Magazine article Business Credit

Have You Received a Preference Claim for Less Than $5,000 since the Passage of the BAPCPA in 2005?

Magazine article Business Credit

Have You Received a Preference Claim for Less Than $5,000 since the Passage of the BAPCPA in 2005?

Article excerpt

he results of this first NACM monthly survey question illustrated that preference claims for under $5,000, forbidden by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), have all but vanished since the law's enactment. Of the responses to this question, 95% answered "no" while the remaining 5% said the opposite. The topic of trustees sending out unenforceable preferences demanding less than $5,000 had been raised at several NACM events, but, according to the survey, the issue seems to be isolated to a select few creditors.

Among participants that answered "yes" it was noted that while the amount of preferences has decreased in the wake of the BAPCPA, problems still exist on several fronts including Chapter 9 filings and the currently rising number of business bankruptcies, which are starting to recover to pre-BAPCPA levels. "Chapter 11 and 7 filings have decreased. However, Chapter 9 filings in my area of the country have increased," said one respondent. A Chapter 9 bankruptcy can only be filed by a municipality, political subdivision or public agency.

"Governmental agencies, particularly hospital districts are overly burdened with debt coupled with decreased revenues. …

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