What is Chapter 9 Bankruptcy?

Chapter 9 is the municipal bankruptcy.  The term "municipality" is defined in the Bankruptcy Code as a "political subdivision or public agency or instrumentality of a State." See 11 U.S.C. § 101(40). This definition is broad enough to allow municipal bankruptcy filings by cities, counties, school districts, townships, public improvement districts and the like. It can also included organizations that provide services which are paid for by users rather than by general taxes.  These include bridge authorities, highway authorities, and gas authorities.

Chapter 9 bankruptcy filings are rare.  The most recent notable chapter 9 filing was by Orange County, California in 1994.  Although chapter 9 is similar to other chapters in many ways, in one notable way it is quite different. There is no provision in chapter 9 for the liquidation of the assets of a municipality and distribution of the proceeds to creditors. Like the other bankruptcies, the goal is to resolve outstanding debt issues.

What is Chapter 12 Bankruptcy?

Chapter 12 is a bankruptcy for farmers.  It is not often used, and you will be hard pressed to find an attorney with experience in chapter 12.  However, chapter 12 is similar to chapter 13.  Whereas a chapter 13 is for folks with regular income and requires monthly payments, chapter 12 is geared to payments which come due when the crop comes in.  Payments can be quarterly or semi-annual depending on the type of farm.  Chapter 12 is intended to assist the distressed farmer cope with his debt obligations and keep his farm at the same time.