Legislation Committee Meeting Minutes
2007 Annual Spring Meeting
The Honorable David
Houston and R. Scott Williams were present and co-chaired the
Legislative Committee Meeting. The meeting
served as a follow-up to ABI's plenary session on Congressional
activities. At the beginning of the meeting
it was announced that Mr. Williams will be rotating off his
co-chairmanship of the committee and that the Honorable George Paine
will be taking over as Co-Chair. Judge
Houston and Mr. Williams led a round table discussion among members of
the Committee regarding pending legislative proposals and prospects for
action in the current session of Congress. Of particular interest were discussions of the recent proposal
put forward by a consortium of consumer oriented professionals regarding
modifications to the Bankruptcy Code and legislative changes concerning
subprime lending. A presentation of these
proposals was made by ABI Director John Rao of the National Consumer
Law Center. In addition to potential changes
to the Bankruptcy Code, discussions centered upon Congressional
oversight and actions related to insolvency issues. In particular, a significant discussion took place regarding
home finance industry and recent unrest and disturbances in that sector
of the economy. Various Committee members
discussed proposals and their reactions to the plenary session,
including comments regarding credit counseling, the required financial
management course, and the constitutionality of the debt relief agency
provision of BAPCPA. The meeting concluded without any formal actions or
activities being considered, proposed or acted upon by the
2006 Winter Leadership Conference
At the ABI Winter Leadership Conference were R. Scott Williams,
Co-Chair of the Legislative committee, Co-Chair David Houston was unable
to attend at this Committee meeting.
The Legislation Committee meeting was a joint meeting with the Court
Administration Committee represented by Lynn Tavener.
The presentation by the Legislation Committee was jointly given by
Scott Williams and Judge Gregg.
The Chairs gave presentations on the process of the appointment of
bankruptcy judgeships and related practical considerations. As well, the
historical and statutory background related to the appointed of
judgeships was discussed.
The Court Administration Committee discussed issues upcoming
consideration of revised bankruptcy rules, as well as, the current ABI
The Committee meeting ended with open discussion with participants
concerning changes expected in the new Congress and upcoming legislative
Attached hereto as Exhibit A is a list of legislation committee
attendees who signed up during the course of the meeting.
LEGISLATION COMMITTEE ATTENDEES
Dennis Levine - Tampa, Florida
Patte Bass - Tucson, Arizona
Larry Ahern - Nashville, Tennessee firstname.lastname@example.org
Jerry Markowitz - Miami, Florida email@example.com
Ken Freda - GCG - Melville, New York
James Katchadoris - firstname.lastname@example.org
2006 Annual Spring
A joint meeting of the
Legislative and Pensions/Benefits Committees was held at the Annual
Spring Meeting. R. Scott Williams of Haskell
Slaughter Young & Rediker, LLC opened the meeting with an update on
the current status of legislation in Congress, including pension
legislation. He advised that Congress missed
their self-imposed deadline of April 15th for a reconciliation of the
bills passed by the House and Senate. Further, debate is ongoing and Congress hopes for a final
resolution of this legislation before adjourning in the
Judy Thompson of Poyner &
Spruill and Ray Warner, Professor of Law and Director of the LLM Program
in Bankruptcy at St. John’s University School of Law, co-chairs of
the Pension/Benefits Committee, introduced the new Pensions/Benefits
Committee leadership to the membership:
*Carol Connor Flowe –
*Charles Dyke – Newsletter Editor
*Kristin Going – Assistant Newsletter Editor
*John Hall – List-serve Editor
*Daniel Morse – Pension Manual Project Chair
Terrence Deneen, Director
of Insurance Programs at the Pension Benefit Guaranty Corporation and
Carol Connor Flowe of Arent Fox gave an eye-opening overview of the
current status of pension/benefit issues with particular attention to
the impact of business bankruptcies on the PPGC. Ms. Flowe pointed out that PBGC is currently operating with a
deficit of $23 billion, with the total rising daily. She noted that PBGC estimates that there is an additional $450
billion in potential liability not yet asserted. The huge deficits come from the few, very large Chapter 11
cases. Current deficits come 53% from
companies in primary metals and 15% from air transport, with the rest
spread across various industries. Looking
into the crystal ball, she predicted that the current troubles in the
auto industry promise an ever greater burden on retirees and the
Mr. Deneen and Ms. Flowe
then presented an overview of PBGC issues in bankruptcy, focusing on
minimum funding contributions, pension plan terminations, and the amount
and priority of PBGC’s claims. Mr.
