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House Bill Mirrors Senate on Farm Bankruptcy Update
The so-called Chapter 12 farm bankruptcy rules would be revised by companion bills in Congress that would triple, to $10 million, the amount of debt that could be reorganized. A House version of the bill is sponsored by six representatives, including House Agriculture Chairman Collin Peterson. It was filed three weeks after a Senate bill whose sponsors include Finance Chairman Charles Grassley.
Although farm-loan delinquencies and bankruptcy rates are low, the number of bankruptcies has increased since the commodity boom collapsed in 2014. Chapter 12 of the bankruptcy code is aimed at agricultural producers and relieves them of expensive reorganization requirements intended for large corporations, says Grassley, who took a leading role in creating Chapter 12 during the farm crisis of the mid-1980s.
One of the House sponsors, Representative Jim Sensenbrenner, a Republican, pointed to reports that an average of two dairy farms a day goes out of business in Wisconsin. “Among the myriad of challenges these farmers face is difficulty in restructuring debt under outmoded laws,” he said. The debt cap for Chapter 12 currently is $3.237 million.
Each bill has a bipartisan group of sponsors. Democratic Representative Antonio Delgado, from upstate New York, said the new Chapter 12 rules, if enacted, “will provide the critical restructuring and repayment flexibility these folks need to get through these hard times without permanently closing their operations.”
For a primer on Chapter 12, click here.