-CITE-
    11 USC CHAPTER 11 - REORGANIZATION                          01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION

-MISC1-
                        CHAPTER 11 - REORGANIZATION                    


                SUBCHAPTER I - OFFICERS AND ADMINISTRATION            
    Sec.                                                     
    1101.       Definitions for this chapter.                         
    1102.       Creditors' and equity security holders' committees.   
    1103.       Powers and duties of committees.                      
    1104.       Appointment of trustee or examiner.                   
    1105.       Termination of trustee's appointment.                 
    1106.       Duties of trustee and examiner.                       
    1107.       Rights, powers, and duties of debtor in possession.   
    1108.       Authorization to operate business.                    
    1109.       Right to be heard.                                    
    1110.       Aircraft equipment and vessels.                       
    1111.       Claims and interests.                                 
    1112.       Conversion or dismissal.                              
    1113.       Rejection of collective bargaining agreements.        
    1114.       Payment of insurance benefits to retired employees.   
    1115.       Property of the estate.                               
    1116.       Duties of trustee or debtor in possession in small
                 business cases.                                      

                         SUBCHAPTER II - THE PLAN                     
    1121.       Who may file a plan.                                  
    1122.       Classification of claims or interests.                
    1123.       Contents of plan.                                     
    1124.       Impairment of claims or interests.                    
    1125.       Postpetition disclosure and solicitation.             
    1126.       Acceptance of plan.                                   
    1127.       Modification of plan.                                 
    1128.       Confirmation hearing.                                 
    1129.       Confirmation of plan.                                 

                 SUBCHAPTER III - POSTCONFIRMATION MATTERS             
    1141.       Effect of confirmation.                               
    1142.       Implementation of plan.                               
    1143.       Distribution.                                         
    1144.       Revocation of an order of confirmation.               
    1145.       Exemption from securities laws.                       
    1146.       Special tax provisions.                               

                  SUBCHAPTER IV - RAILROAD REORGANIZATION              
    1161.       Inapplicability of other sections.                    
    1162.       Definition.                                           
    1163.       Appointment of trustee.                               
    1164.       Right to be heard.                                    
    1165.       Protection of the public interest.                    
    1166.       Effect of subtitle IV of title 49 and of Federal,
                 State, or local regulations.                         
    1167.       Collective bargaining agreements.                     
    1168.       Rolling stock equipment.                              
    1169.       Effect of rejection of lease of railroad line.        
    1170.       Abandonment of railroad line.                         
    1171.       Priority claims.                                      
    1172.       Contents of plan.                                     
    1173.       Confirmation of plan.                                 
    1174.       Liquidation.                                          

                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Chapter 11 of the House amendment is derived in large part from
    chapter 11 as contained in the House bill. Unlike chapter 11 of the
    Senate amendment, chapter 11 of the House amendment does not
    represent an extension of chapter X of current law [chapter 10 of
    former title 11] or any other chapter of the Bankruptcy Act [former
    title 11]. Rather chapter 11 of the House amendment takes a new
    approach consolidating subjects dealt with under chapters VIII, X,
    XI, and XII of the Bankruptcy Act [chapters 8, 10, 11, and 12 of
    former title 11]. The new consolidated chapter 11 contains no
    special procedure for companies with public debt or equity security
    holders. Instead, factors such as the standard to be applied to
    solicitation of acceptances of a plan of reorganization are left to
    be determined by the court on a case-by-case basis. In order to
    insure that adequate investigation of the debtor is conducted to
    determine fraud or wrongdoing on the part of present management, an
    examiner is required to be appointed in all cases in which the
    debtor's fixed, liquidated, and unsecured debts, other than debts
    for goods, services, or taxes, or owing to an insider, exceed $5
    million. This should adequately represent the needs of public
    security holders in most cases. However, in addition, section 1109
    of the House amendment enables both the Securities and Exchange
    Commission and any party in interest who is creditor, equity
    security holder, indenture trustee, or any committee representing
    creditors or equity security holders to raise and appear and be
    heard on any issue in a case under chapter 11. This will enable the
    bankruptcy court to evaluate all sides of a position and to
    determine the public interest. This approach is sharply contrasted
    to that under chapter X of present law in which the public interest
    is often determined only in terms of the interest of public
    security holders. The advisory role of the Securities and Exchange
    Commission will enable the court to balance the needs of public
    security holders against equally important public needs relating to
    the economy, such as employment and production, and other factors
    such as the public health and safety of the people or protection of
    the national interest. In this context, the new chapter 11 deletes
    archaic rules contained in certain chapters of present law such as
    the requirement of an approval hearing and the prohibition of
    prepetition solicitation. Such requirements were written in an age
    before the enactment of the Trust Indenture Act [15 U.S.C. 77aaa et
    seq.] and the development of securities laws had occurred. The
    benefits of these provisions have long been outlived but the
    detriment of the provisions served to frustrate and delay effective
    reorganization in those chapters of the Bankruptcy Act in which
    such provisions applied. Chapter 11 thus represents a much needed
    revision of reorganization laws. A brief discussion of the history
    of this important achievement is useful to an appreciation of the
    monumental reform embraced in chapter 11.
      Under the existing Bankruptcy Act [former title 11] debtors
    seeking reorganization may choose among three reorganization
    chapters, chapter X, chapter XI, and chapter XII [chapters 10, 11,
    and 12 of former title 11]. Individuals and partnerships may file
    under chapter XI or, if they own property encumbered by mortgage
    liens, they may file under chapter XII. A corporation may file
    under either chapter X or chapter XI, but is ineligible to file
    under chapter XII. Chapter X was designed to facilitate the
    pervasive reorganization of corporations whose creditors include
    holders of publicly issued debt securities. Chapter XI, on the
    other hand, was designed to permit smaller enterprises to negotiate
    composition or extension plans with their unsecured creditors. The
    essential differences between chapters X and XI are as follows.
    Chapter X mandates that, first, an independent trustee be appointed
    and assume management control from the officers and directors of
    the debtor corporation; second, the Securities and Exchange
    Commission must be afforded an opportunity to participate both as
    an adviser to the court and as a representative of the interests of
    public security holders; third, the court must approve any proposed
    plan of reorganization, and prior to such approval, acceptances of
    creditors and shareholders may not be solicited; fourth, the court
    must apply the absolute priority rule; and fifth, the court has the
    power to affect, and grant the debtor a discharge in respect of,
    all types of claims, whether secured or unsecured and whether
    arising by reason of fraud or breach of contract.
      The Senate amendment consolidates chapters X, XI, and XII
    [chapters 10, 11, and 12 of former title 11], but establishes a
    separate and distinct reorganization procedure for "public
    companies." The special provisions applicable to "public companies"
    are tantamount to the codification of chapter X of the existing
    Bankruptcy Act and thus result in the creation of a "two-track
    system." The narrow definition of the term "public company" would
    require many businesses which could have been rehabilitated under
    chapter XI to instead use the more cumbersome procedures of chapter
    X, whether needed or not.
      The special provisions of the Senate amendment applicable to a
    "public company" are as follows:
      (a) Section 1101(3) defines a "public company" as a debtor who,
    within 12 months prior to the filing of the petition, had
    outstanding $5 million or more in debt and had not less than 1000
    security holders;
      (b) Section 1104(a) requires the appointment of a disinterested
    trustee irrespective of whether creditors support such appointment
    and whether there is cause for such appointment;
      (c) Section 1125(f) prohibits the solicitation of acceptances of
    a plan of reorganization prior to court approval of such plan even
    though the solicitation complies with all applicable securities
    laws;
      (d) Section 1128(a) requires the court to conduct a hearing on
    any plan of reorganization proposed by the trustee or any other
    party;
      (e) Section 1128(b) requires the court to refer any plans "worthy
    of consideration" to the Securities and Exchange Commission for
    their examination and report, prior to court approval of a plan;
    and
      (f) Section 1128(c) and section 1130(a)(7) requires the court to
    approve a plan or plans which are "fair and equitable" and comply
    with the other provisions of chapter 11.
      The record of the Senate hearings on S. 2266 and the House
    hearings on H.R. 8200 is replete with evidence of the failure of
    the reorganization provisions of the existing Bankruptcy Act
    [former title 11] to meet the needs of insolvent corporations in
    today's business environment. Chapter X [chapter 10 of former title
    11] was designed to impose rigid and formalized procedures upon the
    reorganization of corporations and, although designed to protect
    public creditors, has often worked to the detriment of such
    creditors. As the House report has noted:
      The negative results under chapter X [chapter 10 of former title
    11] have resulted from the stilted procedures, under which
    management is always ousted and replaced by an independent trustee,
    the courts and the Securities and Exchange Commission examine the
    plan of reorganization in great detail, no matter how long that
    takes, and the court values the business, a time consuming and
    inherently uncertain procedure.
      The House amendment deletes the "public company" exception,
    because it would codify the well recognized infirmities of chapter
    X [chapter 10 of former title 11], because it would extend the
    chapter X approach to a large number of new cases without regard to
    whether the rigid and formalized procedures of chapter X are
    needed, and because it is predicated upon the myth that provisions
    similar to those contained in chapter X are necessary for the
    protection of public investors. Bankruptcy practice in large
    reorganization cases has also changed substantially in the 40 years
    since the Chandler Act [June 22, 1938, ch. 575, 52 Stat. 883,
    amending former title 11] was enacted. This change is, in large
    part, attributable to the pervasive effect of the Federal
    securities laws and the extraordinary success of the Securities and
    Exchange Commission in sensitizing both management and members of
    the bar to the need for full disclosure and fair dealing in
    transactions involving publicly held securities.
      It is important to note that Congress passed the Chandler Act
    [June 22, 1938, ch. 575, 52 Stat. 883, amending former title 11]
    prior to enactment of the Trust Indenture Act of 1939 [15 U.S.C.
    section 77aaa et seq.] and prior to the definition and enforcement
    of the disclosure requirements of the Securities Act of 1933 [15
    U.S.C. 77a et seq.] and the Securities Exchange Act of 1934 [15
    U.S.C. 78a et seq.]. The judgments made by the 75th Congress in
    enacting the Chandler Act are not equally applicable to the
    financial markets of 1978. First of all, most public debenture
    holders are neither weak nor unsophisticated investors. In most
    cases, a significant portion of the holders of publicly issued
    debentures are sophisticated institutions, acting for their own
    account or as trustees for investment funds, pension funds, or
    private trusts. In addition, debenture holders, sophisticated, and
    unsophisticated alike, are represented by indenture trustees,
    qualified under section 77ggg of the Trust Indenture Act [probably
    should be "section 307" which is 15 U.S.C. 77ggg]. Given the high
    standard of care to which indenture trustees are bound, they are
    invariably active and sophisticated participants in efforts to
    rehabilitate corporate debtors in distress.
      It is also important to note that in 1938 when the Chandler Act
    [June 22, 1938, ch. 575, 52 Stat. 883, amending former title 11]
    was enacted, public investors commonly held senior, not
    subordinated, debentures and corporations were very often privately
    owned. In this environment, the absolute priority rule protected
    debenture holders from an erosion of their position in favor of
    equity holders. Today, however, if there are public security
    holders in a case, they are likely to be holders of subordinated
    debentures and equity and thus the application of the absolute
    priority rule under chapter X [chapter 10 of former title 11] leads
    to the exclusion, rather than the protection, of the public.
      The primary problem posed by chapter X [chapter 10 of former
    title 11] is delay. The modern corporation is a complex and
    multifaceted entity. Most corporations do not have a significant
    market share of the lines of business in which they compete. The
    success, and even the survival, of a corporation in contemporary
    markets depends on three elements: First, the ability to attract
    and hold skilled management; second, the ability to obtain credit;
    and third, the corporation's ability to project to the public an
    image of vitality. Over and over again, it is demonstrated that
    corporations which must avail themselves of the provisions of the
    Bankruptcy Act [former title 11] suffer appreciable deterioration
    if they are caught in a chapter X proceeding for any substantial
    period of time.
      There are exceptions to this rule. For example, King Resources
    filed a chapter X [chapter 10 of former title 11] petition in the
    District of Colorado and it emerged from such proceeding as a
    solvent corporation. The debtor's new found solvency was not,
    however, so much attributable to a brilliant rehabilitation program
    conceived by a trustee, but rather to a substantial appreciation in
    the value of the debtor's oil and uranium properties during the
    pendency of the proceedings.
      Likewise, Equity Funding is always cited as an example of a
    successful chapter X [chapter 10 of former title 11] case. But it
    should be noted that in Equity Funding there was no question about
    retaining existing management. Rather, Equity Funding involved
    fraud on a grand scale. Under the House amendment with the deletion
    of the mandatory appointment of a trustee in cases involving
    "public companies," a bankruptcy judge, in a case like Equity
    Funding, would presumably have little difficulty in concluding that
    a trustee should be appointed under section 1104(6).
      While I will not undertake to list the chapter X [chapter 10 of
    former title 11] failures, it is important to note a number of
    cases involving corporations which would be "public companies"
    under the Senate amendment which have successfully skirted the
    shoals of chapter X and confirmed plans of arrangement in chapter
    XI [chapter 11 of former title 11]. Among these are Daylin, Inc.
    ("Daylin") and Colwell Mortgage Investors ("Colwell").
      Daylin filed a chapter XI [chapter 11 of former title 11]
    petition on February 26, 1975, and confirmed its plan of
    arrangement on October 20, 1976. The success of its turnaround is
    best evidenced by the fact that it had consolidated net income of
    $6,473,000 for the first three quarters of the 1978 fiscal year.
      Perhaps the best example of the contrast between chapter XI and
    chapter X [chapters 11 and 10 of former title 11] is the recent
    case of In re Colwell Mortgage Investors. Colwell negotiated a
    recapitalization plan with its institutional creditors, filed a
    proxy statement with the Securities and Exchange Commission, and
    solicited consents of its creditors and shareholders prior to
    filing its chapter XI petition. Thereafter, Colwell confirmed its
    plan of arrangement 41 days after filing its chapter XI petition.
    This result would have been impossible under the Senate amendment
    since Colwell would have been a "public company."
      There are a number of other corporations with publicly held debt
    which have successfully reorganized under chapter XI [chapter 11 of
    former title 11]. Among these are National Mortgage Fund (NMF),
    which filed a chapter XI petition in the northern district of Ohio
    on June 30, 1976. Prior to commencement of the chapter XI
    proceeding, NMF filed a proxy statement with the Securities and
    Exchange Commission and solicited acceptances to a proposed plan of
    arrangement. The NMF plan was subsequently confirmed on December
    14, 1976. The Securities and Exchange Commission did not file a
    motion under section 328 of the Bankruptcy Act [section 728 of
    former title 11] to transfer the case to chapter X [chapter 10 of
    former title 11] and a transfer motion which was filed by private
    parties was denied by the court.
      While there are other examples of large publicly held companies
    which have successfully reorganized in chapter XI [chapter 11 of
    former title 11], including Esgrow, Inc. (C.D.Cal. 73-02510),
    Sherwood Diversified Services Inc. (S.D.N.Y. 73-B-213), and United
    Merchants and Manufacturers, Inc. (S.D.N.Y. 77-B-1513), the
    numerous successful chapter XI cases demonstrate two points: first,
    the complicated and time-consuming provisions of chapter X [chapter
    10 of former title 11] are not always necessary for the successful
    reorganization of a company with publicly held debt, and second,
    the more flexible provisions in chapter XI permit a debtor to
    obtain relief under the Bankruptcy Act [former title 11] in
    significantly less time than is required to confirm a plan of
    reorganization under chapter X of the Bankruptcy Act.
      One cannot overemphasize the advantages of speed and simplicity
    to both creditors and debtors. Chapter XI [chapter 11 of former
    title 11] allows a debtor to negotiate a plan outside of court and,
    having reached a settlement with a majority in number and amount of
    each class of creditors, permits the debtor to bind all unsecured
    creditors to the terms of the arrangement. From the perspective of
    creditors, early confirmation of a plan of arrangement: first,
    generally reduces administrative expenses which have priority over
    the claims of unsecured creditors; second, permits creditors to
    receive prompt distributions on their claims with respect to which
    interest does not accrue after the filing date; and third,
    increases the ultimate recovery on creditor claims by minimizing
    the adverse effect on the business which often accompanies efforts
    to operate an enterprise under the protection of the Bankruptcy Act
    [former title 11].
      Although chapter XI [chapter 11 of former title 11] offers the
    corporate debtor flexibility and continuity of management,
    successful rehabilitation under chapter XI is often impossible for
    a number of reasons. First, chapter XI does not permit a debtor to
    "affect" secured creditors or shareholders, in the absence of their
    consent. Second, whereas a debtor corporation in chapter X [chapter
    10 of former title 11], upon the consummation of the plan or
    reorganization, is discharged from all its debts and liabilities, a
    corporation in chapter XI may not be able to get a discharge in
    respect of certain kinds of claims including fraud claims, even in
    cases where the debtor is being operated under new management. The
    language of chapter 11 in the House amendment solves these problems
    and thus increases the utility and flexibility of the new chapter
    11, as compared to chapter XI of the existing Bankruptcy Act
    [chapter 11 of former title 11].
      Those who would urge the adoption of a two-track system have two
    major obstacles to meet. First, the practical experience of those
    involved in business rehabilitation cases, practitioners, debtors,
    and bankruptcy judges, has been that the more simple and
    expeditious procedures of chapter XI [chapter 11 of former title
    11] are appropriate in the great majority of cases. While attempts
    have been made to convince the courts that a chapter X [chapter 10
    of former title 11] proceeding is required in every case where
    public debt is present, the courts have categorically rejected such
    arguments. Second, chapter X has been far from a success. Of the
    991 chapter X cases filed during the period of January 1, 1967,
    through December 31, 1977, only 664 have been terminated. Of those
    cases recorded as "terminated," only 140 resulted in consummated
    plans. This 21 percent success rate suggests one of the reasons for
    the unpopularity of chapter X.
      In summary, it has been the experience of the great majority of
    those who have testified before the Senate and House subcommittees
    that a consolidated approach to business rehabilitation is
    warranted. Such approach is adopted in the House amendment.
      Having discussed the general reasons why chapter 11 of the House
    amendment is sorely needed, a brief discussion of the differences
    between the House bill, Senate amendment, and the House amendment,
    is in order. Since chapter 11 of the House amendment rejects the
    concept of separate treatment for a public company, sections
    1101(3), 1104(a), 1125(f), 1128, and 1130(a)(7) of the Senate
    amendment have been deleted.

