New Bankruptcy Law 2005 the Term Paper

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The recent impositions on personal bankruptcies attracted the attention but the legal experts opined that new rules could have extensive effects. In common, in the words of a bankruptcy lawyer Jon Schneider of Goodwin Procter in Boston, "There is probably going to be a raft of filings in September to avoid this new law." (Law could trigger Chapter 11 surge) D.J. Baker of Skadden Arps a New York lawyer, representing supermarket chain Winn-Dixie in its reorganization opined that these changes will make some companies to fail in Chapter 11.

James Spryaregen of Kirkland & Ellis in Chicago forecasts that the new rules will make it more stringent to raise sufficient financing in bankruptcy and he visualized more liquidation. The Companies subject to Chapter 11 will only find one and half a year during which the management alone can entail a plan for managing a reorganized company. Presently the Judges can extend exclusivity almost indefinitely, deterring the creditors and external investors from entailing alternative plans to the court.

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A stringent deadline and possibly a fast return on investments could trigger more external financial interest in restructured companies. It is evident that in the absence of evidence of actual job offers the companies won't be permitted to pay officers bonuses to deter them from leaving the company. To safeguard the landlords the companies will now have only 210 days that is about seven months to confirm as to which leased locations to keep open or to close down. Presently a bankruptcy judge can frequently extend the deadline. Mitchell Cohen of Gordon Bros Group, a consultant to Kmart during its reorganization, opined that such confinement will compel the retailers into quick decisions, and they may not be the best decisions. Moreover, the Utilities are also permitted to charge the companies big security deposits while they are in Chapter 11. (Law could trigger Chapter 11 surge).....

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