Dale Bumpers: “I rise in support of S. 540, the Bankruptcy Reform bill, and ask that the following remarks pertaining to section 208 of…”

“I rise in support of S. 540, the Bankruptcy Reform bill, and ask that the following remarks pertaining to section 208 of the bill be included in the Record. A few years ago, some failing SBIC's discovered they could thwart the Small Business Administration's [SBA] efforts at recovery by using the bankruptcy code and filing under chapter 11 as a debtor in possession. This allowed the failed or failing SBIC management to continue to run the company and receive salaries, often at levels well above the amount the SBA would have approved, and to pay significant amounts for attorneys, accountants and other services. In an infamous case in 1989 called River Capital Corp., the Bankruptcy Court for the Eastern District of Virginia discharged the SBIC debtor from paying $35 million in principal and interest to the Government. Several other large bankruptcy filings soon followed. Under an SBA receivership, which was the traditional method of liquidating failed SBIC's, millions of dollars lost in bankruptcy could have been used instead to repay SBA and taxpayers.”