From the Wall Street Journal Bankruptcy Beat –

The House Judiciary Committee’s Subcommittee on Commercial and Administrative Law is holding a hearing this afternoon on the collapse of Circuit City and how recent changes to the Bankruptcy Code may be hurting the ability of companies to restructure under court protection.

Several of the bankruptcy experts testifying at the hearing (Circuit City Unplugged: Why Did Chapter 11 Fail To Save 34,000 Jobs?) are asking Congress to revisit some of the Bankruptcy Code amendments passed in 2005 to again give companies more breathing room to reorganize under Chapter 11…

The big problem, he says, is that companies are so afraid of bankruptcy that they’re waiting too long to file, entering Chapter 11 protection when it’s no longer an effective restructuring tool. Companies need time and cash to pull off a successful Chapter 11 reorganization but are waiting until they have neither. Circuit City, to use the example of the day, could have had a fighting chance if it had sought court protection earlier, Miller says…

George Mason University Professor Todd Zywicki, however, thinks the 2005 changes resulted in a “much smoother and more predictable process.” He thinks Circuit City would have liquidated anyway, even if the changes (including restrictive deadlines, lease-rejection time limits and increased up-front costs) were never passed…

Click here to read the testimony of witnesses, including Harvey Miller, Todd Zywicki and Georgia State Professor Jack Williams. Zywicki, of course, thinks the Code and 2005 amendments, work perfectly well.