The Family Farmer or Family Fisherman Chapter of the Bankruptcy Code
Chapter 12—the Family Farmer or Family Fisherman Chapter of the Bankruptcy Code (11 USC 1201 to 1232)–was added to the Bankruptcy Code in 1986 in response to the farm crisis of the 1980s. Chapter 12 became a permanent part of the Code in 2005. For many reasons, farmers have continued to struggle in the intervening years, causing this chapter to be more relevant than ever. In 2016, farm real estate debt surpassed the 1981 peak. In 2019, commodity prices were 50 percent lower than their peak in 2012, and the weather in 2019 — including massive Midwest floods — prevented American farmers from planting 19.6 million acres of crops, more than double any other year since the U.S. Department of Agriculture began keeping track in 2007. Droughts in California, and much of the Southwest US, for the past several years and continuing to worsen to present, have caused additional losses by farmers and ranchers in those areas.
For chapter 11 and 13 practitioners, chapter 12 will look familiar. Chapter 12 cases are typically administered by a trustee. Many districts have a standing chapter 12 trustee, but others are assigned on a case-by-case basis. Like chapter 13 but unlike chapter 11, chapter 12 cases proceed under the supervision of a trustee and the court until completion of the plan. Chapter 12 cases also have a debt limit of $10 million. After successful plan completion, the debtor receives a discharge. There is no disclosure statement or voting on the plan by creditors. Also unlike chapter 11, there is no absolute priority rule in chapter 12.