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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.)

Small Business
IDNameGroupOtherCode
Sec
Cross
Ref
Problem ReferencedProposed Solutions
NBRC-
0005
Richard L. HaeusslerLaw Offices of Richard L. Haeussler. Sole practitioner who represents chapter 7 & 13 Debtors.


Chapter 11 does not work for small businesses.New Chapter should be open to small businesses with up to $2.5 million in debt.
NBRC-
0005
Richard L. HaeusslerLaw Offices of Richard L. Haeussler. Sole practitioner who represents chapter 7 & 13 Debtors.


Chapter 11 does not work for small businesses.New Chapter should be open to small businesses with up to $2.5 million in debt.
NBRC-
0007
Leon S. ForemanScholar-in-Residence - American College of Bankruptcy - Selective Professional Association of 7, 13 & 11 Attys; Accts; Professors; Judges * Gov't Officials (Approx. 300 Fellows).


Are the 1994 small business amendments workingSmall business amendments should be given a chance to work.
NBRC-
0021
James I. ShepardPractitioner; Commissioner, National Bankruptcy Review Commission


Chapter 11 takes too long, Small cases without an active creditor constituency tend to linger on without resolution which creates a burden on taxing authorities because of the need to handle them separately from the mainstream of taxpayers. The voluntary "small business" amendments are simply ineffective.There should be provisions which encourage the compeltion of cases as quickly as possible. The small business provisions should be mandatory.
NBRC-
0042
David J. BardinAttorney; Arent, Fox, Kintner, Plotkin & Kahn. DC counsel for Cult Awareness Network.Testified at Open Forum at July Meeting.

Should the bankruptcy code deal with non-profit corporations Should assets of non-profit/public interest corps enjoy constitutional protectionNo solution suggested. Volunteered time to the Commission.
NBRC-
0042
David J. BardinAttorney; Arent, Fox, Kintner, Plotkin & Kahn. DC counsel for Cult Awareness Network.Testified at Open Forum at July Meeting.

How should the Ch. 7 trustee, the bankruptcy court in Ch. 7 or Ch. 11 and the district court assure protection of associational rights of non-debtor individuals who choose to associate with the debtor For example, how should they protect membership and donor lists of a bankruptcy non-profit corporationNo solution suggested. Volunteered time to Commission
NBRC-
0042
David J. BardinAttorney; Arent, Fox, Kintner, Plotkin & Kahn. DC counsel for Cult Awareness Network.Testified at Open Forum at July Meeting.

Under Ch. 7 how does the representative of the estate carry-out fiduciary obligations of the bankrupt corp. to those who associated with it in order to safeguard their rights When issues of Const'l privacy are raised, how should a trustee respond procedurally and substantively Should the trustee be expected to present a program for vindicating such rights Should the Code provide guidance as to these const'l dimensionsNo solution suggested. Volunteered time to the Commission.
NBRC-
0042
David J. BardinAttorney; Arent, Fox, Kintner, Plotkin & Kahn. DC counsel for Cult Awareness Network.Testified at Open Forum at July Meeting.2004
Should the trustee address issues of ongoing physical access to files of non-profit debtors by representatives of the debtor differently from the files of for-profitsNo solution suggested. Volunteered time to the Commission.
NBRC-
0042
David J. BardinAttorney; Arent, Fox, Kintner, Plotkin & Kahn. DC counsel for Cult Awareness Network.Testified at Open Forum at July Meeting.F.R.B.P. 7026F.R.B.P. 2004Should the trustee allow adversaries of the non-profit debtor to acquire privileged attorney-client and work-product documents needed by the debtor for on-going non-bankruptcy litigationNo solution suggested. Volunteered time to the Commission.
NBRC-
0075
Judge Thomas E. CarlsonChief Bankruptcy Judge; District of San FranciscoInvited participant to small business and jurisdiction working groups.

Results of poll of Ninth Circuit Bankruptcy Judges: Need for a separate chapter to deal with small business debtors78% of the judges believe there should not be a separate chapter governing the reorganization of small business debtors. The substantive portions of Ch. 11 should apply to such cases.
NBRC-
0075
Judge Thomas E. CarlsonChief Bankruptcy Judge; District of San FranciscoInvited participant to small business and jurisdiction working groups.

Should there be fast track procedures to speed resolution of small ch. 11 cases78% of the judges believe that there should be fast-track procedures to speed the resolution of small chapter 11 cases.
NBRC-
0075
Judge Thomas E. CarlsonChief Bankruptcy Judge; District of San FranciscoInvited participant to small business and jurisdiction working groups.

Should the small business definition be $10 million in annual gross incomeA plurality of the judges believe that the fast-track procedures should apply to all cases in which the debtor's annual gross-income is less than $10 million.
NBRC-
0075
Judge Thomas E. CarlsonChief Bankruptcy Judge; District of San FranciscoInvited participant to small business and jurisdiction working groups.

What should proposed plan filing deadline be for fast-track small business cases89% of the judges believe that the proposed 45-day plan filing deadline is too short. Several judges also stated that any statutory deadline should be subject to extension in suitable cases.
NBRC-
0075
Judge Thomas E. CarlsonChief Bankruptcy Judge; District of San FranciscoInvited participant to small business and jurisdiction working groups.

Should the fast-track procedures include standard form plans and disclosure statements81% of the judges believe that standard form plans and disclosure statements should be encouraged. More enthusiasm for simplifying disclosure statements and eliminating disclosure hearings than for combining the disclosure and confirmation hearings.
NBRC-
0075
Judge Thomas E. CarlsonChief Bankruptcy Judge; District of San FranciscoInvited participant to small business and jurisdiction working groups.

Should a chapter 13-type trustee be appointed in small ch. 11 casesOnly one-half of the judges believe a chapter 13-type trustee should be appointed in small ch. 11 cases.
NBRC-
0078
David A. LanderAttorney; Thompson CoburnInvited participant to small business working group sessions.

How to define a small business in order to provide different treatment in ch. 11.Definition of $10 million in revenue is much too broad and should be reduced by at least one-third. This definition as it now stands covers all cases except those that would be considered very large in my part of the country.
NBRC-
0116
Kenneth J. DoranLaw Offices of Kenneth J. DoranParticipated at Consumer Bankruptcy Working Group on July 19.

