[Congressional Record Volume 148, Number 107 (Wednesday, July 31, 2002)]
[Senate]
[Page S7735]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




    BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2002

  Mr. LEAHY. Mr. President, last Thursday Senate and House conferees 
reached final agreement on the Conference Report for H.R. 333, the 
Bankruptcy Abuse Prevention and Consumer Protection Act of 2002. I look 
forward to Senate consideration of this measure in September, following 
House action on the conference report.
  It seems inevitable in a bill nearly five hundred pages in length, 
even with our most diligent efforts, that the conferees sometimes fail 
to catch all drafting errors. Shortly after the conference was 
concluded, it was brought to our attention that the effective date 
provision of Section 1234 contained an error. Section 1234 is not a new 
provision of law but a reiteration of current law, which Senator Baucus 
offered as a amendment to the Senate-passed bill. The House and Senate 
conferees agree to retain the provision during our conference. This 
section makes clear that a claim that is in bona fide dispute over the 
existence of liability, or the amount of that liability, cannot be used 
as a weapon for bringing an involuntary bankruptcy action.
  This clarification is consistent with the 1984 legislative history of 
this portion of Section 303 of the Bankruptcy Code. It also tracks the 
decisions of all five Courts of Appeals that have ruled on the bona 
fide dispute bar to the bringing of involuntary bankruptcy actions. 
Section 1234 restates and strengthens Congressional intent that an 
involuntary bankruptcy action should not be employed by creditors 
seeking to gain more leverage than they would have if they litigated 
contract disputes in the proper judicial forum. A party to a dispute 
over the amount or liability for a claim should not also be 
disadvantaged by the stigma and expense of an involuntary bankruptcy 
proceeding. Our overcrowded bankruptcy courts should not be burdened 
with such disputes.
  In as much as Section 1234 restates existing law, it is given 
immediate effect upon enactment. As it currently reads, due to a 
drafting error, it would not apply to cases now pending before the 
bankruptcy courts. This mistake would have a particularly perverse 
effect in the five federal circuits that have already ruled that the 
bona fide dispute standard applies to both liability and the amount 
thereof.
  As soon as the conferees became aware of this mistake, we worked to 
fashion a correction contained in a concurrent resolution to be adopted 
simultaneously with the conference report. In order to dispel any 
confusion regarding Congressional understanding and intent in this 
matter, I am placing the relevant portion of the agreed upon Concurrent 
Resolution in the Record. It directs the Clerk of the House to correct 
the enrollment of H.R. 333 by amending it as follows:
  ``Section 1234(b) of the bill by striking `shall not apply with 
respect to cases commenced under Title II of the United States Code 
before such date' and inserting `shall apply with respect to cases 
commenced under Title II of the United States Code before, on, and 
after such date'.''

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