[Congressional Record Volume 147, Number 25 (Wednesday, February 28, 2001)]
[House]
[Pages H447-H449]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
FAMILY FARMER BANKRUPTCY RELIEF EXTENSION
Mr. SENSENBRENNER. Mr. Speaker, I move to suspend the rules and pass
the bill (H.R. 256) to extend for 11 additional months the period for
which chapter 12 of title 11 of the United States Code is reenacted.
The Clerk read as follows:
H.R. 256
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. AMENDMENTS.
Section 149 of title I of division C of Public Law 105-277,
as amended by Public Law 106-5 and Public Law 106-70, is
amended--
(1) by striking ``July 1, 2000'' each place it appears and
inserting ``June 1, 2001''; and
(2) in subsection (a)--
(A) by striking ``September 30, 1999'' and inserting ``June
30, 2000''; and
(B) by striking ``October 1, 1999'' and inserting ``July 1,
2000''.
SEC. 2. EFFECTIVE DATE.
The amendments made by section 1 shall take effect on July
1, 2000.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Wisconsin (Mr. Sensenbrenner) and the gentlewoman from Wisconsin (Ms.
Baldwin) each will control 20 minutes.
The Chair recognizes the gentleman from Wisconsin (Mr.
Sensenbrenner).
(Mr. SENSENBRENNER asked and was given permission to revise and
extend his remarks, and include extraneous material.)
Mr. SENSENBRENNER. Mr. Speaker, I will include in the Record the
Congressional Budget Office's cost estimate of H.R. 256.
General Leave
Mr. SENSENBRENNER. Mr. Speaker, I ask unanimous consent that all
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Members may have 5 legislative days within which to revise and extend
their remarks on H.R. 256.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Wisconsin?
There was no objection.
Mr. SENSENBRENNER. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of H.R. 256. Chapter 12 is a form of
bankruptcy relief only available to family farmers enacted on a
temporary basis to respond to the particularized needs of farmers in
financial distress. As a part of the Bankruptcy Judges, United States
Trustees and Family Farmer Bankruptcy Act of 1986, chapter 12 has been
extended several times since 1986 until it lapsed on July 1 of last
year.
Absent chapter 12, farmers are forced to file for bankruptcy relief
under the Bankruptcy Code's other alternatives. None of these forms of
bankruptcy relief, however, work quite as well for farmers as chapter
12. Chapter 11, for example, will require a farmer to sell the family
farm to pay the claims of creditors. With respect to chapter 13, many
farmers would simply be ineligible to file under that form of
bankruptcy relief because of its debt limits. Chapter 11 is an
expensive process that does not accommodate the special needs of
farmers.
In the last Congress, the House on two occasions passed legislation
that would have extended chapter 12. Unfortunately, the other body did
not act on these bills and chapter 12 expired on July 1, 2000 as a
result. By virtue of H.R. 256, chapter 12 will be reenacted retroactive
to July 1, 2000 and extended for 11 months to June 1 of this year. I
must note, however, that H.R. 333, the Bankruptcy Abuse Prevention and
Consumer Protection Act of 2001, a bill that will be considered on the
floor tomorrow, will make chapter 12 a permanent fixture of the
Bankruptcy Code for family farmers. I urge my colleagues to vote for
H.R. 256.
U.S. Congress,
Congressional Budget Office,
Washington, DC, February 26, 2001.
Hon. F. James Sensenbrenner, Jr.,
Chairman, Committee on the Judiciary, House of
Representatives, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for H.R. 256, a bill to
extend for 11 additional months the period for which chapter
12 of title 11 of the United States Code is reenacted.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Lanette J.
Walker, who can be reached at 226-2860.
Sincerely,
Barry B. Anderson
(For Dan L. Crippen, Director).
Enclosure.
congressional budget office cost estimate
H.R. 256--A bill to extend for 11 additional months the
period for which chapter 12 of title 11 of the United
States Code is reenacted
H.R. 256 would extend chapter 12 of title 11 of the U.S.
Code until June 1, 2001. Chapter 12, which was created by the
Bankruptcy Judges, United States Trustees, and Family Farmer
Bankruptcy Act of 1986 (Public Law 99-554), specifies
bankruptcy procedures available only to family farmers with
regular annual income and is intended to facilitate an
efficient and expeditious bankruptcy process. The
authorization for such bankruptcy proceedings expired July 1,
2000.
CBO estimates that enacting H.R. 256 would have no
significant budgetary impact. It would result in a small loss
of offsetting collections to the U.S. Trustee System Fund,
thus causing an insignificant increase in net outlays from
this fund in 2001. In addition, CBO estimates that enacting
H.R. 256 would result in a negligible loss of offsetting
receipts and revenues in 2001. Because H.R. 256 would affect
direct spending and governmental receipts pay-as-you-go
procedures would apply. The bill contains no
intergovernmental or private-sector mandates as defined in
the Unfunded Mandates Reform Act and would impose no costs on
state, local, or tribal governments.