Except for sole proprietorships that meet the Chapter 13 debt limit, there is not a useful reorganization option in the Code for the smallest businesses (revenues in the five- and six-figure range.)Create a reorganization option for small businesses, e.g., eliminate Chapter 13 debt limits, and extend eligibility to any natural person, including sole proprietors.
NBRC-
0143
Riley C. WalterMcCormick, Barstow, Sheppard, Wayte & Carruth LLP


There is no separate chapter to address small business bankruptcy issues.Create a separate, small business chapter, like Chapter 12, for businesses with aggregate debts of $2.5 million or less.
NBRC-
0143
Riley C. WalterMcCormick, Barstow, Sheppard, Wayte & Carruth LLP


The 45-day plan filing requirement is too short.A 75-90 day plan filing deadline is appropriate for small business cases.
NBRC-
0143
Riley C. WlaterMcCormick, Barstow, Sheppard, Wayte & Carruth LLP


The proposed small business definition of $10 million in revenues is too high.Either lower the small business eligilibility limits or provide an opportunity to opt out of the small business treatment on notice.
NBRC-
0143
Riley C. WalterMcCormick, Barstow, Sheppard, Wayte & Carruth LLP


The deadlines proposed in the Sept. 7 Small Business Memo are too inflexible.Allow courts flexibility in extending deadlines, clarifying that extensions are the exception and not the rule.
NBRC-
0143
Riley C. WalterMcCormick, Barstow, Sheppard, Wayte & Carruth LLP


Small business debtors do not need a monitoring agent. Furthermore, the US Trustee should not be deciding which chapter 11 cases have merit.Find some way to increase creditor involvement in small business cases.
NBRC-
0143
Riley C. WalterMcCormick, Barstow, Sheppard, Wayte & Carruth LLP


Small business plans and disclosure statements are unnecessarily burdensome and costly.Simplify plan and disclosure statement requirements for small business cases.
NBRC-
0143
Riley C. WalterMcCormick, Barstow, Sheppard, Wayte & Carruth LLP


Discharge date in Chapter 11 cases should not be extended. Confirmation creates a contract and the enforcement is left to the state courts. The debtor needs to start with a cleaned up balance sheet. Creditors can achieve their protections by negotiating provisions for inclusion in the plan.Discharge date should not be discharged.
NBRC-
0143
Riley C. WalterMcCormick, Barstow, Sheppard, Wayte & Carruth LLP


The Code does not plainly state that fees to oversecured creditors must be approved by the court.The Code should plainly state that fees paid out of the estate to oversecured creditors must be approved by the court.
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-
0149
L.E. Creel, IIIAttorney, Malouf, Lynch, Jackson, Kessler, Collins


Proposed 45 day time limit within which debtor must file a plan is unrealistic and impractical.In the early days following a ch. 11 filing by a small business debtor, the energies of the management are directed at initiating the ch. 11 process. To think that a business debtor can negotiate and formulate a plan of reorganization within six weeks of filing is naive. Strongly oppose a 45-day limit or any shortening of the 180 day exclusive period.
NBRC-
0149
L.E. Creel, IIIAttorney, Malouf, Lynch, Jackson, Kessler, Collins


Lack of creditor representation when no committee exists and moving the ch. 11 process alongLegislating the authority to hold status conferences, but not imposing strict time limits is a useful concept especially in those cases where there is no active creditors committee. If there is an active creditors' committee, then such status conferences should be held only upon request of a party in interest.
NBRC-
0149
L.E. Creel, IIIAttorney, Malouf, Lynch, Jackson, Kessler, Collins


Problem with disclosure statement requirements for small business debtors.In the majority of cases, the disclosure statement necessitates unwarranted expense because it is either never read or is read and used in "the approval process for leverage or other non-disclosure purposes."
NBRC-
0149
L.E. Creel, IIIAttorney, Malouf, Lynch, Jackson, Kessler, Collins


Whether a need exists for a small business monitoring agent.The addition of a small business monitoring agent seems superfluous and an unnecessary expense. In a case with a creditors' committee, such a person is unneccessary. In a case without a creditors' committee, staus conferences with the judge should suffice. The bankruptcy judge should be more involved in the case (as under the Act) and should not merely be a dispute resolver. The system should be based upon someone's good judgement and who is more appropriate for that position than the bankruptcy judge.
NBRC-
0164
Philip J. HendelAttorney; Hendel, Collins & Newton


Current proposal under consideration is unworkable.Simpler Solution to problems of small business bankruptcy exist.
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-
0178
Gary White, on behalf of the Natl. Assoc. of Credit ManagementChair, Government Affairs Comm., Natl. Assoc. of Credit Management


Working group's proposed ten million dollar income threshold in defining "small business" would qualify businesses that otherwise would not qualify as "small." Under this test, over 91% of all businesses filing for bankruptcy would qualify as small businesses. Even the largest companies, by manipulating tax returns, could be treated as small businesses. Expedited treatment is justified for businesses who legitimately qualify as "small" because of the difficulty of forming creditor committees in small business bankruptcies. However, allowing larger companies to benefit from this treatment will compromise the bankruptcy system.NACM strongly supports the testimony of Jim Sczudlo, Vice Chair of NACM's Government Affairs Committee, that was presented at the Santa Fe meetings, urging the NBRC to define a small business as a debtor with secured and unsecured debts totaling no more than two million dollars.
NBRC-
0178
Gary White, on behalf of the Natl. Assoc. of Credit ManagementChair, Government Affairs Comm., Natl. Assoc. of Credit Management


Use of a small business monitoring agent to ensure timely case adjudication will further and unnecessarily erode the financial base of the small business debtor.NACM strongly opposes the use of a small business monitoring agent to ensure timely case adjudication.
NBRC-
0178
Gary White, on behalf of the Natl. Assoc. of Credit ManagementChair, Government Affairs Comm., Natl. Assoc. of Credit Management


U.S. Trustee does not adequately review the progress of small business cases.NBRC should urge the Executive Office of the U.S. Courts to review the efficacy of small business Chapter 11 cases and report the findings to the General Accounting Office.
NBRC-
0179
Geraldine MundUS Bankruptcy Judge, Central Dist. of CA


