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Jan 9, 2001
During the final days of the 106th Congress in December,
Congress
gave final approval to legislation to revise the federal
Bankruptcy Code.
As promised, however, President Clinton vetoed the legislation
because of
objections to some of the consumer bankruptcy provisions
of the legislation.
As passed, this legislation included language amending Section
546©
of the Bankruptcy Code to expand the period in which unsecured
trade
creditors may reclaim goods sold to insolvent buyers. The
legislation
expands this period from the present 10 days to 45 days.
CFA, working with
House and Senate staff and with representatives from trade
creditors John
Deere and Maytag successfully added language to the legislation
making
it clear that any collateral encumbered by a security interest
may not
be reclaimed.
It is expected that bankruptcy reform will again be considered
in
the 107th Congress which convened on January 3, 2001. Because
of election
results and internal rules limiting the terms of committee
and subcommittee
chairmen, the major players on bankruptcy in the House and
Senate changed
with the new Congress. Senator Charles Grassley (R-IA),
sponsor of the
Senate bankruptcy legislation and author of the reclamation
expansion
provision of that bill, is leaving the chairmanship of the
subcommittee in
charge of bankruptcy legislation to take over the Senate
Finance Committee.
He is expected to be replaced by Senator Jeff Sessions of
Alabama.
On the House side, the chief sponsor of bankruptcy legislation
there,
Representative George Gekas (R-PA) must relinquish his chairmanship
of the
House Judiciary Committee's Administrative Law Subcommittee,
which oversees
bankruptcy legislation, due to House rules which limit terms
of committee
and subcommittee chairmen. The new chairman of the subcommittee
will
not be determined until early
January.
Due to these changes, CFA will undertake efforts to educate
the new
subcommittee chairs and their staff on the asset-based lending
industry in
general and on reclamation in particular. CFA will begin
these education
efforts early in January to insure that any new bankruptcy
legislation does
not contain provisions that would harm our members' ability
to
conduct business.
In addition, CFA will be closely monitoring Congress and
federal
regulatory agencies for developments on a number of other
issues that may,
either directly or indirectly, have an impact on asset-based
lending. These
issues include privacy of financial services data, registration
of security
interests in copyrighted collateral, use of credit reports
for commercial
lending, predatory lending, and the treatment of asset-based
loans by the
Office of the Comptroller of the Currency.
At the state level, the revised Article 9 of the Uniform
Commercial
Code (UCC) has been adopted by 28 states and the District
of Columbia.
These states include Alaska, Arizona, California, Delaware,
Hawaii,
Illinois, Indiana, Iowa, Kansas, Kentucky, Maine, Maryland,
Michigan,
Minnesota, Montana, Nebraska, Nevada, North Carolina, Oklahoma,
Rhode
Island, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia,
Washington,
West Virginia. The legislation has also been introduced
in three states,
Massachusetts, Missouri and New Jersey, so far in 2001.
It is expected that
most of the 22 states that have yet to adopt the revised
Article 9 will do
so before the revision becomes effective on July 1, 2001.
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