FSM's first Bankruptcy Law passes with reservations
Palikir, POHNPEI (FSM Information Services): February 15, 2005 - Public Law No. 13-73 has established for the Federated States of Micronesia the first Bankruptcy Law of the nation by enacting Title 31 of the FSM Code "Bankruptcy and Insolvency."
Passed by the Sixth Special Session of the 13th Congress, the stated purpose for the Congressional Act is to establish a bankruptcy system for FSM that "fairly balances the interest of creditors and debtors in circumstances where the debtor is unable to meet his financial obligations [...]"
President Joseph J. Urusemal congratulated Congress for the "much-needed and long-awaited legislation," which he said is a positive step towards establishing a process for the "orderly and equitable resolution of creditor claims against a debtor."
Although the President is highly supportive of the intents of the measure, he noted four primary concerns that prevented his signature on the legislation.
The first concern was that only the Bank of the FSM was excluded in the law's definition of "debtor." The President's letter to Speaker Peter M. Christian urged that all FDIC-insured banks in the FSM should be excluded in the definition of "debtor" to the extent that FDIC laws apply.
Second, President Urusemal was concern that while the law allows for reorganization of corporate debtors as an alternative to receivership proceedings, it does not allow similar opportunity to individual. The President said that it is imperative that "our bankruptcy law provides the option of individual debt reorganization to individual debtors and the FSM Supreme Court."
His third worry was the need to instate a criminal penalty provision for Bankruptcy Fraud to deter any abuses of the law. The last
The final issue was the legislations' listings of property exemption. The President was concern that the provisions allowing the States to decide the property exemptions from receivership estate was too extensive and open-ended, which could eventually defeat the purpose of the law. His letter to the Speaker urged that the property exemptions listed in the legislation act as a ceiling for the state law exemptions.
Given the complexities of the bankruptcy law, President Urusemal urged collaborative efforts between the two Branches to adequately resolve the noted issues before the next congressional session.
In addition to the Bankruptcy law, three other public laws and four Congressional Resolutions resulted from the Yap Special Session:
PL No. 13-67, requires each FSM State to give fill faith and credit to public acts, records and judicial proceedings of every other state.
PL No. 13-68, appropriates $400,000 for the following purposes:
50,000 - Sixth Special Session of the 13th Congress (Yap);
250,000 - FSM Games in 2005; and
100,000 - Fuel for national police surveillance.
PL. No 13-69, limits the diversity jurisdiction of the national courts in cases involving ownership of land or waters.
The Congressional Resolutions are as follows:
1. 13-163: Transmits of the proposed FSM Strategic Development Plan (SDP) to JEMCO;
2. 13-164: Shortens the Sixth Special Session of the 13th Congress;
3. 13-165: Expresses appreciation to the leadership and people of Yap for hosting the Sixth Special Session ;
3. 13-166: establishes the ceiling of funding for fiscal year 2005 at $ 29,474,000 with $ 22,900,000 from domestic revenue and $ 6,574,000 from the amended Compact.
For further information on this release, please contact:
FSM Office of the President Public Information: Press, Radio, Video P.O Box 34 Palikir Station, Pohnpei, FM 96941 Tel.: (691) 320-2548/2092 Fax.: (691) 320-4356 e-mail: firstname.lastname@example.org http://www.fsmpio.fm/