The debtors were forced to shut down their chicken farm and file for Chapter 12 bankruptcy after their contract with a meat processor was terminated. After their plan was confirmed, the debtors received a grant from the USDA for $100,000 (due to the shutdown of their farming operation) and settlement proceeds from the meat processing company in the amount of $105,000. The debtors did not amend their bankruptcy Schedule B or seek a modification of the confirmation order. Instead, they spent both amounts. The trustee filed a motion to modify, alleging that the grant was a prepetition asset that should have been included in the “best interest of creditors” calculation. The trustee also requested that the debtors turn over the settlement proceeds pursuant to the confirmation order. The court granted the motion, recognizing that the debtors did incur certain expenses beyond their control, such as loss due to a former employee’s theft. The court found that the debtors were thus required to turn over $43,978 of the USDA grant and any additional restitution they received from the former employee. The court found that the debtors were required to turn over $75,000 of the settlement payment because they were required to pay the balance in taxes. In re Hudson, No. 3:09-bk-07857-JAF, 2014 Bankr. LEXIS 820 (Bankr. M.D. Fla. Feb. 28, 2014).
- Ag Docket