    [Public Papers of the Presidents of the United States: William J. Clinton (1994, Book II)]
    [October 22, 1994]
    [Pages 1847-1848]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Statement on Signing the Bankruptcy Reform Act of 1994
    October 22, 1994

        The ``Bankruptcy Reform Act of 1994,'' H.R. 5116, stands out as a
    significant achievement of the 103rd Congress, and I am pleased today to
    sign this measure into law. Breaking through years of gridlock that
    prevented the enactment of meaningful bankruptcy reform legislation, the
    chief sponsors of this measure worked tirelessly on a bipartisan basis
    with the Justice Department and other agencies of this Administration to
    pass this bill. Senator Howell Heflin, Chairman of the Senate Judiciary
    Subcommittee on Courts and Administrative Practice, Senator Charles
    Grassley, Ranking Member of that Subcommittee, House Judiciary Committee
    Chairman Jack Brooks, Congressman Hamilton Fish, Jr., Ranking Member of
    that Committee, Congressman Mike Synar, and their respective staffs are
    to be commended for their efforts.
        This is the most broad-based bankruptcy reform measure to be signed
    into law in 16 years. Bankruptcy plays a pivotal role in the dynamic
    American economy and is a critical element of our civil justice system.
    The Act will update the bankruptcy system so that it may better serve
    the needs of debtors and creditors, from individuals and small business
    owners to large corporations and financial institutions. The role of
    government agencies in bankruptcy proceed-

    [[Page 1848]]

    ings will also be clarified, assuring enhanced collection of debts owed
    to the public treasury.
        Of particular significance are the provisions of this Act directed
    at accelerating the reorganization process for small businesses. The
    current version of chapter 11, which embodies a single set of procedures
    for all types of reorganizations, has proven to be particularly
    burdensome and time consuming to both small business debtors and
    creditors, resulting in unnecessary costs and delays. The Act will
    create a simplified ``fast-track'' system for businesses with debts
    totaling less than $2 million, meaning far quicker and less costly
    disposition of approximately 70 percent of the business reorganizations
    handled by the bankruptcy system. This is precisely the kind of reform
    that will restore public faith in the ability of our courts to perform
    in a timely and cost-effective manner.
        This Act also expands the use of ``consumer reorganizations,''
    allowing individuals with debts up to $1 million to file for bankruptcy
    under chapter 13. This provision provides an alternative to the harsher
    process of liquidation while maintaining safeguards against fraud and
    abuse.
        I am also pleased to note the enactment of new bankruptcy fraud
    measures. Creation of a criminal bankruptcy fraud offense will enhance
    the integrity of the bankruptcy process and give prosecutors new tools
    to use against those who would abuse the system.
        Finally, and perhaps of the greatest, long-range importance, is the
    creation of a National Bankruptcy Review Commission to study and report
    on the issues and problems relating to bankruptcy. Beyond the numerous
    specific deficiencies in the Bankruptcy Code, it is also time to look at
    critical policy issues concerning the bankruptcy system. These issues
    include the relationship of the bankruptcy system to the health of the
    economy in general and of individual communities, the interaction
    between bankruptcy law and other legal disciplines, and encouraging the
    use of alternatives to litigation. I look forward to the expeditious
    appointment of members of the Commission, drawn from diverse backgrounds
    of legal, academic, business, and practical experience.

                                                          William J. Clinton

    The White House,
    October 22, 1994.

    Note: H.R. 5116, approved October 22, was assigned Public Law No. 103-
    394. This statement was released by the Office of the Press on October
    24.