Enterprise Analysis: Not Just an End-of-Year Exercise
Much of the work we do is helping farmers decide how to restructure their debt and whether to file bankruptcy—and if they do file, representing them in navigating their case. We are also committed to assisting farmers and small business owners in examining their operations so that perhaps they won’t reach the point of needing to restructure their debt or file bankruptcy. This is our enterprise analysis service—which, as indicated, is for both farms and businesses, although the vast majority of our clients are farmers. The goal of farm enterprise analysis is to help the producer figure out which flows, or “enterprises,” of their business are or are not pulling their financial weight. Common enterprises on one farm might include two or more of the following: It is also possible to use enterprise analysis to determine whether to continue renting certain farmland, or whether it might be wiser to give up a lease further away for one much closer that might cost more in rent but save on fuel, hauling, and time. For growers in Iowa¹, summer is a prime time to have analysis done for purposes of renting (as the September 1 deadline looms to inform landlords or tenants of non-renewal in March 2027), and also to adequately prepare for input purchasing decisions later in the fall. Right now most of the analyses we perform are for row-crop-heavy farms, but the process is useful for any farm type. How the analysis helps It’s important to assess each individual enterprise to see if it can support itself, but also for the impact it’s having on income for the entire farm. These individual assessments usually provide surprising insights to even the most knowledgeable farmer. Recently we worked with a client to perform an analysis on each of his farm’s six enterprise flows, to help determine which pieces of equipment to keep or sell while writing his Chapter 12 plan of reorganization. We determined how much each piece was used in each enterprise—which included combining, planting, spreading manure, grain storage, spraying, and custom cattle finishing—to assign a percentage of each machine’s use to the enterprise(s) using the equipment. Then we divided the cost of the piece among them accordingly and calculated the income from each enterprise against that and its other costs. In the end, we showed many of these enterprises could not support all the equipment required to conduct that work. This is the type of process that helps a farmer decide if they should continue with a specific enterprise and, if they do, if they really need the equipment. Another good example is a farmer raising corn and soybeans, with some of the corn being used as feed for their livestock. The key question here is: What is the effective price per bushel that the farmer is receiving for what is being fed to livestock, and how does that compare to the market price it would fetch at an elevator? If the price received by walking the grain off the farm is less than the elevator payment, the farmer should ask, “Why am I continuing to feed livestock?” A secondary line of questioning would be: Is this a short-term anomaly or a long-term issue? If it is long-term, can the enterprise be turned to a profit? If not, what are the financial ramifications of ceasing the livestock operation? Would the farming operation be more profitable by either selling the crops at market price or divesting the farm of that livestock? (319) 363-1641 Honesty in outside advice It is not uncommon for farmers we work with to realize during an enterprise analysis that the numbers they’ve been working with aren’t precisely accurate. Good longtime farmers develop gut feelings about their work and the supplies they need—but when margins are as tight as they are right now, every opportunity to trim costs should be considered. We’ve heard everything from, “So I’m really not using this equipment enough to justify having it?” to, “I didn’t realize my yield estimate was that far off my actual average.” Producers confident in their cost versus profitability have been surprised, for instance, to see their actual piglets per sow per year in black-and-white, or more dry days for dairy cows between weaning and estrus than they had been figuring. This is where an outside perspective is so valuable. Farming is a business, but it’s also a calling with much emotion tied up in it—and as such, the people who do it sometimes justify unnecessary expense as a given. We provide an impartial, honest point of view that works in facts and data. It’s good to love your work, but to avoid losing money or the farm, it’s great to know your assets, liabilities, and the profitability of each enterprise on the farm. If your overall income far exceeds your costs and you can afford to keep equipment you’re not adequately using or extra livestock that costs more to feed and medicate than you earn in marketing them, you are unlikely to need our assistance. (However, even in this case, not keeping your eye on costs and profitability could lead to declining net worth and unwise borrowing later on, that could eventually result in financial distress.) If you see reduced return on investment, experience mounting debt, or otherwise feel you could better streamline your farm’s expenses, Ag & Business Legal Strategies can help you pinpoint where to make changes. Call us to find out where you’re really headed—and if it’s a good idea to pivot and change course. (319) 363-1641 At Ag & Business Legal Strategies, we want our clients to be honest with themselves and have a solid business plan. Our team will help you create and execute that business plan, and, if necessary, assist you with the legal, tax, and practical aspects of debt restructuring or bankruptcy. Don’t wait for the problems to become insurmountable. Connect with someone you can trust today, not tomorrow, when it may be too late. ¹Lease termination deadline in Iowa
