The most sweeping changes to federal bankruptcy law in over a quarter century went into effect in October 2005. Distressed businesses and their creditors face new challenges, and comprehensive pre-bankruptcy planning will now need to be undertaken by debtors to ensure a successful reorganization.CPAs can play an integral role in this planning process.
The new provisions of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 are far-reaching and affect both businesses and consumers. Some of the most significant provisions favor trade creditors in commercial bankruptcies, including changes to reclamation rights, the avoiding powers of a trustee, and rules for bringing and defending preference actions. These, along with new rules for commercial property leases, will have far-reaching effects on the commercial bankruptcy landscape.
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