Extension of family farmer bankruptcy provisions : hearing before the Subcommittee on Economic and Commercial Law of the Committee on the Judiciary, House of Representatives, One Hundred Third Congress, first session on H.R. 416 ... March 10, 1993

58 Pages·1993·1.6 MB·English

by  United States. Congress. House. Committee on the Judiciary. Subcommittee on Economic and Commercial Law

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EXTENSION OF FAMILY FARMER
BANKRUPTCY PROVISIONS
HEARI! NG „
BEFORE THE ' ,—^^^
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SUBCOMMITTEE ON
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ECONOMIC AND COMMERICAL LAW
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COMMITTEE ON THE JUDICIARY
HOUSE OP REPRESENTATIVES
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
ON
H.R. 416
TO EXTEND THE PERIOD DURING WHICH CHAPTER 12 OF TITLE 11 OF
THE UNITED STATES CODE REMAINS IN EFFECT; AND FOR OTHER
PURPOSES
MARCH 10, 1993
Serial N9. 3
t^i\ n \ 2333
BOSTON PUBLIC LIBRARY
GOVERNMENT DOCUMENTS DEPARTMENT
Printed for the use of the Committee on the Judiciary
U.S. GOVERNMENT PRINTING OFFICE
67-706 CC WASHINGTON : 1993
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402
ISBN 0-16-041097-5

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EXTENSION OF FAMILY FARMER
BANKRUPTCY PROVISIONS^nT75r
HEARING!
aug'iTi^I
BEFORE THE ' ^ '^^^
J J;
SUBCOMMITTEE ON
"
ECONOMIC AND COMMERICAL LAW
ijQ^^s,
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OP REPRESENTATIVES
ONE HUNDRED THIRD CONGRESS
FIRST SESSION
ON
H.R. 416
TO EXTEND THE PERIOD DUREMG WHICH CHAPTER 12 OF TITIJ^: 11 OF
THE UNITED STATES CODE REMAINS IN EFFECT; AND FOR OTHER
PURPOSES
MARCH 10, 1993
Serial N9, 3
1
APk n ^ 2333
BOSTON PUBLIC LIBRARY
GOVERNMENTDOCUMENTS DEPARTMENT
Printed for the use of the Committee on the Judiciary
U.S. GOVERNMENT PRINTING OFFICE
67-706 CC WASHINGTON : 1993
ForsalebytheU.S.GovernmentPrintingOffice
SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402
ISBN 0-16-041097-5
COMMITTEE ON THE JUDICIARY
JACK BROOKS, Texas, Chairman
DON EDWARDS. California HAMILTON FISH, JK.. New York
JOHN CONYERS. JR.. Michigan CARLOS J. MOORHEAD. California
ROMANO L. MAZZOLl. Kentucky HENRY J. HYDE, Illinois
WILLIAM J. HUGHES, New Jereey F. JAMES SENSENBRENNER, JH..
MIKE SYNAR. Oklahoma Wisconsin
PATRICIA SCHROEDER. Colorado BILL McCOLLUM. Florida
