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Reprinted from August 1998 ABI Journal

Web posted and Copyright © August 1, 1998, American Bankruptcy Institute.

The Senate bankruptcy reform bill (S. 1301) did not receive consideration by the full Senate before the month-long August recess. Majority Leader Lott (R-MS) pledged to bring the bill before the Senate in September, between consideration of must-pass spending bills. The delay in full Senate consideration will make it difficult to achieve any reform this year, as the session is scheduled to adjourn on October 9. The Senate bill, though more modest in scope than its House counterpart (H.R. 3150), will attract a host of controversial amendments. Sixty votes are needed under Senate rules to cut off extended debate from opponents. Even if S. 1301 passes the full Senate, it must be reconciled with the House bill in a conference committee and re-passed in identical form in both chambers before presentment to the President. Attorney General Janet Reno testified at a July 16 Senate hearing that she would be inclined to recommend a veto of H.R. 3150 in its current form. The House bill passed by a veto-proof margin (306-118) on June 10.

The House Judiciary Committee approved a compromise bill to provide a right of judicial review for panel and standing trustees who are removed from case rotation by the U.S. Trustee (UST) or who are denied recovery of certain expenses. The bill, H.R. 2592, sponsored by Rep. Bob Goodlatte (R-VA) provides for judicial review in the district court upon exhaustion of administrative remedies, and permits a matter to be referred to either a bankruptcy or magistrate judge under a standard of review that is more deferential to the UST decision than in earlier versions of the bill.

The fate of business bankruptcy reform is tied to the fortunes of consumer bankruptcy. H.R. 3150 contains special rules for small business debtors (less than $5 million in debt) and single asset real estate cases, among other features. In the Senate, some of the business provisions in S. 1914 (Grassley, R-IA) could be added to S. 1301. One provision that must be addressed involves the continuation of chapter 12, which will sunset unless Congress acts before adjournment.

The Home Health Integrity Preservation Act (S. 2031), introduced on May 5 by Sen. Grassley, would amend the Social Security Act to provide that certain Medicare actions against debtors shall not be subject to the stay and makes certain Medicare debts nondischargeable, among other features.


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