Chapter 12/Farm Cases

Alexandria, Va. — The U.S. House of Representatives today passed the Family Farmer Relief Act of 2019 (H.R. 2336). ABI testified in June in support of the bipartisan and bicameral bill, and it is also supported by the American College of Bankruptcy, the American Farm Bureau and the American Farmers Union. Rep. Antonio Delgado (D-N.Y.) introduced the bill on April 18, 2019.

Chapter 12 — the chapter under the U.S. Bankruptcy Code that provides reorganization relief to family farmers and fishermen — was added to the Bankruptcy Code in 1986 to more properly handle this specialized area of bankruptcy law. The current debt limit for chapter 12 filings is $4.3 million. H.R. 2336 would raise this limit to $10 million.

Farm size has increased substantially since 1986; meanwhile, net farm income has declined since 2013.

“For more than 30 years, chapter 12 has provided 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,” said ABI Executive Director Samuel J. Gerdano. “Chapter 12 has not only assisted family farmers in their efforts to successfully reorganize debts in bankruptcy court, it has perhaps more significantly provided a framework that encouraged stakeholders to reach agreement on debt restructuring outside the expense of the formal bankruptcy process.”

In a letter to the House Judiciary Committee, the American Bankers Association (ABA) had urged that Congress proceed with caution on approving the increase, emphasizing the importance of having ready capital available to farmers at low interest rates. The ABA also cited the 2018 Farm Bill as having greatly strengthened the farm economy since its passage.

A bipartisan companion bill is pending in the Senate.

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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/education-events.