Author states that the U.S. Trustee in her district has asked the court to delay the initial status conference until 60 days after commencement of a case. This would allow the Trustee to obtain one cycle of required reports and hold the § 341(a) meeting. In so doing, the Trustee is better prepared for the status conference and is able to give the judge meaningful information.Initial status conferences should not be held until about 60 days after a case commences. If the Bankruptcy Code is amended to make this status conference mandatory, a flexible time period should be provided (e.g., 30-60 days) so that each district can create a system that is tailored to its needs.
NBRC-
0179
Geraldine MundUS Bankruptcy Judge, Central Dist. of CA


Disclosure statement and reorganization plan should be combined in one document in order to minimze the time required for judicial approval. In most cases, the plan merely reiterates the contents of the disclosure statement, and a great deal of judicial time is required to approve both documents. A single document could be approved more quickly. In cases where the disclosure statement is voluminous, two separate documents should still be required.Disclosure statement and reorganization plan should be combined into a single document, except in cases where the court orders otherwise.
NBRC-
0179
Geraldine MundUS Bankruptcy Judge, Central Dist. of CA


Grant of discharge should not occur until the plan is performed, unless there is cause shown to discharge earlier.Same.
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-
0185
Terrance L. StinnettAttorney
101(51)
"Small business" should not be defined by a $10 million income threshold. The author suspects that "in the Northern District of California at least 95% of the [C]hapter 11 cases that are filed involve debtors whose gross annual income is less than $10 million," including many businesses who should not otherwise qualify as small businesses. This threshold seems to be based on the incorrect assumption that only in cases where debtors' gross income exceeds $10 million will adequate creditor interest be generated to assure that the provisions of Chapter 11 are not abused by the debtor. The author's experience has been that it is the size of debts owed and not the debtor's income that determines the level of creditor interest. Moreover, "just because creditors do not wish to become actively involved in a case does not mean they have no interest in its outcome or that the case lacks merit.""Small business" should not be defined by a bright line test of the debtor's annual income.
NBRC-
0185
Terrance L. StinnettAttorney


Mandatory deadline should not be imposed for filing a plan. The author particularly disagrees with a deadline of 45 days after the petition date, even if the court has discretion to extend the deadline upon a showing by the debtor that a feasible plan is possible. In the great majority of cases, a meaningful plan cannot be formed within 45 days. The first 30-60 days are devoted to many other details, leaving little time for plan formation. Also, in many cases development of a plan may take an even longer period of time as the parties wait for various events to occur, such as negotiating terms for restructuring secured debts, finding a source of new capital, or decreasing the vacancy rate of rental properties. In addition, requiring a plan filing deadline is based upon the erroneous assumption that neither creditors, debtors, nor debtors' counsel wish to move Chapter 11 cases to confirmation. In fact, in most cases creditors will exert upon the debtor whatever pressure is necessary to move the case along. In those cases that do languish, the Bankruptcy Court can determine at the status conference an appropriate deadline for filing a plan and achieving confirmation. Such has been the case in Northern California, where Bankruptcy Judges and U.S. Trustees conscientiously monitor Chapter 11 cases and deadlines. The author discusses four recent cases illustrating the need to eliminate deadlines for filing a plan.Mandatory deadlines for filing plans should be eliminated.
NBRC-
0185
Terrance L. StinnettAttorney


Working group's proposed Special Extension Hearing is not an appropriate mechanism for dealing with those cases where a feasible plan cannot be proposed promptly. The Hearing would likely lead to increased, unnecessary litigation early in the case, and will divert counsel and the debtor from their efforts to maintain the business and develop a realistic plan. Futhermore, logistical and administrative details may prevent debtors from being able to demonstrate early in a case that they can confirm a feasible plan. That debtor can often develop a feasible plan if given additional time. Also, requiring this Hearing will increase the cost of Chapter 11 cases, and will force potential counsel to require higher retainers to cover the cost of the Hearing, thereby depleting the debtor's limited funds.Opposes the Working Group's proposed Special Extension Hearing.
NBRC-
0185
Terrance L. StinnettAttorney


Proposed provision regarding small business monitoring agent would merely add expense to the Chapter 11 process, and the agent would add little to the prospects for successful reorganization. A monitoring agent would only be helpful in cases that are obviously hopeless from the start and where there is little or no creditor interest. These cases should be obvious to the court, and can be weeded out through the status conference procedure.Opposes proposed creation of Small Business Monitoring Agent.
NBRC-
0186
Robert A. GoeringAttorney


Proposed 45 day deadline for filing a plan in the fast track program does not provide the debtor enough time to get counsel, put the numbers straight, develop an effective plan, and then file the petition and plan together. Forty-five days is just too short to give a small business a chance to put its best foot forward in the presentation of a plan.Opposes proposed 45 day deadline for filing a plan in the fast track program. The 90 day period presently provided "makes sense," and should not be shortened.
NBRC-
0186
Robert A. GoeringAttorney


Proposed small business monitoring agent would be just another layer of bureacracy and expense, and would not help debtors survive. Rather, these layers would become impediments to the successful conclusion of the debtor's case.Opposes the working group's proposal wtih regard to small business monitoring agents.
NBRC-
0200
Kenneth N. KleeInvited participant
101(51C)
Defining "small business" with a $10 million threshold is "ill conceived." The definition would embrace many large businesses that simply have large debts but little income. The NBRC should "contact some big 6 accounting firms" to verify that many start up ventures, high tech companies, and bio tech companies have little or no gross income in the early years when products are still under development. These companies should not be entitled to small business treatment."Small business" should not be defined by a $10 million threshold, but rather by a requirement that the debtor have fewer than 25 employees, or less than $10 million in assets (or liabilities), as well as having less than $10 million gross income.
NBRC-
0203
Amy M. Tonti, on behalf of the Allegheny Co. Bar Assoc.'s Bankruptcy & Commericial Law SectionChair, Allegheny County Bar Assoc. (ACBA), Bankruptcy and Commerical Law SectionSummary of ACBA's recommendations

"[O]pposes the Small Business Chapter 11 proposed modifications, but supports specialized programs run by the U.S. Trustee's Office where there is no active Creditors' Committee to review petitions and schedules. The author also supports requiring "early status conferences in those cases that the U.S. Trustees' Office believes are not appropriate Chapter 11 cases."Same.
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.
NBRC-
0223
Frank R. KennedyProfessor, Michigan Law School; former Executive Director, Commission on the Bankruptcy Laws of the United States (1973)Cover letter discussing various areas of concern

Author provides a list of 30 "Topics for Consideration by Commission on Bankruptcy Laws." The recommended topic relating to partnerships is: Revision of provisions governing partnerships and limited liability companies.None.
NBRC-
0236
Thomas E. CarlsonChief Bankruptcy Judge (N.D. Cal.)