                                AMENDMENTS                            
      2005 - Pub. L. 109-8, title III, Sec. 321(a)(2), title IV, Sec.
    436(b), Apr. 20, 2005, 119 Stat. 95, 113, added items 1115 and
    1116.
      1988 - Pub. L. 100-334, Sec. 2(c), June 16, 1988, 102 Stat. 613,
    added item 1114.
      1984 - Pub. L. 98-353, title III, Secs. 514(b), 541(b), July 10,
    1984, 98 Stat. 387, 391, added item 1113 and substituted
    "Implementation" for "Execution" in item 1142.
      1983 - Pub. L. 97-449, Sec. 5(a)(1), Jan. 12, 1983, 96 Stat.
    2442, substituted "subtitle IV of title 49" for "Interstate
    Commerce Act" in item 1166.

-End-


-CITE-
    11 USC SUBCHAPTER I - OFFICERS AND ADMINISTRATION           01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
                SUBCHAPTER I - OFFICERS AND ADMINISTRATION            

-End-



-CITE-
    11 USC Sec. 1101                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1101. Definitions for this chapter

-STATUTE-
      In this chapter - 
        (1) "debtor in possession" means debtor except when a person
      that has qualified under section 322 of this title is serving as
      trustee in the case;
        (2) "substantial consummation" means - 
          (A) transfer of all or substantially all of the property
        proposed by the plan to be transferred;
          (B) assumption by the debtor or by the successor to the
        debtor under the plan of the business or of the management of
        all or substantially all of the property dealt with by the
        plan; and
          (C) commencement of distribution under the plan.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2626.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                         SENATE REPORT NO. 95-989                     
      This section contains definitions of three terms that are used in
    chapter 11. Paragraph (1) defines debtor in possession to mean the
    debtor, except when a trustee who has qualified in serving in the
    case.
      Paragraph (2), derived from section 229a of current law [section
    629(a) of former title 11], defines substantial consummation.
    Substantial consummation of a plan occurs when transfer of all or
    substantially all of the property proposed by the plan to be
    transferred is actually transferred; when the debtor (or its
    successor) has assumed the business of the debtor or the management
    of all or substantially all of the property dealt with by the plan;
    and when distribution under the plan has commenced.
      Paragraph (3) defines for purposes of Chapter 11 a public company
    to mean "a debtor who, within 12 months prior to the filing of a
    petition for relief under this chapter, had outstanding liabilities
    of $5 million or more, exclusive of liabilities for goods,
    services, or taxes and not less than 1,000 security holders." There
    are, as noted, special safeguards for public investors related to
    the reorganization of a public company, as so defined.
      Both requirements must be met: liabilities, excluding tax
    obligations and trade liabilities, must be $5 million or more; and
    (2) the number of holders of securities, debt or equity, or both,
    must be not less than 1,000. The amount and number are to be
    determined as of any time within 12 months prior to the filing of
    the petition for reorganization.

-End-



-CITE-
    11 USC Sec. 1102                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1102. Creditors' and equity security holders' committees

-STATUTE-
      (a)(1) Except as provided in paragraph (3), as soon as
    practicable after the order for relief under chapter 11 of this
    title, the United States trustee shall appoint a committee of
    creditors holding unsecured claims and may appoint additional
    committees of creditors or of equity security holders as the United
    States trustee deems appropriate.
      (2) On request of a party in interest, the court may order the
    appointment of additional committees of creditors or of equity
    security holders if necessary to assure adequate representation of
    creditors or of equity security holders. The United States trustee
    shall appoint any such committee.
      (3) On request of a party in interest in a case in which the
    debtor is a small business debtor and for cause, the court may
    order that a committee of creditors not be appointed.
      (4) On request of a party in interest and after notice and a
    hearing, the court may order the United States trustee to change
    the membership of a committee appointed under this subsection, if
    the court determines that the change is necessary to ensure
    adequate representation of creditors or equity security holders.
    The court may order the United States trustee to increase the
    number of members of a committee to include a creditor that is a
    small business concern (as described in section 3(a)(1) of the
    Small Business Act), if the court determines that the creditor
    holds claims (of the kind represented by the committee) the
    aggregate amount of which, in comparison to the annual gross
    revenue of that creditor, is disproportionately large.
      (b)(1) A committee of creditors appointed under subsection (a) of
    this section shall ordinarily consist of the persons, willing to
    serve, that hold the seven largest claims against the debtor of the
    kinds represented on such committee, or of the members of a
    committee organized by creditors before the commencement of the
    case under this chapter, if such committee was fairly chosen and is
    representative of the different kinds of claims to be represented.
      (2) A committee of equity security holders appointed under
    subsection (a)(2) of this section shall ordinarily consist of the
    persons, willing to serve, that hold the seven largest amounts of
    equity securities of the debtor of the kinds represented on such
    committee.
      (3) A committee appointed under subsection (a) shall - 
        (A) provide access to information for creditors who - 
          (i) hold claims of the kind represented by that committee;
        and
          (ii) are not appointed to the committee;

        (B) solicit and receive comments from the creditors described
      in subparagraph (A); and
        (C) be subject to a court order that compels any additional
      report or disclosure to be made to the creditors described in
      subparagraph (A).

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2626; Pub. L. 98-353, title
    III, Sec. 499, July 10, 1984, 98 Stat. 384; Pub. L. 99-554, title
    II, Sec. 221, Oct. 27, 1986, 100 Stat. 3101; Pub. L. 103-394, title
    II, Sec. 217(b), Oct. 22, 1994, 108 Stat. 4127; Pub. L. 109-8,
    title IV, Secs. 405, 432(b), Apr. 20, 2005, 119 Stat. 105, 110.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1102(a) of the House amendment adopts a compromise
    between the House bill and Senate amendment requiring appointment
    of a committee of creditors holding unsecured claims by the court;
    the alternative of creditor committee election is rejected.
      Section 1102(b) of the House amendment represents a compromise
    between the House bill and the Senate amendment by preventing the
    appointment of creditors who are unwilling to serve on a creditors
    committee.

                         SENATE REPORT NO. 95-989                     
      This section provides for the election and appointment of
    committees. Subsection (c) provides that this section does not
    apply in case of a public company, as to which a trustee, appointed
    under section 1104(a) will have responsibility to administer the
    estate and to formulate a plan as provided in section 1106(a).
      There is no need for the election or appointment of committees
    for which the appointment of a trustee is mandatory. In the case of
    a public company there are likely to be several committees, each
    representing a different class of security holders and seeking
    authority to retain accountants, lawyers, and other experts, who
    will expect to be paid. If in the case of a public company
    creditors or stockholders wish to organize committees, they may do
    so, as authorized under section 1109(a). Compensation and
    reimbursement will be allowed for contributions to the
    reorganization pursuant to section 503(b) (3) and (4).

                          HOUSE REPORT NO. 95-595                      
      This section provides for the appointment of creditors' and
    equity security holders' committees, which will be the primary
    negotiating bodies for the formulation of the plan of
    reorganization. They will represent the various classes of
    creditors and equity security holders from which they are selected.
    They will also provide supervision of the debtor in possession and
    of the trustee, and will protect their constituents' interests.
      Subsection (a) requires the court to appoint at least one
    committee. That committee is to be composed of creditors holding
    unsecured claims. The court is authorized to appoint such
    additional committees as are necessary to assure adequate
    representation of creditors and equity security holders. The
    provision will be relied upon in cases in which the debtor proposes
    to affect several classes of debt or equity holders under the plan,
    and in which they need representation.
      Subsection (b) contains precatory language directing the court to
    appoint the persons holding the seven largest claims against the
    debtor of the kinds represented on a creditors' committee, or the
    members of a prepetition committee organized by creditors before
    the order for relief under chapter 11. The court may continue
    prepetition committee members only if the committee was fairly
    chosen and is representative of the different kinds of claims to be
    represented. The court is restricted to the appointment of persons
    in order to exclude governmental holders of claims or interests.
      Paragraph (2) of subsection (b) requires similar treatment for
    equity security holders' committees. The seven largest holders are
    normally to be appointed, but the language is only precatory.
      Subsection (c) authorizes the court, on request of a party in
    interest, to change the size or the membership of a creditors' or
    equity security holders' committee if the membership of the
    committee is not representative of the different kinds of claims or
    interests to be represented. This subsection is intended, along
    with the nonbinding nature of subsection (b), to afford the court
    latitude in appointing a committee that is manageable and
    representative in light of the circumstances of the case.

-REFTEXT-
                            REFERENCES IN TEXT                        
      Section 3(a)(1) of the Small Business Act, referred to in subsec.
    (a)(4), is classified to section 632(a)(1) of Title 15, Commerce
    and Trade.


-MISC2-
                                AMENDMENTS                            
      2005 - Subsec. (a)(3). Pub. L. 109-8, Sec. 432(b), inserted
    "debtor" after "small business".
      Subsec. (a)(4). Pub. L. 109-8, Sec. 405(a), added par. (4).
      Subsec. (b)(3). Pub. L. 109-8, Sec. 405(b), added par. (3).
      1994 - Subsec. (a). Pub. L. 103-394 substituted "Except as
    provided in paragraph (3), as" for "As" in par. (1) and added par.
    (3).
      1986 - Subsec. (a). Pub. L. 99-554, Sec. 221(1), amended subsec.
    (a) generally, substituting "chapter 11 of this title, the United
    States trustee shall appoint a committee of creditors holding
    unsecured claims and may appoint additional committees of creditors
    or of equity security holders as the United States trustee deems
    appropriate" for "this chapter, the court shall appoint a committee
    of creditors holding unsecured claims" in par. (1) and "United
    States trustee" for "court" in par. (2).
      Subsec. (c). Pub. L. 99-554, Sec. 221(2), struck out subsec. (c)
    which read as follows: "On request of a party in interest and after
    notice and a hearing, the court may change the membership or the
    size of a committee appointed under subsection (a) of this section
    if the membership of such committee is not representative of the
    different kinds of claims or interests to be represented."
      1984 - Subsec. (b)(1). Pub. L. 98-353 substituted "commencement
    of the case" for "order for relief".

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, and not applicable with respect to cases commenced under this
    title before such effective date, except as otherwise provided, see
    section 1501 of Pub. L. 109-8, set out as a note under section 101
    of this title.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Effective date and applicability of amendment by Pub. L. 99-554
    dependent upon the judicial district involved, see section 302(d),
    (e) of Pub. L. 99-554, set out as a note under section 581 of Title
    28, Judiciary and Judicial Procedure.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1103                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1103. Powers and duties of committees

-STATUTE-
      (a) At a scheduled meeting of a committee appointed under section
    1102 of this title, at which a majority of the members of such
    committee are present, and with the court's approval, such
    committee may select and authorize the employment by such committee
    of one or more attorneys, accountants, or other agents, to
    represent or perform services for such committee.
      (b) An attorney or accountant employed to represent a committee
    appointed under section 1102 of this title may not, while employed
    by such committee, represent any other entity having an adverse
    interest in connection with the case. Representation of one or more
    creditors of the same class as represented by the committee shall
    not per se constitute the representation of an adverse interest.
      (c) A committee appointed under section 1102 of this title may - 
        (1) consult with the trustee or debtor in possession concerning
      the administration of the case;
        (2) investigate the acts, conduct, assets, liabilities, and
      financial condition of the debtor, the operation of the debtor's
      business and the desirability of the continuance of such
      business, and any other matter relevant to the case or to the
      formulation of a plan;
        (3) participate in the formulation of a plan, advise those
      represented by such committee of such committee's determinations
      as to any plan formulated, and collect and file with the court
      acceptances or rejections of a plan;
        (4) request the appointment of a trustee or examiner under
      section 1104 of this title; and
        (5) perform such other services as are in the interest of those
      represented.

      (d) As soon as practicable after the appointment of a committee
    under section 1102 of this title, the trustee shall meet with such
    committee to transact such business as may be necessary and proper.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2627; Pub. L. 98-353, title
    III, Secs. 324, 500, July 10, 1984, 98 Stat. 358, 384.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                         SENATE REPORT NO. 95-989                     
      This section defines the powers and duties of a committee elected
    or appointed under section 1102.
      Under subsection (a) the committee may, if authorized by the
    court, employ one or more attorneys, accountants, or other agents
    to represent or perform services for the committee. Normally one
    attorney should suffice; more than one may be authorized for good
    cause. The same considerations apply to the services of others, if
    the need for any at all is demonstrated.
      Under subsections (c) and (d) the committee, like any party in
    interest, may confer with the trustee or debtor regarding the
    administration of the estate; may advise the court on the need for
    a trustee under section 1104(b). The committee may investigate
    matters specified in paragraph (2) of subsection (c), but only if
    authorized by the court and if no trustee or examiner is appointed.

