BROKERS SEEK PROTECTION IN BANKRUPTCY LAW
Rep. Lindsey Graham, R-S.C., introduced legislation in the House yesterday that would help to protect customs brokers in cases when their importer clients file for bankruptcy.
The current bankruptcy law gives specific priority to claims that are made by Customs for unpaid import duties within a specified time period before the date of filing the petition. The National Customs Brokers and Forwarders Association of America has argued that since brokers facilitate the payment of duties to the government they should be entitled to similar priority when the customer files for bankruptcy.
Customs’ regulations permit brokers to pay import duties on behalf of their clients. The importer must pay estimated duties within 10 days of release of the goods. The arrangement, which uses the government’s “Automated Clearing House” system, speeds cargo release.
Last year, Congress passed compromise bankruptcy reform legislation, which was vetoed by former President Clinton. Congress is expected to reconsider the bankruptcy reform legislation this summer.
If the legislation, which has been referred to the House Judiciary Committee, is passed, the duties that are paid by brokers would be recovered under a so-called “Tenth Priority.”
The bill states: “Tenth, allowed measured claims of customs brokers (as defined in section 641 of the Tariff Act of 1930) for duties, taxes, or other charges paid to the Customs Service of the United States on behalf of the debtor arising out of the importation of merchandise entered for consumption within one year before the date of the filing of the petition.”