HOUSE PASSES BANKRUPTCY BILL
Byline: Joanna Ramey
WASHINGTON — Bankruptcy reform legislation is on a fast track. The House on Thursday voted overwhelmingly to approve the bill and the Senate is set to take up the measure on Monday, with a possible vote by week’s end.
This is good news for retailers, who’ve been waiting for five years for reform legislation to be enacted. There have been two previous bills — one died in Congress and the other was vetoed by then-President Clinton in December.
On Thursday, Mallory Duncan, vice president and general counsel at the National Retail Federation, could finally relax. The House voted 306-108 to approve this year’s bankruptcy bill and the Senate agreed to speed it to the floor. President Bush has said he’ll sign the bill.
“I used to say I was guardedly optimistic,” Duncan said of the measure finally emerging from Congress. “Now, I am very optimistic we’ll get a good bankruptcy bill.”
The bill that cleared the House and is now before the Senate is almost identical to last year’s edition, a compromise reached after much wrangling. The measure, designed to curb the frequency of personal bankruptcy filings, establishes a means test to judge whether people in bankruptcy can repay a portion of their debt.
The bill would also make it easier for retailers to approach debtors who have already sought bankruptcy-court protection to seek reaffirmation agreements. These agreements allow consumers to keep merchandise bought on credit by renegotiating a payment schedule.
The bill also contains a provision that could put a crimp in the plans of retailers who themselves file for bankruptcy. The measure sets a 120-day deadline for bankrupt tenants to decide whether they’ll terminate a commercial lease — a deadline retail officials have criticized as unfair because the time could lapse before a tenant has completed its reorganization plan. A judge could grant a 90-day extension to that deadline.
Opposition to the bill continued to be fierce during debate in the House and it is expected to be strong in the Senate, where Democrat opponents, calling the measure anticonsumer, are readying several amendments. However, supporters of the bill in the Senate form a bipartisan majority. Last year, the reform measure passed the chamber 70-28.
One rider to the Senate bill approved Wednesday by the Judiciary Committee at the urging of the panel’s top Democrat, Sen. Patrick Leahy, of Vermont, deals with consumer privacy.
The rider is a reaction to a controversy that arose last year, when bankrupt Toysmart.com sought to sell information about its customers that it had previously promised it would keep confidential. The amendment would prevent bankrupt retailers from negating their privacy policies without a judge’s approval.
Other pro-consumer provisions of the Senate version require credit-card bills to carry a warning about the adverse consequences of making minimal payments.
But such provisions haven’t done enough to appease opponents, like Sen. Paul Wellstone (D., Minn.), who see the bill as being too weighted in favor of creditors. If it weren’t for Wellstone’s opposition, Senate Majority Leader Trent Lott, of Mississippi, would have brought the bill to the Senate floor on Thursday.
“It seemed to me this was a bill that had been worked through the meat grinder very aggressively and that we should move it very quickly,” Lott told Wellstone Wednesday in a tete-a-tete on the Senate floor. “To delay this bill another week, what does it accomplish?”
Wellstone declared he wanted time to thoroughly debate the bill, saying, “I don’t want to miss an opportunity to talk about how harsh and mistaken this piece of legislation is.”