Deneen emphasized that the agency believes that the decisions in
US Airways and United Air
Lines, which upheld the use of PBGC’s
discount rate for calculating its claims after rejecting several older
decisions that reached the contrary result, will be followed in future
This will mean much larger PBGC claims.
Members of the audience
were encouraged to become involved with the new Pensions/Benefits
Committee. The co-chairs announced that
there are multiple opportunities for persons to write for the various
publications on Pensions/Benefits issues and invited anyone interested
to contact them. The Pension Benefits
Committee is currently preparing a program for the Winter Leadership
Meeting in December ’06.
The Legislative Committee is
continuing to monitor various legislative efforts regarding bankruptcy
currently pending before Congress. Further, at this time, it
appears highly unlikely that any substantial bankruptcy revisions will
pass before the end of the legislative session.
2004 Annual Spring Meeting
The committee met on Saturday,
April 17, 2004, at the J.W. Marriott Hotel, Washington, D.C., in
conjunction with the ABI 2004 Annual Spring Conference. An excellent
crowd attended the program organized by the committee which consisted of
- A presentation by Tom Salerno
(Squire, Sanders and Dempsey L.L.P.; Phoenix) on the Sarbanes/Oxley
legislation entitled "One Year Later, How Is It Working?"
- A presentation by Susan Jensen
(Counsel, House Judiciary Committee; Washington, D.C.) on the recently
passed legislation affecting identity theft prevention and fair credit
reporting. This bill is known as the National Consumer Credit Reporting
System Improvement Act of 2003 and became Public Law No. 108-159 on Dec.
4, 2003. This legislation also makes improvements in consumer access to
credit information. A topic of interest discussed during this
presentation was the privacy regulations now being implemented in the
clerk’s offices of U.S. bankruptcy courts across the
- A presentation by Philip
Corwin (Butera & Andrews; Washington, D.C.) and David Lachman (Staff
Member, House Judiciary Subcommittee on the Constitution; Washington,
D.C.) on the current status of the bankruptcy reform legislation. The
speakers discussed several scenarios that might develop in both the
Senate and House that could impact the passage of a bankruptcy bill. The
principal theme of this segment of the program was whether Congress
would pass a major bill, a mini bill or nothing at all.
The moderators for the
Legislative Committee presentation were Judge David W. Houston III (U.S.
Bankruptcy Court, N.D. Miss.) and Judge George C. Paine (U.S. Bankruptcy
Court, M.D. Tenn.). The committee will next present a program at the
2004 Winter Leadership Conference.
2003 Annual Spring Meeting
A panel presentation focusing
on bankruptcy reform legislation that might be considered in the 108th
Congress was presented by Susan Jensen, counsel to Chairman James
Sensenbrenner, House Judiciary Committee; David Lachmann, House
Judiciary Subcommittee on Commercial and Administrative Law; and Ed
Pagano, counsel to Senator Patrick Leahy, Senate Judiciary Committee.
Judge David W. Houston III, U.S. Bankruptcy Court for the
Northern District of Mississippi, served as moderator for the
Susan Jensen indicated that
H.R. 975 had passed the House of Representatives on March 19, 2003, by
an overwhelming vote. This bill is identical to the Conference Report
adopted by the Senate and House Conferees in the 107th Congress on July
25, 2002, omitting, however, the compromise language, negotiated by Sen.
Charles Schumer (D-N.Y.) and Rep. Henry Hyde (R-Ill.), which created an
additional exception to discharge for fines, penalties and other debts
resulting from clinic violence or civil disobedience protests. This
provision has become commonly known as the "abortion clinic protest"
exception to discharge. It is considered a potential "poison pill" for
the passage of the bankruptcy reform legislation in the House. The House
bill has been forwarded to the Senate, where it will be handled by Sen.
Orin Hatch (R-Utah), Chairman of the Senate Judiciary Committee. Sen.
