11th Hour

Entrepreneur, Dec, 1999 by Cynthia E. Griffin

Is the end of Chapter U at hand for small business?

A bill currently in Congress could fundamentally change the way small-business bankruptcies are handled.

"This legislation, if it goes into effect, is going to sign the death knell for Chapter 11 reorganization of small businesses," predicts Charles A. Docter, a Washington, DC, bankruptcy lawyer who primarily works with small firms. "It's already an expensive process, and this is going to make it doubly expensive."

Wesley W. Steen, a Houston bankruptcy judge and author of an analysis of the legislation's business provisions for the American Bankruptcy Institute, says the Bankruptcy Reform Bill of 1999 would institute several changes. These include:

* a definition of small businesses as those with $4 million or less in debt;

* a set time period of 150 days in which to obtain court confirmation of a reorganization plan and disclosure statement;

* new forms that will simplify the filing process for small businesses;

* requirements for debtors to file balance sheets, statements of operations, cash-flow statements and federal income tax returns; file all bankruptcy schedules and statements of affairs, post-petition financial and other reports and tax returns in a timely manner; and more.

Supporters of the legislation believe the current system needs reform, as it promotes bankruptcy as a first rather than a last resort. Catherine Pulley of the American Bankers Association says a fundamental flaw in the current system is there's no measure to determine whether to file under Chapter 7 (liquidation) or Chapter 11 (repayment). This allows people who could repay some of their debts to abuse the system and repay none.

According to Steen, the legislation is in need of some fine tuning. He is concerned that lack of judicial discretion to decide who is and isn't a small business could result in some small businesses having to follow the same rules as Fortune 500 companies.

BOOK 'EM

Valerie Wilson delves into that most taboo of topics (no, even more taboo than that one) I in The Secret Life of Money: Exposing the Private Parts of Personal Money (Allen & Unwin, $14.95). Taking an interdisciplinary tack, Wilson explains why money talk still isn't kosher and how attitudes about money are often irrational, Freud, childhood letting dramas and prominent social scientists have their say. Yep, Freud had an "anal theory" of money, too.

- Laura Tiffany