Submitted by Barbara Franklin on
What qualifies as a “farming operation?”
What qualifies as a “farming operation?”
For purposes of seeking federal protection from creditors, a “farming operation” is defined in 11 U.S.C. section 101(21) as “including farming, tillage of the soil, dairy farming, ranching, production or raising of crops, poultry, or livestock, and production of poultry or livestock products in an unmanufactured state.” Courts have struggled with the definition over the years and have determined that the word “operation” requires that the farmer, whether a natural person or a stockholder relative of a family-owned operation, must be actively involved in the day-to-day management of the farming business. For example, a Christmas tree lot that only sells cut trees and is not involved in growing the trees, does not qualify as a farming operation, whereas some courts have held that a vineyard does qualify. Some courts have determined that if the operation only involves boarding horses, it would not qualify, but breeding and raising horses or even dogs would.
In recognizing that the list is not an exclusive list of what can be considered a farming operation, the courts have found that if the operation is subject to the risks inherent in farming, such as disease, weather, market fluctuations, and such costs as seedlings, then the operation would qualify, but not a corner vegetable market or butcher, unless integrated into the entire operation of a farm.
After the first Chapter 12 laws were passed by Congress in 1986, courts found that aquatic farms were not “farming operations” and fishing was excluded; however, in 2005 fishing was included, provided it is a “commercial fishing operation.”
Farming operations have an advantage over other types of debtors struggling to repay and restructure debt. In other words, with the help of an experienced Hawaii debt relief attorney, you and your family farming operation may be able to escape the pressure of repaying mounting debt, keep the farm, and restructure secured debt to remain viable into the future.
