109th Congress Outlook
Senate Majority Leader Bill Frist (R-Tenn.) has promised bankruptcy bill supporters a vote on a bill during the first session of the 109th. The Senate Judiciary Committee now has a 10-8 ratio of Republicans to Democrats; the ratio was 10-9 before last November's election results gave more seats to Republicans. Should the bankruptcy bill have to go through committee again, this margin should be enough to keep off killer amendments on issues such as abortion or homestead. Departing from the committee is retiring Sen. John Edwards (D-N.C.), an opponent of the bill in the last Congress. New members are Sam Brownback (R-Kan.) and freshman Sen. Tom Coburn (R-Okla.). Though the committee is now chaired by moderate Arlen Specter (R-Pa.), the ideological divide between left and right is deeper than ever. The committee held a hearing Jan. 11 on hold-over legislation to help resolve the asbestos-litigation crisis, which has forced more than 50 companies into bankruptcy.
Pension reform legislation is also high on the 109th agenda, with the rising number of bankrupt companies terminating their defined benefit plans along the way. This issue of the Journal features an interview with Senate Finance Committee Chairman Chuck Grassley (R-Iowa) on his proposals to deal with the problems facing both retirees and the Pension Benefit Guaranty Corp. (see p. 6). The most recent distress terminations are in the troubled airline industry. The first bankruptcy bill of the new Congress (H.R. 89) is aimed at air carriers who suspend service after a bankruptcy. The "Airline Consumer Protection Act" would require, to the extent practicable, all other carriers to provide air transportation to ticketed passengers denied service due to insolvency or bankruptcy. It has been referred to the House Transportation Committee.
Bankruptcy Reform by Other Means
It would be a mistake to think that the substantive law of bankruptcy has not changed over the last eight years, despite the fact that four successive Congresses have failed to enact a reform bill. Indeed, the law continues to change shape as a result of many other actions, including case-specific developments, the appellate process, local and national rules, state law developments, movement in the local legal culture and more. It can be argued that much of the bankruptcy system reforms and transforms itself irrespective of the Code, a fact illustrated in a recent law review article by Prof. Melissa Jacoby in the American Bankruptcy Law Journal. Viewed more broadly, bankruptcy "reform" can result from (a) case-by-case negotiation among professionals, including deals approved by courts that may push the envelope of the Code's literal language; (b) adoption of model rules and forms by local districts to create more uniform and efficient practice and procedure; (c) rulings by appellate judges, including district courts, BAPs and appeals courts, where bankruptcy professionals reform the law by their advocacy; and (d) passage of laws by state legislatures and enforcement actions by state attorneys general. Each is important to the law's continued development and should not be overlooked while fixating on the actions or inaction of official Washington.