CLLA Newswire 2019
Wednesday, September 24 , 2019
Reps. Zoe Lofgren (D-CA) and Jim Sensenbrenner (R-WI) Introduce H.R. 4421, the Bankruptcy Venue Reform Act of 2019
Last week, two of the Commercial Law League of America’s (“CLLA”) friends in Congress, Reps. Zoe Lofgren (D-CA) and Jim Sensenbrenner (R-WI), introduced H.R. 4421, bipartisan, common-sense legislation in the U.S. House of Representatives to reform and strengthen the U.S. Bankruptcy Code. Reps. Charlie Christ (D-FL), and Greg Steube (R-FL) have also signed on as original cosponsors. Simply put, our country’s Bankruptcy Code allows companies to flee their communities, employees, and local creditors to reorganize their finances in another state that might be more sympathetic to their interests. Visit www.clla.org/press-releases or download PDF
Friday, September 20 , 2019
CLLA Venue Reform Bill Introduced
The CLLA supported venue reform bill, H.R.4421, was introduced yesterday, September 19th. The Official Short Title is “To amend title 28, United States Code, to modify venue requirements relating to bankruptcy proceedings.” It was sponsored by Rep. Zoe Lofgren (D-CA), and the initial cosponsors are Rep. Jim Sensenbrenner (R-WI), Rep. Greg Steube (R-FL) and Rep. Charlie Crist (D-FL). It was referred to the House Committee on the Judiciary by the House of Representatives, and then Introduced to the House.
Wednesday, September 18 , 2019
The U.S. Supreme Court is being urged by the Trump administration to grant more presidential control over the Consumer Financial Protection Bureau (CFPB).
The U.S. Supreme Court is being urged by the Trump administration to grant more presidential control over the Consumer Financial Protection Bureau (CFPB). The CFPB was set up in the wake of the 2008 financial crisis to regulate credit cards, mortgages, loans and a variety of other consumer finance products. During the setup of CFPB in 2010, the law denoted that the director could only be removed for “inefficiency, neglect of duty or malfeasance in office”. The administration lawyers are arguing that the Constitution requires the president be able to fire the agency’s director for any reason.
This filing was prompted by an appeal from Seila Law, a California firm, that the CFPB’s structure is unconstitutional, which appears to be an attempted derailment of the CFPB investigation into their sales pitches to indebted consumers. U.S. Solicitor General Noel Francisco agreed that the CFPB’s structure is set up in violation of the constitutional separation of powers. Multiple lower court judges have come to similar conclusions in recent years.
Kathy Kraninger (the current CFPB director) is a Trump administration appointee who was confirmed at the end of 2018. Kraninger noted “My determination that the for-cause removal provision is unconstitutional does not affect my commitment to fulfilling the Bureau’s statutory responsibilities”. She also stated, during her nomination process, “the ultimate question of constitutionality of the Bureau’s structure is one for Congress or the courts to resolve.”
Click here to view full Seila petition: https://www.supremecourt.gov/DocketPDF/19/19-7/116040/20190917144324154_19-7%20Seila%20Law.pdf
Wednesday, September 4, 2019
United Mine Workers of America President Cecil Roberts Denounced Congress’ Neglect of Bankruptcy Laws that Favor CEOs
On September 4th, the United Mine Workers of America President Cecil Roberts denounced Congress’ neglect of bankruptcy laws that favor CEOs over workers. He criticized the lawmakers for failing to protect the workers at bankrupted mining companies. This was following the national attention that the Kentucky miners have received recently for blocking train tracks that transport coal from their bankrupt employer, Blackjewel LLC.
Mr. Roberts noted that “CEO[s] gets millions of dollars for filing bankruptcy. The CFO gets millions of dollars for filing bankruptcy. And then you go down the line…..They call those retention bonuses.” While workers “lose their health care upon retirement. Their benefits shrink if they’re still working. And sometimes the bankruptcy judge says you don’t even get to keep your job.” He laid this at the feet of Congress stating: “Congress has known about this forever and has done nothing about it.”
Thursday, August 29, 2019
CFPB Announces Settlement With Asset Recovery Associates
On August 28, 2019, the Consumer Financial Protection Bureau (CFPB) announced they settled with Asset Recovery Associates Inc. (ARA), a debt collection company. The agency had accused the Illinois company, also known as Financial Credit Service Inc., with using heavy-handed tactics on consumers. This included allegedly threatening to sue, arrest consumers, garnish wages and/or place liens on their homes, with no actual intent of doing so. It was found that they had also falsely told consumers that their employees were attorneys. ARA did not admit or deny these findings. CFPB will be receiving $36,878 in restitution and $200,000 in civil money penalty from ARA.