                          HOUSE REPORT NO. 95-595                      
      Subsection (a) of this section authorizes a committee appointed
    under section 1102 to select and authorize the employment of
    counsel, accountants, or other agents, to represent or perform
    services for the committee. The committee's selection and
    authorization is subject to the court's approval, and may only be
    done at a meeting of the committee at which a majority of its
    members are present. The subsection provides for the employment of
    more than one attorney. However, this will be the exception, and
    not the rule; cause must be shown to depart from the normal
    standard.
      Subsection (b) requires a committee's counsel to cease
    representation of any other entity in connection with the case
    after he begins to represent the committee. This will prevent the
    potential of severe conflicts of interest.
      Subsection (c) lists a committee's functions in a chapter 11
    case. The committee may consult with the trustee or debtor in
    possession concerning the administration of the case, may
    investigate the acts, conduct, assets, liabilities and financial
    condition of the debtor, the operation of the debtor's business,
    and the desirability of the continuance of the business, and any
    other matter relevant to the case or to the formulation of a plan.
    The committee may participate in the formulation of a plan, advise
    those it represents of the committee's recommendation with respect
    to any plan formulated, and collect and file acceptances. These
    will be its most important functions. The committee may also
    determine the need for the appointment of a trustee, if one has not
    previously been appointed, and perform such other services as are
    in the interest of those represented.
      Subsection (d) requires the trustee and each committee to meet as
    soon as practicable after their appointments to transact such
    business as may be necessary and proper.

                                AMENDMENTS                            
      1984 - Subsec. (b). Pub. L. 98-353, Secs. 324, 500(a),
    substituted "An attorney or accountant" for "A person", substituted
    "entity having an adverse interest" for "entity", and inserted
    provision that representation of one or more creditors of the same
    class as represented by the committee shall not per se constitute
    the representation of an adverse interest.
      Subsec. (c)(3). Pub. L. 98-353, Sec. 500(b)(1), substituted
    "determinations" for "recommendations", and "acceptances or
    rejections" for "acceptances".
      Subsec. (c)(4). Pub. L. 98-353, Sec. 500(b)(2), struck out "if a
    trustee or examiner, as the case may be, has not previously been
    appointed under this chapter in the case" after "section 1104 of
    this title".

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1104                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1104. Appointment of trustee or examiner

-STATUTE-
      (a) At any time after the commencement of the case but before
    confirmation of a plan, on request of a party in interest or the
    United States trustee, and after notice and a hearing, the court
    shall order the appointment of a trustee - 
        (1) for cause, including fraud, dishonesty, incompetence, or
      gross mismanagement of the affairs of the debtor by current
      management, either before or after the commencement of the case,
      or similar cause, but not including the number of holders of
      securities of the debtor or the amount of assets or liabilities
      of the debtor;
        (2) if such appointment is in the interests of creditors, any
      equity security holders, and other interests of the estate,
      without regard to the number of holders of securities of the
      debtor or the amount of assets or liabilities of the debtor; or
        (3) if grounds exist to convert or dismiss the case under
      section 1112, but the court determines that the appointment of a
      trustee or an examiner is in the best interests of creditors and
      the estate.

      (b)(1) Except as provided in section 1163 of this title, on the
    request of a party in interest made not later than 30 days after
    the court orders the appointment of a trustee under subsection (a),
    the United States trustee shall convene a meeting of creditors for
    the purpose of electing one disinterested person to serve as
    trustee in the case. The election of a trustee shall be conducted
    in the manner provided in subsections (a), (b), and (c) of section
    702 of this title.
      (2)(A) If an eligible, disinterested trustee is elected at a
    meeting of creditors under paragraph (1), the United States trustee
    shall file a report certifying that election.
      (B) Upon the filing of a report under subparagraph (A) - 
        (i) the trustee elected under paragraph (1) shall be considered
      to have been selected and appointed for purposes of this section;
      and
        (ii) the service of any trustee appointed under subsection (d)
      shall terminate.

      (C) The court shall resolve any dispute arising out of an
    election described in subparagraph (A).
      (c) If the court does not order the appointment of a trustee
    under this section, then at any time before the confirmation of a
    plan, on request of a party in interest or the United States
    trustee, and after notice and a hearing, the court shall order the
    appointment of an examiner to conduct such an investigation of the
    debtor as is appropriate, including an investigation of any
    allegations of fraud, dishonesty, incompetence, misconduct,
    mismanagement, or irregularity in the management of the affairs of
    the debtor of or by current or former management of the debtor, if -
     
        (1) such appointment is in the interests of creditors, any
      equity security holders, and other interests of the estate; or
        (2) the debtor's fixed, liquidated, unsecured debts, other than
      debts for goods, services, or taxes, or owing to an insider,
      exceed $5,000,000.

      (d) If the court orders the appointment of a trustee or an
    examiner, if a trustee or an examiner dies or resigns during the
    case or is removed under section 324 of this title, or if a trustee
    fails to qualify under section 322 of this title, then the United
    States trustee, after consultation with parties in interest, shall
    appoint, subject to the court's approval, one disinterested person
    other than the United States trustee to serve as trustee or
    examiner, as the case may be, in the case.
      (e) The United States trustee shall move for the appointment of a
    trustee under subsection (a) if there are reasonable grounds to
    suspect that current members of the governing body of the debtor,
    the debtor's chief executive or chief financial officer, or members
    of the governing body who selected the debtor's chief executive or
    chief financial officer, participated in actual fraud, dishonesty,
    or criminal conduct in the management of the debtor or the debtor's
    public financial reporting.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2627; Pub. L. 99-554, title
    II, Sec. 222, Oct. 27, 1986, 100 Stat. 3102; Pub. L. 103-394, title
    II, Sec. 211(a), title V, Sec. 501(d)(30), Oct. 22, 1994, 108 Stat.
    4125, 4146; Pub. L. 109-8, title IV, Secs. 416, 442(b), title XIV,
    Sec. 1405, Apr. 20, 2005, 119 Stat. 107, 116, 215.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1104 of the House amendment represents a compromise
    between the House bill and the Senate amendment concerning the
    appointment of a trustee or examiner. The method of appointment
    rather than election, is derived from the House bill; the two
    alternative standards of appointment are derived with modifications
    from the Senate amendment, instead of the standard stated in the
    House bill. For example, if the current management of the debtor
    gambled away rental income before the filing of the petition, a
    trustee should be appointed after the petition, whether or not
    postpetition mismanagement can be shown. However, under no
    circumstances will cause include the number of security holders of
    the debtor or the amount of assets or liabilities of the debtor.
    The standard also applies to the appointment of an examiner in
    those circumstances in which mandatory appointment, as previously
    detailed, is not required.

                         SENATE REPORT NO. 95-989                     
      Subsection (a) provides for the mandatory appointment of a
    disinterested trustee in the case of a public company, as defined
    in section 1101(3), within 10 days of the order for relief, or of a
    successor, in the event of a vacancy, as soon as practicable.
      Section 156 of chapter X ([former] 11 U.S.C. 516 [556]) requires
    the appointment of a disinterested trustee if the debtor's
    liabilities are $250,000 or over. Section 1104(a) marks a
    substantial change. The appointment of a trustee is mandatory only
    for a public company, which under section 1101(3), has $5 million
    in liabilities, excluding tax and trade obligations, and 1,000
    security holders. In view of past experience, cases involving
    public companies will under normal circumstances probably be
    relatively few in number but of vast importance in terms of public
    investor interest.
      In case of a nonpublic company, the appointment or election of a
    trustee is discretionary if the interests of the estate and its
    security holders would be served thereby. A test based on probable
    costs and benefits of a trusteeship is not practical. The
    appointment may be made at any time prior to confirmation of the
    plan.
      In case of a nonpublic company, if no trustee is appointed, the
    court may under subsection (c) appoint an examiner, if the
    appointment would serve the interests of the estate and security
    holders. The purpose of his appointment is specified in section
    1106(b).

                          HOUSE REPORT NO. 95-595                      
      Subsection (a) of this section governs the appointment of
    trustees in reorganization cases. The court is permitted to order
    the appointment of one trustee at any time after the commencement
    of the case if a party in interest so requests. The court may order
    appointment only if the protection afforded by a trustee is needed
    and the costs and expenses of a trustee would not be
    disproportionately higher than the value of the protection
    afforded.
      The protection afforded by a trustee would be needed, for
    example, in cases where the current management of the debtor has
    been fraudulent or dishonest, or has grossly mismanaged the
    company, or where the debtor's management has abandoned the
    business. A trustee would not necessarily be needed to investigate
    misconduct of former management of the debtor, because an examiner
    appointed under this section might well be able to serve that
    function adequately without displacing the current management.
    Generally, a trustee would not be needed in any case where the
    protection afforded by a trustee could equally be afforded by an
    examiner. Though the device of examiner appears in current chapter
    X [chapter 10 of former title 11], it is rarely used because of the
    nearly absolute presumption in favor of the appointment of a
    trustee. Its use here will give the courts, debtors, creditors, and
    equity security holders greater flexibility in handling the affairs
    of an insolvent debtor, permitting the court to tailor the remedy
    to the case.
      The second test, relating to the costs and expenses of a trustee,
    is not intended to be a strict cost/benefit analysis. It is
    included to require the court to have due regard for any additional
    costs or expenses that the appointment of a trustee would impose on
    the estate.
      Subsection (b) permits the court, at any time after the
    commencement of the case and on request of a party in interest, to
    order the appointment of an examiner, if the court has not ordered
    the appointment of a trustee. The examiner would be appointed to
    conduct such an investigation of the debtor as is appropriate under
    the particular circumstances of the case, including an
    investigation of any allegations of fraud, dishonesty, or gross
    mismanagement of the debtor of or by current or former management
    of the debtor. The standards for the appointment of an examiner are
    the same as those for the appointment of a trustee: the protection
    must be needed, and the costs and expenses must not be
    disproportionately high.
      By virtue of proposed 11 U.S.C. 1109, an indenture trustee and
    the Securities and Exchange Commission will be parties in interest
    for the purpose of requesting the appointment of a trustee or
    examiner.
      Subsection (c) directs that the United States trustee actually
    select and appoint the trustee or examiner ordered appointed under
    this section. The United States trustee is required to consult with
    various parties in interest before selecting and appointing a
    trustee. He is not bound to select one of the members of the panel
    of private trustees established under proposed 28 U.S.C. 586(a)(1)
    which exists only for the purpose of providing trustees for chapter
    7 cases. Neither is he precluded from selecting a panel member if
    the member is qualified to serve as chapter 11 trustee. Appointment
    by the United States trustee will remove the court from the often
    criticized practice of appointing an officer that will appear in
    litigation before the court against an adverse party.

                                AMENDMENTS                            
      2005 - Subsec. (a)(3). Pub. L. 109-8, Sec. 442(b), added par.
    (3).
      Subsec. (b). Pub. L. 109-8, Sec. 416, designated existing
    provisions as par. (1) and added par. (2).
      Subsec. (e). Pub. L. 109-8, Sec. 1405, added subsec. (e).
      1994 - Subsec. (b). Pub. L. 103-394, Sec. 211(a)(2), added
    subsec. (b). Former subsec. (b) redesignated (c).
      Subsec. (c). Pub. L. 103-394, Sec. 211(a)(1), redesignated
    subsec. (b) as (c). Former subsec. (c) redesignated (d).
      Subsec. (d). Pub. L. 103-394, Secs. 211(a)(1), 501(d)(30),
    redesignated subsec. (c) as (d) and inserted comma after
    "interest".
      1986 - Subsecs. (a), (b). Pub. L. 99-554, Sec. 222(1), (2),
    inserted "or the United States trustee" after "party in interest".
      Subsec. (c). Pub. L. 99-554, Sec. 222(3), substituted "the United
    States trustee, after consultation with parties in interest shall
    appoint, subject to the court's approval, one disinterested person
    other than the United States trustee to serve" for "the court shall
    appoint one disinterested person to serve".

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by section 1405 of Pub. L. 109-8 effective Apr. 20,
    2005, and applicable only with respect to cases commenced under
    this title on or after Apr. 20, 2005, see section 1406 of Pub. L.
    109-8, set out as a note under section 507 of this title.
      Amendment by sections 416 and 442(b) of Pub. L. 109-8 effective
    180 days after Apr. 20, 2005, and not applicable with respect to
    cases commenced under this title before such effective date, except
    as otherwise provided, see section 1501 of Pub. L. 109-8, set out
    as a note under section 101 of this title.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Effective date and applicability of amendment by Pub. L. 99-554
    dependent upon the judicial district involved, see section 302(d),
    (e) of Pub. L. 99-554, set out as a note under section 581 of Title
    28, Judiciary and Judicial Procedure.

-End-



-CITE-
    11 USC Sec. 1105                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1105. Termination of trustee's appointment

-STATUTE-
      At any time before confirmation of a plan, on request of a party
    in interest or the United States trustee, and after notice and a
    hearing, the court may terminate the trustee's appointment and
    restore the debtor to possession and management of the property of
    the estate and of the operation of the debtor's business.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2628; Pub. L. 98-353, title
    III, Sec. 501, July 10, 1984, 98 Stat. 384; Pub. L. 99-554, title
    II, Sec. 223, Oct. 27, 1986, 100 Stat. 3102.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                         SENATE REPORT NO. 95-989                     
      This section authorizes the court to terminate the trustee's
    appointment and to restore the debtor to possession and management
    of the property of the estate and to operation of the debtor's
    business. Section 1104(a) provides that this section does not apply
    in the case of a public company, for which the appointment of a
    trustee is mandatory.

                          HOUSE REPORT NO. 95-595                      
      This section authorizes the court to terminate the trustee's
    appointment and to restore the debtor to possession and management
    of the property of the estate, and to operation of the debtor's
    business. This section would permit the court to reverse its
    decision to order the appointment of a trustee in light of new
    evidence.

                                AMENDMENTS                            
      1986 - Pub. L. 99-554 inserted "or the United States trustee"
    after "party in interest".
      1984 - Pub. L. 98-353 substituted "estate and of the" for
    "estate, and".

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Effective date and applicability of amendment by Pub. L. 99-554
    dependent upon the judicial district involved, see section 302(d),
    (e) of Pub. L. 99-554, set out as a note under section 581 of Title
    28, Judiciary and Judicial Procedure.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1106                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1106. Duties of trustee and examiner

-STATUTE-
      (a) A trustee shall - 
        (1) perform the duties of the trustee, as specified in
      paragraphs (2), (5), (7), (8), (9), (10), (11), and (12) of
      section 704;
        (2) if the debtor has not done so, file the list, schedule, and
      statement required under section 521(1) of this title;
        (3) except to the extent that the court orders otherwise,
      investigate the acts, conduct, assets, liabilities, and financial
      condition of the debtor, the operation of the debtor's business
      and the desirability of the continuance of such business, and any
      other matter relevant to the case or to the formulation of a
      plan;
        (4) as soon as practicable - 
          (A) file a statement of any investigation conducted under
        paragraph (3) of this subsection, including any fact
        ascertained pertaining to fraud, dishonesty, incompetence,
        misconduct, mismanagement, or irregularity in the management of
        the affairs of the debtor, or to a cause of action available to
        the estate; and
          (B) transmit a copy or a summary of any such statement to any
        creditors' committee or equity security holders' committee, to
        any indenture trustee, and to such other entity as the court
        designates;

        (5) as soon as practicable, file a plan under section 1121 of
      this title, file a report of why the trustee will not file a
      plan, or recommend conversion of the case to a case under chapter
      7, 12, or 13 of this title or dismissal of the case;
        (6) for any year for which the debtor has not filed a tax
      return required by law, furnish, without personal liability, such
      information as may be required by the governmental unit with
      which such tax return was to be filed, in light of the condition
      of the debtor's books and records and the availability of such
      information;
        (7) after confirmation of a plan, file such reports as are
      necessary or as the court orders; and
        (8) if with respect to the debtor there is a claim for a
      domestic support obligation, provide the applicable notice
      specified in subsection (c).

