Congressional Legislation to Prevent Chapter 11 Corporate Bankruptcy Abuse

WHEREAS, bankruptcies grievously harm employees, creditors, suppliers and investors of companies, in some cases causing the financial ruin of those investors, and regular employees, which in most cases is disproportionately minorities, creditors and suppliers; and

WHEREAS, people who invested in, sought employment with, extended credit to, or sold materials and services to companies in Chapter 11 Bankruptcy made their decisions based on the best information available regarding the financial health and stability of those companies; and

WHEREAS, fraudulent bookkeeping is alleged, or in some cases, admitted to have played a significant role in the bankrupting of companies like Enron, WorldCom and Global Crossing; and

WHEREAS, current bankruptcy laws, in particular, Chapter 11 of the U.S. Bankruptcy Code – allow bankrupt companies to shed debt and other financial responsibilities, reorganize and then return to the market place relatively unhampered by past obligations; and

WHEREAS, such re-emergent companies enjoy the competitive advantages of greatly reduced debt and therefore a greatly reduced cost structure, allowing them to employ artificially aggressive pricing in competition with those companies, careful stewards of their finances who have avoided bankruptcy; and

WHEREAS, such unfair competition puts us at a competitive disadvantage to companies that should be rewarded for their prudence.

THEREFORE, BE IT RESOLVED, that the NAACP officially oppose any abuse of the Chapter 11 Bankruptcy Code by companies found guilty of fraudulent bookkeeping which results in lost to investors, creditors and employees; and

BE IT FURTHER RESOLVED, that the National NAACP shall immediately call upon the United States Congress and Senate to enact legislation amending the U.S. Bankruptcy Code to prohibit the filing of Chapter 11 Bankruptcies by companies found guilty of fraudulent bookkeeping; and

BE IT FINALLY RESOLVED, that all NAACP units be urged to contact their Congress people and Senators to support an amendment to the U.S. Bankruptcy Code to prohibit the filing of Chapter 11 Bankruptcies by companies found guilty of fraudulent bookkeeping.