Chapter 12

AAA

DEFINITION of 'Chapter 12'

A U.S. bankruptcy proceeding specifically for family farms or fisheries that gives the farm or fishery owner the ability to reorganize his or her finances and debts while still keeping the farm or fishery. The farm or fishery owner will work with a bankruptcy trustee and creditors to formulate a payment program that will meet his or her owner obligations. This proceeding is available for individually run family farms and fisheries as well as those owned by a corporation or partnership.

INVESTOPEDIA EXPLAINS 'Chapter 12'

Chapter 12 was enacted in 1986 specifically for farms and fisheries to make the bankruptcy process easier for these types of businesses. Prior to Chapter 12, farmers would have to either file for protection under Chapter 11, which can be very expensive and is mainly for large corporations, or Chapter 13, which is mainly for those with relatively small outstanding debts (generally not the case for farms and fisheries).

In order to qualify for this protection, both individuals and corporations must get the majority of income for the farm/fishery operations. There is also a limit on the size of the outstanding debt.

RELATED TERMS
  1. Wage Earner Plan (Chapter 13 Bankruptcy)

    Also known as a Chapter 13 bankruptcy, this enables individuals ...
  2. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  3. Chapter 11

    Named after the U.S. bankruptcy code 11, Chapter 11 is a form ...
  4. Chapter 7

    A bankruptcy proceeding in which a company stops all operations ...
  5. Bankruptcy Risk

    The possibility that a company will be unable to meet its debt ...
  6. Discharge In Bankruptcy

    A permanent order that releases the debtor from personal liability ...
Related Articles
  1. What happens to a company's stocks and ...
    Investing

    What happens to a company's stocks and ...

  2. An Overview Of Corporate Bankruptcy
    Bonds & Fixed Income

    An Overview Of Corporate Bankruptcy

  3. What are the differences between chapter ...
    Entrepreneurship

    What are the differences between chapter ...

  4. What are some examples of a debt management ...
    Credit & Loans

    What are some examples of a debt management ...

Hot Definitions
  1. Conduit Issuer

    An organization, usually a government agency, that issues municipal securities to raise capital for revenue-generating projects ...
  2. Financing Entity

    The party in a financing arrangement that provides money, property, or another asset to an intermediate entity or financed ...
  3. Hyperinflation

    Extremely rapid or out of control inflation. There is no precise numerical definition to hyperinflation. Hyperinflation is ...
  4. Gross Rate Of Return

    The total rate of return on an investment before the deduction of any fees or expenses. The gross rate of return is quoted ...
  5. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
  6. Leading Indicator

    A measurable economic factor that changes before the economy starts to follow a particular pattern or trend. Leading indicators ...
Trading Center