Hatch has not decided whether to bring the bill directly to the Senate
floor or whether he will alternatively refer it for consideration to the
Senate Judiciary Committee.
Ed Pagano indicated that the
House bill could be subject to several Senate amendments, either in
committee or on the floor. One potential amendment could address the
homestead exemption "cap" adopted in last year's Conference Report.
Another could obviously be the aforementioned Schumer-Hyde compromise
language which was intentionally omitted from the House bill.
Since there is now a Republican
majority in the Senate, the real question appears to be whether the
sponsors of the legislation can obtain a 60-vote "filibuster proof"
majority to pass the reform legislation without the Schumer-Hyde
compromise language. The uncertainty of the number of votes is
apparently a factor delaying the introduction of the bill in the
A lively discussion relative to
several provisions in the legislation was enjoyed by those attending.
The sincere gratitude of the ABI Legislative Committee is extended to
the Senate and House staff whose participation made this an exceptional
and informative program.
2002 Winter Leadership Conference
The ABI Legislative Committee
presented a panel discussion concerning the status of the 2002
Bankruptcy Reform Legislation at the ABI Winter Leadership Conference at
Tucson, Ariz., on Friday, Dec. 5, 2002. The following individuals
participated on the panel: Philip S. Corwin, Butera & Andrews,
Washington, D.C.; Dianne C. Kerns, Chapter 13 Trustee, Tucson, Ariz.;
Bankruptcy Judge George C. Paine, Middle District of Tennessee; and
Bankruptcy Judge David W. Houston III, Northern District of
Judge Houston opened the
presentation with a discussion of the fate of the bankruptcy reform
legislation in the 107th Congress. The Legislative Conference Report,
which had been adopted on July 25, 2002, after protracted negotiations
between the Senate and House Conferees, failed to pass the House on Nov.
15, 2002, on a procedural vote with 172 voting for and 243 voting
against the passage of the House Rule, which was necessary prior to
bringing the Report to the House floor for a vote. The primary issue of
contention was the effect of compromise language, negotiated by Senator
Charles Schumer (D-N.Y.) and Congressman Henry Hyde (R-Ill.), relative
to an amendment offered by Sen. Schumer and passed by the Senate, which
created an additional exception to discharge for fines, penalties and
other debts resulting from civil disobedience protests at abortion
clinics and other related facilities. An unlikely coalition of
conservative Republicans and liberal Democrats joined forces to defeat
the Rule during the "lame duck" session of Congress, which was convened
shortly after the November elections. The House subsequently passed a
version of the Bankruptcy Reform Legislation without the Schumer/Hyde
compromise language and also without the provisions authorizing
twenty-seven new bankruptcy judgeships, but this proposal was never
considered by the Senate before adjournment.
Philip Corwin, a Washington
lobbyist who has been actively involved for several years in supporting
the passage of the reform legislation, fleshed out in detail the
movement of the bill in the latest Congressional session. He then
discussed the political makeup of the 108th Congress and described the
efforts that might likely be undertaken to reintroduce and pass the
legislation. While he did not believe that passage would be automatic or
immediate, he thought that the legislation could be realistically
enacted by the 2003 August Congressional recess. Corwin candidly
described his reactions, as he observed from the House Gallery, to an
effort led by Republican Representatives Chris Smith (R-N.J.) and Joseph
Pitts (R-Pa.), that resulted in a decision by House Majority Leader Dick
Army (R-Texas) and House Majority Whip Tom Delay (R Texas), just prior
to the August recess, to defer a vote on the Conference Report until
after the November elections. Corwin's "hands-on" experience and
knowledge contributed significantly to the panel's
Dianne Kerns offered several
insightful comments about the reform legislation from her perspective as
a chapter 13 trustee. Most notably, she observed that while the stated
intent of the legislation was to channel more debtors into chapter 13,
that the opposite result, that is, more debtors actually filing for
chapter 7 relief, would likely occur. The two primary driving forces
supporting her conclusion were the proposed treatment for automobile
loans in chapter 13 cases and the further erosion of the chapter 13
Judge Paine and R. Scott
Williams, Haskell Slaughter, Birmingham, Ala., former counsel to Senator
Howell Heflin (D-Ala.) and one of the drafters of the 1994 Bankruptcy
Amendments, offered comments on the failure of the 2002 reform
legislation, as well as the prospects for passage of a bill in
The committee co-chairs
solicited assistance from the members present in order to prepare and
disseminate a committee e-newsletter. This solicitation will be further
extended to all members of the ABI Legislative Committee with the
anticipation that periodic e-newsletters can be provided to the
membership describing significant legislative events.
