NRF Calls For Bankruptcy Reform
By George Anderson
The National Retail Federation (NRF) has urged the Senate to approve bankruptcy reform legislation contained in S. 256, the Bankruptcy Abuse Prevention and Consumer Protection
Act of 2005, sponsored by Senate Finance Committee Chairman Charles Grassley (R-Iowa).
If approved, S. 256 would require people who can afford to repay a significant portion of their debt to do so under Chapter 13 rather than having all debts eliminated by filing
for Chapter 7.
In a letter to Majority Leader Bill Frist (R-Tenn), Steve Pfister, NRF’s senior vice president for government relations, wrote, “As retailers, we have seen firsthand the dramatic
effect bankruptcy has had on both consumers’ finances and on our ability to serve the public. These filings ultimately cost each of the millions of households we serve hundreds
of dollars in unseen costs every year. Unfortunately, many of those losses are the result of misuse of the law by irresponsible, higher-income individuals. Bankruptcy should not
be a mere convenience or financial planning tool, but rather a safety net for those who genuinely need it.”
Moderator’s Comment: Do you think the spirit of bankruptcy law protections are being circumvented by individuals and businesses? What has been the impact?
The Senate and House might look to tighten up the rules as it applies to business, as well.
On one day, investors can see the value of their holdings drop to zero because a company says it lacks the ability with cash and assets to pay off its creditors.
A few months go by and, after emerging from bankruptcy, the company starts selling off its ‘worthless’ assets, such as real estate, and suddenly it is flush
with cash. The practice may be legal and it may even be good business. That doesn’t make it right, however. –
George Anderson – Moderator