Business Bankruptcy

Chapter 12 Bankruptcy

Chapter 12 can be utilized by farmers or commercial fishermen to reorganize their debts, while continuing to operate their farms, fisheries, or fishing vessels. Chapter 12, as opposed to any other chapter, provides flexibility to debtors, given the nature of agricultural and fishing industries. The main advantage of a Chapter 12 bankruptcy is that the proposed reorganization plan may allow for seasonal payments, as opposed to monthly, to be made when farmers or fishermen sell their crop or catch.

Chapter 12 cases are assigned a Chapter 12 Trustee, who is familiar with agricultural and fishing industries. The Chapter 12 Trustee works with farmers and/or fishermen, as well as their attorneys, to obtain approval of a plan of reorganization that provides for repayment of creditors, typically between three (3) and five (5) years. During this repayment period, the farmer and/or fisherman can continue to farm or fish, making annual payments to the Chapter 12 Trustee according to the plan of reorganization. Once all of the payments are made, all of the remaining debts and obligations addressed in the Chapter 12 bankruptcy case will be discharged.

Chapter 12 is available to corporations, partnerships, limited liability companies, and individuals provided that their assets are primarily related to farming or fishing operations and with respect to farmers, at least fifty-percent (50%) of their debt is related to, or arises from, their farming operations, or with respect to fisherman, at least eighty-percent (80%) of their outstanding debt is related to, and arises from, their fishing operations.