We've been looking in previous posts at the issue of farming business bankruptcy. As we've noted, the farming industry is currently going through a great deal of stress due to decreased commodity prices, and there are bound to be business failures before things get better, particularly for smaller operators.
Previously, we briefly mentioned the qualification requirements for individual and couple family farmers. Operations organized as corporations and partnerships must meet a separate set of requirements.
Specifically, corporate and partnership farms must meet each of the following requirements:
- Over half of the business' outstanding stock or equity must be owned by one family or by one family and its relatives;
- Corporate farms which issue stock must not do so publicly;
- The family or the family and its relatives must be involved in the farming operation;
- Over 80 percent of the value of the corporation or partnership assets must be related to the farming operation;
- At least 50 percent of the farm operation's fixed debts must be related to actual farming operations; and
- The farm operation's debt must not be greater than 4,031,575.
There are certain other standard requirements as well, such as the requirement for credit counseling, as is required in other forms of bankruptcy, and the requirement that there be no dismissals of a bankruptcy petition within the previous 180 days of the current filing. In our next post, we'll take a little closer look at how Chapter 12 bankruptcy works and how an experienced advocate can assist a debtor in the process.