If a Farmer has filed for protection under Chapter 7, 11, 12, or 13 of the United States Bankruptcy Code, these procedures must be followed at a minimum:
Within 60 days of the Lender becoming aware that the Farmer has filed for bankruptcy, the Lender must send WHEDA either a copy of the Proof of Claim filed with the court or an explanation of why a claim has not been filed.
If Bankruptcy is filed, and if the CROP loan is unsecured or under-secured, the Lender may apply for a guarantee payment immediately. Under no circumstances should the Lender give up WHEDA's lien position.
Lender will obtain legal counsel as it deems necessary to assure all steps are taken to maximize the amount of proceeds received.
In accordance with United States Bankruptcy Code and the laws of the State of Wisconsin, the Lender is responsible for monitoring the sale of the Farmer's property to assure a fair price is received for the collateral securing the CROP loan. Any proceeds obtained as a result of the sale of the collateral securing the CROP loan will be applied toward reducing the outstanding balance of the CROP loan. After the sale, the Lender will submit to WHEDA an inventory of the items sold and the amount received for each.
If there is an outstanding balance on the CROP loan after the sale, it is the Lender's responsibility to determine whether or not full payment of the loan by the Farmer is likely. If it is not, the Lender must submit a Request for Guarantee Payment (CROP Form 7), no later than June 30 of the year following the origination of the CROP loan.
Once the principal on the Guaranteed Loan becomes ninety (90) days or more past due, the loan must be placed on non-accrual, with all future payments applied to the principal balance. The Lender must notify WHEDA if there are reasons why the loan should not be placed on non-accrual or if it should be removed from non-accrual status.
The Lender is entitled to apply proceeds from the sale of the collateral toward satisfying up to ninety (90) days of accrued interest due from the Farmer.
If the CROP loan is included in a repayment schedule established by the court, the Lender must provide WHEDA with a copy of the reorganization plan confirmed by the court. If repayment is scheduled to take longer than three years, the Lender can apply to WHEDA for payment of the guarantee. In such cases, the Lender will enter into an agreement with WHEDA whereby the Lender agrees to forward to WHEDA within five days of receiving them, 90% of the payments made under the established repayment plan.