Author attaches a copy of his report on the reactions of Ninth Circuit Bankruptcy Judges who participated in the Ninth Circuit Judicial Conference with regard to the working group proposals on small chapter 11 cases.The results of the Judges' dicussion and questionnaire responses can be summarized as follows: 1) Severnty-eight percent of the judges believe there should not be a new chapter govering reorganization of small business debtors. The judges believe the substantive provisions of chapter 11 should apply to such cases. 2) Seventy-eight percent believe there should be fast-track procedures to speed the resolution of small chapter 11 cases. 3) A plurality of the judges believe that the fast-track procedures should apply to all cases in which the debtor's annual gross income is less than $10 million. 4) Eighty-nine percent believe that the proposed plan-filing deadline (45 days after the petition date) is too short. In oral and written comments, several judges also stated that any statutory plan deadline should be subject to extension in suitable cases. 5) Eighty-one percent believe that standard-form plans and disclosure statements should be encouraged. There was more enthusiasm for simplifying disclosure statements and eliminating disclosure hearings than for combining the disclosure and confirmation hearings. 6) Only one-half of the judges believe a chapter 13-type trustee (monitoring agent) should be appointed in small chapter 11 cases. Author attaches questionnaire responses and a synopsis of the judges written and oral comments.
NBRC-
0252
Thompson Coburn and David A. LanderAttorneys


Proposed definition of small business, as an entity with $10 million or less in gross income, is too broad. This definition as it now stands covers all cases except those would be considered very large in the author's part of the country.Proposed definition of small business should be reduced by at least one third.
NBRC-
0252
Thompson Coburn and David A. LanderAttorneys


Proposed 45-day deadline in the fast track program for the filing of a plan is too short. Too short a deadline and will simlpy cause more courts to extend the deadline, and the net effect will be contrary to the purpose of this provision.Fast track plan filing deadline should be extended to either 60 or 75 days. Likewise, the deadline for the Mandatory Status Conference No. 2 should be extended to 15 days after the plan filing deadline.
NBRC-
0252
Thompson Coburn and David A. LanderAttorneys


Establishment of a third party other than a Judge as a monitoring agent who determines the viability of a business would be a serious mistake. Problems that would arise include cost and the fact that each side will still offer its own experts. If the agent were given decision-making authority, the fact that the agent is not subject to the same restrictions as a judge presents constitutional concerns.Opposes creation of small business monitoring agents.
NBRC-
0252
Thompson Coburn and David A. LanderAttorneys


Disclosure Statement Hearing should be a standardized and inexpensive process, and the court should have discretion to determine when a hearing is needed.Supports third proposed "alternative" regarding Disclosure Statement Hearings: use as a baseline the mandatory use of a standard form without a hearing, but give the court discretion to either dispense altogether with the disclosure statement or to require a hearing and mandate disclosure beyond the standard form.
NBRC-
0252
Thompson Coburn and David A. LanderAttorneys


Bankruptcy system already supplies adequate remedies in cases where reorganized debtors fail to perform as called for in the plan. Additional safeguards in the form of deferred granting of discharges is not necessary.Opposes proposal concerning deferred granting of the discharge.
NBRC-
0252
Thompson Coburn and David A. LanderAttorneys


NBRC Subcommittee should revisit its decision regarding voting and absolute priority in the context of a "very small business" case. The only way that a very small business coud effectively reorganize would be through a process similar to chapter 12. In the event there are a few recalcitrant creditors that stand in the way of an out-of-court workout, a chapter 12 process for businesses, corporatations, partnerships, LLC's or individuals with limits slightly above chapter 13 would be a useful vehicle that would benefit all parties and the employees as well.Establish a definition for very small businesses and provide chapter 12-like rules for the elimination of the absolute priority rule and voting.
NBRC-
0270
Kenneth F. MeasePresident, SELMAX Corporation
209, 547
Code does not provide adequate protections for creditors who are small businesses against "unethical business practices by those [debtors] who deliberately mismanage their affairs." Sections 209 and 547 were amended in 1994 supposedly to "simplify" the bankruptcy process, but in reality, both sections are used by unscrupulous debtors against their creditors.Code should offer more protections to creditors who are small businesses by reducing unnecessary government regulations and preventing debtors from manipulating the Code to avoid debts owed to these small business creditors.
NBRC-
0301
National Bankruptcy ConferenceNational Bankruptcy Conference (NBC), Bernard Shapiro - Chair


National Bankruptcy Conference believes that the following issue merits study by the NBRC: whether the law of partnerships should be "totally reconsidered."NBC concludes that partnership law should be "reconsidered." (No additional details are provided. The NBC Report, however, which discusses this position more thoroughly, has been "refined" and will be available to the NBRC.)
NBRC-
0303
Commercial Law League of AmericaCommercial Law League of America (CLLA)


The Commerical Law League of America believes that the following issue should be considered by the NBRC: whether small businesses should be permitted to reorganize in chapter 13. Or should business bankruptcies be handled in other chaptersThe CLLA believes that this issue should receive top priority because this issue has become more important with the increase in debt limitations for filing chapter 13, particularly with the sole proprietorship and professionals who are seeking relief under chapter 13.
NBRC-
0303
Commercial Law League of AmericaCommercial Law League of America (CLLA)


The Commerical Law League of America believes that the following small business issues should be considered by the NBRC: 1) How can reorganization under the Code be more effective, inexpensive and expeditious for small businesses Should small businesses have a "fast track" where absolute priority, disclosure and committee appointment requirements are eased Consideration of these issues should be based on the underlying premise that these efficiencies need to be accomplished without sacrificing the rights of the parties, other than the debtor, who are interested and involved in the bankruptcy (CLLA believes these issues should receive high priority). 2) What procedures would dispose of small business cases that do not have a reasonable chance ot reorganization ("non-priority" issue).The CLLA believes that, with regard to procedures that would dispose of small business cases that do not have a reasonable chance ot reorganization, adequate mechansims already exist to deal with business cases that do not have a reasonable chance of reorgnization.
NBRC-
0303
Commercial Law League of AmericaCommercial Law League of America (CLLA)


