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| vol 19, num 1 | January 2022 |
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| 2021 Legislation Committee Co‑Chair Corner |
| ABI’s Legislation Committee had an active year in 2021. We tracked legislation and provided guidance for ABI members, published two newsletters, and hosted engaging panels at the Annual Spring Meeting and Winter Leadership Conference. We also have planned a webinar on the SBRA, and held a virtual happy hour at WLC for membership engagement.
We believe 2022 will also have robust legislative activity, and we look forward to continuing to provide guidance and other valuable content to members. Please see below for more information about our activities in 2021.
Legislation Tracking We have been tracking several pieces of legislation this year, with a focus on the following bills:
- The Daniel Anderl Judicial Security and Privacy Act of 2021: On the committee’s behalf, Member Relations Director Jill Dalrymple prepared an analysis of this bill and circulated for committee review. Our analysis was published in the Legislative Update column of the ABI Journal.
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| Could Bankruptcy Discharges of Student Loans Be Getting Easier? |
| As many practitioners already know, it can be enormously difficult for student loan borrowers to discharge their loans in bankruptcy. But through a combination of new case law, potential upcoming administrative action and a series of bankruptcy reform bills, it might be getting just a little bit easier for some student loan borrowers.
Recent Case Shows It’s Not Impossible to Discharge Student Loans in Bankruptcy
To discharge student debt in bankruptcy, most student loan borrowers have to try to show that they meet the Bankruptcy Code’s “undue hardship” standard by initiating an adversary proceeding. Most jurisdictions use the Brunner test to determine whether a borrower has met that standard, although some use the “totality of the circumstances” test. Regardless of the specific test, adversary proceedings to discharge student loans can be a long, exhausting and invasive process for both debtors and attorneys; many don’t even try.
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| Nondebtor Release Prohibition Act: Proposed Legislation Could Limit Third-Party Plan Releases |
| There are situations where the bankruptcy court extends protections to nondebtor parties, either in the form of a release of claims or a stay of litigation, to facilitate the restructuring of a debtor. Driven in part by the social media coverage of Purdue Pharma and other mass tort bankruptcy cases (e.g., Boy Scouts of America), legislation in the form of the Non-Debtor Release Prohibition Act of 2021 (NRPA) has been introduced in Congress. The NRPA focuses on the protections sometimes extended to parties that did not seek bankruptcy protection but are affiliated with a debtor.
Nondebtor releases relieve nondebtors of claims and liabilities owed to third parties, such as creditors of the debtor. The releases are generally provided in consideration for a substantial contribution of money or other resources that facilitate a debtor’s reorganization. Such releases may either be consensual, with the creditor’s knowledge and consent, or nonconsensual and approved over the creditor’s objection.
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