Written by attorney Julianne R. Frank

Bankruptcy’s Best Kept Secret: Chapter 12

One of the least known attributes of bankruptcy is the benefits it can afford to the distressed farming or fishing operation. There is a form of bankruptcy – Chapter 12 – that is designed exclusively for that purpose. It happens to be, for those few practitioners who have had any experience with it, one of the most flexible and feature-abundant forms of reorganizing bankruptcy. Unlike Chapter 11, the voting acceptance of creditors is not required, and using it, the farmer/fisherman can reduce and restructure loans on equipments and vehicles, eliminate or substantially reduce debt to suppliers, and forestall payments on a seasonal basis.

Are you eligible for Chapter 12? If you can answer “yes" to the following questions, it may provide the solution you are looking for:

• Are you or your business primarily engaged in a farming or fishing operation?

• Is your total debt less than 3,800,000?

• Is the debt at least 50% related to your farming or fishing operation?

Keep in mind that Chapter 12 bankruptcies are very rare and involve specialized experience in the intricacies of this area. It is important to select a firm whose lawyers understand the particularly sensitivities of the farm and fishing industry, and who have had experience working with bankruptcy trustees who have participated in such cases. Ask your prospective counsel how many Chapter 12 cases they have handled, their success rate, and whether they will share the perspective of other Chapter 12 clients.

Additional resources provided by the author

The bankruptcy laws related to farmer and fisherman bankruptcies can be found at 11 U.S. C. Sections 1201 to 1231

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