The Commerical Law League of America believes that the following partnership issues should be considered by the NBRC: 1) Is a partnership agreement an executory contract (CLLA believes this issues should receive high priority; no additional details are provided) 2) Does the trustee exercise the rights of partners who are debtors or are those rights reserved to the debtor ("high priority" issue). 3) Are clauses automatically converting a general partner's interest to a limited partnership enforceable in bankruptcy Are clauses compelling the sale of the bankrupt partner's interest enforceable ("high priority" issue) 4) Under what circumstances may the bankrupt court stay creditor actions against non-debtor partners for their liability for partnership debts Are there differences during the pendency of the case and after a plan is confirmed and the case is closed ("high priority" issue) 5) Should the bankruptcy court have the power to prohibit general partners of the bankruptcy partnership from transferring non-partnership assets during the pendency of the case ("high priority" issue) 6) Should the bankruptcy court have the power to compel non-debtor general partners to disclose information about their financial condition Should this information be sealed ("high priority" issue) 7) What rights should the chapter 7 trustee have against general partners What rights should the chapter 11 estate have against the partners ("high priority" issue) 8) Should non-partnership creditors have priority over partnership creditors as to non-partnership assets of general partners who are in bankruptcy, or who are in bankruptcy ("high priority" issue) 9) Should § 1111 be calrified to provide that conversion of non-recourse debt to recourse debt does not create general partner liability on such debt ("high priority" issue) 10) Should the Code authorize creation of committees of partners ("high priority" issue) 11) What is the status of new partners, fomer partners, special partners and partners by estoppelThe issue of the status of new partners, fomer partners, special partners and partners by estoppel should be a "non-priority" because it is much too broad and probably could never be addressed effectively by statutory enactment.
NBRC-
0315
Paul Mignini, Jr. and Gary WhitePresident-National Association of Credit Management ("NACM"), and Chairman-NACM Government Affairs Committee, respectively


The proposed definition of small business as a business with less than $10 million in net income would effectively allow for over 90% of all non-consumer filings to qualify for expedited treament. The definition should be narrowed so that only true small businesses are entitled to such treatment.Small business should be defined not be by income, a figure which is easily manipulated, but by the amount of debt, a figure which more accurately represents the debtor's financial position.
NBRC-
0315
Paul Mignini, Jr. and Gary WhitePresident-National Association of Credit Management ("NACM"), and Chairman-NACM Government Affairs Committee, respectively


NACM believes that the time frame for the filing of a plan by a small business debtor must be viewed in relationship to the availability of extensions on the period of exclusivity for the debtor. While the proposed 45 day period for filing a plan is too short, NACM remains equally concerned that the ability of the debtor to secure extensions of the exclusivity period leads to abuses of the bankruptcy system.NACM recommends that the time in which small businesses can file a plan should be kept to 120 days, and that no extensions be granted. Failure to meet this deadline should allow the creditors to either liquidate the business or dismiss the case.
NBRC-
0318
Paul Mignini, Jr., Mary E. Wysocki and Charles M. TatelbaumPresident-National Association of Credit Management ("NACM"), Chair-NACM Government Affairs Committee, and NACM Legislative and Bankruptcy Counsel, respectively
362(h)
NACM concludes that the current small business provisions in chpater 11 do not provide sufficeint relief to debtors and creditors involved with small business cases.NACM's Government Affairs Committee recommends that the NBRC review the possibility of "reinstating the language which was contained in Chapter 10 as passed by the U.S. Senate in 1992 and 1994."
NBRC-
0320
Robert M. Zinman, on behalf of the Bankruptcy InstituteAmerican Bankruptcy Institute ("ABI")Numerous position papers, memoranda and research material1304, 1321, 1102, 1103
In order to make chapter 13 an alternative to chapter 11 for small businesses, chapter 13 would need to be amended so that it is more effective for small businesses.To make chapter 13 an effective alternative to chapter 11 for small businesses, the Code should be amended as follows:broaden the eligibility limits; increase the debt limit to $1.5 million; lengthen the period for payment of non-consumer secured claims in order to accomodate commercial real esate and equipment loans; § 1304, which defines "debtor engaged in business," should be expanded to include corporations and partnerships; the U.S. Trsutee should be given the power to appoint a creditors committee for corporate and partnership debtors in the manner provided for under §§ 1102 and 1103; finally, § 1321, which provides for the filing of plans, should require the debtor engaged in business to file its plan within 60 days of filing the petition, which period may be extended an additional 60 days upon substantial justification.
NBRC-
0320
Robert M. Zinman, on behalf of the Bankruptcy InstituteAmerican Bankruptcy Institute ("ABI")Numerous position papers, memoranda and research material723Rule 1007(g)The author observes that: (1) most courts have found that partnership ageements are executory contracts; (2) that courts are split as to whether the trustee exercises the rights of the partners who are debtors, as opposed to those rights being reserved to the debtor; (3) most courts have found that clauses automatically converting a general partner's interest to a limited partnership enforceable in bankruptcy; (4) the majority of courts have found that the automatic stay does not protect non-debtor partners when the partnership files for bankruptcy relief; and (5) The extent of a partner's liability for partnership debts at state law determines whether, and to what extent, the partner may be compelled to contribute to a deficiency under current § 723;Code should be amended as follows: (1) Clarify the provisions regarding the court's power to prohibit general partners of the bankruptcy partnership from transferring non-partnership assets during the pendancy of a case. Such amendments should allow both partner and partner creditor requests for relief; (2) Provide the bankruptcy court with the power to compel non-debtor general partners to disclose information about their financial condition, as the information is relevant to many issues in the liquidation or reorganization of the debtor partnership; (3) Provide that the rights of the trustee contained currently in § 723 of the Code should be equally available to chapter 7 and chapter 11 trustees; (4) Give nonpartnership creditors and partnership creditors equal priority claims on the assets of general partners, and avoid return to the "jingle rule"; and (5) Clarify that § 1111 to provide that conversion of non-recourse debt to recourse debt does not create general partner liability on such debt; (6) Permit creation, where necessary, of a committee of partners;
NBRC-
0340
A. Thomas Small Bankruptcy Jduge (E.D. NC)


