Bracewell v. Kelley, No. 05-11951 (11th Cir. June 30, 2006). Debtor filed a Chapter 12 petition on May 29, 2002, and he converted to a Chapter 7 on January 2, 2003. After the conversion date, Congress passed the Agricultural Assistance Act of 2003, which provided for monetary assistance to farmers who had suffered crop losses in 2001 or 2002 due to weather related disasters or other emergency conditions. In January 2004, the debtor applied for a payment as a result of losses he suffered in 2001. He subsequently received a payment of $41,566 and the trustee claimed the payment should be property of the estate. The Bankruptcy Court held the payments were estate property pursuant to §541(a)(1), and the District Court held the payment was not property of the estate.
The Eleventh Circuit affirmed. Pursuant to §1207(a)(1), the estate includes property acquired by a Chapter 12 debtor after the filing of the Chapter 12 petition, up to the date the case is closed, dismissed or converted. However, the legislation authorizing the payment was not passed until after the case was converted, and therefore, not until the enactment did the debtor’s hope for payment become an interest cognizable under §541(a)(1).
Note that the bulk of the opinion is a response to the dissent, wherein Justice Pryor believed the payment was property of the estate either because it as a contingent interest in disaster relief created by a reduced yield, or proceeds from property of the estate.