NEW YORK, Sept 1 (Reuters) - Ailing companies may rush to the courthouse in the next six weeks ahead of sweeping revisions to U.S. bankruptcy laws -- and experts say it's probably a good idea.

Beginning Oct. 17, it will become tougher and more expensive for companies to seek protection under Chapter 11 of the bankruptcy code. Creditors will gain power, and businesses, large and small, will have to reorganize faster.

"We're going to see some large filings between now and October 17," says Lynn LoPucki, a bankruptcy law professor at the University of California at Los Angeles.

Speculation has risen that the ailing Delta Air Lines Inc. <DAL.N> and Northwest Airlines Corp. <NWAC.O> will, or should, seek court protection soon.

Standard & Poor's said higher oil prices after Hurricane Katrina ripped across the U.S. Gulf Coast may hasten a Delta bankruptcy, which it said on Wednesday it expects "within weeks." Delta declined to comment on market speculation.

Evan Flaschen, co-head of Bingham McCutchen LLP's bankruptcy practice in Hartford, Connecticut, who represents large institutional and distressed debt investors, says the new law could prompt a "sea change."

"Recent trends have been too much in favor of debtor control to the detriment of creditors," he says. "This legislation helps level the playing field."

There were 34,817 business bankruptcies in the year ended Sept. 30, 2004, down 4 percent from the prior year, according to the Administrative Office of the U.S. Courts.

Experts predict filings will drop after the law changes, and businesses may exit bankruptcy weaker than if they file now.

"Businesses ought to file before October 17 unless they are dead certain they have business plans to stay out of bankruptcy for a minimum of two years," says Bill Rochelle, a partner at Fulbright & Jaworski LLP in New York. "A CEO will look pretty stupid if he puts a company in Chapter 11 in December."

THREE CHANGES

Experts cite three big changes that will affect businesses.

First, companies will have for only 18 months the exclusive right to present their own reorganization plans. Exclusivity blocks disgruntled creditors from offering alternative schemes.

Judges now can extend exclusivity almost indefinitely. That helps United Airlines Inc., for example, which after 33 months in bankruptcy still has an exclusive right to file a reorganization plan.

Another change bars payments of retention bonuses except when executives prove they are entertaining other job offers. This was intended to stop companies from rewarding executives -- including those who drove companies into bankruptcy -- as they cut jobs, wages and benefits elsewhere.

Enron Corp. awarded some $80 million to employees it considered too important to lose just before it filed for Chapter 11 -- and fired thousands.

Some judges are already cracking down on retention pay. In June, a judge excised top officers from a bid by US Airways Group Inc. <UAIRQ.OB> to pay severance and retention awards to some 1,800 executives and managers.

Rochelle says the bonus prohibition "will make it very difficult" for companies to keep their best mid-level managers.

CATCHING ONE'S BREATH

A third, widely criticized change gives companies just 210 days to decide whether to keep or reject leases for items such as stores or, in the case of airlines, even airport gates.

This may bedevil retailers hoping to close underperforming outlets. Many seek Chapter 11 protection in January or February, before they pay for holiday merchandise.

But 210 days won't get them to the next Christmas, and may force premature decisions on which locations to keep open or close.

"The draconian lease provision is a mistake," says Robert Zinman, a St. John's University law professor and former president of the American Bankruptcy Institute. "Although I have some sympathy for landlords, this goes too far."

For the courts themselves, LoPucki expects intensified competition for the biggest cases, now often brought in New York and Delaware. He expects judges to find ways around the limits on exclusivity and bonuses, but says limits on leases appear ironclad.

Some groups like the new law.

"These reforms will not eliminate delays, but will certainly reduce them," says Wayne Abernathy, an executive policy director at the American Bankers Association. "If you file Chapter 11, it gives you time to catch your breath -- and then get on with being a business."

Airlines aren't divulging their plans. Delta has said Chapter 11 is possible if its finances worsen too much. And Northwest Chief Executive Doug Steenland has called the Oct. 17 date "one of the factors" in his decision-making process.

Henry Sommer, co-editor of the "Collier on Bankruptcy" reference work, says filing soon eliminates uncertainty over how the new law will be applied. "When billions of dollars of assets are at stake," he says, "you don't want to take chances."