A Decade of Decisions for Better Debt Management
July 2026 isn’t just a notable birthday for the nation — it also happens to be the 10-year anniversary of when Ag & Business Legal Strategies founder Joe Peiffer opened his own firm specializing in farm and small business debt restructuring, bankruptcy, and related legal representation. And although the decision to leave his previous law firm and strike out on his own was made in relatively short order, coming up with the right name for this new business took more time. On July 1, 2016, Peiffer Law Office, P.C. opened its doors, but in October 2017 it was finally Ag & Business Legal Strategies… or, as a lot of folks refer to it, ABLS. “I worked on figuring out what I wanted my trade name to say,” Peiffer says of the wait. “I wanted people to know more about the firm by its name, as opposed to a person’s name. The ABLS name reflects what we work with here: ag people, business people, and how we help them strategize to figure out their best options, so we can empower them to pursue the best course of action.” If he had to boil down the ABLS mission to an elevator pitch? “We help farmers and small business owners get creditors off their back, preserve their assets, and minimize their taxes.” In 10 years, the mission hasn’t seen any changes, although technology has introduced some into the office. For example, Peiffer is looking into how to safely use artificial intelligence to help the attorneys quickly devise strategies for clients and conduct other research, while also protecting the firm’s and clients’ privacy. With Covid in 2020, ABLS had to learn how to meet with clients and courts at a distance — and keeping these remote options in place even now helps save on some time and travel expenses for both attorneys and clients. Fortunately at the time, ABLS had already switched over to using laptops instead of desktop computers, which made it easy to convert to a remote platform for delivery of legal services. Uncommon solutions A few years into ABLS’s tenure, Peiffer added the tagline: An Uncommon Law Firm. Sure, he wanted something to grab attention and differentiate his firm from others assisting farmers or small businesses. But it was also important that this hook be something true and meaningful. “We spend time learning a person’s business itself, whether it’s a farm or other kind of business,” he explains. “We don’t want to take a case to court until we have a plan of action in place.” As it turns out, each case is unique and there is rarely, if any, opportunity to use the same plan for two different clients. So “uncommon” captures the ABLS approach just about perfectly. An early case for the firm involved a client meeting to discuss options for restructuring farm debt in the millions of dollars. Early on, the farmer admitted to Peiffer he had forged grain contracts before handing them over to his accountant, who then unwittingly relied on those documents in preparing audited financials — which the bank used to decide to extend the farmer’s loan. There was, in fact, no grain to deliver. ABLS brought in an outside attorney to represent the farmer on potential criminal charges so all attorneys could negotiate with the bank to keep him out of prison. There have been many situations in which clients committed major mistakes before consulting with ABLS; not all could be considered criminal. But all must be faced head-on. “The first thing to do is to minimize the creditor’s loss, in order to maximize the client’s chances of staying out of jail where possible,” says Peiffer. “Our strategy is how to put the genie back in the bottle or at least minimize the loss that’s been caused by the mistake.” Debt restructuring and bankruptcy represent the main types of cases ABLS handles. Another significant portion of the caseload is tax planning for farmers looking into succession planning. Peiffer said a common situation is that a farmer transfers their land into a limited liability corporation, or LLC, for tax advantages and corporate liability shield. Unfortunately, when it comes time to bequeath the farm to the next generation, that LLC designation can eliminate the step-up in basis that individuals receive on the assets after death. (319) 363-1641 Advocacy matters too Representing clients is most of what Peiffer has done over the past decade with ABLS, but he’s also kept up with pushing for stronger federal and Iowa state legislation to protect farm and small business debtors — something he’s been passionate about since seeing how the 1980s Farm Crisis left so many producers ruined. These include stronger protections for farmers under Chapter 12, including deprioritizing federal tax liability that used to make it impossible to confirm a Chapter 12 plan of reorganization, as the secured creditor would get all the money while the IRS and state tax authorities had veto power over the confirmation. In many instances, since there was no money to pay the taxes, the farmer’s plan would not be confirmed and the case would be dismissed. He has also helped exempt IRAs from being liquidated to pay debt in bankruptcies. Too, Peiffer spearheaded a change of Iowa law that clarified how information about bankruptcies could be filed with court clerks as a bankruptcy transcript, which incurs a filing fee ($195) instead of paying for certified copies of the bankruptcy filings, then paying a recording fee ($5 a page, for 50 or more pages) so real estate titles can be easily transferred. In many cases, there is land in multiple counties that each require the bankruptcy data to be transferred — his legislative effort has saved many Iowans and their attorneys significant money and time. To do his legislative work, Peiffer has maintained relationships with elected officials in Congress and the state legislature, notably U.S. Senator Chuck Grassley. Just last month Iowa Governor Kim Reynolds signed into law the Uniform Assignment for Benefit