2001 Winter Leadership Conference
At the meeting of the ABI
Legislative Committee held on December 1, 2001, at the La Costa Resort,
Carlsbad, California, a panel discussion was presented addressing the
future of bankruptcy law reform. The following individuals participated
in the presentation:
- Phillip S. Corwin
Esq., Butera and Andrews, Attorneys at Law, 1301 Pennsylvania
Avenue, NW, Washington, D.C. 20004-1701
Cordry, National Association of Attorneys General, 750 First
St. NE, Suite 1100, Washington, D.C. 20002-8013
- Wesley W.
Steen, U.S. Bankruptcy Judge, Southern District of Texas,
- David W. Houston
III, U.S. Bankruptcy Judge, Northern District of Mississippi,
The panel initially discussed
the status of the current bankruptcy reform legislation which has passed
the Senate, S. 420, and the House, H.R. 333. A conference committee has
been appointed to address the legislation that will carry the House
designation for the bill, H.R. 333. The chairman of the conference is
Congressman James Sensenbrenner (R-Wis.). The committee is comprised of
- 13 Senate members, 7 Democrats
and 6 Republicans, all from the Senate Judiciary Committee.
- 11 House members, 6
Republicans and 5 Democrats, from the House Judiciary Committee, plus 9
other members from other House committees affected by the
The conferees were initially
scheduled to meet on Sept. 12, 2001, but this meeting was cancelled as a
result of the terrorists attacks occurring one day earlier. The
conferees met for the first time on Nov. 14, 2001, but made no headway
on negotiations. The House conferees did send their Senate counterparts
a list of provisions on which they indicated a willingness to
compromise. However, there are still major differences in the two bills,
some of which are identified as follows:
- There is a sharp disagreement
as to the homestead exemption cap. In the Senate version, there is a cap
on the exemption of $125,000. In the House version, the exemption is
capped at $100,000, but only for those individuals who have resided in
the forum state less than two years prior to the bankruptcy filing. If
the time of residency exceeds the two year period, the debtor would be
permitted to claim the applicable state homestead exemption.
- In the Senate version, there
is a specific provision addressing the non-dischargeability of debts
that result from violence perpetrated at abortion clinics. The House
version has no such provision.
- Insofar as the presumption of
non-dischargeability of debts related to luxury goods, purchased within
90 days of a bankruptcy filing, there is a difference in the threshold
dollar value of the purchases that would trigger the presumption. In the
House version, purchases exceeding $250 within the 90-day period would
trigger the presumption; while in the Senate version, this amount is
- Sen. Patrick Leahy, the new
Democratic Chairman of the Senate Judiciary Committee, has indicated an
interest in opening up the amendment process to the legislation. This is
strongly opposed by Cong. Sensenbrenner, Sen. Charles Grassley, and Sen.
Orrin Hatch, all Republicans, who want the conference to follow the
Senate Rules, which would not allow the amendment process to extend
beyond the differences in the versions of the bills already passed in
each chamber. The "anti-cramdown" sections concerning automobile loan
transactions provide a good example: In a chapter 13 bankruptcy case, a
debtor would not be permitted to "cramdown" a debt, secured by an
automobile, to the value of that automobile if the loan transaction
occurred within five years of the bankruptcy filing. The Senate version
reduced this period to three years, but Sen. Leahy has indicated that he
prefers a further reduction to one year.
- There are significant
differences in the provisions pertaining to chapter 12 of the Bankruptcy
Code, the Adjustments of Debts for a Family Farmer with Regular Income.
The House version merely extends the current provisions of chapter 12,
while the Senate version raises the eligibility debt limits for a family
farmer to $3 million, and modifies the income requirement to the effect
that 50% of the debtor's income must have been generated from farming
activities within three years, rather than one year, before the filing
of the bankruptcy petition.
