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April 26, 1999 Monday Final

SECTION: Business Pg. 2

LENGTH: 506 words

HEADLINE: Bankruptcy bill would protect workers' pension funds
Reform measure designed to prevent loss of money in cases like Louis Allis

BYLINE: ELIZABETH HURT

SOURCE: S
tates News Service

DATELINE: Washington

BODY:
A situation that left more than 150 workers at the former Louis Allis Co. without access to their pension funds could be avoided in the future under a bankruptcy reform law that could reach the House floor t his week.

When Louis Allis filed for bankruptcy last year, workers lost about $200,000 that had been withheld from their paychecks for their retirement accounts because the company had failed to forward the money to the plan administrator s. As a result, at the time of the bankruptcy, the retirement funds were considered part of the company's estate. The workers will not know until the bankruptcy is final whether there will be any money left over for their retirement funds. Amendments added to a bankruptcy law reform measure last week would protect workers from the sort of uncertainty now faced by those at Louis Allis. The bankruptcy reform bill, which could be debated on the House floor as early as this week, is int ended to stanch the growing number of consumer bankruptcies filed each year. Under current law, there is no protection for employees if their company declares bankruptcy and has not properly handled their retirement plans. A similar situa tion arises if the company owes its employees any money in back pay. Louis Allis owed employees about $150,000 in back pay.

"American workers are being told to save more to ensure they have a good retirement," said Rep. Tammy Baldwin (D-Mad ison), who introduced the amendments to the bankruptcy bill. "But when a company fails to transfer these funds and then goes bankrupt, the worker's deducted wages become part of the company's estate. This is obviously wrong and must be fixed."

Baldwin's two amendments were added to the bankruptcy bill in the House Judiciary Committee. The first, dealing with the retirement issue, would guarantee that any funds withheld from an employee's paycheck, but are still in the company's posse ssion when it declares bankruptcy, are returned to the worker.

The second amendment would ensure that back wages are paid. Baldwin introduced her amendments at the request of Rep. Jerry Kleczka (D-Milwaukee), who represents many of the fo rmer Louis Allis workers.

"It is too late for this (law) to help the Louis Allis workers, but workers in the future will be helped," Kleczka said.

Although Baldwin's amendments were passed easily by the committee, the reform bil l as a whole faces some obstacles.

The bill is intended to make it more difficult for debtors to file Chapter 7 bankruptcy, which wipes out all debts. Lawmakers instead want more debtors to file Chapter 13, which requires them to pay off at least some debts. Although the basic premise of the bill has garnered bipartisan support, differences have surfaced over who would still qualify for Chapter 7.

The bill is expected to be voted out of committee on Tuesday and may be vot ed on by the House as early as Thursday, according to a House Judiciary Committee source.

A companion measure in the Senate may be voted on next month.

LOAD-DATE: April 27, 1999