Chapter 14 bankruptcy is not an established law as yet, but it might be only a matter of time until it appears on the law books as part of the bankruptcy codes. Chapter 14 bankruptcy was proposed in July, 2009, as an amendment to the existing Chapter 11 bankruptcy code. The bill was originally introduced by Rep. Bachus, a republican from Alabama, and currently has the backing of the Republican Party.
What is Chapter 14 Bankruptcy?
The main focus of the chapter 14 bankruptcy bill is to create a legal recourse for major multinational or national corporations that are in dire financial straits, but do not want to file for chapter 11 bankruptcy. The bill defines these companies as those that cannot be allowed to fail for the good of the general economy. If passed into law, chapter 14 bankruptcy would allow a company to restructure and reorganize its finances with the goal of finding a way to service its debt and pay off its creditors before taking the irreversible step of filing for chapter 11 bankruptcy.
In Support
The proponents of this bill argue that it will mitigate the need for major bailouts, such as the infamous auto company bailouts that deepened the looming recession and furthered the economic crisis in this country. Seen as a reaction to the failure of major companies like Lehman Brothers in 2009, the bill seeks to ensure that in the future the collapse of such big financial players does not affect the rest of the economy in such a dire way. In part, the bill is viewed as a purely Republican reaction to a Democratic administration that is seen as being responsible for providing the notorious bailout plans of the last few years, thereby significantly weakening the national economy.
Opposing Parties
Opponents of this bill, primarily Democrats, argue that while the principle of preventing major, economically detrimental bailouts in the future is sound, the existing chapter 11 bankruptcy code is flexible enough to allow for the same measures as those proposed in the chapter 14 bankruptcy bill.
The chapter 14 bankruptcy bill has been in existence since 2009, but still has not cleared the House. If it does, which is likely, given that the House is currently Republican-heavy, the bill will then pass on to the Senate. Even if this does happen, it is unlikely that the bill will be passed into law, given the fact that the Senate is primarily composed of Democrats. However, only time will tell if the chapter 14 bankruptcy bill will become actual law.
Need More Information?
If you need more information about this pending bill or would like assistance with filing for bankruptcy, TalkLocal can help. Our free online service allows you to request bankruptcy lawyers in your area who can help you resolve your legal issues. We will then connect you directly with the right professional who can help you.
