The U-S Senate passed a bill Monday to temporarily extend a section of the federal bankruptcy code tailored to help farmers reorganize debt and stay in business. Iowa Senator Chuck Grassley wrote the measure and is pleased it is finally headed to President Bush’s desk. Grassley says the bill addresses Chapter 12 bankruptcy, which is just for farmers, since farming is different from running a business on Main Street. One difference is a process lawyers call “cram down,” when there’s less value to a business compared to the debt, a lot of corporations have income to put into the bankruptcy court to offset a decrease in value. Grassley says farmers often can’t do that, which is why Chapter 12 was created for them. When farmland goes down, it’s at the same time farmers might not have any income to put back into the business while they’re reorganizing. One of the main parts of Chapter 12 is to make different provisions for farmers caught in a cram-down position. The House passed the bill in October. The bill will now got to the President to be signed into law.
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