      (b) An examiner appointed under section 1104(d) of this title
    shall perform the duties specified in paragraphs (3) and (4) of
    subsection (a) of this section, and, except to the extent that the
    court orders otherwise, any other duties of the trustee that the
    court orders the debtor in possession not to perform.
      (c)(1) In a case described in subsection (a)(8) to which
    subsection (a)(8) applies, the trustee shall - 
        (A)(i) provide written notice to the holder of the claim
      described in subsection (a)(8) of such claim and of the right of
      such holder to use the services of the State child support
      enforcement agency established under sections 464 and 466 of the
      Social Security Act for the State in which such holder resides,
      for assistance in collecting child support during and after the
      case under this title; and
        (ii) include in the notice required by clause (i) the address
      and telephone number of such State child support enforcement
      agency;
        (B)(i) provide written notice to such State child support
      enforcement agency of such claim; and
        (ii) include in the notice required by clause (i) the name,
      address, and telephone number of such holder; and
        (C) at such time as the debtor is granted a discharge under
      section 1141, provide written notice to such holder and to such
      State child support enforcement agency of - 
          (i) the granting of the discharge;
          (ii) the last recent known address of the debtor;
          (iii) the last recent known name and address of the debtor's
        employer; and
          (iv) the name of each creditor that holds a claim that - 
            (I) is not discharged under paragraph (2), (4), or (14A) of
          section 523(a); or
            (II) was reaffirmed by the debtor under section 524(c).

      (2)(A) The holder of a claim described in subsection (a)(8) or
    the State child enforcement support agency of the State in which
    such holder resides may request from a creditor described in
    paragraph (1)(C)(iv) the last known address of the debtor.
      (B) Notwithstanding any other provision of law, a creditor that
    makes a disclosure of a last known address of a debtor in
    connection with a request made under subparagraph (A) shall not be
    liable by reason of making such disclosure.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2628; Pub. L. 98-353, title
    III, Secs. 311(b)(1), 502, July 10, 1984, 98 Stat. 355, 384; Pub.
    L. 99-554, title II, Sec. 257(c), Oct. 27, 1986, 100 Stat. 3114;
    Pub. L. 103-394, title II, Sec. 211(b), Oct. 22, 1994, 108 Stat.
    4125; Pub. L. 109-8, title II, Sec. 219(b), title IV, Sec. 446(c),
    title XI, Sec. 1105(b), Apr. 20, 2005, 119 Stat. 56, 118, 192.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                         SENATE REPORT NO. 95-989                     
      Subsection (a) of this section prescribes the trustee's duties.
    He is required to perform the duties of a trustee in a liquidation
    case specified in section 704 (2), (4), (6), (7), (8), and (9).
    These include reporting and informational duties, and
    accountability for all property received. Paragraph (2) of this
    subsection requires the trustee to file with the court, if the
    debtor has not done so, the list of creditors, schedule of assets
    and liabilities, and statement of affairs required under section
    521(1).
      Paragraph (3) of S. 1106 requires the trustee to investigate the
    acts, conduct, assets, liabilities, and financial condition of the
    debtor, the operation of the debtor's business, and the
    desirability of the continuance of the business, and any other
    matter relevant to the case or to the formulation of a plan.
    Paragraph (4) requires the trustee to report the results of his
    investigation to the court and to creditors' committees, equity
    security holders' committees, indenture trustees and any other
    entity the court designates.
      Paragraph (5) requires the trustee to file a plan or to report
    why a plan cannot be formulated, or to recommend conversion to
    liquidation or to an individual repayment plan case, or dismissal.
    It is anticipated that the trustee will consult with creditors and
    other parties in interest in the formulation of a plan, just as the
    debtor in possession would.
      Paragraph (6) [enacted as (7)] requires final reports by the
    trustee, as the court orders.
      Subsection (b) gives the trustee's investigative duties to an
    examiner, if one is appointed. The court is authorized to give the
    examiner additional duties as the circumstances warrant.
      Paragraphs (3), (4), and (5) of subsection (a) are derived from
    sections 165 and 169 of chapter X [sections 565 and 569 of former
    title 11].

-REFTEXT-
                            REFERENCES IN TEXT                        
      Sections 464 and 466 of the Social Security Act, referred to in
    subsec. (c)(1)(A)(i), are classified to sections 664 and 666,
    respectively, of Title 42, The Public Health and Welfare.


-MISC2-
                                AMENDMENTS                            
      2005 - Subsec. (a)(1). Pub. L. 109-8, Sec. 1105(b), substituted
    "(11), and (12)" for "and (11)".
      Pub. L. 109-8, Sec. 446(c), amended par. (1) generally. Prior to
    amendment, par. (1) read as follows: "perform the duties of a
    trustee specified in sections 704(2), 704(5), 704(7), 704(8), and
    704(9) of this title;".
      Subsec. (a)(8). Pub. L. 109-8, Sec. 219(b)(1), added par. (8).
      Subsec. (c). Pub. L. 109-8, Sec. 219(b)(2), added subsec. (c).
      1994 - Subsec. (b). Pub. L. 103-394 substituted "1104(d)" for
    "1104(c)".
      1986 - Subsec. (a)(5). Pub. L. 99-554 inserted reference to
    chapter 12.
      1984 - Subsec. (a)(1). Pub. L. 98-353, Sec. 311(b)(1),
    substituted "704(5), 704(7), 704(8), and 704(9)" for "704(4),
    704(6), 704(7) and 704(8)".
      Subsec. (b). Pub. L. 98-353, Sec. 502, inserted ", except to the
    extent that the court orders otherwise,".

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, and not applicable with respect to cases commenced under this
    title before such effective date, except as otherwise provided, see
    section 1501 of Pub. L. 109-8, set out as a note under section 101
    of this title.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Amendment by Pub. L. 99-554 effective 30 days after Oct. 27,
    1986, but not applicable to cases commenced under this title before
    that date, see section 302(a), (c)(1) of Pub. L. 99-554, set out as
    a note under section 581 of Title 28, Judiciary and Judicial
    Procedure.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

          PAYMENT OF CERTAIN BENEFITS TO RETIRED FORMER EMPLOYEES      
      Pub. L. 99-500, Sec. 101(b) [title VI, Sec. 608], Oct. 18, 1986,
    100 Stat. 1783-39, 1783-74, and Pub. L. 99-591, Sec. 101(b) [title
    VI, Sec. 608], Oct. 30, 1986, 100 Stat. 3341-39, 3341-74, as
    amended by Pub. L. 100-41, May 15, 1987, 101 Stat. 309; Pub. L. 100-
    99, Aug. 18, 1987, 101 Stat. 716; Pub. L. 100-334, Sec. 3(a), June
    16, 1988, 102 Stat. 613, provided that:
      "(a)(1) Subject to paragraphs (2), (3), (4), and (5), and
    notwithstanding title 11 of the United States Code, the trustee
    shall pay benefits to retired former employees under a plan, fund,
    or program maintained or established by the debtor prior to filing
    a petition (through the purchase of insurance or otherwise) for the
    purpose of providing medical, surgical, or hospital care benefits,
    or benefits in the event of sickness, accident, disability, or
    death.
      "(2) The level of benefits required to be paid by this subsection
    may be modified prior to confirmation of a plan under section 1129
    of such title if - 
        "(A) the trustee and an authorized representative of the former
      employees with respect to whom such benefits are payable agree to
      the modification of such benefit payments; or
        "(B) the court finds that a modification proposed by the
      trustee meets the standards of section 1113(b)(1)(A) of such
      title and the balance of the equities clearly favors the
      modification.
    If such benefits are covered by a collective bargaining agreement,
    the authorized representative shall be the labor organization that
    is signatory to such collective bargaining agreement unless there
    is a conflict of interest.
      "(3) The trustee shall pay benefits in accordance with this
    subsection until - 
        "(A) the dismissal of the case involved; or
        "(B) the effective date of a plan confirmed under section 1129
      of such title which provides for the continued payment after
      confirmation of the plan of all such benefits at the level
      established under paragraph (2) of this subsection, at any time
      prior to the confirmation of the plan, for the duration of the
      period the debtor (as defined in such title) has obligated itself
      to provide such benefits.
      "(4) No such benefits paid between the filing of a petition in a
    case covered by this section and the time a plan confirmed under
    section 1129 of such title with respect to such case becomes
    effective shall be deducted or offset from the amount allowed as
    claims for any benefits which remain unpaid, or from the amount to
    be paid under the plan with respect to such claims for unpaid
    benefits, whether such claims for unpaid benefits are based upon or
    arise from a right to future benefits or from any benefit not paid
    as a result of modifications allowed pursuant to this section.
      "(5) No claim for benefits covered by this section shall be
    limited by section 502(b)(7) of such title.
      "(b)(1) Notwithstanding any provision of title 11 of the United
    States Code, the trustee shall pay an allowable claim of any person
    for a benefit paid - 
        "(A) before the filing of the petition under title 11 of the
      United States Code; and
        "(B) directly or indirectly to a retired former employee under
      a plan, fund, or program described in subsection (a)(1);
    if, as determined by the court, such person is entitled to recover
    from such employee, or any provider of health care to such
    employee, directly or indirectly, the amount of such benefit for
    which such person receives no payment from the debtor.
      "(2) For purposes of paragraph (1), the term 'provider of health
    care' means a person who - 
        "(A) is the direct provider of health care (including a
      physician, dentist, nurse, podiatrist, optometrist, physician
      assistant, or ancillary personnel employed under the supervision
      of a physician); or
        "(B) administers a facility or institution (including a
      hospital, alcohol and drug abuse treatment facility, outpatient
      facility, or health maintenance organization) in which health
      care is provided.
      "(c) This section is effective with respect to cases commenced
    under chapter 11, of title 11, United States Code, in which a plan
    for reorganization has not been confirmed by the court and in which
    any such benefit is still being paid on October 2, 1986, and in
    cases that become subject to chapter 11, title 11, United States
    Code, after October 2, 1986 and before the date of the enactment of
    the Retiree Benefits Bankruptcy Protection Act of 1988 [June 16,
    1988].
      "(d) This section shall not apply during any period in which a
    case is subject to chapter 7, title 11, United States Code."
      Similar provisions were contained in Pub. L. 99-656, Sec. 2, Nov.
    14, 1986, 100 Stat. 3668, as amended by Pub. L. 100-41, May 15,
    1987, 101 Stat. 309; Pub. L. 100-99, Aug. 18, 1987, 101 Stat. 716,
    and were repealed by Pub. L. 100-334, Sec. 3(b), June 16, 1988, 102
    Stat. 614.

-End-



-CITE-
    11 USC Sec. 1107                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1107. Rights, powers, and duties of debtor in possession

-STATUTE-
      (a) Subject to any limitations on a trustee serving in a case
    under this chapter, and to such limitations or conditions as the
    court prescribes, a debtor in possession shall have all the rights,
    other than the right to compensation under section 330 of this
    title, and powers, and shall perform all the functions and duties,
    except the duties specified in sections 1106(a)(2), (3), and (4) of
    this title, of a trustee serving in a case under this chapter.
      (b) Notwithstanding section 327(a) of this title, a person is not
    disqualified for employment under section 327 of this title by a
    debtor in possession solely because of such person's employment by
    or representation of the debtor before the commencement of the
    case.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2628; Pub. L. 98-353, title
    III, Sec. 503, July 10, 1984, 98 Stat. 384.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      The House amendment adopts section 1107(b) of the Senate
    amendment which clarifies a point not covered by the House bill.

                         SENATE REPORT NO. 95-989                     
      This section places a debtor in possession in the shoes of a
    trustee in every way. The debtor is given the rights and powers of
    a chapter 11 trustee. He is required to perform the functions and
    duties of a chapter 11 trustee (except the investigative duties).
    He is also subject to any limitations on a chapter 11 trustee, and
    to such other limitations and conditions as the court prescribes
    cf. Wolf v. Weinstein, 372 U.S. 633, 649-650 (1963).

                                AMENDMENTS                            
      1984 - Subsec. (a). Pub. L. 98-353 substituted "on a trustee
    serving in a case" for "on a trustee".

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1108                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1108. Authorization to operate business

-STATUTE-
      Unless the court, on request of a party in interest and after
    notice and a hearing, orders otherwise, the trustee may operate the
    debtor's business.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2629; Pub. L. 98-353, title
    III, Sec. 504, July 10, 1984, 98 Stat. 384.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      The House amendment adopts section 1108 of the House bill in
    preference to the style of an identical substantive provision
    contained in the Senate amendment. Throughout title 11 references
    to a "trustee" is read to include other parties under various
    sections of the bill. For example, section 1107 applies to give the
    debtor in possession all the rights and powers of a trustee in a
    case under chapter 11; this includes the power of the trustee to
    operate the debtor's business under section 1108.

                         SENATE REPORT NO. 95-989                     
      This section permits the debtor's business to continue to be
    operated, unless the court orders otherwise. Thus, in a
    reorganization case, operation of the business will be the rule,
    and it will not be necessary to go to the court to obtain an order
    authorizing operation.

                          HOUSE REPORT NO. 95-595                      
      This section does not presume that a trustee will be appointed to
    operate the business of the debtor. Rather, the power granted to
    trustee under this section is one of the powers that a debtor in
    possession acquires by virtue of proposed 11 U.S.C. 1107.

                                AMENDMENTS                            
      1984 - Pub. L. 98-353 inserted ", on request of a party in
    interest and after notice and a hearing,".

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1109                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1109. Right to be heard

-STATUTE-
      (a) The Securities and Exchange Commission may raise and may
    appear and be heard on any issue in a case under this chapter, but
    the Securities and Exchange Commission may not appeal from any
    judgment, order, or decree entered in the case.
      (b) A party in interest, including the debtor, the trustee, a
    creditors' committee, an equity security holders' committee, a
    creditor, an equity security holder, or any indenture trustee, may
    raise and may appear and be heard on any issue in a case under this
    chapter.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2629.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1109 of the House amendment represents a compromise
    between comparable provisions in the House bill and Senate
    amendment. As previously discussed the section gives the Securities
    and Exchange Commission the right to appear and be heard and to
    raise any issue in a case under chapter 11; however, the Securities
    and Exchange Commission is not a party in interest and the
    Commission may not appeal from any judgment, order, or decree
    entered in the case. Under section 1109(b) a party in interest,
    including the debtor, the trustee, creditors committee, equity
    securities holders committee, a creditor, an equity security
    holder, or an indentured trustee, may raise and may appear and be
    heard on any issue in a case under chapter 11. Section 1109(c) of
    the Senate amendment has been moved to subchapter IV pertaining to
    Railroad Reorganizations.

                         SENATE REPORT NO. 95-989                     
      Subsection (a) provides, in unqualified terms, that any creditor,
    equity security holder, or an indenture trustee shall have the
    right to be heard as a party in interest under this chapter in
    person, by an attorney, or by a committee. It is derived from
    section 206 of chapter X ([former] 11 U.S.C. 606).
      Subsection (b) provides that the Securities and Exchange
    Commission may appear by filing an appearance in a case of a public
    company and may appear in other cases if authorized or requested by
    the court. As a party in interest in either case, the Commission
    may raise and be heard on any issue. The Commission may not appeal
    from a judgment, order, or decree in a case, but may participate in
    any appeal by any other party in interest. This is the present law
    under section 208 of chapter X ([former] 11 U.S.C. 608).

                          HOUSE REPORT NO. 95-595                      
      Section 1109 authorizes the Securities and Exchange Commission
    and any indenture trustee to intervene in the case at any time on
    any issue. They may raise an issue or may appear and be heard on an
    issue that is raised by someone else. The section, following
    current law, denies the right of appeal to the Securities and
    Exchange Commission. It does not, however, prevent the Commission
    from joining or participating in an appeal taken by a true party in
    interest. The Commission is merely prevented from initiating the
    appeal in any capacity.

