The recent article Wall Street Journal titled Farm Belt Bankruptcies are Soaring, notes that “a wave of bankruptcies is sweeping the U.S. Farm Belt as trade disputes add pain to the low commodity prices that have been grinding down American farmers for years.” The article also notes that bankruptcy filings have doubled since 2008 in the regions covered by the Seventh and Eighth Circuit Court of Appeals, which includes the states of Iowa, Illinois, Minnesota, Wisconsin, Missouri and Nebraska, among others. According to the authors, the rise of bankruptcies is due to a “multiyear slump in prices for corn, soybeans and other farm commodities,” a “world-wide glut” in production, and current trade disputes.
Given this climate, it is important for anyone involved with the Agricultural industry to have a basic understanding of Chapter 12 Bankruptcy, as well as distressed Ag loans. Chapter 12 generally allows farm debtors to reorganize their debts pursuant to a three to five year plan of reorganization, and allows farm debtors to restructure their loans. A number of remedies also exist for creditors pursuant to Chapter 12.
Dickinson attorneys have extensive experience dealing with both troubled Agriculture loans and Chapter 12 bankruptcies. This September, we began to understand the impact of the all of the factors on our farm economy, and presented Troubled Ag Loans and Chapter 12 at Dickinson’s Annual Banking Law Seminar to cover the ins and outs of Chapter 12 filings.
It is also very important for creditors to understand lien priorities affecting their security interests. To help you understand the different types of ag liens, how they can be filed, and their priorities, we will hosting Third Party Ag Liens—You’re Not as Secure as You Think! February 27th from 12-1 CST. We hope you can join us for the webinar.