We hold that individuals and business firms that declare bankruptcy are not fulfilling their contractual obligations to their creditors. The government should cease providing an avenue through bankruptcy laws for violation of the rights of those creditors who have provided goods or performed services and are entitled to payment under the terms of the contract.
In the case of insolvency of a business enterprise, we recognize the need for legal means by which assets may be liquidated and debts discharged, especially where initiated by creditors. Though we believe that each individual should bear the risk and cost of failure, it is a legitimate function of the law to prescribe means to preserve assets and protect the security interests of claimants from fraudulent or preferential conveyances. The current state of the law, however, serves more to create excessive exemptions by which the bankrupt debtor may retain substantial assets while escaping responsibility for legitimate obligations.
Accordingly we call for reform of existing bankruptcy law to severely restrict the extent and nature of assets that may be exempted from distribution to creditors. We encourage and applaud the use of private mediators to assist debtors to work out solutions that are acceptable to both debtors and creditors.