Web posted and Copyright © 1/12/98, American Bankruptcy Institute.

The following abstract summarizes the text of submissions made to the National Bankruptcy Review Commission. The abstract is organized by NBRC working group and topic.

The Final Report of the NBRC can be viewed on-line. To obtain a copy of any document shown below, contact the Center for Legislative Archives, Room 205, National Archives Building, Washington, D.C. 20408. The telephone number is 202/501-5350. Mr. R. Michael McReynolds, Deputy Director, will be able to assist with specific inquiries. (The NBRC documents will be housed at this location until June, 1999. Thereafter, the records will be transferred to the Center's archives in College Park, MD.)

H.R. 764: Bankruptcy Amendments of 1997
IDNameGroupOtherCode
Sec
Cross
Ref
Problem ReferencedProposed Solutions
NBRC-
0017
Professor Cynthia A. Baker, "Other People's Money: The Problem of Professional Fees in Bankruptcy," (Working Draft)Professor of Law; Emory University
330
The recent amendments to the Code that were designed to effectively control fees and reign in costs are an attempt "to cure a broken leg with a Band-Aid." Efforts to control costs through after-the-fact judicial review of fees don't work. The problem is that the bankruptcy system of priorities enables the parties to treat professional fees and costs as externalities, costs ignored by the parties to a transaction because they are incurred by other members of society.The system for compensating professionals should be changed. The fees and expenses incurred by an official committee should be charged against distributions to the class or classes that the committee represents; fees incurred by the debtor-in-possession's professionals should be allocated among all classes of unsecured claims and equity interests in proportion to the value of hte property distributed to each class under the plan of reorganization; judicial review of professional fees should be eliminated except where a party in interest objects
NBRC-
0041
Billy R. McCoyEx-Husband of Ch. 7 debtor.
523(a)(15)
Confusion over non-dischargeability provisions permitted wife to avoid "hold harmless" provisions in divorce. Judge stated that confusion over section precluded non-dischargeability becaiuse ex-wife benefitted from divorce.Make Provision clear and give rights to former non-bankruptcy filing spouses. Now left holding the bag and completely victimized by bankruptcy proceedings.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"

The Code does not waive filings fees for debtors who cannot them.Filing fees whould be waived for individual who cannot afford them.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"522(b)
Federal bankruptcy exemptions are not available in all states.The language in § 522(b) permitting a state to make the federal bankruptcy exemptions unavailable to its resident should be repealed.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"522(b)(2)
The law regarding exemption of entirities property in bankruptcy is confused and variable amount circuits and districts.Amend § 522(b)(2) to resolve the confusion over exemption of entirities property in a way that does not cause the liquidation of all entirities property in the bankruptcy case and protects a modest amount of entirities property as exempt.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"522
The law regarding whether, and to what extent, consumer debtors may convert nonexempt property to exempt property prepetition is confusing and unpredictable.Clarify that the conversion of nonexempt to exempt property should be grounds to bar a discharge.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"547
Case law varies sharply regarding whether wages garnished within 90 days prepetition may be recovered under § 547.Clarify that garnishment of monies earned by debtor during 90 days prepetition should be subject to preference recovery notwithstanding any nonbankruptcy law that would divest the debtor of an interest in property at an earlier point in time.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"506
Lien stripping law in Chapters 7 and 13 is not uniform.Permit a Chapter 7 debtor to use § 506 to strip down a lien on any collateral and, for loans secured by a lien on consumer goods or on the debtor's principal residence, the bankruptcy court should be empowered to determine the resulting terms of the lending agreement with respect to the time and amount of payments by the debtor to satisfy the lien indebtedeness.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"