Don’t Wait to See How Harvest Plays Out
By Joseph PeifferFounding Attorney At nearly the halfway mark, 2026 is providing farmers with some of the most challenging economic times they’ve seen in a generation. This is from a combination of lower commodity prices than what they were seeing just a couple or so years ago, to increases in fertilizer, chemical, and other input costs. On the plus side, the One Big Beautiful Bill Act that Congress enacted last year contained safety net mechanisms that increased the statutory reference prices for key crops including corn and soybeans. This means higher ARC and PLC payouts are likely to be triggered. And the USDA is disbursing one-time bridge payments to some growers from a $12 billion fund announced to help offset losses stemming from tariffs President Trump put in place. On the down side, adding to the tariff-related losses and lower commodity prices are 50 percent higher fuel costs and other elevated input expenses because of the Iran war and subsequent difficulty getting products through the Strait of Hormuz. The payments mentioned above are better than nothing, but they’re a bandage — not a solid fix. Farmers would rather have stable, dependable markets for their products, than what they view as handouts. Instead, many are projected to lose money on the corn and soy acres they’ve planted this year. This is leading them to consider hard decisions, which is always better tackled sooner than later. Our office is receiving more calls than at this time last year, from farmers seeking help with debt restructuring or filing for Chapter 12 bankruptcy. I would have expected to hear from more in January or February than since mid-April, but that has not been the case. The first cash rents for the new farmland lease year were due March 1, and if a farmer was going to decide they wanted to trim their expenses or restructure debt for 2026, they had more options in January-February than they now have. Those who were unsure but pressed forward with renting to plant more anyway may have figured they could use their bridge payment to get through this season and then reevaluate after harvest. They were not expecting war nor its effect on expenses. (319) 363-1641 Potential Income Options Farmers who have significant operating capital and/or little to no debt are probably safe to weather 2026 to farm another year. That doesn’t mean they won’t lose money. But what does this year mean for those who don’t have that kind of capital and do have debt? If this is you, what can you do between now and harvest time to protect your financial interests? One of the first steps will be to review planned inputs for this summer. For example: It’s not that growers don’t normally consider this anyway, but 2026 will require even more examination of expenses versus return. If it looks like you’re only going to trade dollars one-for-one, why do it? If you can’t trim expenses enough to meet financial obligations, including loan and other debt payments, you may need to earn more income through an off-farm job, contract work such as harvesting or hauling grain or livestock for others, or finding other ways to add value to your operation. I have a client who has set up a transloading platform at his farm, where he can load crops and other commodities into containers to be shipped for export — this increases the price of his product by 50 cents per bushel. Other exporters have recently begun paying him to use the platform for their products as well. In addition, he recently attracted outside investment into opening a mixing facility to be able to ship specialized product to South Korea — an established mixing facility recently closed, so he took advantage of the brief market vacuum to fill a need. If you are a farmer with sufficient equity and liquidity, and vision, to do something like this right away, it’s certainly something to consider. But if this is not within your means and you don’t have an investor — and it won’t be, for most farmers — perhaps there is another way you can add value to your operation or find a market niche either without such a large investment. What should you be doing? If margins are tight but you are nonetheless making money this year, don’t be afraid to pay the taxes you owe. Borrowing to purchase equipment you don’t need right away, just to claim a large deduction against income and to lower taxes, might hurt you in the long run. The key here is “borrowing” — going into loan debt isn’t necessarily smarter than paying taxes, if you’re going to owe the bank for a while. If you can see that you will struggle this year to make loan payments, talk with your banker now. I can tell you after more than 40 years of this work that the farmer who comes to the bank, acknowledges their problem, and proposes how they can help solve it typically has more luck getting the bank to help them rework the loan than those who put off such a meeting. It’s never great to have the banker come to you after a default, when you had not told them that you would not be able to meet your debt service obligations. Finally, if your financial problems run deeper than one loan, it may be time to analyze operations and think about serious restructuring. Ag & Business Legal Strategies offers enterprise analysis, which reviews your liabilities and assets, revenue and expense streams, and shows you where you are losing and making money so you can decide how to move forward. If after this step you are still unsure how to proceed, our attorneys can help by reviewing options. Whether it is refiguring your operations, or needing to restructure debt or file for bankruptcy, Ag & Business Legal Strategies is dedicated to helping farmers work toward an outcome that is beneficial for their unique situation.
