S. 684 INTRODUCTORY STATEMENT (Sen. Susan Collins)
Mr. President, today I am introducing a bill to make reorganization under Chapter 12 of the Bankruptcy Code applicable to family fishermen. In brief, the bill would allow family fishermen the opportunity to apply for the protections of reorganization in bankruptcy and provide to them the same protections and terms as those granted the family farmer who enters bankruptcy.
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS (Senate - March 23, 1999)
As Reported Online at http://thomas.loc.gov
Posted by the Amerian Bankruptcy Institute
Posted by the Amerian Bankruptcy Institute
THE FISHERMEN'S BANKRUPTCY PROTECTION ACT [Begin insert] Ms. COLLINS. Mr. President, today I am introducing a bill to make reorganization under Chapter 12 of the Bankruptcy Code applicable to family fishermen. In brief, the bill would allow family fishermen the opportunity to apply for the protections of reorganization in bankruptcy and provide to them the same protections and terms as those granted the family farmer who enters bankruptcy. Like many Americans, I'm appalled by those who live beyond their means, and use the bankruptcy code as a tool to cure their self-induced financial ills. I have supported and will continue to support alterations to the bankruptcy code that ensure the responsible use of its provisions. All consumers bear the burden of irresponsible debtors who abuse the system. Therefore, I believe bankruptcy should remain a tool of last resort for those in severe financial distress. As those familiar with the bankruptcy code know, business reorganization in bankruptcy is a different creature than the forgiveness of debt traditionally associated with bankruptcy. Reorganization embodies the hope that by providing business a break from creditors, and allowing debt to be adjusted, the business will have an opportunity to get back on sound financial footing and thrive. In that vein, Chapter 12 was added to the bankruptcy code in 1986 by the Senator from Iowa, Mr. Grassley, to provide for bankruptcy reorganization of the family farm and to give family farmers a `fighting chance to reorganize their debts and keep their land'. To provide the `fighting chance' envisioned by the authors of Chapter 12, Congress provided a distinctive set of substantive and procedural rules to govern effective reorganization of the family farm. In essence, Chapter 12 was a recognition of the unique situation of family owned businesses and the enormous value of the family farmer to the American economy and our cultural heritage. Chapter 12 was modeled on bankruptcy Chapter 13 which governs the reorganization of individual debt. However, to address the unique problems encountered by farmers, Chapter 12 provided for significant advantages over the standard Chapter 13 filer. These advantages include a longer period of time to file a plan for relief, greater flexibility for the debtor to modify the debts secured by their assets, and alteration of the statutory time limit to repay secured debts. The Chapter 12 debtor is also given the freedom to sell off parts of his or her property as part of a reorganization plan. Unlike Chapter 13, which applies solely to individuals, Chapter 12 can apply to individuals, partnerships or corporations which fall under a $1.5 million debt threshold--a recognition of the common use of incorporation even among small family held farms. Without getting too technical, I should also mention that Chapter 12 also contains significant advantages over corporate reorganization which is governed by Chapter 11 of the Bankruptcy Code. For example, Chapter 12 creditors generally may not challenge a payment plan that is approved by the Court. Chapter 12 has been considered an enormous success in the farm community. According to a recent University of Iowa study, 74 percent of family farmers who filed Chapter 12 bankruptcy are still farming, and 61 percent of farmers who went through Chapter 12 believe that Chapter 12 was helpful in getting them back on their feet. Recognizing its effectiveness, my bill proposes that Chapter 12 should be made a permanent part of the bankruptcy code, and equally important, my bill would extend Chapter 12's protections to family fishermen. In my own state of Maine, fishing is a vital part of our economy and our way of life. The commercial fishing industry is made up of proud and fiercely independent individuals whose goal is simply to preserve their business, family income and community. In my opinion, for too long the fishing industry has been treated like an oddity, rather than a business through which courses the life's blood of families and communities. This bill attempts to bridge that gap and afford fishermen the protection of business reorganization as it is provided to family farmers. There are many similarities between the family farmer and the family fisherman. Like the family farmer, the fisherman should not only be respected as a businessman, but for his or her independence in the best tradition of our democracy. Like farmers, fishermen face perennial threats from nature and the elements, as well as changes to laws which threaten their existence. Like family farmers, fishermen are not seeking special treatment or a hand-out from the federal government, they seek only `the fighting chance' to remain afloat so that they can continue in their way of life. Although fishermen do not seek special treatment from the government, they play a special role in seafaring communities on our coasts, and they deserve protections granted others who face similar, often unavoidable, problems. Fishermen should not be denied the bankruptcy protections accorded to farmers solely because they harvest the sea and not the land. I have proposed not only to make Chapter 12 a permanent part of the bankruptcy code, but also to apply its provisions to the family fisherman. The bill I have proposed mirrors Chapter 12 with very few exceptions. Its protections are restricted to those fishermen with regular income who have total debt less than $1.5 Million, the bulk of which, eighty percent, must stem from commercial fishing. Moreover, families must rely on fishing income for these provisions to apply. Those same protections and flexibility we grant to farmers should also be granted to the family fisherman. By making this modest but important change to the bankruptcy code, we will express our respect for the business of fishing, and our shared wish that this unique way of life should continueTuesday, March 23, 1999