Friday, August 9, 2019
House Bill 4181
On August 9, 2019, House Bill 4181 was introduced in the House by Morgan Griffith (R-VA-09) to amend the Internal Revenue Code of 1986. The bill would allow distributions from qualified cash or deferred arrangements, such as 401ks, in the event that the employer files for chapter 11 bankruptcy and the employee is not regularly scheduled for work or paid.
After introduction, H.R. 4181 was referred to the House Committee on Ways and Means. At this time, full text is unavailable.
Thursday, August 1, 2019
Bankruptcy Bill Updates
On August 1, 2019, bankruptcy bills for farmers, businesses, and veterans passed in the Senate.
H.R. 2336 (The Family Farmer Relief Act of 2019), H.R. 3311 [The Small Business Reorganization Act of 2019 (SBRA)], and H.R. 2938 (The HAVEN Act) passed in the Senate without Amendment by Voice Vote. All three bills will now go to President Trump for his signature.
Currently, the debt limit for chapter 12 filings is $4.3 million. The Family Farmer Relief Act would increase the limit debt to $10 million to reflect the economic challenges in the agricultural industry. SBRA would simplify bankruptcy for businesses with less than $2.7 million in debt. The HAVEN Act modifies how income is calculated during bankruptcy proceedings for veterans by excluding their disability payments.
“The three bills modernize the Bankruptcy Code to ensure that struggling veterans, Main Street businesses and family farmers have access to better tools for achieving a financial fresh start,” said American Bankruptcy Institute (ABI) Executive Director Samuel J. Gerdano. “ABI commends the Senate action.”
Please follow the link for House Floor Activities referring to these bills: http://clerk.house.gov/floorsummary/floor.aspx?day=20190802&today=20190806.
Wednesday, July 31, 2019
Senate Bill 2405
On July 31, 2019, Senator Bob Mendez (D-NJ) – along with co-sponsors Cory Booker, Elizabeth Warren, Sherrod Brown, and Kirsten Gillibrand – introduced the Christopher Bryski Student Loan Protection Act (S. 2405). The bill, as introduced, establishes additional protections and disclosures for students and cosigners with respect to student loans, and for other purposes. This increases transparency regarding the obligations of co-signers. Specifically, the bill protects students and their families during a time of loss. Under the bill, when the required criteria are met an automatic co-signer release is provided.
Following its introduction, S. 2405 was referred to Committee on Health, Education, Labor, and Pensions. Link to Senate Bill 2405
Tuesday, July 23, 2019
House Bill 3887/Senate Bill 2235
On July 23, 2019, The Student Loan Debt Relief Act of 2019 (H.R. 3887/S. 2235) was introduced. As introduced, the bill – sponsored by Representatives Jim Clyburn (D-SC-06) and Senator Elizabeth Warren (D-MA) – discharges the qualified loan amounts of each individual, and for other purposes. Under the bill, borrowers, with household incomes under $100,000, are eligible to discharge up to $50,000 of student loan debt. For borrowers earning between $100,000 and $250,000 debt would be discharged by $1 for every $3 earned over $100,000. Borrowers earning over $250,000 would not be eligible to discharge their student loans. This bill has the potential to aid 45 million students.
After introduction, H.R. 3887 was referred to the Committee on Education and Labor, and in addition to the Committees on Ways and Means, and the Judiciary, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. In the Senate, it was referred to the Committee on Finance. Link to House Bill 3887
Tuesday, July 23, 2019
H.R. 3311 – Small Business Reorganization Act of 2019
On July 24, H.R. 3311 was received in the Senate.
Bill Passed (Agreed by voice vote). On July 23, Mr. David Cicilline (Chair) moved to suspend the rules and pass the bill, as amended. H.R. 3311 — “To amend chapter 11 of title 11, United States Code, to address reorganization of small businesses, and for other purposes.”
H.R. 2938 – Honoring American Veterans in Extreme Need (HAVEN) Act of 2019
On July 24, H.R. 2938 was received in the Senate.
