On February 25, 2019, the Commercial Law League of America returned to Capitol Hill for its Sixth Annual Hill Day. This year’s delegation numbered 24, making it the largest group to date. Collectively the commercial law activists had over one hundred meetings with Congressional members and staff. The group was broken into three teams: bankruptcy venue, bankruptcy preference reform and creditors’ rights.
The bankruptcy venue team, which included retired Bankruptcy Judges Russell Nelms and Steven Rhodes, sought support for a new version of the Bankruptcy Venue Reform Act of 2018. This legislation, which was co-sponsored by U.S. Senators John Cornyn and Elizabeth Warren, would eliminate the ability of companies to file for bankruptcy in distant forums based on their state of incorporation or the location of an affiliate. The bill was drafted with assistance from Prof. Jay Westbrook of the University of Texas School of Law (who was also the 2018 recipient of the King Award).
The preference reform team advocated for an end to abusive practices related to recovery of preferential transfers, such as trustees suing everyone who received payments during the 90 days before bankruptcy and filing suit on small claims in distant forums. The CLLA’s package of reforms included a meet and confer requirement prior to filing a preference suit, requiring that preference suits seeking to recover $50,000 or less be filed in the defendant’s home district and including payments made under settlement agreements within the ordinary course of business defense.
The creditor’s rights contingent focused on H.R. 5082, a House Bill from the 115th Congress that made it out of the Financial Services Committee but did not make it to the floor for a full House of Representatives vote. 5082 sought to exempt attorneys, actively engaged in litigation, from the definition of a debt collector under the FDCPA. In addition, 5082 sought to remove attorneys engaged in litigation from CFPB authority unless the attorney was not a debt collector and is providing a financial product or service. Although it is unlikely that 5082 will be re-introduced in the 116th Congress, much positive feedback was provided and the creditor’s rights team will continue to focus on drafting potential legislation addressing this critical area as well as reaching out to elected officials to build bi-partisan support. See photos below: