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Priority Debts: Farmers and Fishermen

by Adam Mack

Hillary Stirling, research assistant

If a business or business ownerfiles bankruptcy and owes a farmer or fisherman money for their products, that debt is considered priority and is nondischargeable under certain circumstances. In both cases, the dollar limit per individual claiming a priority debt is $4000.

Like most laws, however, there are exceptions. Farmers are limited to “grain,” not other agricultural produce. However, “grain” is defined in the Bankruptcy Codeas “wheat, corn, flaxseed, grain sorghum, barley, oats, rye, soybeans, other dry edible beans, or rice.” (See 11 U.S.C. 557(b).) The person (or corporation) claiming the debt must be the one who produced or raised the grain. At the time the debt is incurred, the debtor must have owned or operated a grain storage facility. The grain storage facility is just what it sounds like, “a site or physical structure regularly used to store grain for producers, or to store grain acquired from producers for resale” with “producers” being those who grow the grain. If the debtor owns or operates a grain storage facility and owes a farmer money, the farmer might have a priority claim.

The limitations on the fisherman priority claim are a little lessstringent in some ways but are even tighter in others. The debtor must be doing two things when the debt was incurred for a claim under this statute to be valid. He or she must have “acquired fish or fish produce from a fisherman through sale or conversion” and be “engaged in operating a fish produce storage or processing facility.” (See 11 U.S.C. §507 (a)(6)(B).) The person trying to collect the debt must be the actual person (orcorporation) who catches the fish. The “fish” can be a wide variety of aquatic animals, including but not limited tolobsters, urchins, seaweed, and shellfish. (See11 U.S.C. § 101 (7A)(A) and In re Voliva, 10-10031-8-RDD.) If all of these criteria are met, then a fisherman might have a claim.

The Most Important Part
If you interacted professionally with farmers or fishermen and owe them money, that can have a profound impact on your bankruptcy. You deserve to have a qualified Kansas bankruptcy attorney as your legal ally to help you. Call us today!


These articles are for general informational use and do not constitute legal advice. Since laws change over time, it’s possible some articles are out of date and for that reason, we make no representation that the articles are fully accurate. For actual, up-to-date legal advice (including a free consultation), please contact us!