In Re Jimmie Lee Johnston Ferol Johnston, Debtors. Jimmie Lee Johnston Ferol Johnston v. Greg K. Webster, Chapter 11 Trustee

Chapter 11 debtors Jimmie Lee and Ferol Johnston appeal the decision of the Bankruptcy Appellate Panel affirming the bankruptcy court’s order authorizing the Chapter 11 Trustee to abandon a large residential property known as El Granada. The John-stons argue that abandonment was improper because El Granada was subject to imminent foreclosure and because the intent of the abandonment was to shift the resulting taxable gain from the bankruptcy estate to the Johnstons. We hold that property which is of inconsequential value and benefit to the estate may be abandoned under § 554(a) of the Bankruptcy Code, 11 U.S.C. § 554 (a), whether or not it shifts tax consequences to the debtor. We have jurisdiction, 28 U.S.C. § 158 (d), and we affirm.

I

The Johnstons filed a Chapter 11 petition in November, 1989. The principal asset of the estate was El Granada, a 497-acre parcel in Half Moon Bay containing a 24,000 square foot residence. The value of El Granada was estimated at $16 to $17 million when the petition was filed. However, the property, was encumbered by a number of security interests, including a first deed of trust in favor of Imperial Federal Savings Association in the amount of…