Contract Provisions: When Business Dreams Turn to Nightmares
By Austin PeifferAssociate Attorney Recently I read two quotes that really struck me: “Nobody’s business plan includes bankruptcy,” from attorney Ferd Niemann and, from software entrepreneur and essayist Patrick McKenzie, “Contracts exist to be followed on very bad days.” They’re both accurate, of course. Nobody plans to start a business that ends up in bankruptcy, but many ventures end that way. If your farm or business ends up in bankruptcy, that’s a very bad day—but it’s also one of the main reasons contracts exist. Business owners, farmers included, would benefit from time thinking about these two quotes. Your business plan shouldn’t include bankruptcy, but your contingency plans should. It’s good to consider: I’m going to give this business my all, but what happens if, despite everything, it goes badly? Will I lose my house? Will I lose my investments? Will I be forced into bankruptcy myself? What if my contractual counter-party has a very bad day? Then, start looking at the contracts you’re signing for your business. Banks and other sophisticated parties already know the moving parts behind these two quotes well. That’s why their contracts contain pages of legalese. Many or even most borrowers don’t read that language, since they’re sure the business plan will work and none of the contract’s, “In the event of default,” language will be necessary. That language wasn’t inserted on a whim; the drafter (or the person the drafter copied it from) likely paid a lawyer to research and draft that provision—and it wasn’t out of a concern for that poor, starving lawyer’s income stream. It’s said that safety regulations are written in blood; contract provisions are written in red ink. Somewhere, at some time, someone had a bad day, a contract was enforced, and someone lost money. That contract provision exists to allocate the risk in such a situation and make sure that on certain kinds of bad days, one party or another loses money when the contract is enforced. And if someone else drafted the contract that you signed, you can guess how that risk is likely to be assigned. (319) 363-1641 Don’t let optimism interrupt reality Sometimes contractual obligations are overwhelmingly one-way. For a loan, the lender’s main obligation is to lend money, while the borrower will have numerous ongoing obligations: submitting reports, maintaining capital ratios, and, of course, making payments. Other contracts have more mutual ongoing obligations, such as an employment or supply contract. Those obligations on both sides matter. Many contracts are performed by their terms to the parties’ mutual satisfaction, and the default terms are never activated. With others, eventually, someone is going to have a very bad day. Whether it results in bankruptcy or something else, things will not go to plan, and sometimes the parties can’t reach a mutually agreeable resolution. That’s when those oft-neglected default provisions matter. Business owners, particularly farmers, are optimistic: Tomorrow will be better than today. Things will work out. This counter-party would never mistreat me. It makes sense—if you spend all your time worrying about what could go wrong, you’ll never have time to run your business and make money. But never worrying about the consequences, if things go wrong, is dangerous. Take some time to think through what kinds of very bad days might happen—whether to you or your contractual counter-party—and what would happen under the contract on those kinds of very bad days. Can you live with that? If not, think about how to address it. If you need help with the particulars of making a plan, or consulting on the legal provisions of a specific contract, Ag & Business Legal Strategies is here to help. An instructive case study One of our clients had a series of very bad days. They were involved in business ventures that went sour when economic fortunes changed, and their business partner filed bankruptcy. Many contracts were enforced against our client. Fortunately, they thought ahead to seek our legal advice, and planned how to protect themselves. Make no mistake—those days were very bad indeed for the client. They lost investments and business opportunities. But because they planned ahead and didn’t wait to seek legal assistance, the damage was isolated and limited compared to how it could have turned out. Too many people don’t think about very bad days until they’re already happening. When clients come to us early enough, we can do a lot more to prepare and position them for the best possible outcome. We can’t prevent all bad days from happening, and we can’t prevent painful contractual consequences when they do happen. But if we have time to act, we can often help minimize the extent of their consequences. Don’t face very bad days alone—reach out to us sooner than later, for your best outcome. (319) 363-1641 At Ag & Business Legal Strategies, we want our clients to be honest with themselves and have a solid business plan. Our team will help you create and execute that business plan, and, if necessary, assist you with the legal, tax, and practical aspects of debt restructuring or bankruptcy. Don’t wait for the problems to become insurmountable. Connect with someone you can trust today, not tomorrow, when it may be too late.
Our Strategies in the Headlines
By Joseph Peiffer, Founding Attorney Nearly 10 years ago, after 30 years of rural-focused practice with other firms, I founded Ag & Business Legal Strategies as a practice focused on advocating for the legal and financial interests of Iowa, Illinois, and now Missouri farmers and other small business owners facing debt restructuring or bankruptcy. This year, in the wake of more mainstream news focus on the farm economy, we at ABLS have seen a sharp increase in our efforts to provide news media with information and analysis about farm bankruptcy, financial planning, and more. Associate Attorney Austin Peiffer and I have provided multiple interviews over the past several months both to agricultural media—geared to a farmer and agribusiness audience—and to general news media that are trying to help the non-farming public understand more about agriculture. Here is a sampling of the 2025 news coverage featuring ABLS insights: We have more notable interviews to come, all with an eye toward keeping the public, as well as the farming and agribusiness communities, informed of financial and related legal factors affecting agriculture’s bottom line and future plans. If you are dealing with worry or uncertainty about debt, your financial health, or legal issues related to these, don’t wait to act—reach out for a discussion and plan of action NOW. Help yourself with the holiday gift of peace of mind! (319) 363-1641 At Ag & Business Legal Strategies, we want our clients to be honest with themselves and have a solid business plan. Our team will help you create and execute that business plan, and, if necessary, assist you with the legal, tax, and practical aspects of debt restructuring or bankruptcy. Don’t wait for the problems to become insurmountable. Connect with someone you can trust today, not tomorrow, when it may be too late.