The author states that Chapter 11 cases can be managed without elaborate and expensive conferences, and encloses a report on four years of his bankruptcy cases which he believes demonstrates this point. Any recommendation concerning small business should not require numerous preconfirmation status conferences and hearings because chapter 11 already provides adeqaute case management procedures.
NBRC-
0347
Philip J. HendelAttorney


The author recommends using chapter 13 for small business cases. He states that "this is truly a business recommendation" and that he hopes that the NBRC will consider this recommendation as a viable alternative to the other suggestions currently under review.Bankruptcy Code should be amended to expand the use of chapter 13 to include closely held corporations and other business entities.
NBRC-
0348
Grant W. Newton Vice President of the Association of Insolvency Accountants ("AIA")


The AIA believes that the proposed definition of "small business" will result in many of the larger companies being forced to file under the small business provisions which would not otherwise qualify as small businesses. A business debtor's last income tax return should be used to establish whether the business is a small business. Also, while AIA does not object to including provisions that reauire debtors to file income tax returns, it is best not to establish or enforce this provision through the definition of small business, but rather through provisions. Suggested statutory language is provided.
NBRC-
0348
Grant W. NewtonVice President of the Association of Insolvency Accountants ("AIA")


AIA agrees with the Working Group proposal to consider affiliated corporate debtors as a consoldated group, but recoomends that the word "corporate" be deleted. There are cases where partnerships have been consolidated with corporations and the combined entity should be measured to determine the threshold test.Bankruptcy Code should be amended to consider affiliated debtors as a consoldated group. Also, AIA agrees that intecompany transactions should be eliminated, and suggests basing the test on aggregate amounts.
NBRC-
0348
Grant W. NewtonVice President of the Association of Insolvency Accountants ("AIA")


AIA fully supports requiring debtors to submit a uniform set of operating reports.AIA fully supports requiring debtors to submit a uniform set of operating reports, but suggests that the focus of the cash flow statements be on cash flow from operating activities of the business, and should clearly distinguish cash flows from operations from those related to liquidation and other nonoperating, extraordinary activities. Section B should be expanded to include all chapter 11 filings.
NBRC-
0348
Grant W. NewtonVice President of the Association of Insolvency Accountants ("AIA")


The Working Group's proposal for reducing the cost of administering small business chapter 11 cases will help, but will not solve all the problems associated with these cases because it would never answer the question: Is this a viable businessAIA believes that the U.S. Trustees should appoint a small business examiner to determine the viability of businesses. The examiner would have 15-20 days to make a visit to the premises, complete his initial report and file it with the court and the U.S. Trustee. The information from this report should be made available in 30 days.
NBRC-
0348
Grant W. NewtonVice President of the Association of Insolvency Accountants ("AIA")


Status conferences should be held within 30 days to ascertain if the business is viable or at least take action in the larger number of cases where it is obvious reorganization is not an alternative.None (no additional comments provided).
NBRC-
0352
Bernard ShapiroChair, National Bankruptcy Conference
28 U.S.C. § 5861112The Naitonal Bankruptcy Conference makes the following comments about the Small Business Working Group proposals: (1) the use of a gross revenue bright line definition for small business is "most inappropriate," and $10 million is far too high (the author attaches a copy of the IRS's definition of "gross income"); (2) requiring 4-5 status hearings complicates and adds unnecessary cost to the bankruptcy process; (3) the proposed amendments to 28 U.S.C. § 586 and 11 U.S.C. § 1112 are well founded, but if the proposeals are adopted, the "overlay of the balance of the small business proposal" is unncessary; (4) the 45-day period for filing a plan is far too short; (5) the court should have greater flexibility to dispense with the disclosure statement altogether in cases where there is no publically-held debt or equity; (6) the proposal with regard to "designated real estate debtor" is "very bad" because, if enacted, every lender would have the leverage to cause every debtor to make such an election; and (7) NBC generally favors Bob Maritn's proposal to modify the procedure for appointment of a trustee, but is opposed to shifting the burden to the debtor to prove that the appointment of a trustee would not be in the best interests of general creditors because the provision would substantially change the Code and goes beyond the objective of weeding out small business/abusive cases.Small business shold be defined as a business with less than $4 miliion in debt, less than 10 employees, and gorss revenues of less than $3 million; (2) Bankruptcy process should be simplified to have less stautus conferences; (3) the time period for filing a plan should be 60 days or more; (4) NBC generally favors Bob Maritn's proposal to modify the procedure for appointment of a trustee, but is opposed to shifting the burden to the debtor to prove that the appointment of a trustee would not be in the best interests of general creditors.
NBRC-
0387
National Association of Credit ManagementNational Association of Credit Management ("NACM")


In this statement entitled "Position on Small Businesses in Bankruptcy," the NACM expresses concern about the cost, delay and administration of small business bankruptcies. However, the NACM concludes that "it is best for its members and the economy in general for legitimate, honest businesses to be able to reorganize and continue with operations, even if trade creditors are unable to receive full payment of their debts." Also, more small businesses wold be encouraged to use the reorganization process if there were procedures in place which would facilitate their reorganization cases.Code should be amended to provide sufficient guidelines to protect creditors from the dishonest or unscrupulous business debtor seeking to manipulate the system at the expense of creditors.
NBRC-
0415
Bernard ShapiroChair, National Bankruptcy Conference (a voluntary organization of persons interested in the improvement of the Bankruptcy Code and its administration)


