Magazine article Business Credit

Why Now Is the Time for Business Credit Advocacy

Magazine article Business Credit

Why Now Is the Time for Business Credit Advocacy

Article excerpt

This year, there has been a growing interest on Capitol Hill regarding the impact of the Bankruptcy Code on the economy and on the ability to realize a timely and vigorous economic recovery. To this end, the House Judiciary Committee convened a hearing to examine if the Bankruptcy Code changes brought about as a result of the 2005 Bankruptcy Reform Act were helping or hurting the economy. The Committee certainly received dramatic testimony when the opening line from one of the witnesses was, "Chapter 11 is dead in the United States."

In the past, the Committee has held hearings to review the impact that the changes in the non-commercial provisions of the Bankruptcy Abuse Protection and Consumer Protection Act of 2005 (BAPCPA) was having on the bankruptcy process. Most of those hearings concentrated on the means-testing methodology for consumer bankruptcies. This hearing by the House Judiciary Committee was one of the few hearings examining the effects that the changes to the commercial provisions were having on the process.

One of the primary provisions in the Bankruptcy Code that witnesses addressed is the provision that was added to the Code in 2005 that requires an entity in Chapter 11 to decide within 210 days of a filing whether or not to assume or reject existing leases and restructure other operations. The provision was strongly supported by shopping center owners and operators who argued that large anchor tenants in Chapter 11 were not paying rents--depriving the shopping centers of needed income and placing other retail interests in jeopardy.

Several witnesses testified that the Circuit City bankruptcy was harmed by the requirement that the retailer had to make this determination within this 210-day window. In fact, members of the House Judiciary Committee also expressed some interest in whether this change in the Code may need to be re-examined particularly during a time of economic stress. …

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