[Congressional Record Volume 141, Number 205 (Wednesday, December 20, 1995)]
[Extensions of Remarks]
[Page E2422]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        SINGLE-ASSET BANKRUPTCY

                                 ______


                          HON. JOE KNOLLENBERG

                              of michigan

                    in the house of representatives

                      Wednesday, December 20, 1995

  Mr. KNOLLENBERG. Mr. Speaker, I rise today to introduce a bill to 
address an injustice that exists within title 11 of the United States 
Code regarding single asset bankruptcies.
  This injustice stems back to the 103d Congress when an 11th hour 
decision placed on arbitrary $4 million ceiling on the single asset 
provisions of the bankruptcy reform bill. The affect has been to render 
investors helpless in forclosures on single assets valued over $4 
million.
  To rectify this problem, my bill eliminates the $4 million ceiling, 
thereby allowing creditors the ability to recover their losses. Under 
the current law, chapter 11 of the Bankruptcy Code becomes a legal 
shield for the debtor. Upon the investor's filing to foreclose, the 
debtor preemptively files for chapter 11 protection which postpones 
foreclosure indefinitely.
  While in chapter 11, the debtor continues to collect the rents on the 
commercial asset. However, the commercial property typically is left to 
deterioriate and the property taxes go unpaid. When the investor 
finally recovers the property through the delayed foreclosure, they owe 
an enormous amount in back taxes, they receive a commercial property 
left in deterioration which has a lower rent value and resale value, 
and meanwhile, the rent for all the months or years they were trying to 
retain the property went to an uncollectible debtor.
  My bill does not leave the debtor without protection. First, it is 
only as a last resort when the investor brings a foreclosure against a 
debtor. This usually is after all other efforts to reconcile delinquent 
mortgage payments are unsuccessful. Second, the debtor retains up to 90 
days to reorganize under chapter 11. It should be noted, however, that 
single asset reorganizations are typically a false hope since the owner 
of a single asset does not have other properties from which he can 
recapitalize his business.
  Finally, Mr. Speaker, my bill helps all American families by making 
their investments more secure and more valuable. The hardworking 
American families who depend on their life insurance policies and who 
have paid for years into their pensions will save millions in reduced 
costs. My bill protects the ``little guy'' from being plagued with 
years of litigation while the commercial property owner continues to 
collect the rent to line his own pockets.

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