NBC Levin & King statement on 1988 Chapter 9 Amendments
In brief(AI Overview)
The National Bankruptcy Conference submits a statement to the Senate Judiciary Committee supporting amendments to Chapter 9 (municipal bankruptcy) of the Bankruptcy Code. The statement identifies deficiencies in how the 1978 Code incorporated general commercial bankruptcy concepts into municipal finance, particularly affecting revenue bonds and enterprise funds.
Key points(AI Overview)
- Chapter 9 as enacted in 1978 incorporated commercial bankruptcy concepts that do not work in municipal finance contexts
- Current deficiencies could terminate liens on municipal revenues and convert revenue bonds to general obligations, violating municipal finance principles and state constitutional provisions
- Separate enterprise funds (water, electric) should not be reached to pay general creditors unless permitted under nonbankruptcy law
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