- The House version contains
language that would prohibit class action lawsuits for abusive credit
practices. Recovery would be limited to costs, attorneys fees, and the
greater of actual damages or $1,000. There could be no recovery of
punitive damages. The Senate bill has no such provisions.
There are approximately 40
substantive differences between the House and Senate versions of the
legislation, but most are not as significant as those noted
Without question, the two most
significant events that have affected the movement of the bankruptcy
reform legislation are the terrorist attacks of Sept. 11, and the shift
in the control of the Senate from a Republican majority to a Democratic
Phillip Corwin, a Washington
lobbyist who has had extensive experience with the bankruptcy reform
legislation, offered significant political insights into the legislative
processes affecting the legislation. Corwin indicated that while passage
of bankruptcy reform legislation is doubtful for this first session of
Congress, that the legislation should not be pronounced "dead." Corwin's
analysis of the political effects of the differences in the two bills
was particularly informative.
Karen Cordry, National
Association of Attorneys General, commented on the provisions pertaining
to support for women and children. She indicated that placing the
support obligations in a third tier priority category would be much more
practical than placing these obligations in the first tier priority
where they currently are located in both the House and Senate versions.
She indicated that no Senator or Congressman wanted to take the
initiative in lowering the priority because of the potential political
fallout when, in actuality, such a maneuver would be better for all
There was discussion of a
possible "mini-bill," which has been addressed by the General Practice
Section of the American Bar Association. This section has proposed a
resolution to the following effect:
- Part 1—That there be a
moratorium on the consideration of bankruptcy reform legislation until
September 2002, because of the tragic events of Sept. 11.
- Part II—That passage of
a separate non-controversial bankruptcy bill containing the following,
should be undertaken:
- A. Permanent enactment of
- B. Enactment of the ancillary
and cross-border case provisions (transnational bankruptcies) as chapter
15 of the Bankruptcy Code.
- C. That the financial
contracts netting provisions be enacted to promote flexibility for
dealing with certain financial instruments in bankruptcy.
- D. That the proposed
additional bankruptcy judgeships be enacted.
Karen Cordry indicated that if
the priority alignment issue could be resolved that she would like to
see the provisions related to support obligations included in the
An excess capacity crowd
attended a very spirited and energetic meeting of the committee. The
committee co-chairs were very grateful for the participation of Phillip
Corwin and Karen Cordry, whose realistic insights concerning the
prospective success of the bankruptcy reform legislation were
2001 Annual Spring Meeting
The Legislative Committee
presented a panel discussion of the bankruptcy reform legislation
currently pending in the U.S. Senate and House. The following persons
participated on the panel:
- Ed Pagano—Counsel to
Senator Patrick Leahy, Ranking Minority Member of the Senate Judiciary
Jensen-Conklin—Counsel to the House Judiciary Committee's
Subcommittee on Commercial and Adminstrative Law (Ms. Jensen-Conklin
formerly served as General Counsel for the National Bankruptcy Review
Lachmann—Legislative staff to Congressman Jerrold Nadler, formerly
the Ranking Minority Member of the House Judiciary Committee's
Subcommittee on Commercial and Administrative Law.
- Judge Wesley Steen—U.S.
Bankruptcy Judge, Southern District of Texas.
- Judge David W. Houston
III—U.S. Bankruptcy Judge, Northern District of
Initially, the panel discussed
the current status of H.R. 333 and S. 420,, the two bankruptcy reform
bills that have respectively passed the House and Senate. Several of the
differences in the two versions were mentioned:
- The homestead exemption
- In the Senate version, a
debtor's homestead exemption claim would be initially "capped" at
- In the house version, the
debtor's homestead exemption claim would be "capped" at $100,000, but if
a debtor had resided in a particular state for a period of two years
prior to filing bankruptcy, that debtor could claim that state's maximum
- The "anti-cramdown" provisions
applicable to chapter 13 debtors:
- In the House version, a
chapter 13 debtor would not be permitted to "cramdown" a claim secured
by an automobile, i.e., paying only the value of the
automobile plus interest, if the transaction secured by the automobile
occurred within five years of the debtor's bankruptcy filing. As to
other personal property, "cramdown" would not be permitted for claims
arising within one year of a debtor's filing bankruptcy.