Bill Passed (Agreed by voice vote). On July 23, Mr. Cicilline moved to suspend the rules and pass the bill, as amended. H.R. 2938 — “To exempt from the calculation of monthly income certain benefits paid by the Department of Veterans Affairs and the Department of Defense.”
H.R. 3304 – National Guard and Reservists Debt Relief Extension Act of 2019
On July 24, H.R. 3304 was received in the Senate.
Bill Passed [Agreed to by the yeas and nays (2/3 required)]. On July 23, Mr. Cicilline moved to suspend the rules and pass the bill, as amended.
Please follow the link for House Floor Activities Legislative Day of July 23, 2019: http://clerk.house.gov/floorsummary/floor.aspx?day=20190723
Monday, July 22, 2019
Resolution Authorizing Issuance of Subpoenas, Small Businesses, Veteran Benefits, HAVEN Act, and the Family Farmer Relief Act
Tomorrow evening, the House Judiciary Committee is scheduled to consider the following bills under suspension of the rules: H.R. 3311 [Small Business Reorganization Act of 2019], H.R. 2938 [Honoring American Veterans in Extreme Need “HAVEN” Act of 2019], and H.R. 3304 [National Guard and Reservists Debt Relief Extension Act of 2019].
No amendments would be allowed and a two-thirds majority would be required for passage. Having spoken with the Chief Majority Counsel for the Subcommittee on Antitrust, Commercial, and Administrative Law, Mr. Slade Bond, the bills are likely to be passed as introduced.
Thursday, July 11, 2019
Resolution Authorizing Issuance of Subpoenas, Small Businesses, Veteran Benefits, HAVEN Act, and the Family Farmer Relief Act
On July 11, 2019, the House Committee on the Judiciary met for a Full Committee Mark-Up on Resolution Authorizing Issuance of Subpoenas, Small Businesses, Veteran Benefits, HAVEN Act, and the Family Farmer Relief Act.
H.R. 3311, the “Small Business Reorganization Act of 2019,” was Ordered to be Reported Favorably, Voice Vote en bloc [with H.R. 3304, the “National Guard and Reservists Debt Relief Extension Act of 2019”; H.R. 2938, the “Honoring American Veterans in Extreme Need Act of 2019” or the “HAVEN Act”; and H.R. 2336, the “Family Farmer Relief Act of 2019. Link
Monday, July 2, 2019
Oversight of Bankruptcy Law and Legislative Proposals Hearing
On July 2, 2019, the Oversight of Bankruptcy Law and Legislative Proposals Hearing took place from 10:00 AM – 12:30 PM EDT.
During the hearing on Oversight of Bankruptcy Law and Legislative Proposals, the Subcommittee on Antitrust, Commercial, and Administrative Law covered issues related to recent bankruptcy legislation. H.R. 3311 [the Small Business Reorganization Act of 2019] was directly mentioned in favorable manner. With the addition of subchapter V, the debtor is permitted to retain ownership. HR 3311 remedies the complexity of Chapter 11 and “provides incentives and procedures for both debtors and creditor to arrive at consensual plans.”
The hearing touched upon HR 3027 [the Student Loan Borrowers’ Bill of Rights Act of 2019] and HR 3102 [the Helping Individuals Get a Higher Education while Reducing Education Debt Act of 2019]. As a refresher, both bills were introduced with the aim of establishing protections for student borrowers. An implication for abuse of bankruptcy courts was highlighted to suggest that in providing basic consumer protections, an opening would be created for student borrowers to avoid repayment of debt. The Subcommittee recognized this implication as a fallacy, because the “undue hardship” standard is such an insurmountable threshold for the dischargeability student loan debt. Nevertheless, the Subcommittee presented overarching themes of support for HR 3027 and HR 3102 by emphasizing the need to protect student borrowers.
In closing, Mr. Cicilline noted witnesses had five days to submit additional items to go on record.
A video of the Hearing has been posted here. Please see materials from the Hearing linked below, in addition to the full transcript.
The Honorable Richard Durbin
Senator, United States Senate
Richard Durbin Statement
The Honorable Ben Cline
Member of Congress, Washington D.C.
