3 KEYS THINGS TO KNOW ABOUT CHAPTER 12 BANKRUPTCY PLANS
by Jamie L. Harris
Chapter 12 bankruptcy which is a type of bankruptcy designed for family farmers and family fishermen permits the filing of a reorganization plan. Here are a few key things to know about Chapter 12 plans:
1. Timing. The Chapter 12 plan is due to be filed with the Court within (90) ninety days of filing the petition. This time period can be extended under certain circumstances.
2. Cramdown. In addition to modifying loan terms such as interest rate or amortization rate, secured debt can be crammed down to the value of the collateral securing the debt.
3. Payments. For optimal plan success, plan payments should be structured to coordinate with the cash flow of the farm or fishing operation. For example, payments may be set up on a quarterly, semiannual, or annual basis depending on peak seasonal or annual cash flow.