President Signs Bankruptcy Overhaul
Most Provisions Effective October 17, 2005
President Bush signed the Bankruptcy Abuse Prevention and Consumer
Protection Act of 2005 (S. 256) into law. The new law will make for some
of the most significant changes in consumer and business bankruptcy
practice. The new law is generally effective in 180 day , applicable
only to cases filed on or after the effective date (October 17,
2005).
However, there are some important departures from this default rule,
including some provisions that are effective Now . For
example,
- Sections 308 (reduction of the exemption for fraud), 322 (limiting
the exemption) and 330 of the bill, relating to the homestead exemption,
are effective to cases filed today.
- Section 324, relating to the courts’ exclusive jurisdiction
over matters concerning professional employment, applies to cases filed
after today.
- Section 325, changing the filing fee structure, is effective for the
two-year period beginning today (subsections (b) and (c) regarding the
U.S. Trustee system fund and the allocation of fees collected by
courts).
- Section 1213, amending Section 547 of the Code, overruling the
DiPrezio rule on insider preferences, applies to any case now
pending or commenced on or after today, and is thus retroactive.
- Section 1223, providing for the authorization of new bankruptcy
judges, is effective today.
- Section 1234, amending Section 303 of the Code regarding involuntary
cases, is effective today and applies to cases commenced before, on or
after today and is thus retroactive.
- Section 1401, increasing the cap on the wage priority from $4,000 to
$10,000 and doubling the look-back period from 90 to 180 days, is
effective today, but applies only to cases filed after today.
- Section 1402, enlarging the look-back period to allow avoidance of
certain transfers to or for the benefit of insiders, applies to cases
filed on or after today.
- Section 1403, regarding retiree benefit plans, applies to cases
filed on or after today.
- Section 1404, which makes certain debts nondischargeable if incurred
in violation of securities fraud laws, is retroactive to July 30, 2002,
the effective date of the Sarbanes-Oxley Act.
- Section 1405, amending Section 1104 of the Code, requiring the U.S.
Trustee to move for the appointment of a trustee where there are
“reasonable grounds to suspect” fraud, dishonesty or
criminal conduct on the part of certain corporate insiders, is effective
today and applicable to cases filed after April 20.
The full text of
the new law is available online.
For the changes in current law, see the House Judiciary Committee's
document listing changes to existing Bankruptcy Code enacted by the new
law, available at ABI’s
special section on the bankruptcy bill.
|
|
