06 25 19 RM Collins Opening Statement: Oversight of Bankruptcy Law and Legislative Proposals

Thank you, Chairman Cicilline and Ranking Member Sensenbrenner. I'm glad we're having this hearing today, and it's good to be on something that we can all discuss and hopefully move forward on. It's good to see the senators and the rest of my members here as well. The bankruptcy system is a critical component of the economy; it provides an important safety net for entrepreneurs and households when they need a fresh start. It also stabilizes and encourages lending because it is a tried-and-true way for creditors to recover as much as feasible when things go wrong for borrowers. I particularly applaud this subcommittee for considering today the Small Business Reorganization Act. This important bill, recently introduced by Representative Kline and Subcommittee Chairman Cicilline, offers long-term and long-needed reform to Chapter 11 of the Bankruptcy Code to help small businesses. Chapter 11 has for many years been the key to survival for firms that need to reorganize their debt so they can continue in business. Reorganization preserves jobs, investments, and valuable contributions to our economy. But for just as many years, Chapter 11's terms have been poorly suited to allow small businesses and their creditors to take full advantage of the relief it promises. To solve this problem, this bill takes as a model for small business the provisions of Chapter 12 that help small family farmers to reorganize their family farming enterprises when needed. Chapter 12 has long worked well for family farmers; weaving terms modeled on it into Chapter 11 for general use in small business cases is a terrific idea. I was proud to have introduced a Small Business Reorganization Act last term with the Subcommittee Chairman Cicilline, and I'm proud to be an original cosponsor this term. This bill promises to finally make Chapter 11 work for the entrepreneurs whose small businesses form the backbone of job creation and communities across our nation. We also consider today several other bills; respectively, they offer more flexibility in bankruptcy for service members and their families, an increase in the amount of debt that can be reorganized in Chapter 12 bankruptcies, and increased transparency concerning firms helping to resolve Puerto Rico's insolvency under the 114th Congress's permissive legislation. I am glad that we have the chance to examine these bills today. We're also here to consider Chairman Nadler's proposed legislation to expand the amount of student loan debts that can be discharged in bankruptcy, and also recognize the senators' work on that as well. However, like many members, I'm deeply troubled by the skyrocketing cost of higher education and the massive amounts of debt students are taking on to shoulder these costs. To the best, Congress must find ways to stop the explosion of cost. Congress has answered that students should not be sorry; we're not willing to drive down costs, but we want to make it easier for you to end up in bankruptcy court? The answer needs to be about the costs themselves and the institutions, with a firm look at the total picture. And someone who just came from, you know, a few years ago on the state level, this is one of the biggest issues we have, and I'm glad we're discussing it. We need to find an answer to this, but I think we cannot also discharge the cost aspect of universities and systems as we go forward. Also, since the vast majority of student loans are now federal loans, the answer to taxpayers shouldn't be that, in response to unbearable student loan levels, all Congress can do is increase the ways in which taxpayers get left holding the bag. That is exactly what happens when federal student loans are discharged in bankruptcy cases. I want to help the chairman's proposal and the senator's as well, and would ask all my colleagues to join in a real search for real solutions so that we can find a total picture of this problem we have. It is something that needs to be fixed, but simply, sometimes the best answer is not free; it is, how do we get in and dig and find an important answer? With that, I yield back.