Based on information from the Executive Office of the
United States Trustees, CBO expects that, without the
temporary extension of chapter 12, family farmers filing for
bankruptcy would split their filings about evenly between
chapter 11 and chapter 13. Chapter 12 has a $200 filing fee
and does not require the bankrupt party to pay quarterly fees
to the government. Chapter 11, in contrast, requires an $800
filing fee as well as quarterly filing fees. (On average,
$1,000 is collected per case.) Chapter 13 requires only a
$130 filing fee.
Bankruptcy fees are recorded in three different places in
the budget. Portions of the fees are recorded as governmental
receipts (revenues), as offsetting collections to the
appropriation for the U.S. Trustee System Fund, and as
offsettting receipts to the Administrative Office of the
United States Courts (AOUSC). The percentage of the fees
allocated among these accounts varies by chapter. Because
only 300 to 400 bankruptcy cases are likely to be affected by
the bill, it would have only a small effect on the amount of
fees collected in 2001.
The CBO staff contact for this estimate is Lanette J.
Walker, who can be reached at 226-2860. This estimate was
approved by Robert A. Sunshine, Assistant Director for Budget
Analysis.
Mr. Speaker, I reserve the balance of my time.
Ms. BALDWIN. Mr. Speaker, I yield myself such time as I may consume.
Mr. Speaker, the bipartisan legislation before us, H.R. 256, which I
am sponsoring with the gentleman from Michigan (Mr. Smith) would
restore needed bankruptcy protection for family farmers.
Last June the authorization for chapter 12 of the Bankruptcy Code
expired. Since that time, family farmers who must turn to the
Bankruptcy Code have faced almost certain liquidation of their assets
and an end to their family farms and their way of life.
Our legislation, H.R. 256, would restore chapter 12 to the Bankruptcy
Code through May 31, 2001. The bankruptcy reform bill which is
scheduled for floor action tomorrow, that is H.R. 333, includes a
permanent reauthorization of chapter 12.
But since the current authorization has expired, farmers need
immediate relief. With planting season just about to begin, farmers
need to know that they can reorganize and keep their farms. With milk
at lowest prices in decades, far below the break-even point, dairy
farmers need to know that they have this option, too.
Our bill would provide security for family farmers in crisis; the
security that they need to decide whether they can stay in business
during these incredibly difficult times.
I urge my colleagues to support this bill.
Mr. Speaker, I reserve the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I yield 5 minutes to the gentleman
from Michigan (Mr. Smith), the author of the bill.
Mr. SMITH of Michigan. Mr. Speaker, I thank the chairman for yielding
me this time. I thank the gentlewoman from Wisconsin (Ms. Baldwin) for
joining with me in introducing this bill. I thank the chairman
especially for expediting the bill, bringing it to the floor, along
with the full bankruptcy bill tomorrow.
This is so very important. The first thing I would urge is for the
United States Senate to try to immediately move this bill into effect.
Let me tell my colleagues the predicament. Since last July, farmers
have not had the availability of chapter 12 which was originally
designed and specifically written to accommodate their needs in a
bankruptcy situation. We are now facing an environment in United States
agriculture where commodity prices are at record lows. Many farmers
that had become highly leveraged are now facing bankruptcy or the
potential for bankruptcy.
Chapter 11 and chapter 13 do not accommodate the needs of a family
farmer. In too many cases they simply have to sell out their equipment
or other property. To tell a farmer to reorganize, but at the same time
urging, insisting that that farmer sell their means of production,
their livelihood, the way they can work themselves out of debt means
often that those farmers are put out of business.
Congress I think has long recognized, Mr. Speaker, that farmers face
special circumstances in bankruptcy not faced by other debtors.
Congress provided special provisions for farmers in section 75 of the
Bankruptcy Act in 1933. And certainly when Congress held hearings to
determine whether the Bankruptcy Code adequately provided for family
farmers, Congress concluded that it did not.
The enactment of chapter 12 removed many barriers that family farmers
face when filing for a bankruptcy. For example, it is more streamlined
and less complex and expensive than chapter 11 which is more suitable
for large corporations.
A farmer, a dairy farmer, in fact, in Wisconsin has a herd of 65 cows
and 60 heifers and is facing low commodity prices, depressed milk
prices. He has part of his operation in a corporation designed to pass
the farm on to his
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kids, and; therefore, he cannot even use chapter 13. Being forced to
use chapter 11 may very well put that farmer out of business because
chapter 12 is not available.
Another dairy farmer that I am aware of struggles to make a go of it
with a 100 head herd which, Mr. Speaker, was about the size of my own
herd right before I decided to get out of the dairy business and come
into Congress. Because this particular farmer has more debt relative to
assets than a lender will tolerate, he needs to restructure. Under
chapter 12, he could rewrite his notes. If chapter 12 is not there,
again, this farmer may very well be forced to sell his property and go
out of business.