The area of consumer rent-to-own contracts is rife with litigation and should be clarified.Treat consumer "rent-to-own" contracts as credit sales for all purposes in bankruptcy.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"525
There is confusion in the case law as to how far to extend the language in § 525(a) prohibiting discrimination with respect to a "license, permit, charter, franchise, or other similar grant."Broaden and clarify § 525 (a) to encompass any benefit program administered or controlled by a governmental unit.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"707(b)
707(b) is applied arbitrarily.Repeal § 707(b). Alternatively, § 707(b) should not be interpreted to deny access to Chapter 7 debtors who can make only partial repayment on their debt.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"524
Reaffirmation laws are disparately applied, and allow creditors to threaten debtors and subject them to groundless dischargeability complaints.The provisions of § 524 which premit reaffirmation of consumer debt should be repealed.
NBRC-
0123
Henry J. SommerNational Bankruptcy ConferenceSubmitted report entitled "Reforming the Bankruptcy Code"

The 1994 amendments only partially overrruled Rake v. Wade. This decision cost almost every Chapter 13 debtor desiring to save a home from foreclosure thousands of dollars of additional interests on interest, and interest on other fees and charges.Amend the Code to clarify that when a default on a long-term obligation is cured under a chapter 12 or 13 plan, interest and other costs shall be payable only if, under the contract and applicable nonbankruptcy law, such interests and costs would have been paid in a nonbankruptcy cure of the default.
NBRC-
0123
Henry J. SommerNational Bankruptcy Conference
1325722Case law is confused regarding valuation of property and interest rates in chapter 13.Clairfy the Code to provide that, for purposes of giving creditors present value under § 1325(a)(5)(B), the appropriate interest rate is one which approximates the creditor's cost of funds, and should be, presumptively, the prime rate of interest. The Code should be clarified to provide that collateral should be valued for purposes of sections 1325(a) and 722 based upon the amount the secured creditor would realize if it were permitted to liquidate the property, taking into account costs of sale, i.e. at wholesale value.
NBRC-
0148
Judge Robert MartinChief Bankruptcy Judge; District Wisconsin
1104
Lack of a viable threat that the DIP may lose control of the reorganization process has continued what was known under the old chapter XI as "the arrogance of the Chapter XI debtor." Unresponsiveness, delay, looting of the estate, and "uneconomic decisions" are all potential products of inappropriate DIP control.Proposed statute would provide that at any time after the commencment of the case and prior to the filing of a plan, any party in interest (but not the court or the US Trustee) may move for the appointment of a trustee. In the absence of a hearing on an objection to the motion within 30 days of its service, the motion would be deemed granted. Any objecting party would have to prove that: debtor is operating business consistent with DIP duties; DIP is maintaining books & records; wages, taxes and insurance payments are up to date; plan negotiations have begun; appt of trustee would not be in best interest of general creditors.
NBRC-
0148
Judge Robert MartinChief Bankruptcy Judge; District Wisconsin


Need for more rapid confirmation of plans.Disclosure statements should be done away with, regaining the 30-45 days back in the confirmation process would be far superior to the other expediting proposals.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney


