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Severed Ties

Bankruptcy reforms threaten to cut entrepreneurs off from protective measures.

This story appears in the October 2005 issue of Entrepreneur. Subscribe »

New legislation aimed at reforming the bankruptcy system will eliminate a much-needed safety net for America's small businesses, casting a pall over not only aspiring entrepreneurs but established businesses as well, experts say.

"It will chill the formation of startup businesses," predicts Robert Lawless, a law professor at the William S. Boyd School of Law at the University of Nevada, Las Vegas. "It would have the same effect on businesses taking on new investment risk. It's going to dampen the enthusiasm both to start new businesses and expand existing ones."

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