Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-24
BANKRUPTCY LAWS
AMENDMENT URGED
Congress May Give Some
Thought to Changes in
Present Legislation.
BY WILLIAM BRucKARr.

There is strong likelihood that the
Forthcoming session of Congress win
give some attention to amendment Of
the bankruptcy laws; at least. 1t Is
going to have chance to consider
some questions in that connection.
In these troublesome days. when the
economic way Is strevn with the wreck
age OF so many corporate and individual
businesses that were unable to With
stand the strain of the two-vear dee
preston. increasing attention is being
attracted to the plight Of the creditor.
Indeed. it is made to appear from facts
and figures assembled by Federal spe-
cialists that the creditor is creditor
in name only in too many instances.
While Federal figures and the facts
TO buttress them may be said to be only
generalities they reveal. nevertheless.
that the creditors equities melt away as
the receivers fail TO realize for them
only paltry amount Of the original
investment.
Variety Of Assets.
Whether the Department of Justice
viii make any recommendations to Con-
gress on the subject has not been de-
termined. but IL Is being urged to do so.
Under some circumstances il might be
expected that the Attorney General
would take the initiative and present
the subject to Congress. This course,
however. seems unlikely at the moment.
Almost daily Federal judges are
naming receivers to conserve the assets
of bankrupts. but these receivers, ae-
cording to oficial information, often
construe the present statute so rigidly
that they succeed in obeying the law
and in realizing little from the assets
at the same time. For example. IL was
pointed out that thousands of bust
nesses that have gone bankrupt under
the stress Of the last two years have
owned trade marks, brands, formulate,
patents and good will embodied IN the
name of the concern itself. These are
assets. it is recognized, which compete
tors of the bankrupt would be willing
and do buy where they have a chance,
thereby increasing the cash available
for distribution to the creditors.
Further, 1t is urged that in many
cases the competitors may not be IN
terested In the assets of the bankrupt
estate as represented by stocks of goods.
of buildings or other tangible property,
but the opportunity to take over the
rights inherent in a trade mark. or. a
brand, or q liquid asset of that sort
would be welcomed. These are things
on which, it has been found by the
Federal Trade Commission. banks are
willing to make loans, so that even q
strict requirement by receiver that
the sale be for cash provides no deter
rent.
Changes Held Necessary.
Some big firms have been pushed
over the precipice of bankruptcy in
past few years and they carried with
them in failure the results of many
years of advertising, of fair dealings
with their customers. It Is thought
that these intangibles ought to be
turned into cash.
Although the Department of COM
merce is taking no action respecting
changes in the laws, 1t Is recognized
In the department that the condition
requires a thoroughgoing study with
view to working out some changes.
In that department. 1t Is foreseen that
continuation of a condition under
which probable recovery by creditor
of less than half of what he invests -
surely going to weaken the investment
market The appetite of the investor
is not whetted by knowledge that the
normal business risk carries q splendid
opportunity of providing a return of
10 cents on the dollar in event the
enterprise hits the rocks.
tcopyright, 1919