US Trustee program does not receive sufficient funding for fraud investigation.US Trustee's Office should be given greater resources for funding fraud investigation.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney
28 USC § 1930
Recent legislation requiring debtors to pay US Trustees a fee after a plan is confirmed and until the case is closed could have a tremendous negative impact on the feasibility of small debtors' plans.Legislation requiring debtors to pay US Trustees a fee after a plan is confirmed and until the case is closed should be repealed.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney
327(a)101(5)When determining whether a professional is "disinterested" under 11 USC § 327(a), every member of a firm should not be disqualified because one of its members is not "disinterested." Enlightened courts have held in a number of instances that a member of a firm may be retained under such circumstances where a "Chinese Wall" was created to screen out nondisinterested members.In recognition of the realities of modern practice, the definition of "disinterested" in 11 USC § 327(a) should be amended to recognize that a professional firm is not disqualified solely based on the disqualification of one of its members as long as a proper screening mechanism is applied.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney
327(a)101(14)Definition of a "disinterested person" in 11 USC § 327(a) should not necessarily disqualify professionals who have a claim against the estate. Often, the attorney who has been counseling the debtor prior to the bankruptcy filing, or an accountant who is most familiar with the debtor's books and records, has not been paid all of her or his pre-petition fees. Where the professional is unwilling to waive the claim for fees, most courts have held that he or she is prohibited from representing the DIP post-petition. However, the existence of this claim does not necessarily affect the professional's judgment, and the court should be allowed to evaluate whether a professional is "disinterested" on a case by case basis.11 USC § 327(a) should be amended to delete the requirement that professionals not be creditors, but professionals should still be required to disclose their status to the court when making application for employment. In order to screen out non-disinterested creditor professionals, this section could be amended to prohibit professionals from participating in the case as a creditors, other than to file proof of claim, and from voting on any proposed plans.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney
547(c)(2)(C)
In interpreting the ordinary course defense to preference claims, courts have held that § 547(c)(2)(C), which specifies that tranfers must be made "according to ordinary business terms," requires that the transfers be made in a manner that is "ordinary in the industry in general." This standard is ambiguous, difficult to prove and unnecessary.Requirement under 11 USC § 547(c)(2)(C) that the transfer was "ordinary in the industry in general" is unnecessary. The requirements under subsections (A) (that the debt was incurred in the ordinary course of the debtor's business) and (B) (that the transfer was made in the ordinary course of affairs of the particular debtor and creditor) are sufficient for establishing that the subject of the claim was an ordinary course transfer and not a preference.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney
522F.R.B.P. 4003(b)Thirty day time period under Rule 4003(b) during which objections to a debtor's claimed exemptions can be made is too short, unnecessarily restrictive, and sometimes results in debtors being entitled to unwarranted exemptions.Time period for objecting to a debtor's claimed exemptions should be extended, possibly to 60 days from the first meeting of creditors, in order to coincide with the deadline under Rule 4004 for objecting to the debtor's discharge in Chapter 7 cases.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney


Under current practice, an individual doing business as a sole proprietorship may seek relief under Chapter 13 if his debts meet Chapter 13's requirements. However, if the same individual has incorporated his business, he is effectively prevented from reorganizing because of the prohibitive costs, complexities and time consuming requirements of Chapter 11. Small, closely-held corporations should qualify for relief under Chapter 13, which provides an expeditious and inexpensive method for the small business person to reorganize his or her debts.Small businesses that meet the aggregate debt limitations of Chapter 13 should be allowed to seek relief under that Chapter.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney


