How Would You Change the Bankruptcy Code?

When Congress tweaked the bankruptcy code nearly a decade ago, seeds of discontent were sown.

Critics of the Bankruptcy Abuse Prevention and Consumer Protection Act, or BAPCPA, were many, targeting everything from the amount of time businesses were given to reorganize to who the law said was eligible to file certain chapters of bankruptcy.

Other than BAPCPA, which took effect in 2005, the bankruptcy laws that govern restructuring companies remain largely unchanged from their creation in 1978. Yet the landscape for distressed companies has changed dramatically in the past several decades—among the new phenomenon they must confront are hedge funds and other investors that are very different from the big banks that historically were the key players in restructuring negotiations.

In light of these changes, restructuring pros have begun exploring how the law can better reflect today’s reality. Notably, the American Bankruptcy Institute launched a commission to propose ways to modernize Chapter 11 of the bankruptcy code, and the group is expected to publicly release its recommendations next week. In light of the report, we thought we’d ask our panel of restructuring experts, the Examiners, to weigh in on this question:

If you could make one change to the bankruptcy code, what would it be?

Feel free to share your ideas in the comments, and come back to Bankruptcy Beat throughout the week as we post the Examiners’ responses.

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Correction: An earlier version of this article misstated the name of the Bankruptcy Abuse Prevention and Consumer Protection Act.