Many farmers in Tennessee have had to struggle to make ends meet during the last several years, as fluctuating prices, a stagnant economy and harsh weather have taken their tolls on family farms all across the state. Many have likely had to consider filing for bankruptcy in an effort to discharge debt and hang onto their land. But one farm in another state’s Chapter 7 bankruptcy filing highlights what could happen if debt is too insurmountable.
One of the largest community supported agriculture farms in the country had to file for Chapter 7 bankruptcy a few years ago after years of debt and damage to crops became too much for the farm to afford. In its filing, the farm claimed up to $10 million debt owed to a few hundred creditors.
The owner of the farm, which has been in one family’s hands for decades and was a pioneer in the organic farming movement, has said that he wants to continue farming. But it’s important to remember that a Chapter 7 filing for a business usually means the business will have to be sold to help pay off debts.
A Chapter 7 bankruptcy is known as a liquidation bankruptcy, because many assets have to be auctioned off to help retire debts. In this case, the farmer will likely have to continue farming with different land and a different business if he wishes to continue. He has also said he does not want the land to be farmed conventionally, but he may not have much of a say in what happens. The bankruptcy trustee and judge could decide who gets to control the land.
Source: The Coloradoan, “With Grant Family Farms closed, what happens to the land?” Trevor Hughes, Jan. 8, 2013