Limitations on the dischargeability of taxes are too restrictive. In many cases, taxes are the largest debts owed and often the reason for a bankruptcy filing. Denying debtors the ability to discharge taxes frustrates the objective of providing a fresh start, and sometimes forecloses the possibility of meaningful rehabilitation. Taxes are essentially no different from any other debt and no rationale exists for according taxes nondischargeability status.In order to provide debtors a true fresh start and opportunity for rehabilitation, a much broader range of taxes should be dischargeable. This dischargeability need not extend to tax obligations resulting from tax fraud.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney
26 USC § 6012(a)(2), Reg. § 1.6012-2(a)(2)
Requirement for filing corporate tax returns in Chapter 7 bankruptcy cases is too burdensome and costly in situations where the estate has little income and no taxable income. Currently, Chapter 7 bankruptcy trustees are required to file tax returns in all corporate cases. 26 USC § 6012(a)(2); Reg. § 1.6012-2(a)(2); Reg. § 1.6012-3(b)(4). A Revenue Ruling permits trustees to present facts to the IRS to relieve the filing requirement in cases with no assets or income. Rev. Rul. 84-123 1984-2 CB 244. This procedure may not be applicable in limited income cases because corporations typically have some assets, even if they are fully encumbered. While the IRS appears to apply the Revenue Ruling liberally, administrative practice is subject to change at any time and trustees using the procedure must employ the cumbersome and costly procedure of presenting facts to the District Director and awaiting a response. Trustees often have difficulty obtaining prior tax returns and other financial information necessary for preparation of returns. Moreover, trustees in no-asset cases frequently do not have the funds to pay for tax return preparation, and the estates infrequently have any tax liability.Requirement for filing corporate tax returns in Chapter 7 bankruptcy cases should be eliminated in situations where estate income falls below a certain amount and the estate has no taxable income.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney
101(5)
Bankputcy trustees of estates containing contaminated property should not have to risk being held directly liable for the property's clean-up costs. The Bankruptcy Code fails to accomodate several problems associated with the environmental liability of trustees, and the result has been conflicting and sometimes "poor" case law. One factor contributing to this problem is that the definition of "claim" in § 101(5) is difficult to apply in certain situations, such as where a government agency is seeking to compel the debtor to clean-up contaminated property.Definition of "claim" in § 101(5) should be amended to clarify what types of environmental liabilities and responsibilities fall within its scope.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney
362
Bankputcy trustees of estates containing contaminated property should not have to risk being held directly liable for the property's clean-up costs. The Bankruptcy Code fails to accomodate several problems associated with the environmental liability of trustees, and the result has been conflicting and sometimes "poor" case law. One factor contributing to this problem is that § 362 does not clearly specify those types of environmental litigation that are prohibited by the automatic stay. Some courts have held that actions to recover clean-up costs constitute an exercise of police or regulatory powers and are therefore not stayed. Other courts have held that actions to correct the dollar amount of an environmental claim are not actions to collect a debt and therefore are not stayed. Litigating these actions is unnecessarily burdensome and can be expensive for the debtor.Disputes as to whether a particular litigation is prohibited by an automatic stay are related to administration of the estate, and thus should be resolved within the bankruptcy proceeding and not in separate litigation. 11 USC § 362 should be amended to clarify which types of environmental litigation are prohibited by the stay.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney


Standard is needed for determining whether an environmental claim arose pre- or post-petition, or pre- or post-confirmation. Problems arise when a debtor has contaminated property in the past, but the government has taken no action to compel a clean-up. In these circumstances, it is not clear when the claim arising from the clean-up costs arose.Standard should be developed for determining whether a claim is pre- or post-petition, or pre- or post-confirmation.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney


Bankruptcy Code fails to deal adequately with various environmental issues.Comprehensive review of the interaction between the Bankruptcy Code and environmental laws should be undertaken.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney
547, 550
Recent amendment to 11 USC § 550 does not fulfill its intended purpose of overruling Levit v. Ingersoll Rand (DePrizio). In DePrizio, the court held that payment to a creditor on a debt guaranteed by an insider constitutes a transfer for the benefit of the insider, and thus the one-year extended preference period applies. Rather than precluding DePrizio type preference claims, the amendment simply places a limit on the trustee's ability to recover a voided preference (i.e., the trustee may not recover from a non-insider transferee a voided transfer that occured between 90 days and one year prior to the petition). The trustee's ability to void the transfer is still "left open." With some types of transfers, such as the granting of a security interest, avoidance will effectively result in defeating the non-insider transferee's interest and for all practical purposes result in recovery.11 USC §§ 547 and 550 should be rewritten to provide that all transfers to a non-insider occuring between 90 days and one year prior to a bankruptcy petition may not be avoided by a trustee.
NBRC-
0175
Kenneth P. Childs, on behalf of the Bankruptcy Review Committee of the Oregon State Bar Debtor-Creditor SectionAttorney
727(d)(1)727(e)(1)One year time period in which trustees, creditors and US Trustees may seek revocation of a debtor's discharge where the discharge was obtained through fraud is too short. The fraud often involves concealment of assets and/or false statements, and is frequently discovered more than one year after the discharge was granted.Extend the time period for filing a revocation action based on fraud to five years, making this period consistent with the five year criminal statute of limitations for bankruptcy fraud. Otherwise, it would be possible for a debtor to be criminally prosecuted for bankruptcy fraud but retain his bankruptcy discharge. If a five year time period is not adopted, the period should at least be consistent with the period allowed for revocation actions where acquired property is not reported (§ 727(d)(2)) and for refusals to obey a court order to testify (§ 727 (d)(3))--up to one year after discharge or one year after the case is closed, whichever occurs later.
NBRC-
0183
William E. CumberlandSenior Staff VP, Mortgage Bankers Assoc. of AmericaSubmission of Robert P. Vestewig to Single Asset R.E. working group

