Managed Funds Association Applauds Passage Of Bankruptcy Bill By Congress

The Managed Funds Association (MFA), the hedge fund industry association, says it is pleased that the US Senate approved the passage of S.256, known as the Bankruptcy Bill, late yesterday. "The Bankruptcy code has not been amended since 1990, and

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The Managed Funds Association (MFA), the hedge fund industry association, says it is pleased that the US Senate approved the passage of S.256, known as the Bankruptcy Bill, late yesterday.

“The Bankruptcy code has not been amended since 1990, and was in need of modernization,” says John G. Gaine, MFA President. “In particular, the netting provisions contained in the bill, known as 907, will benefit our investors and the US financial marketplace at large. Passage of this legislation in the Senate has been historically difficult. With yesterday’s action, we are confident that this legislation is well on its way to becoming law which will allow for the many benefits of the legislation to be realized by participants in the US financial markets.”

The bill, sponsored by Senator Charles Grassley (R-Iowa), was introduced into the Senate on February 1 and approved by the Judiciary Committee by a 12-5 vote. Last year a similar bill, HR 2120, was approved by the House but was never acted upon by the Senate.

On March 3, MFA, joined by a number of significant industry and lobbying groups, including International Swap Dealers Association (ISDA), Securities Industry Association (SIA), Futures Industry Association (FIA), Emerging Markets Traders Association (EMTA), and others, sent a letter to both the majority and minority leaders of the Senate. It stated that the legal uncertainties created by the existing law’s treatment of financial contracts result in a less favorable credit treatment of US companies from their trading partners in comparison with companies that are not subject to US bankruptcy laws.

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