-End-



-CITE-
    11 USC Sec. 1110                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1110. Aircraft equipment and vessels

-STATUTE-
      (a)(1) Except as provided in paragraph (2) and subject to
    subsection (b), the right of a secured party with a security
    interest in equipment described in paragraph (3), or of a lessor or
    conditional vendor of such equipment, to take possession of such
    equipment in compliance with a security agreement, lease, or
    conditional sale contract, and to enforce any of its other rights
    or remedies, under such security agreement, lease, or conditional
    sale contract, to sell, lease, or otherwise retain or dispose of
    such equipment, is not limited or otherwise affected by any other
    provision of this title or by any power of the court.
      (2) The right to take possession and to enforce the other rights
    and remedies described in paragraph (1) shall be subject to section
    362 if - 
        (A) before the date that is 60 days after the date of the order
      for relief under this chapter, the trustee, subject to the
      approval of the court, agrees to perform all obligations of the
      debtor under such security agreement, lease, or conditional sale
      contract; and
        (B) any default, other than a default of a kind specified in
      section 365(b)(2), under such security agreement, lease, or
      conditional sale contract - 
          (i) that occurs before the date of the order is cured before
        the expiration of such 60-day period;
          (ii) that occurs after the date of the order and before the
        expiration of such 60-day period is cured before the later of -
        
            (I) the date that is 30 days after the date of the default;
          or
            (II) the expiration of such 60-day period; and

          (iii) that occurs on or after the expiration of such 60-day
        period is cured in compliance with the terms of such security
        agreement, lease, or conditional sale contract, if a cure is
        permitted under that agreement, lease, or contract.

      (3) The equipment described in this paragraph - 
        (A) is - 
          (i) an aircraft, aircraft engine, propeller, appliance, or
        spare part (as defined in section 40102 of title 49) that is
        subject to a security interest granted by, leased to, or
        conditionally sold to a debtor that, at the time such
        transaction is entered into, holds an air carrier operating
        certificate issued pursuant to chapter 447 of title 49 for
        aircraft capable of carrying 10 or more individuals or 6,000
        pounds or more of cargo; or
          (ii) a vessel documented under chapter 121 of title 46 that
        is subject to a security interest granted by, leased to, or
        conditionally sold to a debtor that is a water carrier that, at
        the time such transaction is entered into, holds a certificate
        of public convenience and necessity or permit issued by the
        Department of Transportation; and

        (B) includes all records and documents relating to such
      equipment that are required, under the terms of the security
      agreement, lease, or conditional sale contract, to be surrendered
      or returned by the debtor in connection with the surrender or
      return of such equipment.

      (4) Paragraph (1) applies to a secured party, lessor, or
    conditional vendor acting in its own behalf or acting as trustee or
    otherwise in behalf of another party.
      (b) The trustee and the secured party, lessor, or conditional
    vendor whose right to take possession is protected under subsection
    (a) may agree, subject to the approval of the court, to extend the
    60-day period specified in subsection (a)(1).
      (c)(1) In any case under this chapter, the trustee shall
    immediately surrender and return to a secured party, lessor, or
    conditional vendor, described in subsection (a)(1), equipment
    described in subsection (a)(3), if at any time after the date of
    the order for relief under this chapter such secured party, lessor,
    or conditional vendor is entitled pursuant to subsection (a)(1) to
    take possession of such equipment and makes a written demand for
    such possession to the trustee.
      (2) At such time as the trustee is required under paragraph (1)
    to surrender and return equipment described in subsection (a)(3),
    any lease of such equipment, and any security agreement or
    conditional sale contract relating to such equipment, if such
    security agreement or conditional sale contract is an executory
    contract, shall be deemed rejected.
      (d) With respect to equipment first placed in service on or
    before October 22, 1994, for purposes of this section - 
        (1) the term "lease" includes any written agreement with
      respect to which the lessor and the debtor, as lessee, have
      expressed in the agreement or in a substantially contemporaneous
      writing that the agreement is to be treated as a lease for
      Federal income tax purposes; and
        (2) the term "security interest" means a purchase-money
      equipment security interest.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2629; Pub. L. 103-272, Sec.
    5(c), July 5, 1994, 108 Stat. 1373; Pub. L. 103-394, title II, Sec.
    201(a), Oct. 22, 1994, 108 Stat. 4119; Pub. L. 106-181, title VII,
    Sec. 744(b), Apr. 5, 2000, 114 Stat. 177; Pub. L. 109-304, Sec.
    17(b)(2), Oct. 6, 2006, 120 Stat. 1707.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1110 of the House amendment adopts an identical provision
    contained in the House bill without modifications contained in the
    Senate amendment. This section protects a limited class of
    financiers of aircraft and vessels and is intended to be narrowly
    construed to prevent secured parties or lessors from gaining the
    protection of the section unless the interest of such lessor or
    secured party is explicitly enumerated therein. It should be
    emphasized that under section 1110(a) a debtor in possession or
    trustee is given 60 days after the order for relief in a case under
    chapter 11, to have an opportunity to comply with the provisions of
    section 1110(a).
      During this time the automatic stay will apply and may not be
    lifted prior to the expiration of the 60-day period. Under section
    1110(b), the debtor and secured party or lessor are given an
    opportunity to extend the 60-day period, but no right to reduce the
    period is intended. It should additionally be noted that under
    section 1110(a) the trustee or debtor in possession is not required
    to assume the executory contract or unexpired lease under section
    1110; rather, if the trustee or debtor in possession complies with
    the requirements of section 1110(a), the trustee or debtor in
    possession is entitled to retain the aircraft or vessels subject to
    the normal requirements of section 365. The discussion regarding
    aircraft and vessels likewise applies with respect to railroad
    rolling stock in a railroad reorganization under section 1168.

                         SENATE REPORT NO. 95-989                     
      This section, to a large degree, preserves the protection given
    lessors and conditional vendors of aircraft to a certificated air
    carrier or of vessels to a certificated water carrier under section
    116(5) and 116(6) of present Chapter X [section 516(5) and (6) of
    former title 11]. It is modified to conform with the consolidation
    of Chapters X and XI [chapters 10 and 11 of former title 11] and
    with the new chapter 11 generally. It is also modified to give the
    trustee in a reorganization case an opportunity to continue in
    possession of the equipment in question by curing defaults and by
    making the required lease or purchase payments. This removes the
    absolute veto power over a reorganization that lessors and
    conditional vendors have under present law, while entitling them to
    protection of their investment.
      The section overrides the automatic stay or any power of the
    court to enjoin taking of possession of certain leased,
    conditionally sold, or liened equipment, unless, the trustee agrees
    to perform the debtor's obligations and cures all prior defaults
    (other than defaults under ipso facto or bankruptcy clauses) within
    60 days after the order for relief. The trustee and the equipment
    financer are permitted to extend the 60-day period by agreement.
    During the first 60 days, the automatic stay will apply to prevent
    foreclosure unless the creditor gets relief from the stay.
      The effect of this section will be the same if the debtor has
    granted the security interest to the financer or if the debtor is
    leasing equipment from a financer that has leveraged the lease and
    leased the equipment subject to a security interest of a third
    party.

                                AMENDMENTS                            
      2006 - Subsec. (a)(3)(A)(ii). Pub. L. 109-304 substituted "vessel
    documented under chapter 121 of title 46" for "documented vessel
    (as defined in section 30101(1) of title 46)".
      2000 - Pub. L. 106-181 amended section catchline and text
    generally, substituting present provisions consisting of subsecs.
    (a) to (d) for former subsecs. (a) to (c) which contained somewhat
    similar provisions.
      1994 - Pub. L. 103-394 amended section generally. Prior to
    amendment, section read as follows:
      "(a) The right of a secured party with a purchase-money equipment
    security interest in, or of a lessor or conditional vendor of,
    whether as trustee or otherwise, aircraft, aircraft engines,
    propellers, appliances, or spare parts, as defined in section
    40102(a) of title 49, or vessels of the United States, as defined
    in section 30101 of title 46, that are subject to a purchase-money
    equipment security interest granted by, leased to, or conditionally
    sold to, a debtor that is an air carrier operating under a
    certificate of convenience and necessity issued by the Secretary of
    Transportation, or a water carrier that holds a certificate of
    public convenience and necessity or permit issued by the Interstate
    Commerce Commission, as the case may be, to take possession of such
    equipment in compliance with the provisions of a purchase-money
    equipment security agreement, lease, or conditional sale contract,
    as the case may be, is not affected by section 362 or 363 of this
    title or by any power of the court to enjoin such taking of
    possession, unless - 
        "(1) before 60 days after the date of the order for relief
      under this chapter, the trustee, subject to the court's approval,
      agrees to perform all obligations of the debtor that become due
      on or after such date under such security agreement, lease, or
      conditional sale contract, as the case may be; and
        "(2) any default, other than a default of a kind specified in
      section 365(b)(2) of this title, under such security agreement,
      lease, or conditional sale contract, as the case may be - 
          "(A) that occurred before such date is cured before the
        expiration of such 60-day period; and
          "(B) that occurs after such date is cured before the later of
        - 
            "(i) 30 days after the date of such default; and
            "(ii) the expiration of such 60-day period.
      "(b) The trustee and the secured party, lessor, or conditional
    vendor, as the case may be, whose right to take possession is
    protected under subsection (a) of this section may agree, subject
    to the court's approval, to extend the 60-day period specified in
    subsection (a)(1) of this section."
      Subsec. (a). Pub. L. 103-272 substituted "section 40102(a) of
    title 49" for "section 101 of the Federal Aviation Act of 1958 (49
    U.S.C. 1301)", "section 30101 of title 46" for "subsection B(4) of
    the Ship Mortgage Act, 1920 (46 U.S.C. 911(4))", and "Secretary of
    Transportation" for "Civil Aeronautics Board".

                     EFFECTIVE DATE OF 2000 AMENDMENT                 
      Amendment by Pub. L. 106-181 applicable only to fiscal years
    beginning after Sept. 30, 1999, see section 3 of Pub. L. 106-181,
    set out as a note under section 106 of Title 49, Transportation.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, with this
    section, as amended by section 201 of Pub. L. 103-394, applicable
    with respect to any lease, as defined by subsec. (c) of this
    section, entered into in connection with a settlement of any
    proceeding in any case pending under this title on Oct. 22, 1994,
    see section 702 of Pub. L. 103-394, set out as a note under section
    101 of this title.


-TRANS-
        ABOLITION OF INTERSTATE COMMERCE COMMISSION AND TRANSFER OF
                                 FUNCTIONS
      Interstate Commerce Commission abolished and functions of
    Commission transferred, except as otherwise provided in Pub. L. 104-
    88, to Surface Transportation Board effective Jan. 1, 1996, by
    section 702 of Title 49, Transportation, and section 101 of Pub. L.
    104-88, set out as a note under section 701 of Title 49. References
    to Interstate Commerce Commission deemed to refer to Surface
    Transportation Board, a member or employee of the Board, or
    Secretary of Transportation, as appropriate, see section 205 of
    Pub. L. 104-88, set out as a note under section 701 of Title 49.


-MISC2-
                   AIRCRAFT EQUIPMENT SETTLEMENT LEASES               
      Pub. L. 103-7, Mar. 17, 1993, 107 Stat. 36, provided that:

      "SECTION 1. SHORT TITLE.
      "This Act may be cited as the 'Aircraft Equipment Settlement
    Leases Act of 1993'.

      "SEC. 2. TREATMENT OF AIRCRAFT EQUIPMENT SETTLEMENT LEASES WITH
        THE PENSION BENEFIT GUARANTY CORPORATION.
      "In the case of any settlement of liability under title IV of the
    Employee Retirement Income Security Act of 1974 [29 U.S.C. 1301 et
    seq.] entered into by the Pension Benefit Guaranty Corporation and
    one or more other parties, if - 
        "(1) such settlement was entered into before, on, or after the
      date of the enactment of this Act [Mar. 17, 1993],
        "(2) at least one party to such settlement was a debtor under
      title 11 of the United States Code, and
        "(3) an agreement that is entered into as part of such
      settlement provides that such agreement is to be treated as a
      lease,
    then such agreement shall be treated as a lease for purposes of
    section 1110 of such title 11."

-End-



-CITE-
    11 USC Sec. 1111                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1111. Claims and interests

-STATUTE-
      (a) A proof of claim or interest is deemed filed under section
    501 of this title for any claim or interest that appears in the
    schedules filed under section 521(1) or 1106(a)(2) of this title,
    except a claim or interest that is scheduled as disputed,
    contingent, or unliquidated.
      (b)(1)(A) A claim secured by a lien on property of the estate
    shall be allowed or disallowed under section 502 of this title the
    same as if the holder of such claim had recourse against the debtor
    on account of such claim, whether or not such holder has such
    recourse, unless - 
        (i) the class of which such claim is a part elects, by at least
      two-thirds in amount and more than half in number of allowed
      claims of such class, application of paragraph (2) of this
      subsection; or
        (ii) such holder does not have such recourse and such property
      is sold under section 363 of this title or is to be sold under
      the plan.

      (B) A class of claims may not elect application of paragraph (2)
    of this subsection if - 
        (i) the interest on account of such claims of the holders of
      such claims in such property is of inconsequential value; or
        (ii) the holder of a claim of such class has recourse against
      the debtor on account of such claim and such property is sold
      under section 363 of this title or is to be sold under the plan.

      (2) If such an election is made, then notwithstanding section
    506(a) of this title, such claim is a secured claim to the extent
    that such claim is allowed.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2630.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      A discussion of section 1111(b) of the House amendment is best
    considered in the context of confirmation and will therefore, be
    discussed in connection with section 1129.

                         SENATE REPORT NO. 95-989                     
      This section dispenses with the need for every creditor and
    equity security holder to file a proof of claim or interest in a
    reorganization case. Usually the debtor's schedules are accurate
    enough that they will suffice to determine the claims or interests
    allowable in the case. Thus, the section specifies that any claim
    or interest included on the debtor's schedules is deemed filed
    under section 501. This does not apply to claims or interests that
    are scheduled as disputed, contingent, or unliquidated.

-End-



-CITE-
    11 USC Sec. 1112                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1112. Conversion or dismissal

-STATUTE-
      (a) The debtor may convert a case under this chapter to a case
    under chapter 7 of this title unless - 
        (1) the debtor is not a debtor in possession;
        (2) the case originally was commenced as an involuntary case
      under this chapter; or
        (3) the case was converted to a case under this chapter other
      than on the debtor's request.

      (b)(1) Except as provided in paragraph (2) of this subsection,
    subsection (c) of this section, and section 1104(a)(3), on request
    of a party in interest, and after notice and a hearing, absent
    unusual circumstances specifically identified by the court that
    establish that the requested conversion or dismissal is not in the
    best interests of creditors and the estate, the court shall convert
    a case under this chapter to a case under chapter 7 or dismiss a
    case under this chapter, whichever is in the best interests of
    creditors and the estate, if the movant establishes cause.
      (2) The relief provided in paragraph (1) shall not be granted
    absent unusual circumstances specifically identified by the court
    that establish that such relief is not in the best interests of
    creditors and the estate, if the debtor or another party in
    interest objects and establishes that - 
        (A) there is a reasonable likelihood that a plan will be
      confirmed within the timeframes established in sections 1121(e)
      and 1129(e) of this title, or if such sections do not apply,
      within a reasonable period of time; and
        (B) the grounds for granting such relief include an act or
      omission of the debtor other than under paragraph (4)(A) - 
          (i) for which there exists a reasonable justification for the
        act or omission; and
          (ii) that will be cured within a reasonable period of time
        fixed by the court.

