Effects of the New Bankruptcy Law One Year After its Implementation Examined at October Program
Contact: John Hartgen
EFFECTS OF THE NEW BANKRUPTCY LAW ONE YEAR AFTER ITS IMPLEMENTATION EXAMINED AT OCTOBER PROGRAM
October 19, 2006, Alexandria, Va. — The American Bankruptcy Institute (ABI) and The Financial Services Roundtable held a “One-Year Anniversary Program on the Implementation of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA)” on Oct. 16, 2006, in Washington, D.C., at the Georgetown University Law Center. The One-Year Anniversary Program featured practitioners, judges, trustees, professors, business groups and consumer groups analyzing the impact of BAPCPA one year after it was implemented on Oct. 17, 2005.
The following is a summary of the panel sessions from the program:
The “Macro Overview of the Effects of BAPCPA” session featured moderator Melyssa Barrett of Visa USA, Inc. (San Francisco) and panelists Prof. Michelle J. White of the University of California (San Diego), Dr. Teresa A. Sullivan of the University of Michigan (Ann Arbor, Mich.) and Clifford White, the Acting Director of the Executive Office of the U.S. Trustee (EOUST) (Washington, D.C). Panel discussions focused on the effectiveness of the new law in preventing bankruptcy abuse and how success will be measured going forward, such as the case audits by the EOUST that will begin on Oct. 20.
Panelists on the “Credit Counseling: What Has Been the Outcome of the Credit Counseling Requirements of the New Law?” session agreed that, though the credit counseling and debt-management plan requirements of BAPCPA for consumer bankruptcies have helped improve debtor financial literacy, it was too early to tell what effects the new requirements were having on bankruptcy filings as many filers may not immediately benefit from counseling. The moderator for the session was Travis Plunkett of the Consumer Federation of America (Washington, D.C.) and included panelists Henry G. Hobbs, Acting Chief of the EOUST’s Debtor Education and Credit Counseling Section (Washington, D.C.), Ivan Hand of Money Management International (Houston), Susan C. Keating of the National Foundation for Credit Counseling (Silver Spring, Md.) and John Rao of the National Consumer Law Center (Boston).
“Business Bankruptcy: How Has BAPCPA Affected Chapter 11 Filings?” featured moderator Richardo I. Kilpatrick of Kilpatrick & Associates, PC (Auburn Hills, Mich.) and panelists Bankruptcy Judge Elizabeth Perris (Portland, Ore.), Stuart A. Gold of Gold, Lange & Majoris, PC (Southfield, Mich.), Susan M. Freeman of Lewis and Roca LLP (Phoenix) and Lisa J. Donahue of AlixPartners LLC (New York). The panel, which discussed the new law’s effect on chapter 11 filings, new key employee retention provisions (KERPs) and small business filings, agreed that BAPCPA’s requirements have emphasized the need for businesses to construct a careful exit strategy prior to filing for bankruptcy.
Michael J. Desmond, Tax Legislative Counsel for the U.S. Department of Treasury, gave a keynote luncheon speech on the tax implications for consumers and businesses filing for bankruptcy. Desmond also spoke about the Internal Revenue Service’s (IRS) oversight of the tax-exempt status of credit-counseling organizations. He also reviewed tax guidance for insolvency professionals seeking to comply with the new law.
The “Chapter 7 & 13 Issues: Means Testing and Good Faith” session included moderator Lawrence A. Friedman of eCAST Settlement Group (New York) and panelists Mark A. Redmiles, Chief of the EOUST Civil Enforcement Unit (Washington, D.C.), Prof. Michaela M. White of the Creighton University School of Law (Omaha, Neb.) and Chapter 13 Trustee Andrea E. Celli (Albany, N.Y.). Panelists discussed the line of cases that have been decided since the implementation of BAPCPA interpreting the means test and the issues that have arisen with regard to a debtors’ ability to pay.
Moderator Lynn Tavenner of Tavenner & Beran PLC (Richmond, Va.) and panelists Henry J. Sommer of Miller, Frank & Miller (Philadelphia), Donald F. Walton, Acting EOUST Deputy Director (Washington, D.C.) and Norma Hammes of Gold & Hammes (San Jose, Calif.) agreed that cases under the new law take longer and some fees are more expensive. They also pointed out that attorneys are working to dispel rumors regarding the new bankruptcy law to show that bankruptcy is still available to honest debtors looking to obtain a fresh financial start. The panel discussed whether attorneys are considered “debt relief agencies” under BAPCPA, including Administration arguments that attorneys are covered by the requirements in order to strengthen professional standards for bankruptcy lawyers.
Bankruptcy Judges Eugene Wedoff (Chicago), Christopher Klein (Sacramento, Calif.) and moderator Dennis Dow (Kansas City, Mo.) summarized the rules proposed in August 2006 to implement BAPCPA. A portion of the discussion focused on the official forms that are being developed under the proposed rules to calculate the income and exclusions used in the chapter 13 “means test” repayment formula.
A full transcript of the proceedings will be included with panelist papers and sent to Congress for the upcoming new session.
For online access to an audio file of ABI’s One-Year Anniversary Program, please contact John Hartgen at (703) 739-0800 or [email protected] .
ABI is the largest multi-disciplinary, nonpartisan organization dedicated to research and education on matters related to insolvency. ABI was founded in 1982 to provide Congress and the public with unbiased analysis of bankruptcy issues. The ABI membership includes more than 11,500 attorneys, accountants, bankers, judges, professors, lenders, turnaround specialists and other bankruptcy professionals, providing a forum for the exchange of ideas and information. For additional information on ABI, visit www.abiworld.org. For additional conference information, visit http://www.abiworld.org/conferences.html.