Protecting the Land, Livelihood and Homes for Three Generations of Farmers
We successfully concluded a bankruptcy proceeding after a 15-year-long battle that involved numerous related legal disputes for a family that had farmed the land for generations.
The trouble started in the 1970s when our clients took out United States Department of Agriculture (USDA) farm loans that were cross-collateralized against all of their homes and agricultural properties in Central California. With interest rates of 16%, our clients got behind in their payments. The USDA did not accept partial payoffs that would have helped lessen their financial burden. In 2007, the USDA commenced foreclosure proceedings against all of their properties, where three generations lived and worked.
In May 2007, we filed a Chapter 11 bankruptcy proceeding in the U.S. District Court for the Northern District of California to stop the foreclosures. While we challenged the USDA claim (worth over $15 million with interest), we marketed and sold a few of the lesser-used farm properties.
In 2013, we settled the USDA claim for $5.9 million, contingent on the immediate release of its liens on several of our clients’ properties, including their homes. Afterwards, our Chapter 11 plan was approved, whereby our clients would sell a 50-acre developable parcel to pay the USDA, or else the USDA could foreclose on all remaining properties. In 2014, we hired a broker, marketed the property, and chose a developer who would supposedly close escrow after obtaining entitlements in two years.
In 2014 and 2015, we filed and resolved an adversary proceeding in the U.S. Bankruptcy Court against an adjacent golf course owner to obtain access that was impliedly promised in a 1983 environmental impact report (EIR) for the golf course and separately owned residential development. Once that settled, an adjacent residential homeowner’s association (HOA) refused access to their roads, which led to a state court lawsuit between the developer, our clients, and the HOA. That case successfully resolved in 2021.
Throughout this process, we were challenged with title issues, ancient liens, sewer and water entitlements, soil placement licenses, a geologic hazard abatement district (GHAD) concern, multiple lot line adjustments, storm drainage easements, political opposition, etc. However, success was achieved in 2021 when the developer closed escrow for $7.4 million, enabling our clients to pay off the USDA and all other creditors.
We received a Final Decree and Discharge on August 23, 2022, and the case was dismissed on September 8. Our clients retain their homes, several farm properties, and a seven figure payment.