      (3) The court shall commence the hearing on a motion under this
    subsection not later than 30 days after filing of the motion, and
    shall decide the motion not later than 15 days after commencement
    of such hearing, unless the movant expressly consents to a
    continuance for a specific period of time or compelling
    circumstances prevent the court from meeting the time limits
    established by this paragraph.
      (4) For purposes of this subsection, the term "cause" includes - 
        (A) substantial or continuing loss to or diminution of the
      estate and the absence of a reasonable likelihood of
      rehabilitation;
        (B) gross mismanagement of the estate;
        (C) failure to maintain appropriate insurance that poses a risk
      to the estate or to the public;
        (D) unauthorized use of cash collateral substantially harmful
      to 1 or more creditors;
        (E) failure to comply with an order of the court;
        (F) unexcused failure to satisfy timely any filing or reporting
      requirement established by this title or by any rule applicable
      to a case under this chapter;
        (G) failure to attend the meeting of creditors convened under
      section 341(a) or an examination ordered under rule 2004 of the
      Federal Rules of Bankruptcy Procedure without good cause shown by
      the debtor;
        (H) failure timely to provide information or attend meetings
      reasonably requested by the United States trustee (or the
      bankruptcy administrator, if any);
        (I) failure timely to pay taxes owed after the date of the
      order for relief or to file tax returns due after the date of the
      order for relief;
        (J) failure to file a disclosure statement, or to file or
      confirm a plan, within the time fixed by this title or by order
      of the court;
        (K) failure to pay any fees or charges required under chapter
      123 of title 28;
        (L) revocation of an order of confirmation under section 1144;
        (M) inability to effectuate substantial consummation of a
      confirmed plan;
        (N) material default by the debtor with respect to a confirmed
      plan;
        (O) termination of a confirmed plan by reason of the occurrence
      of a condition specified in the plan; and
        (P) failure of the debtor to pay any domestic support
      obligation that first becomes payable after the date of the
      filing of the petition.

      (c) The court may not convert a case under this chapter to a case
    under chapter 7 of this title if the debtor is a farmer or a
    corporation that is not a moneyed, business, or commercial
    corporation, unless the debtor requests such conversion.
      (d) The court may convert a case under this chapter to a case
    under chapter 12 or 13 of this title only if - 
        (1) the debtor requests such conversion;
        (2) the debtor has not been discharged under section 1141(d) of
      this title; and
        (3) if the debtor requests conversion to chapter 12 of this
      title, such conversion is equitable.

      (e) Except as provided in subsections (c) and (f), the court, on
    request of the United States trustee, may convert a case under this
    chapter to a case under chapter 7 of this title or may dismiss a
    case under this chapter, whichever is in the best interest of
    creditors and the estate if the debtor in a voluntary case fails to
    file, within fifteen days after the filing of the petition
    commencing such case or such additional time as the court may
    allow, the information required by paragraph (1) of section 521,
    including a list containing the names and addresses of the holders
    of the twenty largest unsecured claims (or of all unsecured claims
    if there are fewer than twenty unsecured claims), and the
    approximate dollar amounts of each of such claims.
      (f) Notwithstanding any other provision of this section, a case
    may not be converted to a case under another chapter of this title
    unless the debtor may be a debtor under such chapter.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2630; Pub. L. 98-353, title
    III, Sec. 505, July 10, 1984, 98 Stat. 384; Pub. L. 99-554, title
    II, Secs. 224, 256, Oct. 27, 1986, 100 Stat. 3102, 3114; Pub. L.
    103-394, title II, Sec. 217(c), Oct. 22, 1994, 108 Stat. 4127; Pub.
    L. 109-8, title IV, Sec. 442(a), Apr. 20, 2005, 119 Stat. 115.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1112 of the House amendment represents a compromise
    between the House bill and Senate amendment with respect to the
    factors constituting cause for conversion of a case to chapter 7 or
    dismissal. The House amendment combines two separate factors
    contained in section 1112(b)(1) and section 1112(b)(2) of the
    Senate amendment. Section 1112(b)(1) of the House amendment permits
    the court to convert a case to a case under chapter 7 or to dismiss
    the case if there is both a continuing loss to or diminution of the
    estate and the absence of a reasonable likelihood of
    rehabilitation; requiring both factors to be present simultaneously
    represents a compromise from the House bill which eliminated both
    factors from the list of causes enumerated.
      Sections 1112(c) and 1112(d) of the House amendment is derived
    from the House bill which differs from the Senate amendment only as
    a matter of style.

                         SENATE REPORT NO. 95-989                     
      This section brings together all of the conversion and dismissal
    rules for chapter 11 cases. Subsection (a) gives the debtor an
    absolute right to convert a voluntarily commenced chapter 11 case
    in which the debtor remains in possession to a liquidation case.
      Subsection (b) gives wide discretion to the court to make an
    appropriate disposition of the case sua sponte or upon motion of a
    party in interest, or the court is permitted to convert a
    reorganization case to a liquidation case or to dismiss the case,
    whichever is in the best interest of creditors and the estate, but
    only for cause. Cause may include the continuing loss to or
    dimunition [sic] of the estate of an insolvent debtor, the absence
    of a reasonable likelihood of rehabilitation, the inability to
    effectuate a plan, unreasonable delay by the debtor that is
    prejudicial to creditors, failure to file a plan within the
    appropriate time limits, denial of confirmation and any opportunity
    to modify or propose a new plan, revocation of confirmation and
    denial of confirmation of a modified plan, inability to effectuate
    substantial consummation of a confirmed plan, material default by
    the debtor under the plan, and termination of the plan by reason of
    the occurrence of a condition specified in the plan. This list is
    not exhaustive. The court will be able to consider other factors as
    they arise, and to use its equitable powers to reach an appropriate
    result in individual cases. The power of the court to act sua
    sponte should be used sparingly and only in emergency situations.
      Subsection (c) prohibits the court from converting a case
    concerning a farmer or an eleemosynary institution to a liquidation
    case unless the debtor consents.
      Subsection (d) prohibits conversion of a reorganization case to a
    chapter 13 case unless the debtor requests conversion and his
    discharge has not been granted or has been revoked.
      Subsection (e) reinforces section 109 by prohibiting conversion
    of a chapter 11 case to a case under another chapter proceedings
    under which the debtor is not permitted to proceed.

-REFTEXT-
                            REFERENCES IN TEXT                        
      The Federal Rules of Bankruptcy Procedure, referred to in subsec.
    (b)(4)(G), are set out in the Appendix to this title.


-MISC2-
                                AMENDMENTS                            
      2005 - Subsec. (b). Pub. L. 109-8 added subsec. (b) and struck
    out former subsec. (b) which consisted of introductory provisions
    and pars. (1) to (10) relating to conversion of cases under this
    chapter to chapter 7 cases or dismissal for cause in the best
    interest of creditors and the estate.
      1994 - Subsec. (b). Pub. L. 103-394 inserted "or bankruptcy
    administrator" after "United States trustee".
      1986 - Subsec. (b). Pub. L. 99-554, Sec. 224(1)(A), inserted "or
    the United States trustee" after "party in interest".
      Subsec. (b)(10). Pub. L. 99-554, Sec. 224(1)(B)-(D), added par.
    (10).
      Subsec. (d). Pub. L. 99-554, Sec. 256, inserted reference to
    chapter 12 and added par. (3).
      Subsecs. (e), (f). Pub. L. 99-554, Sec. 224(2), (3), added
    subsec. (e) and redesignated former subsec. (e) as (f).
      1984 - Subsec. (a)(2). Pub. L. 98-353, Sec. 505(a)(1),
    substituted "originally was commenced as an involuntary case" for
    "is an involuntary case originally commenced".
      Subsec. (a)(3). Pub. L. 98-353, Sec. 505(a)(2), substituted
    "other than on" for "on other than".
      Subsec. (b)(5). Pub. L. 98-353, Sec. 505(b)(1), inserted "a
    request made for" before "additional".
      Subsec. (b)(8). Pub. L. 98-353, Sec. 505(b)(2), substituted "or"
    for "and".

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, and not applicable with respect to cases commenced under this
    title before such effective date, except as otherwise provided, see
    section 1501 of Pub. L. 109-8, set out as a note under section 101
    of this title.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Effective date and applicability of amendment by section 224 of
    Pub. L. 99-554 dependent upon the judicial district involved, see
    section 302(d), (e) of Pub. L. 99-554, set out as a note under
    section 581 of Title 28, Judiciary and Judicial Procedure.
      Amendment by section 256 of Pub. L. 99-554 effective 30 days
    after Oct. 27, 1986, but not applicable to cases commenced under
    this title before that date, see section 302(a), (c)(1) of Pub. L.
    99-554.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1113                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1113. Rejection of collective bargaining agreements

-STATUTE-
      (a) The debtor in possession, or the trustee if one has been
    appointed under the provisions of this chapter, other than a
    trustee in a case covered by subchapter IV of this chapter and by
    title I of the Railway Labor Act, may assume or reject a collective
    bargaining agreement only in accordance with the provisions of this
    section.
      (b)(1) Subsequent to filing a petition and prior to filing an
    application seeking rejection of a collective bargaining agreement,
    the debtor in possession or trustee (hereinafter in this section
    "trustee" shall include a debtor in possession), shall - 
        (A) make a proposal to the authorized representative of the
      employees covered by such agreement, based on the most complete
      and reliable information available at the time of such proposal,
      which provides for those necessary modifications in the employees
      benefits and protections that are necessary to permit the
      reorganization of the debtor and assures that all creditors, the
      debtor and all of the affected parties are treated fairly and
      equitably; and
        (B) provide, subject to subsection (d)(3), the representative
      of the employees with such relevant information as is necessary
      to evaluate the proposal.

      (2) During the period beginning on the date of the making of a
    proposal provided for in paragraph (1) and ending on the date of
    the hearing provided for in subsection (d)(1), the trustee shall
    meet, at reasonable times, with the authorized representative to
    confer in good faith in attempting to reach mutually satisfactory
    modifications of such agreement.
      (c) The court shall approve an application for rejection of a
    collective bargaining agreement only if the court finds that - 
        (1) the trustee has, prior to the hearing, made a proposal that
      fulfills the requirements of subsection (b)(1);
        (2) the authorized representative of the employees has refused
      to accept such proposal without good cause; and
        (3) the balance of the equities clearly favors rejection of
      such agreement.

      (d)(1) Upon the filing of an application for rejection the court
    shall schedule a hearing to be held not later than fourteen days
    after the date of the filing of such application. All interested
    parties may appear and be heard at such hearing. Adequate notice
    shall be provided to such parties at least ten days before the date
    of such hearing. The court may extend the time for the commencement
    of such hearing for a period not exceeding seven days where the
    circumstances of the case, and the interests of justice require
    such extension, or for additional periods of time to which the
    trustee and representative agree.
      (2) The court shall rule on such application for rejection within
    thirty days after the date of the commencement of the hearing. In
    the interests of justice, the court may extend such time for ruling
    for such additional period as the trustee and the employees'
    representative may agree to. If the court does not rule on such
    application within thirty days after the date of the commencement
    of the hearing, or within such additional time as the trustee and
    the employees' representative may agree to, the trustee may
    terminate or alter any provisions of the collective bargaining
    agreement pending the ruling of the court on such application.
      (3) The court may enter such protective orders, consistent with
    the need of the authorized representative of the employee to
    evaluate the trustee's proposal and the application for rejection,
    as may be necessary to prevent disclosure of information provided
    to such representative where such disclosure could compromise the
    position of the debtor with respect to its competitors in the
    industry in which it is engaged.
      (e) If during a period when the collective bargaining agreement
    continues in effect, and if essential to the continuation of the
    debtor's business, or in order to avoid irreparable damage to the
    estate, the court, after notice and a hearing, may authorize the
    trustee to implement interim changes in the terms, conditions,
    wages, benefits, or work rules provided by a collective bargaining
    agreement. Any hearing under this paragraph shall be scheduled in
    accordance with the needs of the trustee. The implementation of
    such interim changes shall not render the application for rejection
    moot.
      (f) No provision of this title shall be construed to permit a
    trustee to unilaterally terminate or alter any provisions of a
    collective bargaining agreement prior to compliance with the
    provisions of this section.

-SOURCE-
    (Added Pub. L. 98-353, title III, Sec. 541(a), July 10, 1984, 98
    Stat. 390.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      The Railway Labor Act, referred to in subsec. (a), is act May 20,
    1926, ch. 347, 44 Stat. 577, as amended. Title I of the Railway
    Labor Act is classified principally to subchapter I (Sec. 151 et
    seq.) of chapter 8 of Title 45, Railroads. For complete
    classification of this Act to the Code, see section 151 of Title 45
    and Tables.


-MISC1-
                              EFFECTIVE DATE                          
      Section 541(c) of Pub. L. 98-353 provided that: "The amendments
    made by this section [enacting this section] shall become effective
    upon the date of enactment of this Act [July 10, 1984]; provided
    that this section shall not apply to cases filed under title 11 of
    the United States Code which were commenced prior to the date of
    enactment of this section."

-End-



-CITE-
    11 USC Sec. 1114                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1114. Payment of insurance benefits to retired employees

-STATUTE-
      (a) For purposes of this section, the term "retiree benefits"
    means payments to any entity or person for the purpose of providing
    or reimbursing payments for retired employees and their spouses and
    dependents, for medical, surgical, or hospital care benefits, or
    benefits in the event of sickness, accident, disability, or death
    under any plan, fund, or program (through the purchase of insurance
    or otherwise) maintained or established in whole or in part by the
    debtor prior to filing a petition commencing a case under this
    title.
      (b)(1) For purposes of this section, the term "authorized
    representative" means the authorized representative designated
    pursuant to subsection (c) for persons receiving any retiree
    benefits covered by a collective bargaining agreement or subsection
    (d) in the case of persons receiving retiree benefits not covered
    by such an agreement.
      (2) Committees of retired employees appointed by the court
    pursuant to this section shall have the same rights, powers, and
    duties as committees appointed under sections 1102 and 1103 of this
    title for the purpose of carrying out the purposes of sections 1114
    and 1129(a)(13) and, as permitted by the court, shall have the
    power to enforce the rights of persons under this title as they
    relate to retiree benefits.
      (c)(1) A labor organization shall be, for purposes of this
    section, the authorized representative of those persons receiving
    any retiree benefits covered by any collective bargaining agreement
    to which that labor organization is signatory, unless (A) such
    labor organization elects not to serve as the authorized
    representative of such persons, or (B) the court, upon a motion by
    any party in interest, after notice and hearing, determines that
    different representation of such persons is appropriate.
      (2) In cases where the labor organization referred to in
    paragraph (1) elects not to serve as the authorized representative
    of those persons receiving any retiree benefits covered by any
    collective bargaining agreement to which that labor organization is
    signatory, or in cases where the court, pursuant to paragraph (1)
    finds different representation of such persons appropriate, the
    court, upon a motion by any party in interest, and after notice and
    a hearing, shall appoint a committee of retired employees if the
    debtor seeks to modify or not pay the retiree benefits or if the
    court otherwise determines that it is appropriate, from among such
    persons, to serve as the authorized representative of such persons
    under this section.
      (d) The court, upon a motion by any party in interest, and after
    notice and a hearing, shall order the appointment of a committee of
    retired employees if the debtor seeks to modify or not pay the
    retiree benefits or if the court otherwise determines that it is
    appropriate, to serve as the authorized representative, under this
    section, of those persons receiving any retiree benefits not
    covered by a collective bargaining agreement. The United States
    trustee shall appoint any such committee.
      (e)(1) Notwithstanding any other provision of this title, the
    debtor in possession, or the trustee if one has been appointed
    under the provisions of this chapter (hereinafter in this section
    "trustee" shall include a debtor in possession), shall timely pay
    and shall not modify any retiree benefits, except that - 
        (A) the court, on motion of the trustee or authorized
      representative, and after notice and a hearing, may order
      modification of such payments, pursuant to the provisions of
      subsections (g) and (h) of this section, or
        (B) the trustee and the authorized representative of the
      recipients of those benefits may agree to modification of such
      payments,

    after which such benefits as modified shall continue to be paid by
    the trustee.
      (2) Any payment for retiree benefits required to be made before a
    plan confirmed under section 1129 of this title is effective has
    the status of an allowed administrative expense as provided in
    section 503 of this title.
      (f)(1) Subsequent to filing a petition and prior to filing an
    application seeking modification of the retiree benefits, the
    trustee shall - 
        (A) make a proposal to the authorized representative of the
      retirees, based on the most complete and reliable information
      available at the time of such proposal, which provides for those
      necessary modifications in the retiree benefits that are
      necessary to permit the reorganization of the debtor and assures
      that all creditors, the debtor and all of the affected parties
      are treated fairly and equitably; and
        (B) provide, subject to subsection (k)(3), the representative
      of the retirees with such relevant information as is necessary to
      evaluate the proposal.