1) "Although a bright line test for what is a small business is a worthy goal, the use of a gross revenue definition from the Internal Revenue Code is most inappropriate...and $10.0M is far too high". 2) Instead of making small business Chapter 11s simpler and cheaper, there would be 4-5 hearings in the first 90 days. 3) They support modifications to §586 and §1112 giving more power to U.S. Trustees to monitor Chapter 11 cases and seek dismissal or conversion of abusive cases. With abusive cases weeded out, the small business proposals make it more difficult for a small business to survive Chapter 11. 4) The 45-day period for filing a plan is too short. 5) see proposal below. 6) The proposal with respect to "designated real estate debtor" is very bad. 7) Opposed to shifting burden to debtor to prove that the appointment of a trustee would not be in the best interests of general creditors.1) If it is important to have a revenue test, then gross revenues (as determined by GAAP) of less than $3.0M would be be more appropriate for a small business. 2) Small Business Chapter 11 process should be further simplified. 3) Small Business proposals should make it easier for the small business to confirm a plan. 4) Period for filing plan shoud be at least 60 days, and likely more. 5) The court should have greater flexibiltiy to dispense with the disclosure statement altogether in cases where ther is no publicly-held debt or equity. 6) Drop this proposal 7) Drop this proposal.
NBRC-
0424
Robert A. GreenfieldAttorney, Conferee - National Bankruptcy ConferenceCopy of proposed amendment to the single asset real estate definition prepared by members of the Conference.101(51B)
National Bankruptcy Conference opposes different treatment for single asset real estate cases, any change in the definition of "single asset real estate," and eliminating the $4 million cap.If cap on single asset real estate cases is eliminated, the National Bankruptcy Conference is considering additional amendments to the definition which would limit "single asset real estate" to the smaller cases and to the cases that are not likely to involve an operating business.
NBRC-
0429
Mark HomanEnglandPartner, Price Waterhouse, UK

The number of DOA cases damages the credibility of the Chapter 11 process.Consider the introduction of "entry requirements," a positive showing why Chapter 11 is preferable to Chapter 7. The party applying to the Court should show that there is some prospect of survival or reconstruction of the debtor, or a reason why administration will be better than liquidation. Consider the use of quasi-judicial officers to reduce the burden on the court. Consider making use of qualified/licensed professionals. Identify businesses that are unlikely to reconstruct before they become unsaleable and ensure a bonafide attempt at a sale. Extend the range of companies to which new procedures are applied up to $50 million turnover. Amend the reporting requirements.
NBRC-
0429
Mark HomanEnglandPartner, Price Waterhouse, UK

In some cases the DIP in a Chapter 11 case allows the assets to dwindle to a point where by the time conversion takes place the trustee cannot do anything.Place the burden of proof on the debtor to show why he should remain in Chapter 11 rather than Chapter 7 and require him to take steps to convert as soon as that burden is no longer satisfied.
NBRC-
0431
Barbara J. SellersBankruptcy Judge, U.S. Bankruptcy Court, Sourthern District of Ohio, Eastern Division


Author does not agree that the size of a company's debts or its assets are the determinative factor in whether the case needs to be on an expedited "track." The debt structure is more important. The case most likely to get "stalled" is one with one greatly undersecured creditor (usually with accounts receivable and inventory collateral) and/or very large unpaid tax debt.Don't "fast track" cases based on the size of company debts or assets.
NBRC-
0431
Barbara J. SellersBankruptcy Judge, U.S. Bankruptcy Court, Sourthern District of Ohio, Eastern Division


Mr. Williamson asked for input as to any major areas of the Bankruptcy Code not currently under discussion. Author thinks the entity/enterprise distinction may fit in here. "There are some reforms being suggested in the partnership/partner area, but there are other places where the Bankruptcy Code conceptually does not handle well the enterprise business structure now so often used in this country."Author is "not necessarily suggesting that the Bankruptcy Code go from an entity concept to an enterprise one, but there are places where some elasticity in concepts or provisions might better fit the way large businesses operate."
NBRC-
0433
James Lawniczak
Attorney. Memo sent by E-mail, no address given.

Disclosure statement procedure is cumbersome.Author agrees with Judge Martin that the disclosure statement be simplified, although he would not go so far as to say it should be eliminated.
NBRC-
0433
James Lawniczak
Attorney. Memo sent by E-mail, no address given.

Disclosure statement requirement is cumbersome.A disclosure statement in a small business case should have a short summary of the plan and a short history of the debtor and the reasons for the case.
NBRC-
0435
William C. BeallAttorney


For many small cases, confirmation of a Plan is not the answer. In many small cases, an asset is sold or a pending litigation settled, any stray unsecured creditors are paid, and the case is dismissed. The requirement that a Plan be filed within 45 days will result in nonsensical filings, will put a great burden on debtor and debtor's counsel in the critical first days, and will ultimately not help the creditors.Do not require filing of a Plan of reorganization within 45 days.
NBRC-
0443
Samuel J. GerdanoExecutive Director, American Bankruptcy InstitutePartner and Partnership Bankruptcy: A Survey and Analysis of Case Law and Proposed Amendments to the Bankruptcy Code, by Robert J. Keach, Esq.

Author of letter is forwarding copy of "a detailed analysis and proposed amendments to the Bankruptcy Code relating to partnerships" prepared by Robert J. Keach, Esq., Chair of the Subcommittee on Partnerships of the ABI Committee on Business Reorganization.
NBRC-
0448
Philip J. HendelAttorney,


Author replies on behalf of ABI Business Subcommittee with some general and specific comments with respect to the proposal formulated for the Commission's consideration by Steve Case et al, which led to the white paper prepared by ABI on utilizing Chapter 13 for small business cases. The author made comments under the following headings: 1) General Comments on Small Business Working Group Suggestions; 2) Definition of Small Business - author's group felt that the gross income test is too liberal; 3) Small Business Monitoring Agent - negative reaction to this proposal; 4) Disinterested - "This test strips the debtor of professionals who know the debtor best."; 5) Fast Track - proposed time line is too short, discourages the use of alternative dispute resolution and negotiation techniques to settle disputes.Author makes the following proposals under the headings given above: 1) None; 2) Most participants felt that the parameters of "small business" should be defined by debt rather than income. Perhaps all that is needed is to provide for a quick status conference at the beginning of the case where it can be determined whether or not the case should be handled under a fast-track small business system.; 3) None; 4) The disinterestedness rule should be relaxed in small business cases. Section 327 (c) should be amended to allow general counsel for the debtor to continue representation in the Chapter 11.; 5) "Why not copy what works There are programs in place around the country which have operated successfully for many years in small business cases and with fast-track systems."
NBRC-
0454
Philip J. HendelAttorneyDraft of white paper

Author previously submitted white paper on expanded use of Chapter 13 to include closely held corporations and other business entities. He has made extensive changes and submits a new draft to be substituted for first one submitted.Substitute draft of white paper included with this letter for draft previously submitted.
NBRC-
0469
Paul Mignini, Jr. and Gary WhitePresident and Chairman, Government Affairs Committee, respectively, of the National Association of Credit Management


