value exception" by proposing a plan which granted new equity in the reorganized debtor to its old equity holders in exchange for a contribution of new capital. The facts of this case are distinguishable. In this individual Chapter 11 case there are not, and cannot be, equity interests in the Debtors. Accordingly, unlike LaSalle, the Debtors are not proposing to grant an equity interest in themselves to a non-debtor party. Rather, the Debtors are proposing to retain pre-petition property, namely their ownership interest in Wetdog, that was not excluded from the absolute priority rule by 11 U.S.C. § 1129(b)(2)(B)(ii).
This Court finds it unlikely that the Supreme Court would require a competitive bidding process every time an individual Chapter 11 debtor attempt to retain non-exempt property by means of the "new value exception." For example, it would be extremely burdensome and unnecessary to hold a competitive bidding process to determine the value of a pre-petition vehicle proposed to be retained by the Debtor in a Chapter 11 plan when the value of such vehicle can be easily and reliably obtained through the introduction of evidence. More importantly, if an auction is used to prove the value of the asset to be retained, the asset will be conveyed away to a third party (unless the debtor is the successful bidder) without the debtor having an opportunity to propose another plan provision to address such valuation. That is particularly troubling here since the Debtors' ownership of Wetdog is their primary source of income. Once that asset is auctioned off, the likelihood of a successful reorganization in this case is diminished.
As explained above, this Court believes that the competitive bidding requirement set forth in LaSalle does not extend to the facts of this case. Even if the Court were to find that some form of market valuation must be available to test the adequacy of the Debtors' proposed new value contribution, Belle has had (and still has) ample opportunity to file a competing plan in this case.
This Court concludes that the 2005 amendment to § 1129(b)(2)(B)(ii) and the addition of § 1115 did not eliminate the absolute priority rule in individual Chapter 11 cases. Instead, these BAPCPA amendments created only a limited exception to the absolute priority rule. That is, an individual Chapter 11 debtor who propose to cram down dissenting unsecured creditors may retain only the post-petition property and earnings referred to in § 1115. However, the Court also finds that the "new value" exception to the absolute priority rule is applicable in individual Chapter 11 cases. Accordingly, an individual Chapter 11 debtor may retain non-exempt, pre-petition property that is not excluded from the absolute priority rule by § 1129(b)(2)(B)(ii) if he is able to inject sufficient new value into the plan to match or exceed the value of the non-exempt property proposed to be retained. Further, this proposed new value must be in the form of money or money's worth and from an "outside" source, unless exempt property is contributed for this purpose.
As proposed, the Debtors' Plan violates the absolute priority rule because it allows the Debtors to retain their non-exempt, pre-petition property without paying unsecured creditors in full. Accordingly, the Debtors' Plan is not confirmable, and the Court will enter an order denying approval of the Disclosure Statement. However, the Debtors may amend their Disclosure Statement and Plan in an effort to meet the "new value" exception, or otherwise satisfy the absolute priority rule.
As previously mentioned, while this matter was under advisement, the Debtors filed a Second Amended Disclosure Statement and Amended Plan, which appears to attempt to provide "new value" of $125,000.00 in the form of a loan from a relative. However, the Court will not take up approval of the Second Amended Disclosure Statement, or any further amendments, until this Court determines the value of the Debtors' non-exempt property. In order to make such a determination, the Court will hold a valuation hearing to allow the parties to submit evidence regarding the value of the Debtors' non-exempt property, including the Debtors' ownership interest in Wetdog.
A separate order will be entered contemporaneously with this Opinion.