Business Reorganization

Alexandria, Va. — President Donald J. Trump today signed the Family Farmer Relief Act of 2019 (H.R. 2336) into law. The bipartisan legislation, which ABI testified in support of in June, passed the House in late July and the Senate on August 1.

“With farm loan delinquencies and bankruptcies rising, struggling family farmers now have a stronger tool within the Bankruptcy Code for achieving a financial fresh start,” said ABI Executive Director Samuel J. Gerdano. “ABI commends the Congress for developing this important bill into law.”

The Family Farmer Relief Act of 2019 was introduced on April 18 in the House by Rep. Antonio Delgado (D-N.Y.) to update chapter 12 of the U.S. Bankruptcy Code to reflect the economic challenges facing distressed farmers. Chapter 12 was added to the Bankruptcy Code in 1986 to provide reorganization relief to family farmers and fishermen to more properly handle this specialized area of bankruptcy law. Farm sizes have increased substantially since 1986; meanwhile, net farm income has declined since 2013. A survey released on Aug. 15 by the Federal Reserve Bank of Chicago found that Midwest bankers were reporting that the percentage of farm loans their customers are having problems repaying hit a 20-year high in the second quarter of this year. As the current debt limit for chapter 12 filings is $4.3 million, H.R. 2336 would raise this limit to $10 million. A bipartisan companion bill (S. 897) was introduced on March 27 in the Senate by Sen. Charles Grassley (R-Iowa), the author of chapter 12.

"The Family Farmer Relief Act reinforces chapter 12 to provide family farmers with a durable tool to deal with the cyclical economic challenges faced in American agriculture, roiled by fluctuating land values, swings in commodity prices, weather calamities and adverse trade policies made by government," Gerdano said.

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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abi.org/calendar-of-events.

Alexandria, Va. — President Donald J. Trump today signed the “Small Business Reorganization Act of 2019” (SBRA; H.R. 3311) into law. The bipartisan legislation, which ABI testified in support of in June, passed the House in late July and the Senate on August 1. The law will take effect in February 2020.

“SBRA ensures that small businesses will be able to reorganize and rehabilitate their financial affairs effectively under the Bankruptcy Code,” said ABI Executive Director Samuel J. Gerdano. “ABI commends the Congress for developing this important and bipartisan bill.”

SBRA would add a new subchapter V to chapter 11, providing a better path for small businesses to successfully restructure, reduce liquidations, save jobs and increase recoveries to creditors while recognizing the value provided by the entrepreneur. It adopts the current definition of a “small business debtor” as a person in commercial or business activity with aggregate or noncontingent liquidated secured and unsecured debts as of its bankruptcy filing date of not more than $2,725,625. It is estimated that about half the chapter 11 cases filed today could qualify for subchapter V treatment. Introduced on June 18 by Reps. Ben Cline (R-Va.), David Cicilline (D-R.I.), Doug Collins (R-Ga.) and Steve Cohen (D-Tenn.), the SBRA is inspired by the work of the National Bankruptcy Conference and ABI’s Commission to Study the Reform of Chapter 11. A bipartisan companion bill (S. 1091) was introduced on April 9 in the Senate by Sen. Charles Grassley (R-Iowa).

“With proper planning and execution, the Small Business Reorganization Act enables financially troubled small businesses to emerge from bankruptcy within months following a court-approved plan of reorganization,” Gerdano said.

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ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes nearly 11,000 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abi.org/calendar-of-events.