- The Senate version differs
only as to claims secured by automobiles. No "cramdown" would be
permitted for transactions occurring within three years of the debtor's
filing for bankruptcy.
- The chapter 11 "small
business" provisions applicable to debtors whose aggregate debts are
less than $3 million:
- In the Hosue version, the
debtor's exclusivity period to file a plan of reorganization is "capped"
at 180 days. The plan must be confirmed within 175 days from the date of
the order for relief.
- In the Senate version, the
exclusivity provision is also "capped" at 180 days, and the plan must be
filed no later than 300 days after the date of the order for relief.
Confirmation of the plan must occur no later than 45 days from the date
that the plan is filed.
- Direct appeal
- In the House version, there is
no direct appeal as such. The appealed proceeding is to be sent to the
district court for a holding period of 30 days. If no action is taken by
the district court within that time frame, the proceeding is them
forwarded to the appropriate circuit court of appeals.
- In the Senate version, there
is a direct appeal to the circuit court of appeals if authorized by the
circuit or on the certification of any of the lower courts with the
consent of all parties.
- Credit counseling provisions
as a condition of debtor eligibility for bankruptcy relief:
- In the House version, credit
counseling must be obtained by the debtor within 90 days of the
bankruptcy filing. Use of the Internet for such counseling is not
- In the Senate version, the
credit counselin must be obtained by the debtor within 180 days of the
bankruptcy filing,, and this counseling can occur through the use of the
- Provisions concerning
complaints seeking redress for abusive credit practices:
- In the House version,
class-action lawsuits for abusive credit practices would be prohibited.
In addition, the plaintiff could not seek punitive damages, only the
recovery of costs, attorneys' fees, and the greater of the actual
damages sustained or $1,000.
- These prohibitory provisions
do not appear in the Senate version.
- In the Senate version of the
legislation, Senatory Leahy has offered amendments to address both
privacy concerns and predatory lending practices.
The panelists discussed the
current impasse in forming a conference committee since the Senate
Republicans and Democrats cannot agree on the Senate membership for the
conference. At one point, it was rumored that the Senate conferees would
be split 50/50 along party lines, in keeping with the current membership
composition of the Senate, with Senate Majority Leader Trent Lott
(R-Miss.) casting any tie-breaking votes among the Senate conferees.
This potential agreement has not materialized.
The question was asked as to
whether the House would accede to the Senate version and pass the Senate
bill without the benefir of a conference. The panelists thought that
this would not occur because of the significant differences in the two
versions, particularly the homestead exemption provisions.
Since the Senate is now evenly
divided, the question was raised as to what might happen to the Senate
version is there were a shift in the Senate majority from the
Republicans to the Democrats. The consensus thought that the completion
of this legislation could likely change should this occur.
The panel addressed numerous
questions that were posed by members of the audience. The Congressional
staf panelists indicated that they would welcome any comments and
suggestions about the legislation. Indeed, some of the suggestions that
had been submitted to both Senate and House staff by Judges Eugene
Wedoff (N.D. Ill.) and William Brown (W.D. Tenn.) had been incorporated
into the Senate version. The staff panelists indicated that the
legislation is now so mature that only true "technical"
connections had any significant prospects for consideration. The
committee meeting, which was well attended, was adjourned only because
the allotted time period expired.
On behalf of ABI, the co-chairs
of the committee wish to thank Mr. Pagano, Ms. Jensen-Conklin and Mr.
Lachmann for their candid assessments of the legislation, as well as for
their excellent presentations.
2000 Annual Spring Meeting
The committee discussed the
status of S. 625 and H.R. 833, as well as Department of Justice
comments, and discussed the consumer, business and small business
provisions and the differences between the House and Senate version.
Judge Houston informed the group that the biggest obstacle to passageof
a bankruptcy reform bill has been unrelated provisions that were added
to the Senate version (S. 625) that would raise the minimum wage and cut
taxes levied on small businesses. Susan Jensen Conklin, who staffs the
House Judiciary Committee's Subcommittee on Commercial and
Administrative Law, indicated that although formal conferees have not
been appointed, informal conferees have been working on the bill for
several weeks. Gary Klein (director, National Consumer Law Center;
Boston) offered extremely informative comments concerning the
statistical effect of means-testing and the safe-harbor protections.
