USTA favors bankruptcy law change

The United States Telecom Association called June 3 for an end to the abuse of existing bankruptcy and tax laws by companies filing for Chapter 11 protection. The new policy states that the bankruptcy laws and the Internal Revenue Code should not be used as tools for bankrupt companies to gain competitive advantage over similar non-bankrupt companies.

Currently, when companies file for bankruptcy, they erase existing debts and responsibilities. Companies can use the tax code and bankruptcy laws to avoid paying the taxes associated with shedding their debt. USTA strongly supports closing this loophole.

"The nation shouldn't have to endure another WorldCom," said Walter B. McCormick Jr., president and CEO of USTA. "The country's bankruptcy and tax codes should ensure that the interests of companies that mismanage their finances do not come before those of taxpayers, investors and businesses that conduct themselves in a financially responsible manner."

USTA's Board of Directors unanimously approved a policy to address this issue.

USTA is a trade association representing service providers and suppliers for the telecom industry. USTA's 1,200 member companies offer a wide range of services, including local exchange, long distance, wireless, Internet and cable television service.