WASHINGTON DC (August 1, 2019) — The Senate passed by voice-vote three bills backed by Senator Charles "Chuck" Grassley (R-Iowa) to improve the reorganization processes for family farmers, small-business owners, and veterans. The bills were previously approved by the House of Representatives and now must be signed by President Donald Donald Trump to become law.
“Our current one-size-fits-all bankruptcy laws don’t always address the unique challenges that American families face when they fall on hard times. Our family farmers, small-business owners, and military heroes deserve debt-reorganization tools that recognize their unique situations and help them get back on their feet faster. These bipartisan bills will help ensure greater prosperity for America’s producers, innovators and defenders,” Sen Grassley said.
Family Farmer Relief Act
Recognizing the unique challenges that family farmers and fishers face, Congress established Chapter 12 of the US bankruptcy code, which removes certain costly reorganization requirements intended for large corporations. The Family Farmer Relief Act, authored by Sen Grassley, raises the Chapter 12 operating debt-cap to $10 million, allowing more family farmers to seek relief under the program. More information about this bill is available HERE.
“For family farms whose assets are largely tied up in land and essential equipment, reorganizing debts can be particularly challenging when falling on hard times. As low commodity-prices force farmers to take on more debt, this bill guarantees a safety net is in place for more farmers who need help getting back on their feet. By providing relief to these small-to-mid-size farms, we can ensure more successful reorganizations, which will be beneficial for everyone involved in the supply-chain, while avoiding mass liquidations and further consolidation in the largest sectors of the industry,” Sen Grassley said.
Small Business Reorganization Act
Chapter 11 in the bankruptcy code was designed for administering complex business reorganizations involving multi-million dollar companies. Though several provisions specifically focus on small business debtors, a significant amount of research shows that Chapter 11 may still create difficulties for small businesses, including high costs, deficits, and procedural roadblocks. The legislation, authored by Sen Grassley, addresses these issues by adding a new subchapter V to Chapter 11 to streamline the bankruptcy process for small-business debtors. More information on this bill is available HERE.
“The Small Business Reorganization Act takes into account the unique needs of small businesses and streamlines existing reorganization processes. A well-functioning bankruptcy system, specifically for small businesses, allows businesses to reorganize, preserve jobs, maximize the value of assets and ensure the proper allocation of resources,” Sen Grassley said.
Honoring American Veterans in Extreme Need (HAVEN) Act
Under current bankruptcy law, disability benefits paid by the Department of Veterans Affairs and Department of Defense are included in the calculation of a debtor’s disposable income, increasing the portion of the debtor’s income that is subject to the reach of creditors. By contrast, bankruptcy law explicitly exempts Social Security disability benefits from this calculation. To remove this unequal treatment among various disability benefits, the HAVEN Act would exclude VA and DoD disability payments made to veterans or their dependent survivors from the monthly income calculation used for bankruptcy means tests. The bill was authored by Sen Tammy Baldwin (D-IL) and cosponsored by Sen Grassley. More information on this bill is available HERE.
“Our current and retired military heroes sacrifice so much to defend our freedom, but they may face disproportionate challenges when they fall on hard times. This bill updates the bankruptcy law to ensure that veterans are not penalized for receiving military or veterans disability benefits when filing for bankruptcy,” Sen Grassley said.
