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June 17, 2022

6/17 – UPDATE: HR 6814 – Small Business Fair Debt Collection Protection Act – Rescheduled for Markup 6.22

DOWNLOAD SAMPLE FORM LETTER
(MICROSOFT WORD FILE)

LET CONGRESS KNOW THAT YOU OPPOSE H.R. 6814

June 14, 2022

******JUNE 14th UPDATE******Thank you to the CLLA members that responded and contacted their representatives and members of the House Financial Services Committee. Your efforts have an impact!
 
Today’s markup has been POSTPONED. As soon as the Committee provides the rescheduled day/time for mark-up, we will send another update. 
 
PLEASE CONTINUE to maintain contact with your representatives and the Committee Members on this important issue. You can download the CLLA position paper below.
LET CONGRESS KNOW THAT YOU OPPOSE H.R. 6814

UPDATE: HR 6814 – Small Business Fair Debt Collection Protection Act – Scheduled for Markup 6.14 

Rep. Al Lawson’s (FL) Bill – the Small Business Fair Debt Collection Protection Act (HR 6814) has been scheduled by the House Financial Services Committee for a markup Tuesday, 6/14 – at 10am (alongside 11 other bills).  The CLLA previously published its comment and opposition to HR 6814 which would expand the protections of the FDCPA to commercial debt. Rep. Lawson has also drafted an amendment to the original bill which will be considered during the markup. That language can be found here: https://financialservices.house.gov/uploadedfiles/6.14_bills-117-6841-a000370-amdt-1.pdf 

BILL SUMMARY

This bill would extend the FDCPA to small businesses with loans or obligations that are less than $2.5 million. It would amend section 803 of the FDCPA to define debt as “any obligation or alleged obligation to pay money arising out of a transaction, whether or not such obligation has been reduced to judgment.” It would further amend section 803 of the FDCPA by applying the act to small businesses in the same manner as the act applies to consumers. 

PLEASE ACT NOW!!!

Members should contact their Congressional representatives or members of the House Financial Services Committee listed below, to express their concerns, comments and describe the negative impact that HR 6814 would have on commercial creditors seeking to enforce commercial obligations.

Please inform your legislators or the Member(s) that if the bill is reported out of committee, under Rule XI, clause 2(l)), the report may include minority or dissenting views. Members with dissenting views can give notice of their intention to file supplemental views for inclusion in the report to the full House. Under the rule, the submission must take place not less than two additional calendar days after the day of notice to file such views. This could be a useful pathway to ensure that the language in CLLA’s opposition statement makes its way into the record and is reflected in any potential House floor consideration.

INFORM YOUR REPRENTATIVES AND MEMBER(S) AND ASK FOR RELIEF UNDER THE HOUSE RULES
If you contact Members who are sympathetic to our issue, please ask that the Member(s) make a statement during the markup in opposition to the bill when it comes up for consideration and, if the Bill is reported out of committee, to file a supplemental statement using language similar to that in CLLA’s statement so the CLLA comment and opposition is included in the report to the full House.  In addition, ask that the Member(s) raise the “question of consideration” rule (House Rule XVI). This provides a path for Members on the committee to request a vote on whether the measure/bill should be considered at all during the markup – i.e. if a majority of the committee votes no, then that would prevent the bill and its amendment from being considered and potentially reported to the floor. The fastest way to ensure your voice is heard is to submit your comments on your Reps’ website.

YOUR VOICE MATTERS! 

Maxine Waters, California, Chairwoman
Carolyn B. Maloney, New York
Nydia M. Velázquez, New York
Brad Sherman, California
Gregory W. Meeks, New York
David Scott, Georgia
Al Green, Texas
Emanuel Cleaver, Missouri
Ed Perlmutter, Colorado
Jim A. Himes, Connecticut
Bill Foster, Illinois
Joyce Beatty, Ohio
Juan Vargas, California
Josh Gottheimer, New Jersey
Vicente Gonzalez, Texas
Al Lawson, Florida
Michael San Nicolas, Guam
Cindy Axne, Iowa
Sean Casten, Illinois
Ayanna Pressley, Massachusetts
Ritchie Torres, New York
Stephen F. Lynch, Massachusetts
Alma Adams, North Carolina
Rashida Tlaib, Michigan
Madeleine Dean, Pennsylvania
Alexandria Ocasio-Cortez, New York
Jesús “Chuy” García, Illinois
Sylvia Garcia, Texas
Nikema Williams, Georgia
Jake Auchincloss, Massachusetts, Vice Chair
Patrick McHenry, North Carolina, Ranking Member
Frank D. Lucas, Oklahoma
Pete Sessions, Texas
Bill Posey, Florida
Blaine Luetkemeyer, Missouri
Bill Huizenga, Michigan
Ann Wagner, Missouri, Vice Ranking Member
Andy Barr, Kentucky
Roger Williams, Texas
French Hill, Arkansas
Tom Emmer, Minnesota
Lee M. Zeldin, New York
Barry Loudermilk, Georgia
Alexander X. Mooney, West Virginia
Warren Davidson, Ohio
Ted Budd, North Carolina
David Kustoff, Tennessee
Trey Hollingsworth, Indiana
Anthony Gonzalez, Ohio
John Rose, Tennessee
Bryan Steil, Wisconsin
Lance Gooden, Texas
William Timmons, South Carolina
Van Taylor, Texas