Ben Cline Statement
Ms. Hollister K. Petraeus
Former Assistant Director, Consumer Financial Protection Bureau’s Office of Servicemember Affairs
Hollister Petraeus Statement
Hollister Petraeus Truth in Testimony
Hollister Petraeus Biography
Mr. Robert Keach
on behalf of The American Bankruptcy Institute
Robert Keach Statement
Robert Keach Supplemental 1
Robert Keach Supplemental 2
Robert Keach Supplemental 3
Robert Keach Truth in Testimony
Robert Keach Biography
Thursday, June 19, 2019
Hearing on Oversight of Bankruptcy Law and Legislative Proposals
Please be advised the hearing has been postponed and rescheduled to take place on Tuesday, June 25, 2019 at 10:00 a.m.
Tuesday, June 18, 2019
House Bill 3311/Senate Bill 1091s
On June 18, 2019, The Small Business Reorganization Act of 2019 (H.R. 3311/S. 1091) was introduced. The bill – sponsored by Representatives Ben Cline (VA) and David N. Cicilline (RI) in the House, and Senator Chuck Grassley (IA) in the Senate – would simplify the process for small businesses to use bankruptcy as a means of reorganization by adding a new subchapter V to Chapter 11. Under the bill, businesses with less than $2.5 million in debt would be able to file for bankruptcy in a more streamlined manner. While in bankruptcy reorganization, a small business would be able to negotiate with creditors while retaining the control of the business, keeping employees on payroll, and suppliers and vendors paid. Other specifics of the bill include: not requiring a committee of unsecured creditors and disclosure statement unless the court orders it for cause, and a standing trustee would be appointed in every small business debtor case to perform duties similar to those by a trustee in Chapter 12 or 13.
HR 3311 l Small Business Reorganization Act of 2019 Fact Sheet
Wednesday, June 5, 2019
House Bill 3102
On June 5, 2019, Representative Peter A. DeFazio (OR) introduced H.R. 3102, the Helping Individuals Get a Higher Education while Reducing Education Debt Act of 2019 (without any co-sponsors). The bill, as introduced, amends the Higher Education Act of 1965 to improve loans, and for other purposes.
After introduction, House Bill 3102 was referred to the Committee on Education and Labor, and in addition to the Committees on the Judiciary, and Ways and Means, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. Link
Friday, May 24, 2019
House Bill 3027
On May 24, 2019, Representative Frederica Wilson (D-FL-24) introduced (without any co-sponsors) H.R. 3027, the Student Loan Borrowers’ Bill of Rights Act of 2019. The bill, as introduced, establishes student loan borrowers’ rights to basic consumer protections, reasonable and flexible repayment options, access to earned credentials, and effective loan cancellation in exchange for public service, and for other purposes.
After introduction, House Bill 3027 was referred to the Committee on Education and Labor, and in addition to the Committees on Ways and Means, the Judiciary, and Oversight and Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned. Link
Wednesday, April 16, 2019
Senate Bill 1002
On April 3, 2019, Senator Merkley (OR) introduced S. 1002, the Affordable Loans for Any Student Act, which was co-sponsored by Senators Stabenow (MI), Gillibrand (NY), Baldwin (WI), Blumenthal (CT), Schatz (HI), Cardin (MD), Cortez Masto (NV), Van Hollen (MD), and Wyden (OR).
The bill was introduced to amend the Higher Education Act of 1965, increasing the usage of the Federal student loan income-based repayment plan as well as improve repayment plan options for borrowers. After introduction, the bill was referred to the Committee on Health, Education, Labor and Pensions. Link
Wednesday, April 3, 2019
House Bill 1726
On March 13, 2019, Representative Chris Collins (NY) introduced H.R. 1726, the Protecting Gun Owners in Bankruptcy Act of 2019, which was co-sponsored by Reps. Scott (TN), Latta (OH), and Young (AK). The bills, as introduced, amends title 11 of the United States Code to include firearms in the types of property allowable under the alternative provision for exempting property from the estate. After introduction, House Bill 1726 was referred to the House Judiciary Committee. Link
Wednesday, April 3, 2019
Senate Bill 766
On March 13, 2019, Senator Tillis (NC) introduced S. 460, the PROTECT Asbestos Victims Act of 2019, which was co-sponsored by Senators Grassley (IA), Cornyn (TX), and Crapo (ID). The bills, as introduced, amends title 11 of the United States Code to promote the investigation of fraudulent claims against certain trusts, to amend title 18, United States Code, to provide penalties against fraudulent claims against certain trusts, and for other purposes. After introduction, Senate Bill 766 was referred to the Senate Judiciary Committee. Link
Wednesday, March 6, 2019
House Bill 1557
On March 6, 2019, Representative Cheri Bustos, (IL) introduced H.R. 1557, which was co-sponsored by Reps. Tim Burchett (TN), Elissa Slotkin (MI), and Cynthia Axne (IA). The bill was introduced to amend Title 11 of the US Code to prohibit the payment of bonuses to highly compensated individuals employed by the debtor and insiders of the debtor to perform services during the bankruptcy case. After introduction, the Bill was referend to the Committee on the House Judiciary.