Author provides written submission of Robert P. Vestewig, Senior Vice President of L. J. Melody & Co. Houston, TX, a commercial mortgage banking company, for consideration at the 12/17/96 meeting of the Working Group on Partnerships, Small Business and Single Asset Realty. Mr. Vestewig also serves as Chair of the Bankruptcy Working Group of the Mortgage Bankers Association of America. In his statement, he defines and discusses the "single asset debtor," and provides the following observations: 1) The preservation of jobs is not usually a consideration in reorganizing single asset debtors because these debtors normally have few employees, if any. Also, when a lender forecloses on a single asset property, jobs are not often lost because the lender usually retains the debtor's employees to manage the property. 2) Contrary to some critics' opinions, large land developers and hotel chains who own single asset properties are not automatically put out of business where a lender forecloses on the ownership of a single asset entity. Typically, these companies do not legally own the property, but rather ownership rests in a legal entity such as a corporation or limited partnership in which they own an interest or have a management contract. 3) Often, the creditor has far more capital investment in the asset that does the single asset debtor. Consequently, commercial mortgage lenders are understandably concerned about delays in bankruptcy proceedings and threats of cramdowns. 4) History has demonstrated that reorganization is not always possible with single asset debtor-owners. According to a MBAA survey of life insurance companies, single asset debtors often use Chapter 11 and reorganization provisions for delay rather than legitimate reorganization purposes. 5) Delaying a bankruptcy allows these debtors to avoid or defer income tax liability for recapture of depreciation, to divert rents to the owner, and to induce lenders to pay cash or to forego prepayment penalties. Delay is costly, resulting in higher mortgage interest rates, less investment in commercial mortages, and a decline in property values and corresponding tax bases. During this delay, tenants in commercial and residential property and nearby communites also suffer when single asset properties are not maintained. 6) Congress has begun to recognize that unwarranted delay by single asset debtors is "inappropriate," and has implied in recent amendments that single asset cases should not be entitled to "the presumption that reorganization is possible." The 1994 provision lifting the automatic stay in cases where reorganization is not reasonably likely to succeed may be "quite helpful" if ever applied to all single asset cases.Single asset debtors are often incapable of reorganization because they have no "business" to reorganize. The NBRC should approach the issue of single asset debtors with the assumption that these debtors are not always capable of successful reorganization, but may be using the reorganization provisions simply to delay and take advantage of the bankruptcy system. Many issues, such as cramdowns, creditor classes, and the new value exception to the absolute priority rule, are more easily resolved if "there is no pervasive presumption that reorganization of a single asset debtor-owner is the goal." The Bankruptcy Code should be amended to reflect this "reality."
NBRC-
0199
Heidi Heitkamp, on behalf of the Natl. Assoc. of Attys. General, Bankruptcy & Taxation Working GroupChair of Bankruptcy & Taxation Working Group of Natl. Assoc. of Attorneys General; Attorney General of ND
362105"Strongly supports" the positions set forth in the letter dated 12/12/96 by J. Christopher Kohn, Director, United States Department of Justice, Civil Division, Commercial Litigation Branch, regarding the bankruptcy court's injunctive powers. The author states that the Bankruptcy Code fails to prevent defendants who file bankruptcy from using the automatic stay to shield themselves from state enforcement of police and regulatory powers. She acknowledges that collection of purely monetary judgments, even those entered in police and regulatory actions, should be deferred to the normal bankruptcy process. However, the exercise of state police and regulatory power often requires the state to act against items such as licenses or permits that may be property of the estate, and in cases such as civil or criminal forfeitures, that the state seize assets where the goods have been manufactured in violation of the law. In these instances, the Code should clearly prohibit the defendant from using the automatic stay as a defense to state enforcement.Section 362 should be clarified to prevent defendants who file bankruptcy from using the automatic stay as a defense to state police and regulatory enforcement that occurring outside the normal bankruptcy process. Additionally, § 105 should be limited and clarified with regard to police and regulatory actions so that defendants cannot use this section as a "back-door way" for overruling the exemption from the automatic stay. The author concludes that "it would be a very rare situation where it would be appropriate to exempt a debtor from the operation of laws applicable to other parties."
