In a recent venture to Capitol Hill, NACM, along with lobbyist Jim Wise, met with Senate staff to discuss the association's suggested changes to the Bankruptcy Code, offering its assistance to the Senate Judiciary Committee as it shapes and considers any future legislation on the subject.
NACM previously met with staff members from the House Judiciary Committee, which, at the committee's request, eventually led to the formation and submission of NACM's Issue Brief and Suggested Enhancements to the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA). In many ways, this document served as a rebuttal to legislation proposed by Congressman Jerrold Nadler (D-NY) several months ago, which would've rolled back several benefits to unsecured trade creditors provided by BAPCPA in the interest of keeping Chapter 11 debtors from trying to reorganize, failing and eventually folding into a full-on liquidation. The bill has since stalled in the House.
In the meeting, NACM discussed the difficulties facing unsecured trade creditors in the instance that one of their customers files for bankruptcy. The primary focus was on preference statutes, which have long been a thorn in the side of credit professionals who work diligently to collect on their invoices, only to see their hard work punished as the buyer files for bankruptcy and the money collected by the creditor has to be returned to the estate to be distributed to other lenders with a higher priority than the creditor itself. Reclamation statutes were also discussed along with the Section 503(b)(9) 20-day administrative priority claim, which Nadler's bill would repeal. A copy of NACM's aforementioned suggested changes was left with committee staff along with the association's pledge to offer its assistance should a bill or hearing arise.
It was noted, however, by Senate Committee staff that action on statutory changes to the Bankruptcy Code, at least on the Senate side, will be primarily consumer-focused in the short term. Specifically, the committee is considering S. 257, the Consumer Credit Fairness Act, a bill introduced by Senator Sheldon Whitehouse (D-RI) in January, which will primarily deal with consumer debtors and possibly some sole proprietorships or small businesses. Action on the bill has been delayed due to the Senate Judiciary's focus on vetting President Barack Obama's judicial nominees, but during markup of S. 257, Judiciary Committee Ranking Member Jeff Sessions (R-AL) is expected to introduce some amendments that would affect commercial creditors. Whether or not these amendments will make it into the final version of the bill, however, remains to be seen.
Additionally, Senate staff noted that the Judiciary Committee may consider new, commercial-centric legislation in the fall as well as the possibility of establishing a new chapter of bankruptcy to more readily accommodate small businesses.
NACM's Government Affairs Committee will consider these issues and any further updates on the association's efforts will appear in NACM's eNews and on the Advocacy page. If you have any thoughts or comments on bankruptcy reform, or any other related topic, please email your comments to firstname.lastname@example.org.
Jacob Barron, NACM staff writer