February 18, 2022

Small Business Bankruptcy Rules Poised for Extension by Congress

  • Congress may permanently boost debt that can be expunged
  • New program likely to attract more users should economy falter

In an era of hyper-partisanship, an obscure federal program that makes it easier for small-business owners to shed debt in bankruptcy has been embraced by Democrats and Republicans, who are now weighing an extension of this rule.

So-called Subchapter V bankruptcy lets closely-held businesses move through bankruptcy much more quickly and cheaply than a traditional Chapter 11. There are no official creditor committees to fight, just a government appointed trustee with limited powers who assesses the company’s finances and helps reach consensus with debtholders. More importantly, company owners don’t risk losing control of their companies to creditors, a common outcome in bankruptcies.

The program grew when the pandemic ravaged millions of small businesses, government raised the debt cutoff to qualify for Subchapter V to $7.5 million, from $2.7 million, and then extended it an additional year. Without another renewal, the higher limit will expire next month, boxing out thousands of companies that could benefit as they face new challenges like supply chain woes and higher interest rates.

“It has enjoyed broad bipartisan support from Congress so far, and I’m hopeful that we can soon come to an agreement to permanently authorize a higher limit,” Iowa Republican Chuck Grassley, the ranking member of U.S. Senate’s judiciary committee, said in a statement.

Quick Turnaround

More than 2,800 cases have been filed since the program began, according to court statistics. That number is likely to rise this year as banks and landlords get more aggressive about collecting overdue loans and back rent, restructuring advisers say.

“You have a mountain of debt that has not been addressed,” said Robert J. Keach, an attorney who advocated for the program as a member of the American Bankruptcy Institute. Government assistance and eviction moratoriums have allowed small businesses to exist in a temporary limbo that can’t last. “I think there will be two or three times as many Sub Vs this year.”

Subchapter V’s quick turnaround time — cases typically take weeks or months, while larger Chapter 11s can stretch a year or more — has attracted more businesses, said Ed Flynn, a consultant with ABI who studies bankruptcy statistics. About 80% of companies that were eligible to use Subchapter V did so, he said.

Corporate Envy

The Subchapter V bankruptcy law has even made some distressed corporations envious, sending restructuring advisers hunting in vain for strategies that might let their bigger clients qualify. When co-working giant IWG Plc filed for bankruptcy in 2020, it initially sought to file individual office spaces under the program, before abandoning that strategy for a conventional Chapter 11.

But for smaller companies, the program can be a lifeline.

Bankruptcy attorney Don Swanson spent decades advising small companies and farmers in Nebraska before he became a Chapter V trustee. Out of the 10 cases he’s handled so far, nine successfully slashed debt and kept operating, he said. Only one was forced to liquidate.

None of them could have reorganized under the traditional, Chapter 11 rules, Swanson said. “They probably would have operated until they ran out of cash and then cratered,” he said.

January 26, 2022

H.R. 6424

Official Short Title: HIGHER ED Act

Official Title: To amend the Higher Education Act of 1965 to improve loans, and for other purposes.

Bill Summary: This bill permits a borrower to discharge in bankruptcy a nonprofit, government, or private student loan, or an obligation to repay an educational benefit, scholarship, or stipend.

Sponsored by Rep. Peter DeFazio (D-OR-04)

Latest Action 01/19/2022
Referred to the Committee on Education and Labor, and in addition to the Committee on 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.

LINK TO FULL TEXT OF BILL

January 10, 2022

S. 2679 Update

Official Short Title:
Small Business Reorganization Technical Corrections Act

Official Title:
A bill to amend title 11, United States Code, to make clarifications with respect to amendments made by the Small Business Reorganization Act, and for other purposes.

Latest Action on 08/09/2021
Read twice and referred to the Committee on the Judiciary.

Summary
Small Business Reorganization Technical Corrections Act
This bill modifies provisions related to small business reorganization bankruptcies. Specifically, it provides that a small business debtor includes a debtor that is an affiliate of certain publicly traded companies. Additionally, it authorizes the bankruptcy trustee to operate the business of the debtor if the debtor ceases to be a debtor in possession.

Sponsored by: Sen. Chuck Grassley (R-IA)
Cosponsored by 1 Democrat: Sen. Sheldon Whitehouse (D-RI)

LINK TO FULL TEXT OF BILL

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2020 Newswire