Proposed Bankruptcy Chapter would End Government Bailouts


Financial institutions deemed "too big to fail" may have a new avenue to eliminate debts and get square with creditors under a proposed amendment to the U.S. Bankruptcy Code.

A new bill proposed by Rep. Spencer Bachus (R-AL), called the Consumer Protection and Regulatory Enhancement Act, would create a Chapter 14 of the laws governing bankruptcy in the United States. It would allow non-bank financial institutions to restructure their debts without inflicting chaos into the financial markets.

The bill comes in response to a year of government bailout and interventions to prop up struggling firms such as Bear Stearns and AIG.

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© Chris Kramer, Clear Bankruptcy | Attorney Advertising

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