DAN GLICKMAN, Kansas GEORGE W. GEKAS, Pennsylvania
BARNEY FRANK, MaBsachusctts HOWARD COBLE, North Carolina
CHARLES E. SCHUMER, New York LAMAR S. SMITH, Texas
HOWARD L. BERMAN, California STEVEN SCHIFF. New Mexico
RICK BOUCHER, Virginia JIM RAMSTAD, Minnesota
JOHN BRYANT, Texas ELTON GALLEGLY, California
GEORGE E. SANGMEISTER, Illinois CHARLES T. CANADY, Honda
CRAIG A. WASHINGTON, Texas BOB INGLIS, South Carolina
JACK REED, Rhode Island BOB GOODLATTE, Vin^nia
JERROLD NADLER, New York
ROBERT C. SCOTT, Virginia
DAVID MANN, Ohio
MELVIN L. WATT, North Carolina
XAVIER BECERRA, California
Jonathan R. Yahowsky. (ifneral Counsel i
Robert H. Brink. Deputy (ieneral Counael
Alan F. COFKKY. Jr., Minority ChiefCounsel
SUBCOMMITTKK ON ECONOMU^ AND CoMMKKCIAL IwW
JACK BROOKS, Texas. Chairman
JOHN CONYERS, Jr., Michigan HAMILTON FISH, Jr., New York
MIKE SYNAR. Oklahoma ELTON GALLE(;LY, California
PATRICIA SCHROEDER, Colorado CHARLES T. CANADY, Florida
DAN GLICKMAN, Kansas BOB INGLIS, vSouth Canilina
HOWARD L. BERMAN, California BOB GOOI)1j\TTE, Virwnia
RICK BOUCHER. Virginia CARLOS J. M(X)RHEAI), Cahfornia
ROBERT C. SCOTT. Virginia
DAVID MANN, Ohio
MELVIN L. WATT, North Carolina
Cynthia W. Mkaix)w, Counsel
GhX>RCK p. SI,()VK:r, Assistant Counsel
PKRRY AI'KIJJAUM, Assistant Counsel
CaRRIK Bk;1)W>;LI,, Assistant Counsel
PktvM J. Lkvinson, Minority Counsel
(II)
CONTENTS
HKARING DATK
March 10. 1993 ""[
TKXT OF HILI,
H.R. 416 2
OPKNINC STATKMKNT
Brooks, Hon. Jack, a Representative in Congress frnm the State of Texas,
and chairman, Subcommittee on Kconomic and (Commercial l>aw
1
WITNKSSKS
Plagge, JefT, executive vice president. First State Bank of Webster City,
LA, on behalfofthe American Bankers Association G
Underwood, Charles, attorney, Oklahoma City, OK 6
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARINC
Plagge, Jeff, executive vice president. First State Bank of Webster City,
lA, on behalfofthe American Bankers Association: Prepared statement 9
Synar, Hon. Mike, a Representative in Congress from the State ofOklahoma:
Statement 5
APPENDIX
Matkkiai, Suhmittki) kok tmk Hkakinc Rk(X)ki)
Plaggc, Jeff, executive vice president, First State Bank. Webster City. lA:
Study entitled, "Bankruptcy Costs Under Chapter 12" R<)bt>rt N. Collender,
Agriculture and Rural Economy Division, Economic Research Service, U.S.
Department ofAgriculture, StaffReport No. ACES 9210 2f>
(III)

