02/01/2000 08:15 AM House CRA

HB 233-MUNICIPAL BANKRUPTCY                                                                                                   
                                                                                                                                
Number 0231                                                                                                                     
                                                                                                                                
CO-CHAIRMAN  HARRIS announced  that  the next  order of  business                                                               
before  the  committee would  be  HOUSE  BILL  NO. 233,  "An  Act                                                               
granting authority to  each municipality to be a  debtor under 11                                                               
U.S.C.  (Federal  Bankruptcy Act)  and  to  take any  appropriate                                                               
action  authorized by  federal law  relating to  bankruptcy of  a                                                               
municipality."   He noted that  there was a  committee substitute                                                               
(CS) and he would entertain a motion.                                                                                           
                                                                                                                                
REPRESENTATIVE  HALCRO   moved  that  the  committee   adopt  the                                                               
proposed CSHB 233, Version LS0948\G,  Cook, 1/26/00.  There being                                                               
no objection, it was so ordered.                                                                                                
                                                                                                                                
Number 0283                                                                                                                     
                                                                                                                                
JONATHON  LACK, Legislative  Assistant to  Representative Halcro,                                                               
Alaska State Legislature, pointed out  that HB 233 was introduced                                                               
by the  House Community &  Regional Affairs Committee  last year,                                                               
when the committee  was co-chaired by Representative  Halcro.  He                                                               
explained that in 1994, the  U.S. Congress changed the Bankruptcy                                                               
Code  requiring  that  if  local  entities  were  going  to  seek                                                               
protection under  Chapter 9 of  the federal Bankruptcy  Code, the                                                               
legislature  must  provide  specific authorization  to  do  that.                                                               
Alaska is  one of  the few  states that has  not brought  its law                                                               
into compliance  with the  federal requirements.   There is  a CS                                                               
today  because the  initial version  of HB  233 only  allowed the                                                               
municipal  entities  and  local governments  to  seek  bankruptcy                                                               
protection,  while the  CS  broadens that  to  include all  local                                                               
governments  and political  subdivisions.   For  example, the  CS                                                               
would include the Rural Education Attendance Areas (REAAs).                                                                     
                                                                                                                                
MR. LACK  explained that local governments  would like bankruptcy                                                               
protection  available  to   them  in  order  to   avoid  a  local                                                               
government being placing  in jeopardy by a creditor  coming in to                                                               
seize assets.   A  creditor will seize  assets that  are sellable                                                               
such as  emergency equipment,  fire equipment,  et cetera.   This                                                               
legislation  allows  local governments  the  ability  to file  in                                                               
Bankruptcy Court in order to  avoid assets being seized and allow                                                               
reorganization. [HB 233 was held over.]