[Weekly Compilation of Presidential Documents Volume 30, Number 43 (Monday, October 31, 1994)]
[Page 2129]
[Online from the Government Publishing Office, www.gpo.gov]

<R04>
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 proceedings 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.