The current version of the U.S. Bankruptcy Code (the code),1 which has been in effect since 1978, has been the only federal bankruptcy law that most secured transactions and workout professionals now in practice have ever needed to know. That may change in the not-too-distant future, however, if the American Bankruptcy Institute (ABI) has anything to say about it. The ABI has commenced an initiative, the goal of which is a modernization of the reorganization provisions of Chapter 11 of the code. This project may dramatically affect many of the rights and remedies on which secured creditors now rely in bankruptcy.
Background
The U.S. Constitution expressly gives Congress the power to enact "uniform laws on the subject of Bankruptcies" throughout the United States.2 During the first century of the nation’s existence, Congress exercised this authority in fits and starts, passing bankruptcy legislation in 1800, 1841 and 1867 and, in each instance, repealing the legislation shortly after enactment. The first federal statute intended to deal comprehensively with bankruptcy was the Bankruptcy Act of 1898, but, like its predecessors, even the 1898 Act lacked corporate reorganization provisions.
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