In other words, the productive capacity of the business may be falsely destroyed. Reorganization law takes away the threat of an immediate liquidation, saving the productivity that might have been destroyed and preventing a cascade of sales that lead to price drops, leading to foreclosures and more sales. The bankruptcy reforms that the House and Senate have passed strike at the best and most valuable features of bankruptcy law. The reforms reduce the contribution to productivity restoration of both the fresh start and of the reorganization process. The debtors who have the greatest productive abilities are those who society would benefit most by restoring to productivity as fast as possible by means of a speedy fresh start.
Small businesses are our traditional engine for growth.
Bankruptcy reform fast-tracks the reorganization of small businesses. The increased hurry, of course, will only make it harder to find a buyer for the business and correspondingly increase the likelihood of the destruction of its productivity. Not only does society lose the contribution of the falsely closed small businesses, but the reform also chills their creation. Starting a business becomes less attractive because small businesses are less recession-proof. The campaign donations of financial giants are buying bankruptcy changes that seem good for credit card companies, but even those are good only during economic booms.