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Wednesday, January 21, 2009

Law - "A Kinder Bankruptcy Law Is Sought as Filings Soar "

That is the headline to a lengthy story in today's WSJ, reported by Kristina Doss. Some quotes:

As bankruptcy filings ramp up amid the world-wide financial crisis, companies are finding that changes made to the U.S. Bankruptcy Code three years ago have made it more difficult to restructure. But some experts believe relief could be on the way.

U.S. lawmakers are scrambling to find a way to revive the economy and the businesses that drive it amid the recession. Revamped laws designed to make the restructuring process kinder to struggling companies may be seen as part of the solution, bankruptcy experts say.

Such changes may provide "a mechanism by which people and businesses can begin economic life anew," said Jack Williams, resident scholar at the nonpartisan American Bankruptcy Institute. "Politically, the winds are right for revisiting bankruptcy law."

Changes to the Bankruptcy Code that took effect in late 2005 have made Chapter 11 a less hospitable shelter for struggling companies. Jay Westbrook, a law professor at the University of Texas, said lawmakers focused on changing the consumer provisions and didn't "carefully" work through the business amendments. As a result, provisions were added that gave companies less time and money to reorganize their businesses. * * *

Barack Obama has vowed to change bankruptcy laws to help struggling Americans stay in their homes, and Mr. Williams says bankruptcy reformists believe the new administration will be receptive to the idea of bankruptcy reform for businesses.

Here is more on this from the WSJ Law Blog.

Posted by Marcia Oddi on January 21, 2009 10:52 AM
Posted to General Law Related