"Congress and the President acted just in time to keep Chapter 12 in place for farmers who may need to reorganize farm debt in the coming months," Grassley said. In addition, Grassley urged support for his initiative to make Chapter 12 a permanent part of the federal bankruptcy code. "Chapter 12 has proven itself a viable safety net and kept more farmers in business. The temporary extension signed today gives us time to get the job done," he said.
Grassley's plan to give permanent status to Chapter 12 and expand the law to help more farm families is part of his bi-partisan initiative for a comprehensive overhaul of the bankruptcy code. He introduced the bankruptcy reform bill earlier this month. The Judiciary Committee will consider the measure in mid-April. Grassley also introduced free-standing Chapter 12 legislation with Senate Minority Leader Tom Daschle of South Dakota.
Chapter 12 was enacted in 1986, as part of Grassley's effort to help Iowa farmers survive the economic crisis of the mid-1980s. Chapter 12 addresses the unique risks associated with a family farmer operation. It prohibits lenders from foreclosing on property if the farmer is able to make rental payments. Another key element removed the requirement for farmers to obtain creditor approval of their reorganization plans as they work to get back on their feet. Previously, a farmer's reorganization plan could be vetoed by his lenders and other secured creditors. That provision often led to farm families being forced off their land and out of the business of farming.
"The federal bankruptcy code has permanent protections for railroads, small businesses and corporations. The unique risks inherent in farm business demand equity. If Chapter 12 can help keep more family farmers afloat, it's a win-win situation for rural America. This emergency tool should be there for America's farm families," Grassley said.
Grassley is a member of the Judiciary Committee and chairman of the subcommittee with responsible for bankruptcy policy.