Letter to Congress re: H.R. 333 and its Senate counterpart
The National Bankruptcy Conference writes to congressional leaders recommending deferral of H.R. 333 and its Senate counterpart, arguing that major bankruptcy law overhauls should be postponed given economic uncertainty and the effects of the September 11 attacks. The NBC supports only limited, targeted reforms including chapter 12 permanency, increased bankruptcy judgeships, financial market contract clarifications, and adoption of chapter 15 transnational provisions.
- NBC recommends Congress defer consideration of pending bankruptcy legislation H.R. 333 and Senate counterpart due to economic uncertainty and post-9/11 conditions
- NBC supports enacting permanency for chapter 12 family farmer reorganizations and increasing bankruptcy judgeships
- NBC does not oppose limited changes clarifying bankruptcy effects on financial market contracts and netting, excluding asset securitization
Dear Chairman Leahy and Chairman Sensenbrenner:
On behalf of the National Bankruptcy Conference, we write to recommend that, with limited exceptions, Congress defer further consideration of the pending bankruptcy legislation (H.R. 333 and its Senate counterpart).
Rather than make dramatic changes in our current bankruptcy law, we believe the prudent course is to leave the provisions of current law in place. A new bankruptcy statute, one that runs hundreds of pages and puts new and untested procedures and rules in place for both consumers and business, should not be adopted in this time of economic uncertainty. More than 1 million people have been laid off this year, and the terrorist acts of September 11 will force more families and businesses to the bankruptcy system for relief. Before Congress overhauls the system, it should carefully gauge the effects of the September 11 attacks and the effects they will have on businesses – large and small – and those who work for them.
Consistent with our view that major changes in the bankruptcy system should be avoided at this time, there are certain actions Congress could take now. First, it would be appropriate to enact legislation that gives permanency to chapter 12 (family farmer reorganizations) and increases the number of bankruptcy judges. Second, the Administration and the Federal Reserve have expressed support for specific provisions to clarify the effect of bankruptcy on financial market contracts, including netting. The NBC does not oppose those limited changes, provided they do not extend to the separate subject of asset securitization, which does not impact the market for treasury securities or financial contracts. Finally, Congress might adopt Chapter 15, the transnational provisions of the proposed legislation. Its provisions are both uncontroversial and consistent with current United States law.
The National Bankruptcy Conference is a voluntary, non-profit, self-supporting, non-partisan group of about sixty law professors, judges and practicing lawyers that has been working with Congress on bankruptcy legislation since the Great Depression. As always, we remain available to you and your staff to help in bankruptcy reform.
J. Ronald Trost,
Chair National Bankruptcy Conference
cc: Hon. Gary L. Ackerman, Hon. Rob Barr, Hon. Joseph Biden, Hon. Christopher Bond, Hon. Rick Boucher, Hon. Steve Chabot, Hon. Hilary Rodham Clinton, Hon. John Conyers, Hon. Joseph Crowley, Hon. Mike DeWine, Hon. Richard J. Durbin, Hon. Eliot Engle, Hon. Russ Feingold, Hon. Vito Fossella, Hon. George Gekas, Hon. Charles Grassley, Hon. Orrin Hatch, Hon. Henry Hyde, Hon. Edward M. Kennedy, Hon. John Kerry, Hon. Herb Kohl, Hon. John Kyl, Hon. Nita M. Lowey, Hon. Carolyn Maloney, Hon. Mitch McConnell, Hon. Gregory W. Meeks, Hon. Jerry Nadler, Hon. Major R. Owens, Hon. Charles R. Rangel, Hon. Charles E. Schumer, Hon. Jose Serrano, Hon. Jeff Sessions, Hon. Lamar Smith, Hon. Edolphus Towns, Hon. Nydia Velazquez, Hon. Melvin Watt, Hon. Anthony D. Weiner