Confirmation of liquidating plan bankruptcy farmer
The Bankruptcy Code provides that only a family farmer or family fisherman with "regular annual income" may file a petition for relief under chapter 12. Under the Bankruptcy Code, "family farmers" and "family fishermen" fall into two categories: (1) an individual or individual and spouse and (2) a corporation or partnership. Farmers or fishermen falling into the first category must meet each of the following four criteria as of the date the petition is filed in order to qualify for relief under chapter 12: In order for a corporation or partnership to fall within the second category of debtors eligible to file as family farmers or family fishermen, the corporation or partnership must meet each of the following criteria as of the date of the filing of the petition: A debtor cannot file under chapter 12 (or any other chapter) if during the preceding 180 days a prior bankruptcy petition was dismissed due to the debtor's willful failure to appear before the court or comply with orders of the court or was voluntarily dismissed after creditors sought relief from the bankruptcy court to recover property upon which they hold liens.
They are not available from the court.) The courts must charge a $200 case filing fee and a $75 miscellaneous administrative fee. Moreover, the “absolute priority rule,” prohibits Chapter 11 debtors from retaining an equity interest in their farm over the objections of a dissenting class of unsecured creditors. This makes Chapter 11 unworkable for most businesses with combined management and ownership, such as a family farm. Chapter 12 was initially enacted as a temporary chapter of the Code, and it was extended numerous times, sometimes only after it had expired. A detailed plan or reorganization is submitted by the debtor to all creditors about four months after the case is filed.Creditors are allowed to vote for or against the plan.A Chapter 12 debtor must file a plan of repayment with the petition or within 90 days after filing the petition.
However, a court has power to grant extension of time to file a plan.
If a majority of creditors fail to vote for the plan, a Bankruptcy Court in Kansas may still approve the plan in certain circumstances.
Contact our office now for a Free Chapter 11 Bankruptcy Consultation or call us at 785-273-1353 in Topeka or 800-347-1353.
Chapter 12 is designed for "family farmers" or "family fishermen" with "regular annual income." It enables financially distressed family farmers and fishermen to propose and carry out a plan to repay all or part of their debts. In tailoring bankruptcy law to meet the economic realities of family farming and the family fisherman, chapter 12 eliminates many of the barriers such debtors would face if seeking to reorganize under either chapter 11 or 13 of the Bankruptcy Code. If a debt management plan is developed during required credit counseling, it must be filed with the court.
Under chapter 12, debtors propose a repayment plan to make installments to creditors over three to five years. For example, chapter 12 is more streamlined, less complicated, and less expensive than chapter 11, which is better suited to large corporate reorganizations. The purpose of this requirement is to ensure that the debtor's annual income is sufficiently stable and regular to permit the debtor to make payments under a chapter 12 plan. A chapter 12 case begins by filing a petition with the bankruptcy court serving the area where the individual lives or where the corporation or partnership debtor has its principal place of business or principal assets.
A plan is filed for the fair repayment of debts and the reorganization of the farming operation.