      (2) During the period beginning on the date of the making of a
    proposal provided for in paragraph (1), and ending on the date of
    the hearing provided for in subsection (k)(1), the trustee shall
    meet, at reasonable times, with the authorized representative to
    confer in good faith in attempting to reach mutually satisfactory
    modifications of such retiree benefits.
      (g) The court shall enter an order providing for modification in
    the payment of retiree benefits if the court finds that - 
        (1) the trustee has, prior to the hearing, made a proposal that
      fulfills the requirements of subsection (f);
        (2) the authorized representative of the retirees has refused
      to accept such proposal without good cause; and
        (3) such modification is necessary to permit the reorganization
      of the debtor and assures that all creditors, the debtor, and all
      of the affected parties are treated fairly and equitably, and is
      clearly favored by the balance of the equities;

    except that in no case shall the court enter an order providing for
    such modification which provides for a modification to a level
    lower than that proposed by the trustee in the proposal found by
    the court to have complied with the requirements of this subsection
    and subsection (f): Provided, however, That at any time after an
    order is entered providing for modification in the payment of
    retiree benefits, or at any time after an agreement modifying such
    benefits is made between the trustee and the authorized
    representative of the recipients of such benefits, the authorized
    representative may apply to the court for an order increasing those
    benefits which order shall be granted if the increase in retiree
    benefits sought is consistent with the standard set forth in
    paragraph (3): Provided further, That neither the trustee nor the
    authorized representative is precluded from making more than one
    motion for a modification order governed by this subsection.
      (h)(1) Prior to a court issuing a final order under subsection
    (g) of this section, if essential to the continuation of the
    debtor's business, or in order to avoid irreparable damage to the
    estate, the court, after notice and a hearing, may authorize the
    trustee to implement interim modifications in retiree benefits.
      (2) Any hearing under this subsection shall be scheduled in
    accordance with the needs of the trustee.
      (3) The implementation of such interim changes does not render
    the motion for modification moot.
      (i) No retiree benefits paid between the filing of the petition
    and the time a plan confirmed under section 1129 of this title
    becomes effective shall be deducted or offset from the amounts
    allowed as claims for any benefits which remain unpaid, or from the
    amounts to be paid under the plan with respect to such claims for
    unpaid benefits, whether such claims for unpaid benefits are based
    upon or arise from a right to future unpaid benefits or from any
    benefits not paid as a result of modifications allowed pursuant to
    this section.
      (j) No claim for retiree benefits shall be limited by section
    502(b)(7) of this title.
      (k)(1) Upon the filing of an application for modifying retiree
    benefits, the court shall schedule a hearing to be held not later
    than fourteen days after the date of the filing of such
    application. All interested parties may appear and be heard at such
    hearing. Adequate notice shall be provided to such parties at least
    ten days before the date of such hearing. The court may extend the
    time for the commencement of such hearing for a period not
    exceeding seven days where the circumstances of the case, and the
    interests of justice require such extension, or for additional
    periods of time to which the trustee and the authorized
    representative agree.
      (2) The court shall rule on such application for modification
    within ninety days after the date of the commencement of the
    hearing. In the interests of justice, the court may extend such
    time for ruling for such additional period as the trustee and the
    authorized representative may agree to. If the court does not rule
    on such application within ninety days after the date of the
    commencement of the hearing, or within such additional time as the
    trustee and the authorized representative may agree to, the trustee
    may implement the proposed modifications pending the ruling of the
    court on such application.
      (3) The court may enter such protective orders, consistent with
    the need of the authorized representative of the retirees to
    evaluate the trustee's proposal and the application for
    modification, as may be necessary to prevent disclosure of
    information provided to such representative where such disclosure
    could compromise the position of the debtor with respect to its
    competitors in the industry in which it is engaged.
      (l) If the debtor, during the 180-day period ending on the date
    of the filing of the petition - 
        (1) modified retiree benefits; and
        (2) was insolvent on the date such benefits were modified;

    the court, on motion of a party in interest, and after notice and a
    hearing, shall issue an order reinstating as of the date the
    modification was made, such benefits as in effect immediately
    before such date unless the court finds that the balance of the
    equities clearly favors such modification.
      (m) This section shall not apply to any retiree, or the spouse or
    dependents of such retiree, if such retiree's gross income for the
    twelve months preceding the filing of the bankruptcy petition
    equals or exceeds $250,000, unless such retiree can demonstrate to
    the satisfaction of the court that he is unable to obtain health,
    medical, life, and disability coverage for himself, his spouse, and
    his dependents who would otherwise be covered by the employer's
    insurance plan, comparable to the coverage provided by the employer
    on the day before the filing of a petition under this title.

-SOURCE-
    (Added Pub. L. 100-334, Sec. 2(a), June 16, 1988, 102 Stat. 610;
    amended Pub. L. 109-8, title IV, Sec. 447, title XIV, Sec. 1403,
    Apr. 20, 2005, 119 Stat. 118, 215.)


-MISC1-
                                AMENDMENTS                            
      2005 - Subsec. (d). Pub. L. 109-8, Sec. 447, substituted "order
    the appointment of" for "appoint" and inserted "The United States
    trustee shall appoint any such committee." at end.
      Subsecs. (l), (m). Pub. L. 109-8, Sec. 1403, added subsec. (l)
    and redesignated former subsec. (l) as (m).

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by section 1403 of Pub. L. 109-8 effective Apr. 20,
    2005, and applicable only with respect to cases commenced under
    this title on or after Apr. 20, 2005, see section 1406 of Pub. L.
    109-8, set out as a note under section 507 of this title.
      Amendment by section 447 of Pub. L. 109-8 effective 180 days
    after Apr. 20, 2005, and not applicable with respect to cases
    commenced under this title before such effective date, except as
    otherwise provided, see section 1501 of Pub. L. 109-8, set out as a
    note under section 101 of this title.

                              EFFECTIVE DATE                          
      Section 4 of Pub. L. 100-334 provided that:
      "(a) General Effective Date. - Except as provided in subsection
    (b), this Act and the amendments made by this Act [enacting this
    section, amending section 1129 of this title, enacting provisions
    set out as a note under section 101 of this title, and amending and
    repealing provisions set out as notes under section 1106 of this
    title] shall take effect on the date of the enactment of this Act
    [June 16, 1988].
      "(b) Application of Amendments. - The amendments made by section
    2 [enacting this section and amending section 1129 of this title]
    shall not apply with respect to cases commenced under title 11 of
    the United States Code before the date of the enactment of this Act
    [June 16, 1988]."

          PAYMENT OF CERTAIN BENEFITS TO RETIRED FORMER EMPLOYEES      
      For payment of benefits by bankruptcy trustee to retired
    employees in enumerated circumstances with respect to cases
    commenced under this chapter in which a plan for reorganization had
    not been confirmed by the court and in which any such benefit was
    still being paid on October 2, 1986, and in cases that became
    subject to this chapter after October 2, 1986, and before June 16,
    1988, see section 101(b) [title VI, Sec. 608] of Pub. L. 99-500,
    and Pub. L. 99-591, as amended, set out as a note under section
    1106 of this title.

-End-



-CITE-
    11 USC Sec. 1115                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1115. Property of the estate

-STATUTE-
      (a) In a case in which the debtor is an individual, property of
    the estate includes, in addition to the property specified in
    section 541 - 
        (1) all property of the kind specified in section 541 that the
      debtor acquires after the commencement of the case but before the
      case is closed, dismissed, or converted to a case under chapter
      7, 12, or 13, whichever occurs first; and
        (2) earnings from services performed by the debtor after the
      commencement of the case but before the case is closed,
      dismissed, or converted to a case under chapter 7, 12, or 13,
      whichever occurs first.

      (b) Except as provided in section 1104 or a confirmed plan or
    order confirming a plan, the debtor shall remain in possession of
    all property of the estate.

-SOURCE-
    (Added Pub. L. 109-8, title III, Sec. 321(a)(1), Apr. 20, 2005, 119
    Stat. 94.)


-MISC1-
                              EFFECTIVE DATE                          
      Section effective 180 days after Apr. 20, 2005, and not
    applicable with respect to cases commenced under this title before
    such effective date, except as otherwise provided, see section 1501
    of Pub. L. 109-8, set out as an Effective Date of 2005 Amendment
    note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1116                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER I - OFFICERS AND ADMINISTRATION

-HEAD-
    Sec. 1116. Duties of trustee or debtor in possession in small
      business cases

-STATUTE-
      In a small business case, a trustee or the debtor in possession,
    in addition to the duties provided in this title and as otherwise
    required by law, shall - 
        (1) append to the voluntary petition or, in an involuntary
      case, file not later than 7 days after the date of the order for
      relief - 
          (A) its most recent balance sheet, statement of operations,
        cash-flow statement, and Federal income tax return; or
          (B) a statement made under penalty of perjury that no balance
        sheet, statement of operations, or cash-flow statement has been
        prepared and no Federal tax return has been filed;

        (2) attend, through its senior management personnel and
      counsel, meetings scheduled by the court or the United States
      trustee, including initial debtor interviews, scheduling
      conferences, and meetings of creditors convened under section 341
      unless the court, after notice and a hearing, waives that
      requirement upon a finding of extraordinary and compelling
      circumstances;
        (3) timely file all schedules and statements of financial
      affairs, unless the court, after notice and a hearing, grants an
      extension, which shall not extend such time period to a date
      later than 30 days after the date of the order for relief, absent
      extraordinary and compelling circumstances;
        (4) file all postpetition financial and other reports required
      by the Federal Rules of Bankruptcy Procedure or by local rule of
      the district court;
        (5) subject to section 363(c)(2), maintain insurance customary
      and appropriate to the industry;
        (6)(A) timely file tax returns and other required government
      filings; and
        (B) subject to section 363(c)(2), timely pay all taxes entitled
      to administrative expense priority except those being contested
      by appropriate proceedings being diligently prosecuted; and
        (7) allow the United States trustee, or a designated
      representative of the United States trustee, to inspect the
      debtor's business premises, books, and records at reasonable
      times, after reasonable prior written notice, unless notice is
      waived by the debtor.

-SOURCE-
    (Added Pub. L. 109-8, title IV, Sec. 436(a), Apr. 20, 2005, 119
    Stat. 112.)

-REFTEXT-
                            REFERENCES IN TEXT                        
      The Federal Rules of Bankruptcy Procedure, referred to in par.
    (4), are set out in the Appendix to this title.


-MISC1-
                              EFFECTIVE DATE                          
      Section effective 180 days after Apr. 20, 2005, and not
    applicable with respect to cases commenced under this title before
    such effective date, except as otherwise provided, see section 1501
    of Pub. L. 109-8, set out as an Effective Date of 2005 Amendment
    note under section 101 of this title.

-End-


-CITE-
    11 USC SUBCHAPTER II - THE PLAN                             01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER II - THE PLAN

-HEAD-
                         SUBCHAPTER II - THE PLAN                     

-End-



-CITE-
    11 USC Sec. 1121                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER II - THE PLAN

-HEAD-
    Sec. 1121. Who may file a plan

-STATUTE-
      (a) The debtor may file a plan with a petition commencing a
    voluntary case, or at any time in a voluntary case or an
    involuntary case.
      (b) Except as otherwise provided in this section, only the debtor
    may file a plan until after 120 days after the date of the order
    for relief under this chapter.
      (c) Any party in interest, including the debtor, the trustee, a
    creditors' committee, an equity security holders' committee, a
    creditor, an equity security holder, or any indenture trustee, may
    file a plan if and only if - 
        (1) a trustee has been appointed under this chapter;
        (2) the debtor has not filed a plan before 120 days after the
      date of the order for relief under this chapter; or
        (3) the debtor has not filed a plan that has been accepted,
      before 180 days after the date of the order for relief under this
      chapter, by each class of claims or interests that is impaired
      under the plan.

      (d)(1) Subject to paragraph (2), on request of a party in
    interest made within the respective periods specified in
    subsections (b) and (c) of this section and after notice and a
    hearing, the court may for cause reduce or increase the 120-day
    period or the 180-day period referred to in this section.
      (2)(A) The 120-day period specified in paragraph (1) may not be
    extended beyond a date that is 18 months after the date of the
    order for relief under this chapter.
      (B) The 180-day period specified in paragraph (1) may not be
    extended beyond a date that is 20 months after the date of the
    order for relief under this chapter.
      (e) In a small business case - 
        (1) only the debtor may file a plan until after 180 days after
      the date of the order for relief, unless that period is - 
          (A) extended as provided by this subsection, after notice and
        a hearing; or
          (B) the court, for cause, orders otherwise;

        (2) the plan and a disclosure statement (if any) shall be filed
      not later than 300 days after the date of the order for relief;
      and
        (3) the time periods specified in paragraphs (1) and (2), and
      the time fixed in section 1129(e) within which the plan shall be
      confirmed, may be extended only if - 
          (A) the debtor, after providing notice to parties in interest
        (including the United States trustee), demonstrates by a
        preponderance of the evidence that it is more likely than not
        that the court will confirm a plan within a reasonable period
        of time;
          (B) a new deadline is imposed at the time the extension is
        granted; and
          (C) the order extending time is signed before the existing
        deadline has expired.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2631; Pub. L. 98-353, title
    III, Sec. 506, July 10, 1984, 98 Stat. 385; Pub. L. 99-554, title
    II, Sec. 283(u), Oct. 27, 1986, 100 Stat. 3118; Pub. L. 103-394,
    title II, Sec. 217(d), Oct. 22, 1994, 108 Stat. 4127; Pub. L. 109-
    8, title IV, Secs. 411, 437, Apr. 20, 2005, 119 Stat. 106, 113.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1121 of the House amendment is derived from section 1121
    of the House bill; section 1121(c)(1) will be satisfied
    automatically in a case under subchapter IV of title 11.

                         SENATE REPORT NO. 95-989                     
      Subsection (a) permits the debtor to file a reorganization plan
    with a petition commencing a voluntary case or at any time during a
    voluntary or involuntary case.
      Subsection (b) gives the debtor the exclusive right to file a
    plan during the first 120 days of the case. There are exceptions,
    however, enumerated in subsection (c). If a trustee has been
    appointed, if the debtor does not meet the 120-day deadline, or if
    the debtor fails to obtain the required consent within 180 days
    after the filing of the petition, any party in interest may propose
    a plan. This includes the debtor, the trustee, a creditors'
    committee, an equity security holders' committee, a creditor, an
    equity security holder, and an indenture trustee. The list is not
    exhaustive. In the case of a public company, a trustee is appointed
    within 10 days of the petition. In such a case, for all practical
    purposes, any party in interest may file a plan.
      Subsection (d) permits the court, for cause, to increase or
    reduce the 120-day and 180-day periods specified. Since, the debtor
    has an exclusive privilege for 6 months during which others may not
    file a plan, the granted extension should be based on a showing of
    some promise of probable success. An extension should not be
    employed as a tactical device to put pressure on parties in
    interest to yield to a plan they consider unsatisfactory.

