Norwest Bank Worthington, et al. v. James R. Ahlers et Ux. (485 U.S. 197)
U.S. Supreme Court · decided March 7, 1988 · Supreme Court Database (Spaeth)
- Citation
- 485 U.S. 197 · 108 S. Ct. 963
- Decided
- March 7, 1988
- Term
- October Term 1987
- Vote
- 8–0
- Majority author
- Justice White
- Issue area
- Economic Activity
- Disposition
- Reversed and remanded
- Outcome
- Petitioning party won
- Ideological direction
- Conservative
Opinion excerpt
Justice White delivered the opinion of the Court. In this case, the Court of Appeals found that respondents’ promise of future “labor, experience, and expertise” permitted confirmation of their Chapter 11 reorganization plan over the objections of their creditors, even though the plan violated the “absolute priority rule” of the Bankruptcy Code. Because we find this conclusion at odds with the Code and our cases, we reverse. I — I Respondents operate a failing family farm in Nobles County, Minnesota. Between 1965 and 1984 they obtained loans from petitioners, securing the loans with their farmland, machinery, crops, livestock, and farm proceeds. In November 1984, respondents defaulted on their loan payments to petitioner Norwest Bank Worthington; at the time, the aggregate loan balance owed the petitioners exceeded $1 million. Following the default, Norwest filed a replevin action in Minnesota state court seeking possession of the farm equipment respondents had pledged as security. However, two weeks later respondents obtained an automatic stay of the replevin proceedings, when they filed a petition for reorganization under Chapter 11 of the Bankruptcy Code. See 11 U. S. C. § 362(a) (1982 ed. and Supp. IV). Petitioners filed motions in the Bankruptcy Court for relief from the automatic stay. 11 U. S. C. § 362(d) (1982 ed., Supp. IV). After decisions by the Bankruptcy and the…
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