Following consultations with its Government Affairs Committee and Board of Directors, the National Association of Credit Management (NACM) recently offered its support to Senator Sheldon Whitehouse (D-RI) for his attempts to reform the way that small businesses reorganize themselves in bankruptcy.
Whitehouse chaired a hearing last week in the Senate Judiciary Committee's Subcommittee on Administrative Oversight and the Courts titled "Could Bankruptcy Reform Help Preserve Small Business Jobs." Prior to the hearing, NACM had met with staff in Whitehouse's office to discuss the possibility of new changes to the Bankruptcy Code that would increase the chances small companies have of reorganizing successfully in the court system.
"It is clear that the less time a small business spends in the reorganization process, the more assets are preserved in that business' bankruptcy estate for creditors and for the business itself," said the letter, signed by both NACM President Robin Schauseil, CAE and NACM Chairman Phyllis Truitt, CCE. "To the extent that Congress is willing to revisit the Bankruptcy Code as it applies to small businesses, NACM supports actions that would seek to improve the process for smaller firms."
Among the principles that NACM lent its support to in the letter were expediting the reorganization process for small businesses, reducing administrative costs associated with filing bankruptcy and creating a bankruptcy process that takes into account the interests of all parties in the case without overburdening the court system.
In the hearing chaired by Whitehouse, witnesses and officials present for testimony, including Judge Thomas Small, with whom NACM worked in 2005 to craft changes to the Bankruptcy Code included in the Bankruptcy Abuse Prevention and Consumer Protection Act, agreed that change in the code was necessary, but disagreed on how best to approach the matter. One proposal submitted in the hearing suggested allowing small businesses to file under Chapter 12, which is currently available only to family farmers and fishermen.
NACM's Government Affairs Committee has consistently been focused on bankruptcy reform since the release of its Issue Brief and Suggested Changes to the BAPCPA. Stay tuned to NACM's eNews, its Advocacy page and NACM's Credit Real-Time Blog for future updates. Additionally, if you have any thoughts on potential changes to the Bankruptcy Code, especially as it applies to small businesses, be sure to email your ideas to email@example.com.
Jacob Barron, NACM staff writer