Companies that cannot meet the deadline will have their cases dismissed or be pushed from Chapter 11, which is intended to give them time to get their house in order, into Chapter 7, which forces them to liquidate their assets. Last year, companies with an estimated two million workers filed for bankruptcy, while 1.2 million individuals filed, Professor Warren said. Small businesses generally owe relatively small sums, and typically no creditors are actively lobbying to get their money back. As a result, many of these companies now linger in Chapter 11 rather than speedily dispensing with their debts. Supporters of the bill say the changes are necessary to preserve the rights of creditors.
Time is money.
Judge Jones, one of the biggest supporters of the small-business changes, served on a commission set up by Congress in 1994 to make recommendations on overhauling the bankruptcy code. A prominent Republican, she is viewed as a potential candidate for the Supreme Court. The bill's supporters acknowledge that some companies that would be able to reorganize under the current law would probably suffer. Senator Christopher S. Bond, Republican of Missouri, chairman of the Senate's Small Business Committee, promoted an amendment giving judges discretion on how quickly small companies have to file reorganization plans, but that amendment failed to win the support yesterday of Senator Charles E. Grassley, a sponsor of the bankruptcy bill, according to a Senate official. Senator Bond settled for a change that clarified the bill's various deadlines, rather than eliminated them.