"There are two components of the proposed small business expedited Chapter 11 filing that our members find troubling...the definition of a small business and the time frame for the filing of a plan by the debtor."Author supports the existing Code definition of small business as an entity with $2 million or less in debts, as presented in the initial filing. They also recommend that the time in which a small business can file a plan should be kept at the time allowed under the current code, which is 120 days.
NBRC-
0471
A. Thomas SmallUnited States Bankruptcy Court, Eastern District of North Carolina


"My concern is that the subcommittee's proposal is too heavily weighted toward identifying the bad chapter 11 cases to the detriment of those chapter 11 debtors who have a chance at reorganization. What is needed are a few minor amendments to the Bankruptcy Code to give bankruptcy judges the tools to better manage their chapter 11 cases. What is not needed is unreasonably short deadlines and a series of preconfirmation hearings..." Since 1987 the Eastern District of North Carolina has utilized a "fast track" approach to small business chapter 11 cases that they call "Chapter 11(a)", which the author goes on to describe."The two specific changes that I recommend are: 1) Amend §1121(e) to read "The court many fix a date by which a plan shall be filed"; and, 2) Amend §1125(f) to read "The court may conditionally approve a disclosure statement subject to final approval after notice and a hearing. A hearing on the disclosure statement may be combined with a hearing on confirmation of a plan. Acceptances and rejections of a plan may be solicited based on a conditionally approved disclosure statement." Author feels that the burden of persuasion should not be shifted to the debtor prior to confirmation.
NBRC-
0479
Lisa Hill FenningUnited States Bankruptcy JudgeCopy of Draft of RAND report: Just, Speedy, and Inexpensive: An Evaluation of Judicial Case Management under the Civil Justice Reform Act.

Author is forwarding a RAND Corporation study of the Civil Justice Reform Act and its effectiveness in reducing cost and delay in the federal district courts. She believes that the report provides valuable insights into the process and effectiveness of case management reform efforts that bear upon the Small Business Working Group's pending proposals for small Chapter 11 cases. The report's conclusions sound a cautionary note with respect to the use of short, mandatory deadlines to reduce delay: such dealines actually corollate with increased costs. On the other hand, the overall import of the findings strongly suggests that active judicial case management in general can effectively reduce cost and delay."I urge that the Commission take a close look at this experiment before embarking upon another. You may even want to invite Dr. Deborah Hensler of the RAND Institute to testify about the lessons of CJRA."
NBRC-
0486
A. Thomas SmallU.S. Bankruptcy Court, Eastern District of North Carolina


Author previously sent a memorandum concerning the small business proposal being considered by the NBRC. "Chapter 11 cases can be managed without elaborate and expensive conferences, and I believe that is demonstrated by the following report of my chapter 11 cases from October 1992 to October 1996." There follows and extensive breakdown of authors cases for the stated period.Author's primary recommendation is that any proposal with regard to small businesses not include numerous mandatory preconfirmation status conferences and hearings.
NBRC-
0488

Grant W. NewtonVice President of the Association of Insolvency Accountants

Author is forwarding comments made by a committee of the Board of the Association of Insolvency Accountants which, they believe, are "consistent with the views adopted by the Board at is January meeting, described to Steve Case and summarized in a memo he sent to the Small Business Working Group."Author addresses, item by item, agreement with and suggestions for change in the provisions of the February 20, 1997 memo to the Small Business Working Group.
NBRC-
0507
Edward Rothberg



Author "reviewed the 'Small Business ' Report and determined that a lot of it lacks reality, and appears to have been written by creditors counsel whose clients are trying to put off the responsibility of the case to others (i.e. the Judge and the U.S. Trustee)." The government does not need to watch out for the creditor's money. "The reason a creditor may be apathetic is because it simply does not have enough at stake to warrant participating in the case. If this is the case, so be it." "On the other hand, if the Code gave creditors an incentive to participate, they would." "First, the Code must be amended to provide that creditors who benefit the estate in some way or another will be compensated. The current 'substantial contribution' rules are far too restrictive...why should a creditor who may net 20 cents on the dollar risk incurring fees and expenses to benefit other creditors and not be reimbursed."The Code must be amended to provide that creditors who benefit the estate in sosmse way or another will be compensated.
NBRC-
0507
Edward Rothberg



Author strongly disagrees with the fast track concept. "Often times a small business has complex problem which cannot be resolved in 90 or 120 days. I do, however, agree that the viability of the debtor's operation should be tested early in the case.""I propose a simple test. If the monthly operationg report shows that cash is increasing on a month to month basis over the first few months (say 3), then the debtor should be allowed the normal time frame to file and confirm a plan. On the other hand, if cash is decreasing, the case should either be converted, dismissed, or the debtor forced to file a very quick plan as it won't be in business very long if cash is decreasing while under protection of the automatic stay."
NBRC-
0517
Morris W. MaceyAttorney, Former Chairman, Ad Hoc Committee of the ABAProposed amendment to §569 of the Code; copy of article by author and Professor Kennedy from The Business Lawyer, May, 1995.569
Author is forwarding copy of Amendment to §569 of the Bankruptcy Code proposed by an Ad Hoc Committee of the ABA.Contained in proposed amendment
NBRC-
0522
Richard S. ToderAttorney, Zalkin, Rodin & Goodman LLPCopy of Focus Group's report; letter to Steven H. Ancel from Kevin P. Dempsey dated 12/18/96

Author sets forth his opinions on the revised proposal of the Small Business Working Group.Author notes that "[t]he Revised Proposal reflects significant salutary changes from the original Working Group proposal" which he specifies. He then goes on to discuss specific suggested changes.
NBRC-
0544
Paul Mignini, Jr. & Gary WhitePresident and Chairman, Government Affairs Committee, respectively, of the National Association of Credit Management


With regard to the creation of a bright line test for eligibility for an expedited small business Chapter 11 process, authors support the current $2.5 million in debts. This assures that the debtor can't avail himself of the expedited procedure through creative bookkeeping.Authors support an expedited procedure for small businesses.
NBRC-
0553
Robert D. MartinU.S. Bankruptcy Judge, Western District of WisconsinA second memorandum, 4 pages long, labled "Exhibit A", and a Proposed Draft Statute.
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