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ISC disappointed with ruling, future unclear

The U.S. Bankruptcy Court has valued the International Storytelling Center at almost twice the amount the ISC received from its own appraiser.
Judge Marcia Phillips Parsons read the ruling into record Oct. 4 in the Bankruptcy Courtroom of the James H. Quillen United States Courthouse in Greeneville.
The ruling was continued from the valuation hearing held Sept. 22 in anticipation of ISC’s filing a bankruptcy plan.
“The court sets the value at $1,319,000,” Parsons announced, which is the same amount as the USDA-Rural Development’s appraisal.
In comparison, the appraisal secured by ISC valued the property at only $728,000.
Parsons said the court is not required to accept one appraisal over the other.
“It can consider both and take parts from each,” she said.
The appropriate method for determining value, according to Parsons, is establishing the price the debtor would have to pay in the market to replace the property with like property of the same age and condition.
“The total replacement cost is in excess of the $1.39 million (determined) by the government,” she said.
Parsons said while the court appreciates Jimmy Neil Smith’s testifying the ISC would not be able to pay if the value was set at $1.39 million, the court cannot use bankruptcy as a basis to determine a value lower than the property’s worth.
Following the ruling, Assistant U.S. Attorney Suzanne Bauknight said the ball is in the debtor’s court as far as what it will propose as a payment plan.
“We will listen to what the Storytelling Center has to say and give it due consideration,” she said.
RD filed a $2.63 million claim against the ISC in February for the total amount due on six loans.
“What the court is saying is $1,319,000 is the secured claim that must be paid with interest,” Bauknight said.
“The remainder is the unsecured claim, and the debtor can propose a plan to pay the full amount.”
Mark Dessauer, counsel for the ISC, said the organization will consider all the options available to make a decision on whether to reorganize with or without the ISC building.
“Depending on the final decision ISC makes, hopefully the government will work with us,” he said.
The court recently extended the ISC’s exclusivity period to submit a plan until Dec. 31, but Dessauer did not think the ISC would need that much time to make a decision.
“It’s in everyone’s interest to move forward as expeditiously as possible,” he said.
Smith said he was disappointed with Parsons’ ruling.
“This decision does impact what we will do, but we need to determine our next step before we can make any predictions on the future,” Smith said.