The Benefits of Chapter 12 Bankruptcy For Farmers and Fishermen

The Benefits of Chapter 12 Bankruptcy For Farmers and Fishermen

chapter 12 bankruptcy

Choosing Chapter 12 bankruptcy is similar to Chapter 13 bankruptcy in structure. Both have a three or five year period in which unsecured creditors can get paid for less than the full amount of their debts. However, Chapter 12 has some additional benefits for farmers and fishermen.

Discharge of debts over three or five years

Among the many benefits of filing a Chapter 12 bankruptcy is the ability to discharge debts over a period of three or five years. The debtor may be able to reorganize his or her debts and put together a feasible plan. The debtor may also have more time to make the payments. In many cases, the debtor may also be able to avoid the foreclosure process.

A debtor who was engaged in farming operations was able to file a Chapter 12 bankruptcy to avoid foreclosure on his or her farm property. The debtor had been engaged in farming operations since 1978. The debtor also owned a 23 percent stake in a family farming corporation in southeast Colorado. The debtor was involved in seed corn production, apple production, cherry production, and alfalfa production. The debtor was also involved in boarding horses for other individuals.

The debtor also had over 1,800 head of cattle. He or she also had more than 20 vehicles. The debtor graduated from the University of Michigan with a Bachelor of Arts in Musical Arts. In addition, the debtor had bred horses in the past. The debtor also offered riding lessons to the public. However, the debtor did not get around to breeding horses again.

The debtor’s financial woes began when he or she borrowed $76,049 from a creditor. The debtor failed to make payments on the note. The bank filed an adversary complaint against the debtor. The bank also filed a lawsuit to foreclose on the debtor’s property. The debtor negotiated a subordination agreement with the bank, which allowed the creditor to have first priority lien on all farm assets. The creditor was able to obtain a $151,000 first priority lien in the crop sale proceeds of the 2017 crop.

In addition to the crop sale, the debtor also had to deal with the adverse weather conditions that caused a 30% drop in milk sale revenue due to the China virus. He or she also had to deal with declining commodity market prices.

The debtor also had to deal with his or her tax liability. The tax liability exceeded $300,000. The debtor had a few options. He or she could file a Chapter 7 bankruptcy to discharge the debts, or he or she could refile under Chapter 12 and get back on the right track. The debtor chose the latter, and a bankruptcy court approved their reorganization plan in mid-2018.

The debtor also had to deal the inconvenient truth that he or she had to get out of the business. The debtor had to scale back farming operations, sell farm equipment, and liquidate grain inventory. This was all to pay off creditors. Eventually, the debtor resorted to a wholly owned LLC to file a Chapter 12 bankruptcy. In addition to a Chapter 12 filing, the debtor filed a bad faith lawsuit against the creditor in state court.

Unsecured creditors are paid for less than the full amount of their debt

Upon the filing of a Chapter 12 bankruptcy, unsecured creditors are paid for less than the full amount of their debt. As a result, unsecured creditors are given a choice whether or not to receive a share of the sale proceeds. The courts will look at the facts and circumstances of the case to decide whether a sale is a good deal for the debtor. In some cases, a sale may be approved because the debtor can afford to repay the amount of money that is owed to unsecured creditors. In other cases, the court may reject a sale based on a business judgment analysis.

In this case, the debtor was engaged in a family farming operation. The operation owned more than 1,800 head of cattle, as well as 2,800 acres of leased land. The debtor also owned real estate, farm equipment, and several vehicles. In addition to farming, the debtor also engaged in cherry production and apple production. The debtor was a pass-through entity, i.e., the farm operation was conducted through a limited liability company.

At the time of filing, the debtor had been engaged in farming operations for more than forty years. The debtor’s father personally guaranteed the debtor’s line of credit. However, the debtor’s finances deteriorated and he defaulted on his guarantees. The debtor was also unable to make payments on his line of credit. The debtor subsequently scaled back his farming operations.

The debtor’s reorganization plan called for debt repayment in five-year increments. The plan also addressed the treatment of a secured claim. The proof of claim was secured by the debtor’s crops and real property. The plan also included the purchase of a harvester from an equipment company. The plan would also allow for repayment of student loans. The plan would also allow for payments to be directed toward principal first.

The debtor also proposed a trust for the benefit of unpaid unsecured creditors. The trust would be dissolved after five years. The debtor would also serve as a trustee and would oversee the farming operation.

The creditor sought to have the debtor’s case dismissed. The creditor argued that the debtor’s plan was not a good one. The creditor alleged that the debtor’s plan failed to meet the minimum requirements for a good plan. Moreover, the creditor argued that the debtor had not provided the court with sufficient information about the plan’s features.

The court found that the plan did not include historical information about the amount of cotton that the debtor’s operation produced. Moreover, the plan did not account for the taxes that the debtor would incur. The court ruled that the Roberts Tax was a “tax” under the bankruptcy code. However, the court found that the Roberts Tax was not an “excise tax.” Rather, it was classified as an “income tax.” The debtor’s plan would include a payment of capital gain taxes to the trustee.

Discharge of certain debts not covered by Chapter 12

Whether certain debts are discharged in a Chapter 12 bankruptcy depends on the case, the circumstances surrounding the debt, and the applicable law. In addition, the debtor must have an opportunity to reorganize, and the bankruptcy court must determine that the plan proposed was in good faith. In addition, certain provisions of the Bankruptcy Code, such as 11 U.S.C. SS523(a)(8), require that the debtor either be dismissed or converted to Chapter 7 if certain conditions are met.

This case involves a dairy farming operation. The debtors, a married couple, filed a Chapter 12 bankruptcy in late 2018. The debtors operated several farming entities and ran their farming operations via a limited liability company. The debtors had been engaged in farming since 1978. In 2012, the debtors purchased a ranch for $1,190,000. In the following years, the debtors operated various farming entities, including a cherry production facility, a cherry processing plant, and a seed corn production facility. The debtors also raised cattle and leased acres to grow crops.

The debtors secured financing from a different creditor for the purchase of the ranch. The creditor secured the loan by collateralizing it with personal property and ranches. The debtors were obligated to make payments to the creditor in connection with the loan. In addition to paying the creditor, the debtors were responsible for the income tax obligations associated with the sale of assets. The income tax liability resulting from the sale of assets exceeded $300,000. The debtors had been delinquent on their CFP payments for years and had not been able to make plan payments.

In the fall of 2018, the debtors filed an amended Chapter 12 reorganization plan. The debtors agreed to sell farm equipment, vehicles, and real estate in order to pay off their creditors. They also agreed to lease back the harvester to the creditor. In addition to the harvester, the creditor obtained $151,000 in first priority lien proceeds from the 2017 crop sale. However, the proceeds from the crop sale were not sufficient to repay the creditor. In addition, the creditor had a security interest over the milk production quota. The court disagreed with the creditor’s position.

The creditor then moved to dismiss the debtors’ Chapter 12 case, arguing that the claim was non-dischargeable under 11 U.S.C. SS523(a)(8). The creditor also moved to bar the debtor from using cash collateral. The court issued an interim order barring the debtor from using cash collateral.

The court denied the motion to dismiss the case and ruled that the bankruptcy court had jurisdiction over the case. The court also determined that the debtor’s plan was proposed in good faith. The court held that the plan was fair, equitable, and in the best interests of the creditors. The bankruptcy court determined that the conversion to Chapter 12 was equitable and in the best interests of the creditors.


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