Strengthening Federal Bankruptcy Laws: Implications for Small Businesses

Significant changes in the American bankruptcy laws have recently been passed by both Houses of Congress. Although the terrorist attacks of September 11 , 2001 have temporarily delayed final approval by President Bush, he has indicated his endorsement of these modifications to the law, and eventual realization is expected. While most of the publicity regarding these proposed changes has focused on their impact upon individuals and their ability to erase personal debts, small businesses are also extensively impacted by these changes. This article first explains bankruptcy law in general as it affects small companies, then discusses the expected changes in the law and their small business implications, and finally suggests appropriate responses for small business owners, managers and their consultants