As the first session of the 114th Congress ended on Dec. 18, 2015, nearly 50 pieces of legislation addressing a variety of bankruptcy and debt issues were added to ABI’s Newsroom. Eleven bills introduced throughout 2015 focused on the issue of student loans, either allowing for the discharge of student loans in bankruptcy or proposing additional consumer protections. Puerto Rico's ongoing debt crisis was the focus of seven bills during the first session, including multiple proposals authorizing the territory to place its municipalities under chapter 9 protection.
The Trust Indenture Act of 1939 (TIA) came under fire at the end of the first session in the form of a rider attached to an omnibus appropriations bill. (Note: This development was the feature of an ABI Podcast.) Stemming from developments in the Caesar's and Education Management Corp. cases, the rider would have amended the TIA to allow investors who own a majority of a troubled company's debt to implement a new payment plan without input from a federal bankruptcy judge. However, the proposed rider was stripped from the appropriations bill before it was passed in mid-December after it was opposed by legal scholars, hedge funds and congressional members.
On Puerto Rico, all of the Senate's Democrats wrote to Majority Leader McConnell this month urging action on legislation to allow the territory to file for Chapter 9. Senate Republicans instead favor an alternative that would combine up to $3 billion in federal assistance with a strong financial control board. In the House, Speaker Ryan has promised action on a relief package during the first quarter. The financial crisis will be the focus of this week's ABI Caribbean Insolvency Symposium in San Juan. The December edition of Eye on Bankruptcy was devoted to financial and legal issues, including the current Supreme Court argument on the appeal of the Recovery Act. Oral argument is set for March 22nd.
While Puerto Rico's financial distress and student loans will continue to be a focal point of the second session, new legislative items are sure to be introduced in the election year. According to news reports, House Financial Service Committee Chairman Jeb Hensarling (R-Texas) is crafting legislation that would repeal huge swaths of the Dodd-Frank financial reform law.
The chart [attached] below summarizes the legislation that was introduced during the first session that addressed bankruptcy and debt issues. For updates on bankruptcy and legislation or congressional hearings during the second session, be sure to visit the "Legislative News" section of the ABI Newsroom at http://www.abi.org/newsroom/legislative-news and through the ABI Daily Headlines.