Secured creditor asserted a security interest in debtors' postpetition accounts receivable, based on both its prepetition security interest in debtors' inventory and a previous court order allowing debtors' use of cash collateral upon certain conditions. The court ruled that its cash collateral order had not granted creditor a security interest in postpetition accounts receivable, and that creditor's lien only extended to postpetition accounts receivable that were proceeds from sale of prepetition inventory. Specifically, creditor's lien did not extend to proceeds from sales of inventory that debtors had acquired postpetition.

Chapter 7 trustee moved the court for a change of venue based on the interests of justice and the convenience of the parties. The court held that the party seeking to change venue bears the burden of establishing grounds for such change by a preponderance of the evidence. The court further held that a debtor's choice of forum, though a factor to consider, does not control the decision, and that economic and efficient administrative of the estate is the most important factor. Given that these debtors' only potential asset, the majority of their creditors, and their major business ventures were all located in Oregon, the court granted trustee's motion and transferred debtors' cases to that forum.

Chapter 11 debtors sought confirmation of their plan, which proposed applying the statutory interest rate provided by 28 U.S.C. § 1961(a) (which was 8.75% when the petition was filed) on deferred cash payments to oversecured creditor, rather than the parties' contract rate of 19%. Creditor objected. The court held that, under 11 U.S.C. § 506(b), the contract rate applies when there is a contract, from the petition filing date to the effective date of debtors' plan. Therefore, creditor was entitled to 19% annual interest on its claim during that period. With respect to post-effective date interest, the court found that the statutory rate, which changes on a monthly basis, would be impossible to determine, especially since the "effective date" of an as-yet unconfirmed plan is also uncertain. The court concluded that use of the statutory rate to determine present value under 11 U.S.C. § 1129(b)(2)(A)(i)(2) "would be ill advised and erroneous as a matter of law" since, although the statutory rate may be helpful in determining a risk-free interest rate for a one-year loan, a chapter 11 plan is neither risk-free nor limited to a period of one year. Interest rates that satisfy § 1129(b) should compensate for risks imposed on secured creditors by the plan. Since debtors' proposed interest rate did not do so, the plan would not be confirmed over creditor's objection. The court refused to determine an appropriate post-effective date interest rate, concluding that such a determination would be dictum.

For a ten-month period prior to bank's foreclosure of the property, chapter 11 trustee operated debtor's principal asset, a resort. Trustee sought to recover his expenses of operating the resort under 11 U.S.C. § 506(c), and bank, which then owned the property by virtue of a foreclosure sale, objected, arguing that trustee's expenses were only allowed under § 506(c) when there is equity in the property. The court rejected bank's position, concluding that § 506(c) may apply in the absence of equity in the property. The court identified the elements of § 506(c) applicability as: (1) the costs and expenses sought must be reasonable and necessary; (2) they must have been incurred in preserving or disposing of the property; and (3) recovery is limited to the benefit that was provided to the secured lienholder. The court rejected bank's argument that a decrease in the property's assessed value establishes that no benefit was provided by trustee's operation of the business, finding that interpretation to be "too narrow." Based on the testimony of expert witnesses, the court found that trustee's operation of the resort preserved the property itself, as well as its value as a going concern, and that the benefit conferred was equal to trustee's claimed expenses. Pursuant to § 506(c), trustee was entitled to recover those expenses from the property, but trustee's claim was inferior to bank's superpriority lien for advancing operating expenses during the bankruptcy.