Bankruptcy Law – Chapter 12 Bankruptcy – Requirements of a Chapter 12 Bankruptcy

Requirements of an Arizona Chapter 12 Bankruptcy

To be eligible for filing a Chapter 12:

• An individual entity must be engaged in farming or commercial fishing operations;
• The total debt, both secured and unsecured, must be not more than $10 million for farmers and $1,924,550 for commercial fishermen.
• For the family farmer, at least 50% of these debts must be related to farming operations, and for the fisherman, at least 80% of these debts must be related to commercial fishing.
• More than 50% of the income must be received from farming or commercial fishing activities during the previous tax year (or, in the case of the family farmer, for 2 or 3 of the prior tax years);

For a corporation or partnership to qualify for filing a Chapter 12:

• More than ½ of the outstanding stock or equity must be owned by one family, or one family and its relatives;
• The family and its relatives must conduct farming or commercial fishing operations;
• More than 80% of the assets must be related to farming or fishing;
• Total debt from farming must not exceed $10 million, and $1,924,550 for commercial fishing;
• At least 50% of the debt must be related for farming, or 80% to commercial fishing, depending on the type of business activity the corporation or partnership is engaged.