Don’t Fear the Creditor
Normally, here is where you might find an analogy comparing troubles in farming with some other life situation. And while that is a useful writing tool, the fact is that an analogy doesn’t always capture the real things we need to explain. And reality is that we are seeing a noticeable uptick in financial distress for farmers this year — not just in our own practice, but in farming overall. Corn and soybean prices are still down significantly from their 10-year high earlier this decade. Meanwhile, input costs for crop growers have not decreased at the same rate. Livestock overall is doing better in 2025, especially beef, but there are producers from these sectors also in the middle of bankruptcy proceedings. Stay on top of financial shifts If you planned to harvest corn at 200 bushels/acre and sell for $5/bushel, but you’re seeing only 180 bpa at $4.20, this is of course going to change your plans for the year. Continuing to hope things will improve as you harvest this month is a wonderful thing, but it will not make up lost income. That’s why you need to update your projections and plans as circumstances change. If projections show revenue will be short, there are decisions to make. Do you have enough in savings to pay creditors such as the bank, a landlord, laborers, suppliers, et cetera? If not, can you tap an additional income stream? Maybe you can sell your harvesting services to other growers in the area. And if you do this in Iowa, be sure to perfect a harvester’s lien with the state no later than 10 days after finishing the work, to ensure you are a priority to be paid timely, even if the farmer for whom you’re harvesting gets crossways with their bank). Or maybe you can pick up extra money hauling grain or livestock, driving a truck, packing silage, assisting with farm chores, or doing other temporary labor? Finding additional sources of income will protect the equity you’ve worked so hard to build over the years. If you’re still struggling to meet your obligations, you may be tempted to finance this short-term debt by rolling it into next year’s operating loan or tapping your land’s equity. But remember, these incur additional interest — like rolling a snowball uphill. At some point that debt snowball grows so large that it will roll back over you. Or, let’s say you’ve learned that you can sell grain for more than what you contracted with another party when you grew it. Or, you’re a month behind on rent and the landlord is pressuring you to pay when you also owe the bank a payment — the bank that holds collateral over your grain. These are both situations in which you may be tempted to seek a short-term solution to pay your most pressing debts, at the risk of legal action and penalties. When your farm production is some creditor’s collateral, you need to be very careful and seek sound legal advice. Don’t underestimate negotiation If you took out a bank loan or operating line of credit, that lender usually takes a security interest in every bushel, bale, hundredweight of milk, or animal you produce, meaning it has first dibs if you do not repay the loan on time. There are exceptions, such as if someone has an aforementioned harvester’s lien for doing work on your land or your landlord perfected a landlord’s lien with the state. We wrote about the pitfalls of selling collateral in a “rob Peter to pay Paul” debt-payoff scenario last fall, but it bears repeating: When your farm product is also collateral, you cannot unilaterally decide how to dispose of it or spend the proceeds. In addition to banks, harvesters, and landlords, certain vendors may also hold statutory liens on your crop or livestock. Here at Ag & Business Legal Strategies, we’ve handled many cases in which a farmer liquidated the collateral they had pledged to others as collateral, then needed our assistance when consequences inevitably happened. One farmer sold his grain under another family member’s name so he could use the proceeds to pay off creditors other than the one that had a security interest in the grain. Now he might not be able to discharge his debt to that creditor in a bankruptcy. Even more seriously, both he and the family member could be indicted for defrauding a financial institution — a federal felony — and possibly serve time in a federal penitentiary. In another case, the farmer sealed grain with the government’s Commodity Credit Corporation (CCC). Instead of delivering that grain to an elevator and repaying the sealed loan, he sold it elsewhere to pay bills. Not only did he have to repay the CCC, he also paid a fine and was barred from applying for another CCC sealed grain loan for two years. Yet another farmer created a limited liability corporation to sell his grain and tried to argue since that corporation didn’t owe any debts, it was free to sell the products. In all three of these cases, the collateral holders demanded their share; in fact, even after filing for bankruptcy, the third farmer will owe a six-figure debt that the bankruptcy court cannot discharge. Prepare, don’t react Our attorneys are certainly capable of providing representation for these kinds of cases — but we would rather help producers on the front end avoid fines, judgments, and possibly even jail time. If it seems to be difficult to pay your bank or other creditors in full this season, Ag & Business Legal Strategies can assist in reviewing your options and finding the best solution that does not risk jail time or non-discharged debts if a bankruptcy is necessary. If you have a close relationship with your bank and know you’ll be receiving later income — for example, crop-loss insurance — and you can convince your loan officer to wait, that’s great! If not, we can reach out to your
Bankruptcy Can Be A Vital Tool
Last week, in an article by Joe Mahon of the Federal Reserve Bank of Minneapolis, attorney Joe Peiffer shared valuable insight into the financial state of Iowa farmers. He also highlighted some potentially troubling issues on the horizon. The main concern Joe raised involves farmers’ borrowing habits. He explained, “…so what they’re doing is that they’re borrowing money on the land,” and as a result, “…increase the amount of payments we’re going to have to make next year.” Refinancing like this does kick the can down the road, but only pushes off addressing the underlying issues farmers face. Pressure is building for these farmers, and the situation may eventually reach a breaking point. Fortunately for them, farmers can currently restructure their debt thanks to the value of their land. Land is a finite resource and will likely retain its value. However, other factors—like declining soil quality—could put that lifeline at risk. It’s wise to have a backup plan. This “ace up your sleeve” could help farmers avoid disaster and start climbing out of debt. While some may shy away from it due to societal stigma, bankruptcy—especially Chapter 12—can be a powerful tool when used properly. For more details on Chapter 12 bankruptcy, check out our previous blog posts: Chapter 12: The Farmer’s Ally in Debt Recovery and Chapter 12 Bankruptcy: Is it Right for Me? or call us to discuss your situation at (319) 363-1641.