Martha Davis (general counsel, Executive Office for U.S. Trustees;
Washington) indicated that the EOUST would likely be responsible for
screening and approving qualified credit counselors, as well as for
developing guidelines for acceptable counseling. The discussion then
turned to the areas of lien-stripping and cramdown in chapter 13 cases,
as well as the elimination of the chapter 13
Ñsuper-discharge.æ Judge Steen and Judge Houston advised the
committee that assistance was needed in analyzing the proposed
legislation, and several participants volunteered to assist in this
1999 Winter Leadership Conference
Since the status of the passage
of bankruptcy reform legislation is still somewhat uncertain, the
Legislation and Consumer Bankruptcy Committees thought that a joint
presentation discussion the various versions of the legislation would be
helpful. Consequently, Bankruptcy Judges William H. Brown (W.D. Tenn.),
Eugene Wedoff (N.D. Ill.), Wesley Steen (S.D. Texas) and David W.
Houston III (N.D. Miss.) jointly presided over an open forum discussion
of H.R. 833, the bankruptcy reform bill that passed the U.S. House of
Representatives on May 5, 1999, and S. 625, which is currently pending
in the U.S. Senate. As a part of the program, chapter 13 Trustee Henry
Hildebrand (M.D. Tenn.) discussed the results of a study undertaken
through the auspices of the National Association of Chapter 13 Trustees
concerning the impact of the reform legislation on bankruptcy filings.
The first part of the bifurcated presentation focused on the likelihood
of the passage of reform legislation, particularly on recent
developments in the Senate. Judge Houston reported that Senate Majority
Leader Trent Lott (R-Miss.) had filed a petition for cloture to curtail
debate on S. 625 just prior to the congressional recess. The petition is
returnable to Jan. 25, 2000, the second day after the Senate reconvenes.
The success of the cloture petition will, in large part, be dependent on
negotiations and compromises reached by Republicans and Democrats who
are interested in this legislation, either directly or
One of the principal issues of
concern in the reform legislation is the concept of "needs-based
bankruptcy," or "means testing." Judge Wedoff discussed the differences
in the respective approaches to means testing taken by the House and
Senate. A critical component of means testing is the use of Internal
Revenue Service guidelines to calculate a debtor's reasonable living
expenses. Although the stated purpose of the reform legislation is to
compel more debtors to file chapter 13 bankruptcies as opposed to
chapter 7 liquidations, the second segment of the presentation focused
on some of the modifications to chapter 13 that would be considered
disincentives to file under that chapter. The discussion focused on (a)
the "anti-cramdown" provisions that would be applicable to debts secured
by automobiles and other personal property; (b) the expanded exceptions
to dischargeability that would be incorporated into chapter 13; (c) the
treatment that would be required for alimony and support obligations,
particularly as conditions of confirmation and discharge; (d) credit
counseling as a condition of bankruptcy eligibility, and debt management
education as a condition of discharge; and (e) the expanded role
required of panel and standing trustees in monitoring debtor
1998 Winter Leadership Conference
The Legislation Committee was
well attended. Of particular note, participating in the meeting were
Senator Charles Grassley's (R-Iowa) staff person, John McMickle, and
Congressman Jerrold Nadler's (D-N.Y.) staff person, David Lachmann. A
brief review of the legislation that was enacted during the previous
Congress took place; specifically discussed were the tithing bill and
the extension for chapter 12.
A substantial discussion took
place as to the politics and behind-the-scenes activities, with the
congressional staffers providing their insights on why bankruptcy reform
Turning to the new Congress, it
is noted that there will be a change in the Senate Judiciary Committee
with, in all likelihood, Senator Robert Torricelli (D-N.J.) taking over
as the ranking subcommittee member, as a counterpart to Senator
Grassley. Committee members discussed the impact that the president's
impeachment will have on both the process and the likelihood of passage
of any legislation. Comments and suggestions were solicited as to ways
to ensure that both current and future legislation is technically
correct and as helpful as possible.
The committee closed with a
consensus view that substantial legislative activity is likely during
the next congressional session, but a great deal of uncertainty exists
as to the shape and manner of the legislation.