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This section contains the nature of the case and procedural background.

P is an Arizona general partnership formed for farming. P purchased 1120 acres from the Ladras in 1975 and an additional 320 acres in 1979. The Ladras got a first deed of trust on the property. P borrowed money from Western Cotton Services Corporation (D) for crops. P also borrowed money from Farmers Home Administration (D) for crops and to make payments on the deed of trust. Farmers (D) held a second deed of trust. Western (D) held a third deed of trust. The Ladras ultimately instituted a judicial foreclosure proceeding. The Bakers individually filed Chapter 11. The Ladras obtained relief from the automatic stay and continued their judicial foreclosure proceedings. P, the partnership, filed a voluntary petition for relief under Chapter 11. The court approved the sale of two pieces of real property free and clear of liens. From the net proceeds of the sale and the payment of annual installments, P satisfied the secured claim of the Ladras in the amount of $1,650,000. Farmers (D) then held a first priority, and Western (D) held a second priority lien. P then filed a plan to pay Farmers' (D) $3,837,618 note and Western's (D) $ 65,044 note in full. P proposed to transfer a proportionate fee simple interest in the 635-acre parcel of real property Ds. P also proposed to sell a 360-acre parcel in order to pay the administrative claims. Farmers (D) objected, but Western eventually settled and agreed to accept 130 acres of real property in full satisfaction of its debt. P invoked cramdown and Farmers (D) objected to being crammed down pursuant to § 1129(b)(2). The bankruptcy court confirmed the plan finding that the property had an estimated value of $7,300 per acre. Farmers (D) appealed to the BAP on grounds of indubitable equivalence. The BAP reversed the bankruptcy court's order confirming the plan. P and Western (D) appealed the BAP's reversal.

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