EXTENSION OF FAMILY FARMER BANKRUPTCY
PROVISIONS
WEDNESDAY, MARCH 10, 1993
HOUSK OK Rki'rkskntativks,
SUUCOMMIITKK ON E(X)N()MI(' AND COMMKIU^IAI, LaW,
COMMIITKK ON THK JUDK^IAItY,
Washington, DC.
The subcommittee met, pursuant to notice, at 11:11 a.m., in room
2141, Ravburn House Office Building, Hon. Jack Brooks (chairman
ofthe subcommittee) presiding.
Present: Representatives Jack Brooks, Mike Synar, Robert C.
Scott, Melvin L. Watt, Hamilton Fish, Jr., Elton Gallogly, Charles
T. Canady, and Bob Goodlatte.
Subcommittee staff present: Perry Apclbaum, assistant counsel;
Carrie Bedwell, assistant counsel; Catherine S. Cash, research as
sistant; and Deloris L. Cole, ofTice manager; full committee staff
present: Jonathan R. Yarowsky, general counsel; and Peter J.
Levinson, minority counsel.
OPENING STATEMENT OF CHAIRMAN IIROOKS
Mr. Brooks. The subcommittee will come to order.
The committee's other item of interest this morning is H.R. 416,
to extend chapter 12 of title 11 of the United States Code for an
additional 5 years. Chapter 12, scheduled to sunset October 1 of
this year, allows farmers to reduce the amount of their secured
debt to the credit value ofthe collateral while continuing in control
of their farms. In exchange, the farmers are reouired to commit all
of their disposable income to repaying their creaitors during a debt
adjustment period.
I commend the gentleman from Oklahoma, Mr. Synar, who has
been the driving force to make sure that this important chapter of
the bankruptcy laws continues to function efTicicntly and fairly.
IThebill, H.R. 416, followsil
(1)
103d congress H.R.416
1st Session
Toextend the period duringwhich chapter 12 oftitle 11 ofthe United
States Code remains in effect; and forother purposes.
IN THE HOUSE OF REPRESENTATIVES
January 5, 1993
Mr. S'i'NAR (for himselfand Mr. GraKDY) introduced the followingbill; which
was referred to the Committee onthe Judiciary
A
BILL
To extend the period during which chapter 12 of title 11
of the United States Code remains in effect; and for
other purposes.
1 Be it enacted by the Senate and House ofRepresenta-
2 tives ofthe United States ofAmerica in Congress assembled,
3 SECTION 1. EXTENSION OFTIME PERIOD.
4 The first sentence of section 302(f) of the Bank-
5 ruptcy Judges, United States Trustees, and Family Farm-
6 er Bankruptcy Act of 1986 (Public Law 99-554; 100
7 Stat. 3124) is amended by striking "1993" and inserting
8 "1998".
2
1 SEC. 2. FILINGOF PLAN.
2 Section 1221 of title 11, United States Code, is
3 amended by striking "an extension is sul)stantially justi-
4 fied" and inserting "the need for an extension is attrib-
5 utable to circumstances for which the debtor should not
6 justly be held accountable".
o
•HR 416 IH
Mr. Brooks. We look forward to hearing testimony from two dis-
tinguished witnesses regarding the operation of chapter 12. We do
have both witnesses here, Mr. Plagger
Mr. Pi>ACOK. Yes.
Mr. Brooks. This morning, we will ask the witnesses to appear
jointly. I do not have an opening statement except for that that I
have made.
Mr. Fish, do you have an opening statement?
Mr. Fish. Just very brief, Mr. Chairman.
I also am pleased to welcome our witnesses to this hearing on
legislation to extend the sunset on chapter 12 of the Bankruptcy
Code. Today we will be receiving testimony from an attorney expe-
rienced in family farmer cases and a banker knowledgeable about
agricultural lending practices.
In the 99th Congress, I had the opportunity to participate ac-
tively in the congressional effort to enact Bankruptcy Code relief
for family farmers facing fmancial distress. The new chapter 12
was designed to provide a flexible mechanism for family farmers to
keep their farms and contribute a portion of future income to the
payment of obligations. By making bankruptcy law more respon-
sive to the plight of family farmers, we hoped to help farm commu-
nities around the country.
Our hearing today, together with the record of a similar hearing
last year, gives the subcommittee an opportunity to assess how the
family farmer bankruptcy chapter is working. In that connection,
I ask the witnesses to ^we us their suggestions for possible amend-
ments to chapter 12, including comments on H.R. 416's proposed
change in Bankruptcy Code section 1221. This will assist us great-
ly-
Thank you, Mr. Chairman.
Mr. Brooks. Thank you very much.
Mr. Scott, any questions, any comments at this point, opening
statements?
This morning, I am asking the witnesses to appear jointly. To
save time I would ask both ofyou to limit your statement to 5 min-
utes. When you have completed your statements, the committee
will address questions to both of you. Prepared statements will be
made a part ofthe record, the complete statement.
Our first witness is Charles Underwood, an attorney from Okla-
homa City, OK.
Mr. Undkrwooi). am Charles Underwood, Your Honor.
I
Mr. Brooks. Sit down and relax, you don't have to be sworn. We
have absolute faith in you.
Mr. ScoiT. Mr. Chairman, did Representative Synar have an op-
portunity to speak?
Mr. Brooks. He did, but he did not exercise that.
Mr. Synar's statement follows:!
I