The National Bankruptcy Conference last week assailed a Senate sub-committee's attempt bankruptcy reform, calling it "dearly deficient."

The blue-ribbon group of judges-law professors and attorneys specializing in bankruptcy cases told members of the Subcommittee on Improvements in Judicial Machinery that the bill "does nothing to better the existing system (and) in some instances actually represents a step backward."

The bankruptcy system, created before the turn of the century, was last overhauled nearly 40 years ago. Since then the easy availability of consumer and commercial credit has caused a 20-fold increase in filings up to 254,000 last year, involving $27 billion in assets and $43 billion in liabilities. The burden has resulted in excess delay and wasteful litigation.

One area much in need of reform is railroad organization. Bankruptcy proceedings, as in the case of Penn Central, can last a decade while assets are whittled away. Judge Frank J. MeGarr of the U.S. District Court in Chicago where the Chicago Rock Island and Pacific Railroad Company case is being heard, testified that the ICC appointed trustee and the trustee's lawyer were each being paid $180,000 annually, three times McGarr's salary, Rock Island declared bankruptcy in March, 1975, but no reorganization has yet been worked out.

Much of the blame for delay in railroad reorganization has been put on the Interstate's Commission, which acts in the public interest to preserve rail service. Charles A. Horsky, chairman of the Bankruptcy Conference, argued that the responsibility for working out a plan should be taken away from the ICC and given to the courts. The Senate bill does not do this.

At the same time Sen. Dennis De-Concini (D-Ariz.) and fellow members of the subcommittee sought to curb excessive delays in bankruptcy proceedings by providing for the conversion of a railroad reorganization to a liquidation if the ICC fails to submit a plan within two and a half years. Nicholas G. Manos, attorney for the Rock Island trustee, called this time limit "totally unrealistic."

The most divisive issue in railroad reorganization aired at the hearing was so-called interline debt. or payments from one railroad to another for items such as rental fees and maintenance incurred before the bankruptcy. The Senate bill would require these debts to be paid on a priority basis and other obligations would be paid off as the court ordered.

Another critic of the Senate bill who testified last Thursday was a Louisiana trustee Fred Huenefeld Jr. He called proposed reforms just "another bureaucracy at the expense of the taxpayers of the United States." If cases were handled as they are in Louisiana, he said, where the bankruptcy system is self-sufficient, the country would have an extra $20 million annually coming into bankruptcy court.