Friday, February 22, 2019
McKinsey to Settle With DOJ Over Disclosures in Chapter 11 Cases
The U.S. Trustee Program (USTP) within the Depart of Justice entered into a settlement agreement with KcKinsey and Company, Inc. The USTP alleged that McKinsey made insufficient disclosures about its clients and investments in entities (disclosures that are required under the Bankruptcy Code and Rules).
Under the terms of the settlement McKinsey agreed to pay $15 million in three cases to remedy inadequate disclosures of connections and to make additional disclosures. This is one of the highest repayments made by a bankruptcy professional for non-compliance with disclosure rules. The USTP has agreed not to bring additional actions based on McKinsey’s past disclosures. The settlement does not impact the rights of any parties or government agencies not participating in the settlement.
Friday, February 22, 2019
Senate Bill 460
On February 12, 2019, Senator Warner (VA) introduces S. 460 which was co-sponsored by Senators Thune (SD), King (ME), Capito (WV), Markey (MA), Roberts (KS), Murphy (CT), Hoeven (ND), Jones (AL), Rounds (SD), Blumenthal (CT), Collins (ME), Tester (MT), Blunt (MO), Hassan (NH), Young (IN), Rosen (NV), Gardner (CO), and Sinema (AZ).
The text of the bill has not yet been released but the bill was introduced to amend the Internal Revenue Code of 1986 to extend the exclusion for employer-provided education assistance to employer payments of student loans. After introduction, Sentate Bill 460 was referend to the Finance Committee.
Friday, February 15, 2019
House Bill 885
On January 30, 2019, Representative Steve Cohen (TN) introduced H.R. 885, the Private Student Loan Bankruptcy Fairness Act of 2019, which is co-sponsored by Reps. Joe Courtney (CT), Danny Davis (IL), Henry Johnson (GA), Jerry McNerney (CA), Gwen Moore (WI), Eleanor Holmes Norton (DC), Eric Swalwell (CA), Dina Titus (NV), Peter Welch (VT), John Yarmuth (KY), Jahana Hayes (CT), Chellie Pingree (ME), and Harley Rouda (CA).
The bill was introduced to modify the dischargeability of debts for certain educational payments and loans. More specifically, adding the following language, “any program for which substantially all of the funds are provided by”. After introduction, House Bill 885 was referend to the House Committee on the Judiciary. Link
Wednesday, February 6, 2019
House Bill 683
On January 17, 2019, Representative Nydia Velazquez (NY) introduced H.R. 683, which was co-sponsored by Rep. Jenniffer Gonzalez-Colon (PR), Rep. Raul Grijalva (AZ), Rep. Rob Bishop (UT), Rep. Andy Biggs (AZ), and Rep. Darren Soto (FL). The bill was introduced to impose requirements on the payment of compensation to professional persons employed in voluntary cases commenced under Title III of the Puerto Rico Oversight Management Economic Stability Act.
The Bill states that in cases commenced under Section 304 of the Act, no attorneys, accountants, appraisers, auctioneers, agents, consultants or other professional persons shall be compensated under section 16 of the Act unless prior to making a request for compensation such a professional person has submitted a verified statement conforming to the disclosure requires of rule 2014(a) of the Federal Rules of Bankruptcy Procedure. After introduction, House Bill 683 was referend to the House Committee on the Judiciary. Link
Wednesday, January 9, 2019
Bankruptcy Watchdogs at U.S. Trustee Office Leashed by Shutdown
The partial government shutdown is affecting some Chapter 11 cases. U.S. Trustee lawyers, who are responsible for establishing creditor committees and organizing meetings between debt holders and bankruptcy companies in corporate bankruptcy cases, are limiting their work. Additionally, some bankruptcy cases have been halted as government lawyers cannot participate during the shutdown. These limitations and halts will continue through the shutdown.