Document Type
Article
Publication Title
ABI Law Review
Publication Date
2005
Volume
13
First Page
701
Abstract
(Excerpt)
On April 20, 2005, the President signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 20051 ("2005 Act" or "BAPCPA"). Although most of the controversy surrounding the 2005 Act centered on many of the consumer provisions, the 2005 Act also included substantial changes to business bankruptcies and the most substantial modifications of bankruptcy tax law since 1980. Generally, most provisions in the 2005 Act are effective for cases commenced on or after October 17, 2005, unless otherwise noted. However, there are at least a half dozen other dates noted, including on or after the date of enactment (April 20, 2005) for cases or proceedings filed after such date. Thus, during this transition period, it is important to consult the 2005 Act to determine whether the case or proceeding of interest is governed by the 2005 Act or the prior Bankruptcy Code.
Major winners in the 2005 Act happen to be the federal, state, and local taxing authorities. In fact, one bankruptcy judge is rumored as lamenting that the Internal Revenue Service ("IRS") was able to convince Congress to repeal virtually every tax decision in bankruptcy that had gone against the IRS over the years. The good news is that a number of cases deserved rejection, and the 2005 Act did just that. The bad news is that the 2005 Act did not stop with those cases that had little justification; it went further and proceeded to overturn the results of cases that stood on solid bankruptcy and tax policy. This article addresses two of the changes that may have a drastic impact on how we practice bankruptcy tax law. The first change, discussed in Parts I-II of the Article and prepared by Williams, is the modification to the definition of property of the bankruptcy estate in an individual debtor chapter 11 case through new section 1115. The second change, discussed in Part III of the Article and prepared by Todres, focuses on the meaning of the amendment to section 1125 to require a reasonably specific and meaningful discussion of the federal tax consequences of a proposed plan.
Comments
Reprinted with permission of the American Bankruptcy Institute Law Review. Originally published at 13 AM. BANKR. INST. L. REV. 701 (2005).