March 1, 2000

Further Delay For Bankruptcy Reform Legislation

Holland & Knight Newsletter
Richard E. Lear

On February 2, 2000, the Senate passed the Bankruptcy Reform Act of 2000 (S. 625) by a vote of 83 – 14. The bill must now go into conference along with its House counterpart, the Bankruptcy Reform Act of 1999 (H.R. 833). Members of each house must be chosen to serve on the conference committee. The purpose of the conference committee is to reconcile the differences between the two bills. There is no established length of time within which the conference committee must act. The conference committee will draft a report for the consideration of both houses which must vote on the report as presented without having the ability to amend. The bill will then be sent to the White House for President Clinton’s signature or veto.

While there are a number of different bankruptcy provisions to reconcile in conference, some of the more significant issues relate to collateral issues such as the minimum wage increase and business tax provisions contained in S. 625. The bill provides for a $1.00 increase of the minimum wage over three years. The Clinton administration has stated its opposition to the minimum wage provision as taking too long to implement, favoring an increase to take effect over two years. The small business tax provision was added on the Senate floor as a part of the minimum wage package. The addition of the tax provision to S. 625 has resulted in a delay in naming the conferees.

Article I, section 7 of the Constitution requires that all tax provisions originate in the House. Consequently, S. 625 is subject to a procedural point of order. On March 22, 2000, Senate Republicans and Democrats failed to reach an agreement over how to separate the minimum wage/small business tax package from S. 625. Without removing the tax provisions, it is unlikely that S. 625 will be sent to conference until the House takes action on its own minimum wage package. House action would then allow the Senate to call up S. 625 for the purpose of removing the minimum wage/small business tax package, leaving just the bankruptcy provisions in the bill to send to conference.

No one can be sure how much longer this process will take, especially considering the twists and turns previously taken by the bankruptcy reform legislation over the last two years. In early March, however, House Majority Leader Dick Armey (R-TX) stated that he expected the bankruptcy conference report to be among a list of legislation to be passed before the next recess, which is scheduled to begin April 14, 2000.

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