New Bankruptcy Act

The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 was signed into law on April 20, 2005. It largely deals with consumer debt, but several provisions affect em­ployee benefits and executive compensation. The act improves protection from creditors for employee contributions to plans and for interest in retirement and education savings plans. It extends the avoidance period for fraudulent pre-petition transfers from one year to two. The act allows bankruptcy courts to throw out plan changes made within 180 days of the bankruptcy petition. It also significantly limits payments to plan insiders after a bankruptcy petition.