In re Orlando Trout Creek Ranch

MEMORANDUM OF DECISION ON MOTIONS FOR USE OF CASH COLLATERAL, RELIEF FROM AUTOMATIC STAY, AND LOST OPPORTUNITY PAYMENTS

FACTS

The debtor operates a large “cow-calf” cattle business. It filed its Chapter 11 petition on December 3, 1986. The principal creditor in the case is San Luis Obispo Production Credit Association (“PCA”), which was owed approximately $3.1 million on the petition date, secured by the debt- or’s cattle herd and other assets. It appears to be undisputed that in May, 1986, PCA demanded that the debtor either infuse new capital into its operation or liquidate the herd. In October, 1986, PCA filed suit to foreclose on its collateral; the debt- or filed its Chapter 11 petition a few weeks later.

The debtor has made payments to PCA totalling $530,000.00 since the filing date, so that the balance owing to PCA, excluding interest and costs (which do not appear allowable as a secured claim under section 506(b) of the Bankruptcy Code) is presently about $2.6 million.

The debt to PCA is secured by two deeds of trust to real property and security interests in the debtor’s farm equipment, crops, and cattle. After a hearing at which testimony was heard, the court…