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Senators Reintroduce Bill Aiming to Provide Relief in Family Farm Bankruptcies

Submitted by jhartgen@abi.org on Tue, 2017-05-30 00:00

Senate Judiciary Committee Chairman Chuck Grassley (R-Iowa) and Sen. Al Franken (D-Minn.) have reintroduced legislation that corrects a Supreme Court ruling (Hall v. United States) that they said made it harder for family farmers to reorganize their finances when falling on hard times, according to a press release on Friday. Grassley and Franken’s “Family Farmer Bankruptcy Clarification Act of 2017” remedies the May 2012 Supreme Court ruling that said amendments made to the Bankruptcy Code in 2005, which restricted the Internal Revenues Service’s veto power over a family farmer’s ability to reorganize in bankruptcy in certain situations, unfortunately failed to achieve Congress’s express goal of helping family farmers. The Family Farmer Bankruptcy Clarification Act clarifies that bankrupt family farmers reorganizing their debts are able to treat capital gains taxes owed to a governmental unit, arising from the sale of farm assets during a bankruptcy, as general unsecured claims. It also removes the Internal Revenue Service’s veto power over a bankruptcy reorganization plan’s confirmation, giving the family farmer a chance to reorganize successfully.

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Chapter 12/Farm Cases

Farms Exceeding Chapter 12 Bankruptcy Debt Limits

Submitted by ckanon@abi.org on Mon, 2017-05-08 00:00

While farming has changed in many ways since the 1980s, many aspects of agricultural bankruptcy are similar today, although some are now questioning whether the provisions of chapter 12 have kept pace with the growth of modern agriculture, the (Iowa) Globe Gazette reported Friday. Joseph Peiffer, a bankruptcy attorney in Iowa, said more than half of the farmers that have been coming into his office over the past two years have not qualified for chapter 12 because they had aggregate debts in excess of the current inflation-adjusted limit of $4,153,150. The debt limit for chapter 12 became tied to inflation in 2005. Before that, the limit was $1.5 million. “The debt of family farmers has increased far faster than the rate of inflation,” Peiffer said. “That’s why the debt limit, I believe, is too small.” He added that nearly half of his clients who do not qualify for the current debt limit would still not qualify with a $10 million limit.