Priority-stripping provision of BAPCPA applied in connection with sale of Chapter 12 debtors’ slaughter hogs.
on July 14th, 2008Slaughter hogs that Chapter 12 debtors sold in order to convert their farrow-to-finish hog operation into a reorganized custom hog-raising operation under their plan, because a third party that had agreed to provide them with baby pigs to raise would not provide the pigs until the debtors liquidated their existing stock, qualified as “farm assets used in the debtors’ farming operation,” within the meaning of a provision added to Chapter 12 by the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA) to allow the debtor to treat, as unsecured debt dischargeable in a Chapter 12 case, any debt owed to a governmental unit that “arises as a result of the sale, transfer, exchange, or other disposition of any farm asset used in the debtor’s farming operation.” The phrase “used in” did not have to be accorded the same meaning as comparable language found in a provision of the Internal Revenue Code, and would not be interpreted, in accordance with this provision of the Internal Revenue Code, as limiting the antecedent term “farm assets” to what were essentially capital assets of the farming operation, as opposed to products or inventory, given that the Bankruptcy Code provision at issue was not a tax provision, but a priority-stripping provision, that was not restricted in its operation just to tax claims.
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