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Consumer groups are pressing for the new bankruptcy law that is set to go into effect on Oct. 17 to be delayed for at least one year for victims of Hurricane Katrina. While advocates and lawmakers have lumped small businesses in with individuals and families hurt by the natural disaster and flooding that have hit Louisiana, Mississippi and Alabama, it’s unclear whether larger Gulf Coast companies will also receive a reprieve. “I’m sure companies have similar concerns as individuals, but we haven’t really evaluated them,” said Travis Plunkett, legislative director of the Consumer Federation of America. “We opposed the law and would love for it to be permanently delayed. But from our point of view, this is not an attempt to refight old battles but to offer financial relief for victims of Hurricane Katrina.” The CFA and the National Association of Consumer Bankruptcy Attorneys held a press conference Wednesday outlining which consumer provisions of the new law they’d like hurricane victims to be exempted from. “The harsh new provisions that are set to go into effect in mid-October should be delayed for at least one year for people whose life, finances and businesses have been affected by Hurricane Katrina,” said Brad Botes, a Nacba director and a consumer bankruptcy attorney. “Otherwise, they may face a cruel second blow when trying to take steps to put their lives and finances back together,” he said. Whether lobbyists take up the same cause on behalf of Gulf Coast companies remains to be seen. If they don’t, such companies face more stringent time limits, among other provisions, under the new law. For example, among the new provisions is a firm 18-month period for a debtor to retain the exclusive right to file a reorganization plan — not a very long period considering how long it may take for proprietors to even get back to see what type of shape their companies are in. In addition, the new law gives debtors an initial 120 days after filing for Chapter 11 to affirm or reject their leases. A judge would then have the leeway to grant an additional 90-day extension, for a maximum period of 210 days. Again, though, meeting those deadlines will be a challenge to debtors even without the extra burden of dealing with water-damaged buildings and everyday business disruption. Nonetheless, an effort to seek a delay of the bankruptcy bill in its entirety doesn’t appear to be in the works. “Protecting businesses is not sexy,” said Mark Taylor, a bankruptcy attorney at Arent Fox in Washington. “The impact of the amendments on business is far less than it is on consumers. They are not so dramatic, in my judgment, that they should be delayed. “In the real world of business, companies will figure out how to live within those guidelines,” Taylor said. On the consumer front, meanwhile, some Democrats on Capitol Hill already are heeding the call for help. Sen. Russ Feingold, D-Wis., said Tuesday he is preparing legislation to protect individuals and small businesses from the upcoming bankruptcy law. “We need to make sure that the new bankruptcy law, scheduled to take effect in October, does not compound the hardship for thousands of hard-working Americans who simply will not be able to make ends meet as a result of this disaster,” Feingold said. In the House, Rep. John Conyers, D-Mich., said he intends to draft legislation shortly to help families and small businesses, as well. Meanwhile several Republican lawmakers said they intend to hold hearings on what legislative solutions should be forthcoming. In the meantime, what of Gulf Coast businesses, including the dozens of casinos in Louisiana and Mississippi? While corporate bankruptcy reform was swept up in nearly a decade-long tide to revise consumer bankruptcy laws, now a ripple effect from efforts to delay the law may perhaps reach companies as well. Copyright �2005 TDD, LLC. All rights reserved.

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