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possibly attain after confirmation."95 As implied by these standards, many courts have recognized that the feasibility test imposes a "relatively low threshold of proof,"96 and is not a "rigorous" standard.97 The feasibility determination is factual. The Bankruptcy Court's factual determination will be affirmed unless clearly erroneous.98
"The following factors are relevant to such a finding: (l) the adequacy of the capital structure; (2) the earning power of the business; (3) economic conditions; (4) the ability of management; (5) the probability of the continuation of the same management; and (6) any other related matter which determines the prospects of a sufficiently successful operation to enable performance of the provisions of the plan."99 Perhaps one of the most common feasibility arguments is the question of whether future financing, such as to make a balloon payment called for by the plan, must be presently assured.100 Another common feasibility argument arises from the length of the promised payout, with longer payment terms being increasingly difficult to support with a feasibility analysis.101 This is addressed in greater detail in Part IV, "Cram Down of Secured Claims." Plans that rely on proceeds to be generated from the debtor's litigation are often found not to be feasible.102
95
Pizza of Hawaii, Inc. v. Shakey's, Inc. (Matter of Pizza of Hawaii, Inc.), 761 F.2d 1374, 1382 (9th Cir. 1985).
96
In re Eddington Thread Manufacturing Co., Inc., 181 B.R. 826 (Bankr. E.D. Pa. 1995), appeal dismissed as moot, 189 B.R. 898 (E.D. Pa. 1995).
97
In re Creekstone Apartments Associates, L.P., 1995 Bankr. LEXIS 552 (Bankr. M.D. Tenn. 1995), aff'd, 1995 U.S. Dist. LEXIS 14876 (M.D. Tenn. 1995).
98
Kane v. Johns-Manville Corp., 843 F.2d at 650; Teamsters National Freight Ind. Negot. Comm. v.
U.S. Truck Co., Inc. (In re U.S. Truck Co. Inc.), 800 F.2d 581, 589 (6th Cir. 1986); In re Monnier Bros., 755 F.2d at 1341; Matter of Pizza of Hawaii, Inc., 761 F.2d at 1377.
99
Teamsters National Freight Ind. Negot. Comm. v. U.S. Truck Co., Inc. (In re U.S. Truck Co. Inc.), 800 F.2d 581, 589 (6th Cir. 1986); In re Kovalchick, 1995 Bankr. LEXIS 296 (Bankr. E.D. Pa. 1995)(not for publication, but providing a good summary of feasibility standards as articulated by the case law); In re Creekstone Apartments Associates, L.P., 1995 Bankr. LEXIS 552 (Bankr. M.D. Tenn. 1995), aff'd, 1995 U.S. Dist. LEXIS 14876 (M.D. Tenn. 1995).; In re Mayer Pollock Steel Corporation, 174 B.R. 414 (Bankr. E.D. Pa. 1994)(noting feasibility analysis may differ in the context of a "real" business with real jobs at stake and real asset production, as compared to the single asset cases).
100
In re Eddington Thread Manufacturing Co., Inc., 181 B.R. 826 (Bankr. E.D. Pa. 1995), appeal dismissed as moot, 189 B.R. 898 (E.D. Pa. 1995).
101
In re Kovalchick, 1995 Bankr. LEXIS 296 (Bankr. E.D. Pa. 1995)(not for publication, but providing a good summary of feasibility versus payment term, and rejecting a 30 year term as not feasible).
102
In re Lakewood Partners, 1994 Bankr. LEXIS 1291 (Bankr. E.D. Pa. 1994).
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