To amend the Securities Exchange Act of 1934 to provide shareholders with an advisory vote on executive compensation.

A bill to amend the antitrust laws to ensure competitive market-based fees and terms for merchants' access to electronic payment systems.

A bill to create a fair and efficient system to resolve claims of victims for bodily injury caused by asbestos exposure, and for other purposes.

S. 2901 Would Recover Excessive Payments To Insiders

S. 2901 Would Recover Excessive Payments To Insiders

A
bill introduced by Senator Grassley (R-Iowa) on September 3, 2002, would permit
the recovery of excessive compensation paid to insiders, officers, or directors
of the debtor during the year prior to bankruptcy. In addition, in cases involving securities law violations or
accounting irregularities, the look-back period would be expanded to allow
avoidance of both compensation transfers and of obligations incurred for
compensation within four (4) years prior to bankruptcy. The bill has been referred to the Committee
on the Judiciary.

S.
2901 is drafted to amend both the section 547 preference provision and the
section 548 fraudulent transfer provision. The amendment to section 547 creates a one-year look-back
period and allows recovery of transfers made within the year prior to
bankruptcy to insiders, officers, or directors of the debtor if those transfers
were for "any bonuses, loans, nonqualified deferred compensation, or other
extraordinary or excessive compensation." Although this provision would be added to the preference
section, it would not technically be a preference since the section would
permit recovery of compensation even if the debtor was solvent and even if
there was no pre-existing debt owed to the insider.

It is not clear whether the phrase
"other extraordinary or excessive compensation" is meant to modify
the listed terms. For example,
would all bonus and loan transfers be avoidable, or only those which are either
unusual or excessive? Further,
with respect to a "transfer … made …for any …
loan," is unclear whether the section is limited to loans that are
"compensation." If not,
this language would permit recovery of all loan payments made to insiders (a
term that includes affiliated corporate entities) within the year prior to
bankruptcy, even if the loan transaction was legitimate and not related to
compensation. The provision is not
limited to publicly traded companies and would apply in all cases.

Finally, since the provision establishes
"excessive" and "extraordinary" as alternative grounds for
avoidance, it might result in the avoidance of completely proper bonus
arrangements merely because the debtor's financial condition required it to
resort to unusual compensation schemes as its condition worsened. For example, if a turnaround
professional were employed as an officer on terms that were unusual for the
debtor company, the compensation arrangement might be at risk even if the terms
were not excessive.

The
bill would also add a new sub-section to the section 548 fraudulent transfer
provision establishing a four-year look-back period for the recovery of
compensation in certain cases. The
compensation recovery provision applies only to officers, directors, or
employees of an “issuer of securities” who have engaged in
securities law violations or improper accounting practices. The provision applies both to transfers
made and obligations incurred and thus would allow the debtor to negate a
compensation agreement made within four years before bankruptcy as well as the
payments made pursuant to such an agreement. Note that unlike true fraudulent transfers, this provision
would permit avoidance even though the debtor was not insolvent or in financial
difficulty at the time the transfer was made or the obligation incurred.

The provision targets the same
types of transfers as the amendment to the preference provision and raises
similar interpretive difficulties.
The targeted class of persons is both broader and narrower than the related
preference provision. While the
inclusion of “employees” expands the section’s scope, it does
not apply to insiders who are not officers or directors of the debtor, and thus
would not apply to a controlling shareholder or an affiliated company. Further, unlike the preference
amendment, this provision only applies to issuers of securities that are
registered under section 12 of the Securities and Exchange Act of 1934, or that
are required to file reports under section 15(d) of the Act.

The
subject transfers and obligations are avoidable if the officer, director, or
employee committed: (i) a violation of state or federal securities law or any
regulation or order issued there under; (ii) fraud, deceit, or manipulation in
a fiduciary capacity or in connection with the purchase or sale of any security
registered under section 12 or 15(d) of the Securities and Exchange Act of 1934
or under section 6 of the Securities Act of 1933; or (iii) illegal or deceptive
accounting practices. This section
potentially has a very broad sweep.
The securities violation provision could be read to apply to technical
violations or violations resulting from negligence that might not involve
intentional improper conduct. The
accounting practices prong could also be interpreted broadly since the term
“deceptive” apparently covers practices that are not illegal. In addition, the provision does not
appear to require that the defendant’s improper action relate to the compensation
that would be avoided – either by causation, or by time. Presumably, a securities
violation committed shortly before bankruptcy could be the basis for the
recovery of bonuses paid years earlier.

Prof. G. Ray Warner, ABI Resident Scholar, Professor of Law
at the University of Missouri-Kansas City.

To make technical corrections to title 11, United States Code, and for other purposes.

A bill to amend part A of title IV of the Social Security Act to require a State to promote financial education under the Temporary Assistance for Needy Families (TANF) Program and to allow financial education to count as a work activity under that program.

Fairness in Bankruptcy Litigation Act
A bill to protect consumers, creditors, workers, pensioners, shareholders, and small businesses, by reforming the rules governing venue in bankruptcy cases to combat forum shopping by corporate debtors.

H.R. 627, which was signed into law on May 22, 2009, becoming P.L. 111-24. To amend the Truth in Lending Act to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes.

Makes technical corrections to federal bankruptcy law, relating to amendments made by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, with respect to: (1) the power of the court\; (2) waiver of sovereign immunity\; (3) public access to papers\; (4) who may be a debtor\; (5) penalties for fraudulent or negligent preparation of bankruptcy petitions\; (6) debtor reporting requirements\; (7) automatic stay\; (8) case administration\; (9) determination of tax liability\; (10) priorities of creditors and claims\; (11) debtor's duties\; (12) exceptions to a discharge\; (13) restrictions on debt relief agencies\; (14) property of the estate\; (15) abandonment of property of the estate\; (16) treatment of certain liens\; and (17) conversion or dismissal.

Makes technical corrections to the federal criminal code relating to bankruptcy fraud.

Makes technical corrections to the federal judicial code relating to appeals and to bankruptcy statistics.

To improve the administration of the bankruptcy system, address certain commercial issues and consumer issues in bankruptcy, and establish a commission to study and make recommendations on problems with the bankruptcy system, and for other purposes.