Senate Passes Permanent Reenactment of Chapter 12

The Senate approved an amendment to the Farm Bill on Feb. 7 that would make
Chapter 12 a permanent part of the Code. The provision, introduced by Sen. Jean
Carnahan (D-Mo.), passed by a vote of 93-6. It would apply retroactively
to Oct. 1, 2001, the date the law expired.

The provision is a simple extension, with no other substantive changes. The omnibus
bankruptcy reform bill, currently pending in conference, contains a number of changes to
the law, including a doubling of the debt limit to $3 million, and tax law changes
to benefit farm debtors. The Farm Bill is now in a House-Senate conference committee.
The House version of the bill does not contain the chapter 12 provision.

Though some had hoped to approve a Farm Bill conference report by the spring
recess beginning in late March, it's likely the bill will carry over into at least
April.

Many House and Senate supporters of the larger reform bill have resisted breaking
off the relatively non-controversial chapter 12 extension into a separate bill, or
attaching it to another vehicle. Their view is that such a move reduces the appeal
of the total package. However, the future of the larger bill is in doubt, as
conferees have been at a stalemate since last fall. The fate of the Carnahan
amendment is not clear, though Senate Agriculture Committee Chair Tom Harkin
(D-Iowa) is likely to try to maintain the Senate position.

Chapter 12, offering streamlined protections for farmers at lower costs than
chapter 11, was first adopted at the peak of the farm crisis in 1986. Originally
enacted as a temporary measure with a five-year sunset, it has been extended several
times, most recently last June. Since then, farm cases have had to be filed under
either chapter 11 or 13, if the case meets eligibility criteria.