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Congress Adjourns for Spring Recess; Bankruptcy Bill Left Hanging


Web posted and Copyright © May 1, 2000, American Bankruptcy Institute.

he fate of the bankruptcy bill remains unclear at press time. The Senate is in recess until April 25 and the House is out until May 2. Staff members for the principals continue to swap proposals and proposed language, with House Judiciary Committee staff reportedly sending a response back to the Senate's informal offer. No conferees have been named, with the process still stymied by an inability to achieve unanimous consent in the Senate over the bifurcation of the bill from the minimum wage and business tax breaks, included in S. 625.

In response, Republican leaders in both chambers have agreed to negotiate a compromise bankruptcy package outside the normal conference process. Staffers of Democrat members have been involved in this process as well. The Senate representatives in this informal process have generally found a bipartisan consensus. The ranking Democrat on the Courts subcommittee, Sen. Robert Torricelli (D-NJ), is a strong supporter of S. 625. The House representatives have not had the same consensus. The ranking Democrat on the subcommittee, Rep. Jarrold Nadler (D-NY), opposes the bill and even full committee Chairman Henry Hyde (R-IL) has concerns about the impact of the means test and other aspects of H.R. 833. Many non-consumer items are also on the table for negotiation.

The administration has played a background role only, at least to date. Since there has been no official conference, there has been no administration letter to conferees. It is expected that at least some of the administration's concerns have been communicated to Senate Democrats.

Meanwhile, the Senate Democrat leadership, which supports bankruptcy reform, has assisted Majority Leader Trent Lott (R-MS) by attempting to identify other pending conference vehicles to attach the compromise package. The current favored vehicle is the so-called "electronic signatures" legislation now in conference. This legislation has a complex story of its own.

The bill (also known by "Dig- (for digital) Sig") deals with technologies that are expected to become essential parts of doing business via the Internet. Dig-Sig is an essential component of the "e-agenda" promoting e-commerce. Based on a range of encryption techniques, digital signature systems allow people and organizations to electronically certify such features as their identity, ability to pay or the authenticity of an electronic document. Digital signature systems are the subject of dozens of state laws, so the federal bill would pre-empt the states in some cases. This has made the legislation controversial with politically active organizations such as the National Conference of State Legislatures and the growing electronic privacy community. Due to the length of the House recess, no further action can occur until May on this vehicle.

In April, two hearings addressed other issues in the mix. The bankruptcy subcommittee of the House Judiciary Committee held a hearing on the scope of the automatic stay exception for policy and regulatory actions. Several committee members were critical of the Federal Communications Commission's (FCC) actions in the NextWave case. The full hearing testimony is online at the ABI World home page (http://www.abiworld. org). Both the FCC and NextWave sought to use the bankruptcy reform bill as a way to clarify the distinction of when the government is acting as a regulator or a mere creditor.

The Senate Labor Committee held a hearing on protecting retirement assets in bankruptcy. The committee heard witnesses testify in opposition to a provision in S. 625 that would permit a debtor to waive the protection of retirement assets from the reach of creditors. The provision, contained in ß303(c), would alter the anti-alienation rule for such assets. A bipartisan group of Senators also opposed the provision because they said it would undermine the retirement income security policy. Now that the issue has been raised, it is likely the provision will either be modified to cap the exemption, or will be dropped entirely.


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