The Senate Judiciary Committee approved amendments to the 1978 Bankruptcy Code that will strengthen creditors' hands and remove some of the barriers to fast action.
The Senate on Sept.15 focused on expediting bankruptcy proceedings when it approved the bill and reported it out.
Bankruptcy proceedings were bogged down by nearly 1 million filings in 1992. The amendments to the code call for speeding up the hearing process on automatic stays, more timely fillings of Chapter 11 and 12 reorganization plans and faster procedures for the reaffirmation of debts.
Another change would increase the Chapter 13 ceiling on personal debts to $1 million from $350,000 and give debtors up to five years to reorganize their finances and pay off debts. Intended to reduce the number of people who must liquidate their assets to pay debtors, the new provision is attractive to both bankers and consumers because it allows for the gradual repayment of loans rather than Chapter 7 liquidations.
The legislation, approved by the panel on Sept. 15, would also:
* give debtors more time to make delinquent mortgage payments to avoid foreclosure;
* reverse a court decision that discourages banks from lending to many small businesses by forcing lenders to return all loan payments made in a year before a company filed under the Bankruptcy Code, if the company's officials had personally guaranteed the loan;
* allow representatives of the federal Pension Benefit Guaranty Corp. and state and local pension plans the right to sit on creditor committees in Chapter 11 corporate reorganizations;
* specify that debts run up when taxes are paid with a credit card can't be discharged in bankruptcy;
* test accelerated bankruptcy proceedings for small businesses; and
* establish a National Bankruptcy Review Commission to study the need for other changes in the code.