Austin Peiffer Selected to Participate in National Conference of Bankruptcy Judges Appellate Advocacy Skills Workshop
Media Contact: Allison Miller, allison@blnkpg.com or 317.966.1339 HIAWATHA, Iowa (July 22, 2024) — Just 16 bankruptcy attorneys from across the nation will participate in the National Conference of Bankruptcy Judges’ (NCBJ) Appellate Advocacy Skills Workshop this fall. Among them is Austin Peiffer, Associate Attorney with Ag & Business Legal Strategies (ABLS). The NCBJ’s Annual Meeting September 18-20, which includes this Workshop, provides a variety of high-quality educational programs for attorneys and other legal professionals, featuring judges, academics and other experts addressing compelling bankruptcy issues. It will take place in Seattle, Wash. The Appellate Skills Workshop will focus on a hypothetical appeals case, requiring the eight 2-person attorney teams to present oral and written arguments before judges. This will be followed by meetings with one or more of the judges for detailed discussion and feedback. Paired with the networking and knowledge the 16 attorneys are sharing with one another, this is an exclusive opportunity to strengthen and inform their ongoing practice in bankruptcy law. Peiffer, who joined ABLS in 2020 and is licensed to practice in both Iowa and Missouri, previously clerked for the Honorable A. Benjamin Goldgar, Chief Judge of the United States Bankruptcy Court for the Northern District of Illinois, Chicago. Prior to that, he earned his Juris Doctor from the Washington University School of Law in St. Louis, with a certificate in Business and Corporate Law. While in law school, he worked with its Low-Income Taxpayer Clinic and served as a judicial extern with the Honorable Charles E. Rendlen III of the U.S. Bankruptcy Court for the Eastern District of Missouri. He is the American College of Bankruptcy’s 2018 Distinguished Bankruptcy Law Student for the 8th Circuit. “The young attorneys taking part in this Appellate Skills Workshop are among the brightest in the country,” said Joe Peiffer, ABLS lead attorney and founder. “In the past four years, Austin has developed an excellent reputation for hard work and attention to detail. We at ABLS are extremely proud of his selection for this honor, and also of the work he does to help farmers and small business owners with their debt and bankruptcy problems every day.” “I’m honored and grateful to the NCBJ for providing me excellent learning and networking opportunities,” said Austin Peiffer. “I’m excited to visit Seattle, improve my written and oral appellate advocacy skills, learn at the excellent continuing legal education presentations, and connect with judges and my colleagues from across the country. I’m especially excited that one of the issues in the workshop is whether long-term lease obligations count toward bankruptcy eligibility debt limits, which is an issue that is directly relevant both for family farmers considering Chapter 12 bankruptcies and small businesses contemplating Chapter 11 Subchapter V bankruptcies. “I plan to bring these skills and lessons back to Iowa to continue helping ABLS’s clients deal with their bankruptcy and debt restructuring issues,” Peiffer added. The NCBJ’s mission is to promote the interests of U.S. bankruptcy judges to use their expertise on issues of bankruptcy law and procedure to improve administration of the bankruptcy system and to foster scholarship, collegiality and diversity among members of the bankruptcy bench and bar, and to provide opportunities for education and networking in the bankruptcy law community. About Ag & Business Legal Strategies Ag & Business Legal Strategies is an uncommon law firm focused on the intersection of law, agriculture, business and debt restructuring. Founding Attorney Joe Peiffer, who grew up on a hog and dairy farm, started ABLS in 2016 as a champion for family farms and small businesses, providing compassionate counsel on debt restructuring and bankruptcy. ABLS serves clients in Iowa and Illinois. To learn more, visit ablsonline.com or call 844.363.1641.
