Legal Strategies, Including Farm Debt Restructuring, to Help Soybean Farmers Survive the Squeeze
- Robert J. Gonzales
- Sep 23
- 4 min read
Part 2: Legal and financial strategies for farm debt restructuring, contract risk, lender negotiations, and Chapter 12 or Subchapter V options.
by Robert J. Gonzales, Business Restructuring Attorney at EmergeLaw, PLC
Based in Nashville, Robert represents financially distressed businesses and family enterprises across Tennessee and the Mississippi River corridor, with deep ties to the farming communities of Tennessee, Mississippi and Arkansas.
Editor’s Note: This is Part 2 of a two-part series from EmergeLaw on the financial challenges facing U.S. Soybean farmers. Part 1 explained the market and operational pressures driving financial distress, including how they are affecting producers in Tennessee, Mississippi, and Arkansas. This article focuses on legal strategies to help farms, land owners and ag-related businesses respond.
Facing Financial Distress with a Plan
Many Soybean farmers across the Mississippi River corridor have already cut costs, pursued yield, and done everything they can on the production side. Yet cash flow remains tight. Operational fixes alone are not enough.
At this stage, legal and financial tools may be needed to protect viable operations and buy time for markets to recover. Acting while there is still some breathing room gives farmers more control over outcomes.
Managing Contract Risk in Volatile Markets
Forward grain contracts, input prepay agreements, and custom work arrangements that made sense when markets were steady may now expose farmers to penalties or losses.
Producers and their advisors should review contracts to understand:
Force majeure provisions that might excuse performance if trade disruptions or transport problems occur
Delivery obligations that could lead to penalties if shipments are delayed
Price adjustment clauses that may need renegotiation when costs or market prices change
Legal doctrines under the Uniform Commercial Code can sometimes excuse performance if it becomes impossible or commercially impracticable. A careful contract review helps preserve leverage and avoid disputes.
Negotiating with Farm Lenders Before Defaults Occur
Lenders usually prefer to restructure troubled loans rather than foreclose on valuable farmland. Farms that engage lenders early may secure relief such as:
Covenant waivers for temporary financial ratio breaches
Extended amortization schedules or interest-only periods that ease cash flow pressure
Forbearance agreements that pause collection efforts while operations stabilize
Partial releases of collateral or reduction of personal guarantees to improve flexibility
These kinds of adjustments are much harder to negotiate after a loan is in default. Once default has been declared, lender leverage increases and options narrow.
Strengthening Farm Business Structure and Liability Protection
Even farms already operating under LLC or corporate structures should review them. Ownership consolidation, updated succession planning, and clarifying personal guarantees can reduce exposure if financial pressure increases.
These steps do not erase existing debt but help prevent future liabilities that might threaten personal assets or legacy operations.
Using Chapter 12 or Subchapter V for Farm Debt Restructuring
Using federal bankruptcy laws to restructure is not any farmer’s first choice. But when debt loads become unmanageable despite reasonable efforts to cut costs and negotiate relief, federal law provides structured tools that can help preserve a viable operation.
Chapter 12 is designed for family farmers. It allows restructuring of secured debt on terms that can favor repayment schedules, stretching payments, and discharging certain tax obligations from farm asset sales.
Subchapter V of Chapter 11 Bankruptcy can serve ag-related businesses that are not eligible for Chapter 12. It offers streamlined procedures, no creditors’ committee, and faster plan confirmation.
When used carefully, these tools offer paths to reorganize around a sustainable core business while shedding obligations that cannot be serviced under current conditions.
Possible Federal Assistance on the Horizon
There has been growing discussion in agricultural policy circles, including within the United States Department of Agriculture, about targeted support or emergency relief for Soybean farmers if prices remain depressed and export demand does not recover.
No formal assistance programs have been announced, and any relief may take time to reach farmers. Producers should not delay action in hopes of a bailout. Those with stabilized cash flow now will be in better positions to benefit if aid becomes available.
Why Timing Matters for Farm Debt Restructuring
The earlier legal and financial planning begins, the more options remain available. Waiting until lawsuits are filed or crop liens are at risk can force reactive decisions and limit flexibility.
Starting talks with lenders, reviewing contracts, and assessing restructuring options now allows farmers to negotiate from strength, protect relationships, and build plans under less pressure.
A Path Forward for Distressed Soybean Operations
Farmers cannot control global markets, tariffs, or river levels, but they can choose how they respond to financial risk. With proactive planning and sound legal advice, even operations under intense strain can find a path to stability.
At EmergeLaw, we help farmers and agribusiness stakeholders evaluate legal and financial options, chart feasible restructuring plans, and protect both business operations and family legacy. Early planning expands the set of solutions.
About the Author
Robert Gonzales is a business restructuring attorney and the founder of EmergeLaw, a boutique law firm in Nashville that represents financially distressed businesses, including family farms and agribusinesses. He frequently advises farmers, agribusinesses, and rural lenders on loan workouts, contract risk management, and Chapter 12 and Subchapter V reorganizations. He is recognized for guiding companies through complex financial challenges with clarity, compassion and precision.