A number of proposals to amend the Bankruptcy Code have been introduced in the House of Representatives and US Senate. One proposed bill could have a significant negative impact on secured lenders. Titled The Protecting Employees and Retirees in Business Bankruptcies Act, this legislation is designed to increase the share of wages and benefits that employees of US businesses would be entitled to in the event their companies file for bankruptcy protection. Of particular concern to asset-based lenders, factors and other secured creditors is Section 13 of the bill which seeks to add a new category of costs that can be satisfied from a lateral pursuant to Section 506(c) of the Bankruptcy Code.
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