Chapter 12: The Farmer’s Ally in Debt Recovery
Farmers are special in many ways. John F. Kennedy said, “The farmer is the only man in our economy who has to buy everything he buys at retail—sell everything he sells at wholesale—and pay the freight both ways.” Farmers form the foundation of our nation’s food supply. In recognition of their unique place in our economy (and of their lobbying prowess), farmers have access to specialized tools in bankruptcy that no other debtors have. This starts with Chapter 12 of the Bankruptcy Code. Why Chapter 12? In legal parlance, “chapter” is a shorthand way of referring to a bankruptcy filed under that specific chapter of the Bankruptcy Code. Individuals usually file Chapter 7 (liquidation) or Chapter 13 (repayment plan) bankruptcies. While businesses can liquidate through Chapter 7, they most often reorganize through Chapter 11 bankruptcies. Small businesses can take advantage of Chapter 11 Subchapter V bankruptcies. Chapter 15 bankruptcies are for international companies to file. And family farmers and family fishermen can file under Chapter 12. Chapter 12 has the same basic thrust as other reorganization (Chapter 11 of all varieties) or repayment (Chapter 13) bankruptcies: Paying creditors fairly while allowing the business or individual to escape overwhelming debt loads and hopefully continue being productive members of society. However, Chapter 12—particularly for family farmers—gives overwhelmed debtor options unavailable in other bankruptcy chapters. A full list of these differences is the topic of an hour-long continuing legal education course for lawyers (Ag & Business Legal Strategies attorneys have taught courses like this), so we’ll focus on one near and dear to our hearts: Tax deprioritization. Taking the Bite out of Taxes Benjamin Franklin famously quipped, “In this world nothing can be said to be certain, except death and taxes.” In all chapters of bankruptcy, taxes are granted special “priority” status, meaning they get paid first in a liquidation and must be paid in full in a reorganization or repayment plan. If they are not paid, they are not discharged at the end of the bankruptcy. In contrast, non-priority “general” unsecured claims typically receive pennies on the dollar and are practically always discharged at the end of the case. The problem is that in a typical farm Chapter 12, the debtor has sold or needs to sell farm property to right-size their operation so it is profitable—but those sale proceeds have to pay down the bank and other secured creditors, leaving no money to pay tax bills that are frequently massive. This can force farmers to liquidate instead of reorganizing. Chapter 12 allows family farmers to turn the tables on the tax man. Under Chapter 12 a family farmer can treat the taxes from liquidated farm assets as general unsecured claims (and therefore typically to be paid pennies on the dollar) and discharge any unpaid taxes at the end of the bankruptcy. This can save a Chapter 12 family farm debtor tens or even hundreds of thousands of dollars. How does Ag & Business Legal Strategies know so much about tax deprioritization for family farmers? We regularly file for clients under Chapter 12 and deprioritize their taxes—Ag & Business Legal Strategies filed the first case to use tax deprioritization, in fact, and we’ve helped family farmers deprioritize hundreds of thousands of dollars in taxes. We also often speak and write about Chapter 12 and tax deprioritization. Most of all, our firm’s founder, Joe Peiffer, helped draft the tax deprioritization statutory language, twice—both originally and then again after the Supreme Court found the flaw he had identified in the original language. Here to Help At Ag & Business Legal Strategies we often describe Chapter 12 as the most powerful chapter in the Bankruptcy Code. Tax deprioritization, a high debt limit, and the ability to confirm a reorganization plan without having to persuade creditors to support it are just some of the reasons it deserves that distinction. If you’re a struggling family farmer or know one, reach out to Ag & Business Legal Strategies today. We can help you evaluate your farm business as a whole and, if appropriate, help you file a Chapter 12 bankruptcy, right-size your operation, and deprioritize the taxes from those liquidations. Contact us now—we can do so much more to assist you if we’re brought in early, rather than after everything is falling apart. At Ag & Business Legal Strategies, we want our clients to be honest with themselves and have a solid business plan. Our attorneys and financial strategist will help you create and execute that business plan, and, if necessary, assist you with the legal, tax, and practical aspects of debt restructuring or bankruptcy. Don’t wait for the problems to become insurmountable. Connect with someone you can trust today, not tomorrow.
