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Bankruptcy News
Congress Should Give Katrina Victims Finanical Relief By Delaying Severe New Bankruptcy Law
Burdensome Paperwork Rules, Other “Gotcha!” Requirements Not Practical for Wiped-Out Hurricane Victims; New Law Would Make Victims’ Already Bad Situations Even Worse.
WASHINGTON, D.C. September 8, 2005 Harsh new provisions under federal bankruptcy law set to go into effect in mid-October should be delayed for at least one year for people whose lives, finances or business were directly impacted by Hurricane Katrina, according to the Consumer Federation of America (CFA) and the National Association of Consumer Bankruptcy Attorneys (NACBA). CFA and NACBA warned that, in the absence of the enactment of such emergency relief by Congress, thousands victims of Hurricane Katrina could face a cruel second blow when they try to take steps to put their lives and finances back together.
The two groups urged that the delayed implementation cover those who already were in financial trouble and planned to file before the new law became effective on October 17, 2005, and those who have been driven into bankruptcy because of Katrina and need time to regroup and get their records together. These natural disaster victims already have been devastated and should be allowed to file under the more flexible current law, according to the two groups. CFA Legislative Director Travis Plunkett said: “Bankruptcy is an important safety net that families hit by unforeseen circumstances depend upon.
The federal government should be bending over backwards to help Katrina’s victims get back on their feet, not throwing up new barriers to bankruptcy. The new law's harshest provisions that impose the biggest hurdles to bankruptcy should be permanently waived for victims of Hurricane Katrina. ”
Special purpose entities in bankruptcy can be used
A business, usually a special-purpose entity, established to perform limited functions and to have one or a few primary creditors. This type of entity is sometimes established to protect lenders on large, complex projects, when the lender is to be paid solely or almost exclusively out of the money generated when the project becomes operational.
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News about Bankruptcy in Vermont and nationwide:
New Bankruptcy Law 2005
Beginning on October 17, 2005, most individual debtors filing for bankruptcy relief were required to complete either Official Bankruptcy Form B22A ... Read more >
Definition:
The failure by an entity to abide by the covenants in a debt obligation or other agreement to which it is a party. The most common default is non-payment of interest or principal.
Reverse leveraged buyout
Definition:
When a company that was a leveraged buyout restructures its (usually unmanageable) debt by issuing new equity (usually in exchange for some or all of the outstanding debt incurred during the original leveraged buyout).
Bankrupt
Definition:
The entity that files a bankruptcy; the debtor; the insolvent entity. This is a non-technical term and is not used in the Bankruptcy Code.
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