NBRC-
0207
J. Christopher KohnDirector, Commercial Litigation Branch (DOJ)
362
This nine-page memorandum is a follow-up to the government Round Table discussions in Santa Fe and San Diego. Those discussions focused in part on clarifying the automatic stay to enable police and regulatory actions to impact estate property. The Code's automatic stay provisions currently treats police and regulatory actions in two exceptions, §§ 362(b)(4) and (b)(5). The principle behind these exceptions is that bankruptcy should not prevent police and regulatory actions and judgment enforcement so long as government is not enforcing monetary judgments. This intent can be frustrated by the Code's failure to exempt police and regulatory actions from § 362(a)(3), which stays acts to seize or control state property, and from § 362(a)(6), which stays acts to seize claims. Working Group Proposal #7, which was intended to address these concerns by adding language to § 362(b)(4) enabling governments to exercise control over estate property, is too limited and technically flawed.Section 362(a)(3) should be added to the police power provisions excepted by §§ 362(b)(4) and (b)(5).
NBRC-
0207
J. Christopher KohnDirector, Commercial Litigation Branch (DOJ)
362105This nine-page memorandum is a follow-up to the government Round Table discussions in Santa Fe and San Diego. Those discussions focused in part on limiting overly expansive notions of a bankruptcy court's injunctive power, especially with regard to police and regulatory activities. In response to the NBRC's request, the author provides case citations that illustrate the Branch's concerns relating to overly expansive use of a bankruptcy court injunctive power. Viewed as a whole, the Branch believes that these cases demonstrate several points: (1) the cases are neither limited in number nor aberrational in character; (2) governmental actions are often enjoined even where the action is conceded to be exempt under the police and regulatory exception; (3) the court decisions generally focus on the perceived "harm" to the estate or its chances of reorganization without identification of a substantive right held by the debtor which the injunction, in theory, should protect; and (4) unless expressly limited, debtors will continue to challenege, on a case-by-case basis, whether a given police or regulatory law is really "necessary," and courts, viewing the issue through the lens of the debtor's reorganization effort, will often decide that it is not.Commercial Litigation Division proposes two amendments to § 105 to address these concerns: "(e) In issuing an injunction, the court shall apply the standards and procedures applicable to a district court under nonbankruptcy law, except to the extent procedures are modified by the Federal Rules of Bankruptcy Procedure. (2) A police or regulatory act of a governmental unit that is not stayed or proscribed by a specific provision of this title may be enjoined only to the extent authorized by nonbankruptcy law."
NBRC-
0211
Robert A. GreenfieldConferee, National Bankruptcy ConferenceProposed amendment to the definition of "single asset real estate"101(51B)
National Bankruptcy Conference (NBC) opposes the so-called technical amendments bill that passed in the Senate, but not the House, seeking the elimination the $4 million cap from the § 101(51B) definition of single asset real estate. The NBC is on record as opposing different treatment for single asset real esate cases, any change in the definition of "single asset real estate," and eliminating the $4 million cap.If the $4 million cap were eliminated, the NBC is considering additional amendments to the definition which would limit "single asset real estate" to the smaller cases and those not likely to involve an operating business. The author encloses a copy of the proposed amendment which is presently being considered by the NBC.