Swine Market Losses Demand Prudent Planning—Now
Back in October, we brought you the story of a hog-integrator client who had been suffering tremendous losses since early 2023, their 200,000+ swine business hemorrhaging as much as $1 million per month. It would be nice to be able to say this was an isolated incident or even an isolated year … unfortunately, it seems more of a harbinger of a shrinking livestock sector. Ag and Business Legal Strategies is working with more clients hit hard by the major swine market contraction that has been going on for at least 18 months. Several others have contacted us to discuss how they can wind down their business by filing for bankruptcy or negotiating a settlement with creditors. Entire sow complexes are closing because of supply/demand mismatch. Much of this goes back to California’s Proposition 12, and, more importantly, the U.S. Supreme Court (SCOTUS) decision to uphold its gestation pen requirements that reach outside state lines and into most commercial pork barns. Last year’s SCOTUS ruling seemed to surprise many producers and integrators, on top of market demand contractions in progress. Many have either not had time to modify their operations to comply, or are still trying to decide if they can afford to stay in business. While the meatpacking and other Covid market disruptions that forced liquidation of so many surplus hogs in 2020 were traumatic, it was a temporary setback and does not really seem a factor in current producer and integrator woes. Over decades, U.S. hog production and integration was fine-tuned to Swiss watch-like precision, with occasional hiccups from disease pressure or changes in productivity. And if there was a surplus, production would pare back by a small percent for a period of time, then resume numbers when demand rose again. What is going on now is different, longer-term, and with consequences for many more integrators and producers who may be highly leveraged and have no alternative buyer. Failure to prepare is preparing to fail In addition to integrators trying to gauge if they can pay the bills, we see producers who supply integrators who had taken out loans to finance construction of specialized hog facilities. Their first concern is usually how they can pay their bills if they stop receiving income from a shuttered integrator and cannot immediately find another buyer; another is how to continue making payments on the facilities, which are difficult to sell. There really is no other use for buildings fitted specifically for swine. Even if they are doing well now, questions integrators and producers may want to ask themselves to determine if they will be able to stay in business include: Producers who feel secure in their integrator relationships should still consider: Other Impacts Then there are downstream businesses the swine sector impacts. Many rural communities with large integrator or production facilities depend on it as a sizable employer. There are the truckers, local unrelated businesses, and, to some extent, corn growers. Feed usage has not dropped greatly so far, but if it does because of fewer hogs, growers will need to find a different market—and there is only so much ethanol capacity to supply. Normally exports might absorb surplus corn, but U.S. corn sales have dropped globally in the past year or so. None of the above is meant to make those in the swine industry panic—our hope is to help you get ahead of any potential losses and plan for them even if they never come to pass. Once an integrator does stop filling their buildings, producers typically have only a few months, if that long, to find another buyer or likely lose that income. And if that income stops, many producers have only a few months (if that) before they can’t make their payments. As for October’s hog-integrator client, in the end our attorney was able to work with their creditors to negotiate a settlement which required them to liquidate their hogs and close the business. But that integrator also had 102 producer suppliers who each had to find another buyer or make some hard decisions for their own farming future. Don’t wait until it’s down to the wire to decide—if you work in or adjacent to pig production and you have questions about planning for the future, please reach out to Ag and Business Legal Strategies to discuss potential options. The longer you wait, the fewer financial options you have, so protect the future of your operation by reaching out … and soon! At Ag & Business Legal Strategies, we want our clients to be honest with themselves and have a solid business plan. Our attorneys and financial strategist will help you create and execute that business plan, and, if necessary, assist you with the legal, tax, and practical aspects of debt restructuring or bankruptcy. Don’t wait for the problems to become insurmountable. Connect with someone you can trust today, not tomorrow.
From Debt to Deliverance: Paul and Linda
Note: This is the second of a three-part blog series about ABLS clients and their debt resolution stories. In March we shared the story of retired Iowa farmers Jerry and Deb and the debt restructuring plan we developed for them. In this blog meet another Iowa farm couple, Paul and Linda. An average crop in 2012, a worse crop in 2013 and no crop in 2014 was the beginning of Paul’s and Linda’s woes in eastern Iowa. Paul described what happened next: “We lost one of the farms that we were (working), and that was a third of our acreage for farming. So we didn’t have enough acres to cover our leftover expenses the following year. Plus, the co-op we were working with was hedged-to-arrive and had a change of management, and those people didn’t understand hedge-to-arrive, and forced us to sell at a high tide and we were on the wrong side of the market. That left a deficit that was impossible to overcome.” On top of that, the couple’s bank had a change in management. The new management didn’t understand farming. Paul told bank managers if they wouldn’t work with him on loan repayment he would have to declare bankruptcy and face a tax bill he and Linda couldn’t afford. Body shop, healthy body, and hope We first met with the couple in 2015, shortly after Linda was diagnosed with a form of blood cancer. We determined they couldn’t work through their debt issues outside of bankruptcy, even with the income Paul received from his body shop business. Paul and Linda filed for Chapter 12 in April 2016, and the bankruptcy court confirmed their reorganization plan in early 2017. Paul was able to continue running his body shop and, in fact, has expanded his business. Linda is now cancer-free and sells essential oils. The couple no longer farm but still live in their home post-bankruptcy, and the Chapter 12 addressed their tax bill. It all works out “I grew up on a farm and farmed for 40 years. It was a way of life,” Paul says. “To stop farming was very difficult, but when you have someone like Joe Peiffer reassuring you that everything will work out, it was an easy decision to file Chapter 12.” If farm debt is becoming unmanageable for you, be proactive and reach out to us. Don’t wait – do it today. At Ag & Business Legal Strategies, we want our clients to be honest with themselves and have a solid business plan. Our attorneys and financial strategist will help you create and execute that business plan, and, if necessary, assist you with the legal, tax, and practical aspects of debt restructuring or bankruptcy. Don’t wait for the problems to become insurmountable. Connect with someone you can trust today, not tomorrow.