Since the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed into law by President Bush on April 20, 2005, much of the focus has been on the impacts on consumer bankruptcies. Below are brief descriptions of amendment provisions which will impact chapter 11 business cases. -- Nonresidential Real Property Leases Under the current law, debtors could request extensions of time in which to assume or reject unexpired leases. Under amended Sect. 365(d)(4), a debtor can have only one 90 day extension of the initial 120 day period in which to assume or reject a lease. This provision will have a great impact on retail and restaurant debtors who have multiple locations. A Debtor will have 210 days (with the extension) from the petition date to determine whether to assume or reject each of its non residential leases. -- Tax Provisions Under amended Sect. 1129(a)(9)(c), a debtor is required to pay Sect. 507(a)(8) priority tax claims within 5 years of the order for relief instead of 6 years after the date of assessment. Further, the section requires "regular installment payments in cash" rather than "deferred cash payments." -- Key Employee Retention Programs Oftentimes a debtor proposes a Key Employee Retention Program (KERP) in which essential management personnel are given bonuses or other compensation in order to stay with the reorganizing company. Under new Sect. 503(c), the amount of compensation paid to insiders in order to keep them with the company is impacted. In order for a KERP to be approved, the debtor must provide evidence in the record that the insider has a "bona fide job offer from another business at the same or greater rate of compensation" and that his services are "essential to the survival of the business." Further, Sect. 503(c) caps the retention compensation at 10 times the amount of the mean transfer given to non-management employees during the same calender year, or not more than 25% greater the amount of similar payments to such an insider during the prior calender year if no transfers were made to non-management employees. ? Plan Exclusivity Under the current law, a court had no limits on extending a debtor's initial exclusivity period for filing a reorganization plan. Under the new law, the exclusivity period my not be extended beyond 18 months. Further impact on chapter 11 business bankruptcies have been addressed previously in this blog. Mac McMahan