Chapter 12 was enacted in to make the bankruptcy process easier for farmers and fisherman. While Chapter 11 can be an option, there are advantages in filing a Chapter 12. Those advantages include allowing a Plan of Reorganaization which is generally simpler than that required in a Chapter 11 case and easier to get confirmed. In addition, there are advantages relating to extending payments to secured creditors over a longer period of time.
Chapter 12 has similarities to both Chapter 13 and Chapter 11. One advantage of Chapter 12 is that the debt ceiling for Chapter 12 is much higher than in a Chapter 13. In addition the right to cram down the debt of secured creditors is greater in a Chapter 12 than in a Chapter 13. Also, any payment plan can take into account the seasonal nature of the farm or fishing business. In addition, unlike a Chapter 13, a farm that is a corporation can still qualify for a Chapter 12. To qualify at least fifty (50) percent of gross income must have been generated by farming or fishing operations.
If your farm or family fishing business is having financial difficulties, consulting with an experienced attorney to assist is recommended. Few attorneys have actual experience assisting farmers and small businesses, but finding the right attorney for you is important. The operation of a farm, while having similarities to operating other types of businesses, has unique characteristics that must be taken into consideration in determining the best course of action to address the financial difficulties.
