[Congressional Record Volume 145, Number 22 (Monday, February 8, 1999)]
[Extensions of Remarks]
[Pages E153-E154]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


                     BANKRUPTCY AMENDMENTS OF 1999

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                          HON. JOE KNOLLENBERG

                              of michigan

                    in the house of representatives

                        Monday, February 8, 1999

  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.
  The injustice within Title 11 stems from an 11th hour decision made 
during the 103rd Congress, which placed an arbitrary $4 million ceiling 
on the single asset provisions of the bankruptcy reform bill. The 
effect has been to render investors helpless in foreclosures 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

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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 is typically left to 
deteriorate 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, the 
investor brings a foreclosure against a debtor only as a last resort. 
This usually comes after all other efforts to reconcile delinquent 
mortgage payments have failed. Second, the debtor has up to ninety 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 a few unscrupulous commercial property owners 
continue to colllect the rent to line their own pockets.

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