Reform bill is dangerous electioneering

Article Abstract:

Reform of the Bankruptcy Act of 1978 contained in Senate bill 1985 proposes a review body to examine current bankruptcy law and suggest changes, but also enacts several amendments that will eliminate most of the protections afforded by Chapter 11. While sponsors claim that the goal of reform is to protect the individual, special interests such as insurance companies, secured lenders and the government itself in the form of the Social Security and Small Business Administrations have inserted overriding amendments. The provisions limiting professional fees were drafted without the benefit of hearings.

Priorities of claims and liens

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Regs on claims trading may fall short

Article Abstract:

Bankruptcy debtors want to restrict claims trading, ostensibly to preserve net operating losses (NOLs), which may be valuable to reorganization. IRC 382 puts a limit on how much future income can be set off against NOLs if ownership of the corporation has changed. IRC 382(l)(5) specifies when a bankrupt corporation may avoid these limitations. In general, the limitations do not apply to debt held for certain stated lengths of time. Proposed changes to this section may make it easier for debtors to establish that creditors meet these criteria.

Corporate reorganizations

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Chapter 11 retailers peril landlords

Article Abstract:

Retail chains increasingly see bankruptcy as an attractive way to escape rental agreements for money-losing stores, threatening the commercial real-estate industry. As interpreted by tenant-friendly courts, the bankruptcy laws let such tenants sell or assign their leases and keep the profit, something they cannot do outside bankruptcy. Chapter 11 protection also makes unpaid rent a general unsecured claim, resulting in serious underpayment to the landlord. Such bankruptcy interpretations must stop.

United States, Finance, Retail industry, Retail trade, Commercial leases

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