Feingold Provisions Would Lessen Burden on Small Business February 17, 2005 Washington, D.C. -- U.S. Senator Russ Feingold today offered an amendment during the Senate Judiciary Committee's mark-up of bankruptcy legislation that would strike provisions in the current bill that actually make it harder for small business to reorganize under Chapter 11. The bill the committee is considering today imposes burdens on small business in the Bankruptcy Code that will not be imposed on large corporations. The bill would impose new deadlines on small businesses seeking to reorganize under Chapter 11, and in many cases, these deadlines could force businesses capable of successfully reorganizing into Chapter 7 liquidation proceedings. "It has always been our responsibility as legislators to protect small businesses -- because they are a key part of our economy, and because it is the right thing to do," Feingold said. "The small business provisions in this bill are simply the wrong thing to do to the backbone of our economy. My amendment strikes these unfair provisions." More than half of small business Chapter 11 cases that fail -- meaning those that are dismissed, or converted to Chapter 7 liquidations -- are terminated within four months of filing. Over 70% are terminated within 6 months. By 300 days, more than 90% have already left the system. Thus, the 300-day deadline imposed by the bill will affect a very small percentage of small businesses whose plans are actually bound for failure. Instead, it will punish primarily those who would otherwise succeed. And it constrains the discretion of bankruptcy judges unnecessarily, since reorganization cases without merit are already being terminated in a timely manner. "I am not aware of a single law on the books that formally and explicitly treats small businesses worse than big corporations. Why does this bill seek to change that?" Feingold said. "Given the recent history of large scale corporate bankruptcies and scandals, the way this bill cracks down on small businesses is not only misguided, it is shocking . We should be focusing our energies on helping, not penalizing small businesses."

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