The enactment of chapter 12 has, according to testimony cited by the
commission, reduced family farm failures. The commission concluded, and
I would quote here, ``The test of time has revealed that chapter 12
generally provides financially distressed family farmers with an
effective framework within which to reorganize their operations and
restructure their debts.''
Now, although this provision was originally created as a temporary
one, the commission recommended the Congress made it permanent. That is
what our Committee on the Judiciary did in the full bankruptcy bill.
I urge my colleagues to move this forward, to move it to the Senate.
I would urge that the Senate immediately consider the importance of
this. Farmers have been without this provision since last July. This
legislation simply extends it 3 months until June, a temporary
extension which is so important.
Bankruptcy courts and bankruptcy judges are trying to hold in
abeyance some of those farmers cases that need chapter 12 to survive. I
hope we can move ahead quickly. I thank, again, the Committee on the
Judiciary for moving this bill so quickly.
Mr. BEREUTER. Mr. Speaker, this Member rises today to express his
support for H.R. 256, which extends chapter 12 bankruptcy for family
farms and ranches until June 1, 2001. In fact, this legislation makes
chapter 12 retroactively effective as of July 1, 2000, which is the
previous expiration date. This legislation is very important to the
nation's agriculture sector. It should have been enacted last year.
First, this Member would thank the distinguished gentleman from
Michigan (Mr. Smith) for introducing this legislation (H.R. 256). This
Member would also like to express his appreciation to the distinguished
gentleman from Wisconsin (Mr. Sensenbrenner), the chairman of the
Judiciary Committee, for his efforts in getting this measure to the
House floor for consideration.
This Member supports this extension of chapter 12 bankruptcy since it
allows family farmers to reorganize their debts as compared to
liquidating their assets. Using the chapter 12 bankruptcy provision has
been an important and necessary option for family farmers throughout
the Nation. It has allowed family farmers to reorganize their assets in
a manner which balances the interests of creditors and the future
success of the involved farmer.
If chapter 12 bankruptcy provisions are not extended for family
farmers, it will be another very painful blow to an agricultural sector
already reeling from low-commodity prices. Not only will many family
farmers have no viable option but to end their operations, it will also
cause land values to likely plunge. Such a decrease in value of
farmland will affect the ability of family farmers to earn a living. In
addition, it will impact the manner in which banks conduct their
agricultural lending activities. Furthermore, this Member has received
many contacts from his constituents supporting the extension of chapter
12 bankruptcy because of the situation now being faced by our Nation's
farm families--it is clear that the agricultural sector is hurting.
In closing, for these aforementioned reasons and many others, this
Member urges his colleagues to support H.R. 256.
Mr. ETHERIDGE. Mr. Speaker, I rise today in strong support of this
bill to extend for 11 months chapter 12 bankruptcy for America's small
farmers. I also want to thank the Chairman, Mr. Sensenbrenner, and the
ranking member, Mr. Conyers, of the House Judiciary Committee for
moving so expeditiously in passing H.R. 256 out of committee and
bringing it here to the floor today.
Chapter 12 of the bankruptcy code allows farmers the option to
reorganize debt over 3 to 5 years rather than having to liquidate their
assets when they declare bankruptcy. It also encourages responsible
efforts by farmers facing bankruptcy by requiring them to designate
income not needed for farm operations or family costs to pay off their
debt. As these payments are made, chapter 12 prevents foreclosure on
the family farm.
And we are talking about family farms here. To qualify for bankruptcy
protection, these farmers will have to have at least 50 percent of
their gross annual income coming from farming, no less than 80 percent
of debts resulting in farm operations, and total debts not more than
$1.5 million.
It saddens me that this legislation is necessary in order to save
family farms around the nation. But while most Americans have been
enjoying the benefits of an unprecedented prosperous economy, family
farmers have suffered from prolonged, depressed commodity prices. And
most recently, farmers are confronting rising input costs for energy
and fertilizer.
We are taking action today to make sure that small farmers can stay
on their land and work through these hard times. With signs pointing to
a possible slowdown in the American economy as a whole, I believe we
should permanently extend the chapter 12 farmer bankruptcy provision.
Small farmers should have one less worry every morning when they get up
to harvest America's bounty that each of us enjoys every day.
I am pleased to cosponsor this legislation that we will be passing
today and thank the bill's managers for their efforts to see it enacted
into law. I strongly support this legislation on behalf of the
hardworking, God-fearing farmers of North Carolina's Second District
and across America.
Ms. BALDWIN. Mr. Speaker, I yield back the balance of my time.
Mr. SENSENBRENNER. Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Wisconsin (Mr. Sensenbrenner) that the House suspend the
rules and pass the bill, H.R. 256.
The question was taken.
The SPEAKER pro tempore. In the opinion of the Chair, two-thirds of
those present have voted in the affirmative.
Mr. SENSENBRENNER. Mr. Speaker, on that I demand the yeas and nays.
The yeas and nays were ordered.
The SPEAKER pro tempore. Pursuant to clause 8 of rule XX and the
Chair's prior announcement, further proceedings on this motion will be
postponed.
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