ENRON BANKRUPTCY COMPLICATES BANKRUPTCY REFORM LEGISLATION

January 25, 2002

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Although House and Senate conferees are expected to pick up this year where they left off last month in terms of negotiating the bankruptcy reform bill, those talks will resume in a rigid political environment that has been further stretched by the recent collapse of Enron Corp., reports CongressDaily. The bankruptcy bill won’t have a special bearing on Enron’s corporate bankruptcy filing, but there is no doubt that bill opponents will use the filing as a weapon. “I think this (Enron situation) should end consideration of the bankruptcy bill,” said Frank Torres of Consumers Union.

One industry supporter of the legislation, who asked not to be named, said the Enron debate would exacerbate already intense partisan squabbling in Congress. He insisted, however, that the situation would have no major effect either way on the bankruptcy reform measure. “I think the bill’s fate will be determined as much or more by the overall politics as by the substance of what still divides (the conferees),” the source said. “I don’t think Enron is a big factor other than further poisoning the well.”

The source said the economic recession and the fact that this is an election year are much bigger obstacles for the bankruptcy legislation. With commercial bankruptcies and unemployment figures soaring, along with the number of big businesses coming to Congress seeking federal aid, bipartisan momentum for the legislation has eroded. “I think a lot of members will not want to vote on final passage in 2002 for a bill portrayed as making it harder for consumers to get relief while in the middle of a rather substantial recession,” the source said.