The Family Farmer Relief Act – Amendments to the Bankruptcy Code Signed Into Law
Amendments to the Bankruptcy Code were signed into law last Friday, August 23, 2019. Among other changes, the debt limits to file a Chapter 12 case (for farmers or fishermen/women) were increased from approximately $4 million to $10 million. This means that a farmer whose “aggregate noncontingent, liquidated debts (excluding a debt for the principal residence of such individual or such individual and spouse unless such debt arises out of a farming operation)” do not exceed $10 million is eligible to file a petition for relief under Chapter 12 of the Bankruptcy Code.
The Chapter 12 process is more streamlined, less complicated, and less expensive than the Chapter 11 process. For example, the monthly operating reports are simpler in Chapter 12, there are no unsecured creditors’ committees in Chapter 12, no disclosure statement requirement, and there are no ballots and voting requirements for plan confirmation. From the borrower/debtor’s perspective, Chapter 12 can be used to prevent foreclosures and facilitate successful reorganizations. From the creditor’s perspective, it is good to know what the likely outcome of a Chapter 12 case would be in negotiating an out-of-court loan workout or structured settlement.
You can find the Family Farmer Relief Act of 2019 here.
Mr. Jinkerson is a member of McCormick Barstow’s Fresno office and has significant experience representing insurers in a broad range of insurance coverage and surety matters. He also has extensive experience in commercial litigation in state and federal courts as well as bankruptcy courts, and is certified by the California State Bar as a certified legal specialist in Bankruptcy.