                                AMENDMENTS                            
      2005 - Subsec. (d). Pub. L. 109-8, Sec. 411, designated existing
    provisions as par. (1), substituted "Subject to paragraph (2), on"
    for "On", and added par. (2).
      Subsec. (e). Pub. L. 109-8, Sec. 437, added subsec. (e) and
    struck out former subsec. (e) which read as follows: "In a case in
    which the debtor is a small business and elects to be considered a
    small business - 
        "(1) only the debtor may file a plan until after 100 days after
      the date of the order for relief under this chapter;
        "(2) all plans shall be filed within 160 days after the date of
      the order for relief; and
        "(3) on request of a party in interest made within the
      respective periods specified in paragraphs (1) and (2) and after
      notice and a hearing, the court may - 
          "(A) reduce the 100-day period or the 160-day period
        specified in paragraph (1) or (2) for cause; and
          "(B) increase the 100-day period specified in paragraph (1)
        if the debtor shows that the need for an increase is caused by
        circumstances for which the debtor should not be held
        accountable."
      1994 - Subsec. (e). Pub. L. 103-394 added subsec. (e).
      1986 - Subsec. (d). Pub. L. 99-554 inserted reference to
    subsection (b) of this section.
      1984 - Subsec. (c)(3). Pub. L. 98-353, Sec. 506(a), substituted
    "of claims or interests that is" for "the claims or interests of
    which are".
      Subsec. (d). Pub. L. 98-353, Sec. 506(b), inserted "made within
    the respective periods specified in subsection (c) of this
    section".

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, and not applicable with respect to cases commenced under this
    title before such effective date, except as otherwise provided, see
    section 1501 of Pub. L. 109-8, set out as a note under section 101
    of this title.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Amendment by Pub. L. 99-554 effective 30 days after Oct. 27,
    1986, see section 302(a) of Pub. L. 99-554, set out as a note under
    section 581 of Title 28, Judiciary and Judicial Procedure.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1122                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER II - THE PLAN

-HEAD-
    Sec. 1122. Classification of claims or interests

-STATUTE-
      (a) Except as provided in subsection (b) of this section, a plan
    may place a claim or an interest in a particular class only if such
    claim or interest is substantially similar to the other claims or
    interests of such class.
      (b) A plan may designate a separate class of claims consisting
    only of every unsecured claim that is less than or reduced to an
    amount that the court approves as reasonable and necessary for
    administrative convenience.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2631.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                         SENATE REPORT NO. 95-989                     
      This section codifies current case law surrounding the
    classification of claims and equity securities. It requires
    classification based on the nature of the claims or interests
    classified, and permits inclusion of claims or interests in a
    particular class only if the claim or interest being included is
    substantially similar to the other claims or interests of the
    class.
      Subsection (b), also a codification of existing practice,
    contains an exception. The plan may designate a separate class of
    claims consisting only of every unsecured claim that is less than
    or reduced to an amount that the court approves as reasonable and
    necessary for administrative convenience.

-End-



-CITE-
    11 USC Sec. 1123                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER II - THE PLAN

-HEAD-
    Sec. 1123. Contents of plan

-STATUTE-
      (a) Notwithstanding any otherwise applicable nonbankruptcy law, a
    plan shall - 
        (1) designate, subject to section 1122 of this title, classes
      of claims, other than claims of a kind specified in section
      507(a)(2), 507(a)(3), or 507(a)(8) of this title, and classes of
      interests;
        (2) specify any class of claims or interests that is not
      impaired under the plan;
        (3) specify the treatment of any class of claims or interests
      that is impaired under the plan;
        (4) provide the same treatment for each claim or interest of a
      particular class, unless the holder of a particular claim or
      interest agrees to a less favorable treatment of such particular
      claim or interest;
        (5) provide adequate means for the plan's implementation, such
      as - 
          (A) retention by the debtor of all or any part of the
        property of the estate;
          (B) transfer of all or any part of the property of the estate
        to one or more entities, whether organized before or after the
        confirmation of such plan;
          (C) merger or consolidation of the debtor with one or more
        persons;
          (D) sale of all or any part of the property of the estate,
        either subject to or free of any lien, or the distribution of
        all or any part of the property of the estate among those
        having an interest in such property of the estate;
          (E) satisfaction or modification of any lien;
          (F) cancellation or modification of any indenture or similar
        instrument;
          (G) curing or waiving of any default;
          (H) extension of a maturity date or a change in an interest
        rate or other term of outstanding securities;
          (I) amendment of the debtor's charter; or
          (J) issuance of securities of the debtor, or of any entity
        referred to in subparagraph (B) or (C) of this paragraph, for
        cash, for property, for existing securities, or in exchange for
        claims or interests, or for any other appropriate purpose;

        (6) provide for the inclusion in the charter of the debtor, if
      the debtor is a corporation, or of any corporation referred to in
      paragraph (5)(B) or (5)(C) of this subsection, of a provision
      prohibiting the issuance of nonvoting equity securities, and
      providing, as to the several classes of securities possessing
      voting power, an appropriate distribution of such power among
      such classes, including, in the case of any class of equity
      securities having a preference over another class of equity
      securities with respect to dividends, adequate provisions for the
      election of directors representing such preferred class in the
      event of default in the payment of such dividends;
        (7) contain only provisions that are consistent with the
      interests of creditors and equity security holders and with
      public policy with respect to the manner of selection of any
      officer, director, or trustee under the plan and any successor to
      such officer, director, or trustee; and
        (8) in a case in which the debtor is an individual, provide for
      the payment to creditors under the plan of all or such portion of
      earnings from personal services performed by the debtor after the
      commencement of the case or other future income of the debtor as
      is necessary for the execution of the plan.

      (b) Subject to subsection (a) of this section, a plan may - 
        (1) impair or leave unimpaired any class of claims, secured or
      unsecured, or of interests;
        (2) subject to section 365 of this title, provide for the
      assumption, rejection, or assignment of any executory contract or
      unexpired lease of the debtor not previously rejected under such
      section;
        (3) provide for - 
          (A) the settlement or adjustment of any claim or interest
        belonging to the debtor or to the estate; or
          (B) the retention and enforcement by the debtor, by the
        trustee, or by a representative of the estate appointed for
        such purpose, of any such claim or interest;

        (4) provide for the sale of all or substantially all of the
      property of the estate, and the distribution of the proceeds of
      such sale among holders of claims or interests;
        (5) modify the rights of holders of secured claims, other than
      a claim secured only by a security interest in real property that
      is the debtor's principal residence, or of holders of unsecured
      claims, or leave unaffected the rights of holders of any class of
      claims; and
        (6) include any other appropriate provision not inconsistent
      with the applicable provisions of this title.

      (c) In a case concerning an individual, a plan proposed by an
    entity other than the debtor may not provide for the use, sale, or
    lease of property exempted under section 522 of this title, unless
    the debtor consents to such use, sale, or lease.
      (d) Notwithstanding subsection (a) of this section and sections
    506(b), 1129(a)(7), and 1129(b) of this title, if it is proposed in
    a plan to cure a default the amount necessary to cure the default
    shall be determined in accordance with the underlying agreement and
    applicable nonbankruptcy law.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2631; Pub. L. 98-353, title
    III, Sec. 507, July 10, 1984, 98 Stat. 385; Pub. L. 103-394, title
    II, Sec. 206, title III, Secs. 304(h)(6), 305(a), title V, Sec.
    501(d)(31), Oct. 22, 1994, 108 Stat. 4123, 4134, 4146; Pub. L. 109-
    8, title III, Sec. 321(b), title XV, Sec. 1502(a)(7), Apr. 20,
    2005, 119 Stat. 95, 216.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1123 of the House amendment represents a compromise
    between similar provisions in the House bill and Senate amendment.
    The section has been clarified to clearly indicate that both
    secured and unsecured claims, or either of them, may be impaired in
    a case under title 11. In addition assumption or rejection of an
    executory contract under a plan must comply with section 365 of
    title 11. Moreover, section 1123(a)(1) has been substantively
    modified to permit classification of certain kinds of priority
    claims. This is important for purposes of confirmation under
    section 1129(a)(9).
      Section 1123(a)(5) of the House amendment is derived from a
    similar provision in the House bill and Senate amendment but
    deletes the language pertaining to "fair upset price" as an
    unnecessary restriction. Section 1123 is also intended to indicate
    that a plan may provide for any action specified in section 1123 in
    the case of a corporation without a resolution of the board of
    directors. If the plan is confirmed, then any action proposed in
    the plan may be taken notwithstanding any otherwise applicable
    nonbankruptcy law in accordance with section 1142(a) of title 11.

                         SENATE REPORT NO. 95-989                     
      Subsection (a) specifies what a plan of reorganization must
    contain. The plan must designate classes of claims and interests,
    and specify, by class, the claims or interests that are unimpaired
    under the plan. Priority claims are not required to be classified
    because they may not have arisen when the plan is filed. The plan
    must provide the same treatment for each claim or interest of a
    particular class, unless the holder of a particular claim or
    interest agrees to a different, but not better, treatment of his
    claim or interest.
      Paragraph (3) applies to claims, not creditors. Thus, if a
    creditor is undersecured, and thus has a secured claim and an
    unsecured claim, this paragraph will be applied independently to
    each of his claims.
      Paragraph (4) of subsection (a) is derived from section 216 of
    chapter X [section 616 of former title 11] with some modifications.
    It requires the plan to provide adequate means for the plans
    execution. These means may include retention by the debtor of all
    or any part of the property of the estate, transfer of all or any
    part of the property of the estate to one or more entities, whether
    organized pre- or postconfirmation, merger or consolidation of the
    debtor with one or more persons, sale and distribution of all or
    any part of the property of the estate, satisfaction or
    modification of any lien, cancellation or modification of any
    indenture or similar instrument, curing or waiving of any default,
    extension of maturity dates or change in interest rates of
    securities, amendment of the debtor's charter, and issuance of
    securities.
      Subparagraph (C), as it applies in railroad cases, has the effect
    of overruling St. Joe Paper Co. v. Atlantic Coast Line R. R., 347
    U.S. 298 (1954). It will allow the trustee or creditors to propose
    a plan of merger with another railroad without the consent of the
    debtor, and the debtor will be bound under proposed 11 U.S.C.
    1141(a). See Hearings, pt. 3, at 1616. "Similar instrument"
    referred to in subparagraph (F) might include a deposit with an
    agent for distribution, other than an indenture trustee, such as an
    agent under an agreement in a railroad conditional sale or lease
    financing agreement.
      Paragraphs (5) and (6) and subsection (b) are derived
    substantially from Section 216 of Chapter X ([former] 11 U.S.C.
    616). Paragraph (5) requires the plan to prohibit the issuance of
    nonvoting equity securities, and to provide for an appropriate
    distribution of voting power among the various classes of equity
    securities. Paragraph (6) requires that the plan contain only
    provisions that are consistent with the interests of creditors and
    equity security holders, and with public policy with respect to the
    selection of officers, directors, and trustees, and their
    successors.
      Subsection (b) specifies the matters that the plan may propose.
    The plan may impair or leave unimpaired any claim or interest. The
    plan may provide for the assumption or rejection of executory
    contracts or unexpired leases not previously rejected under section
    365. The plan may also provide for the treatment of claims by the
    debtor against other entities that are not settled before the
    confirmation of the plan. The plan may propose settlement or
    adjustment of any claim or equity security belonging to the estate,
    or may propose retention and enforcement of such claim or interest
    by the debtor or by an agent appointed for that purpose.
      The plan may also propose the sale of all or substantially all of
    the property of the estate, and the distribution of the proceeds of
    the sale among creditors and equity security holders. This would be
    a liquidating plan. The subsection permits the plan to include any
    other appropriate provision not inconsistent with the applicable
    provisions of the bankruptcy code.
      Subsection (c) protects an individual debtor's exempt property by
    prohibiting its use, sale, or lease under a plan proposed by
    someone other than the debtor, unless the debtor consents.

                                AMENDMENTS                            
      2005 - Subsec. (a)(1). Pub. L. 109-8, Sec. 1502(a)(7),
    substituted "507(a)(2), 507(a)(3)" for "507(a)(1), 507(a)(2)".
      Subsec. (a)(8). Pub. L. 109-8, Sec. 321(b), added par. (8).
      1994 - Subsec. (a)(1). Pub. L. 103-394, Secs. 304(h)(6),
    501(d)(31), substituted "507(a)(8) of this title," for "507(a)(7)
    of this title".
      Subsec. (b)(5), (6). Pub. L. 103-394, Sec. 206, added par. (5)
    and redesignated former par. (5) as (6).
      Subsec. (d). Pub. L. 103-394, Sec. 305(a), added subsec. (d).
      1984 - Subsec. (a). Pub. L. 98-353, Sec. 507(a)(1), in provisions
    preceding par. (1) substituted "Notwithstanding any otherwise
    applicable nonbankruptcy law, a" for "A".
      Subsec. (a)(1). Pub. L. 98-353, Sec. 507(a)(2), inserted a comma
    after "classes of claims" and substituted "507(a)(7) of this
    title," for "507(a)(6) of this title".
      Subsec. (a)(3). Pub. L. 98-353, Sec. 507(a)(3), struck out
    "shall" before "specify the treatment".
      Subsec. (a)(5). Pub. L. 98-353, Sec. 507(a)(4), substituted
    "implementation" for "execution".
      Subsec. (a)(5)(G). Pub. L. 98-353, Sec. 507(a)(5), inserted "of"
    after "waiving".
      Subsec. (b)(2). Pub. L. 98-353, Sec. 507(b), substituted
    "rejection, or assignment" for "or rejection", and "under such
    section" for "under section 365 of this title".

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, and not applicable with respect to cases commenced under this
    title before such effective date, except as otherwise provided, see
    section 1501 of Pub. L. 109-8, set out as a note under section 101
    of this title.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by sections 206, 304(h)(6), and 501(d)(31) of Pub. L.
    103-394 effective Oct. 22, 1994, and not applicable with respect to
    cases commenced under this title before Oct. 22, 1994, and
    amendment by section 305(a) of Pub. L. 103-394 effective Oct. 22,
    1994, and applicable only to agreements entered into after Oct. 22,
    1994, see section 702 of Pub. L. 103-394, set out as a note under
    section 101 of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1124                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER II - THE PLAN

-HEAD-
    Sec. 1124. Impairment of claims or interests

-STATUTE-
      Except as provided in section 1123(a)(4) of this title, a class
    of claims or interests is impaired under a plan unless, with
    respect to each claim or interest of such class, the plan - 
        (1) leaves unaltered the legal, equitable, and contractual
      rights to which such claim or interest entitles the holder of
      such claim or interest; or
        (2) notwithstanding any contractual provision or applicable law
      that entitles the holder of such claim or interest to demand or
      receive accelerated payment of such claim or interest after the
      occurrence of a default - 
          (A) cures any such default that occurred before or after the
        commencement of the case under this title, other than a default
        of a kind specified in section 365(b)(2) of this title or of a
        kind that section 365(b)(2) expressly does not require to be
        cured;
          (B) reinstates the maturity of such claim or interest as such
        maturity existed before such default;
          (C) compensates the holder of such claim or interest for any
        damages incurred as a result of any reasonable reliance by such
        holder on such contractual provision or such applicable law;
          (D) if such claim or such interest arises from any failure to
        perform a nonmonetary obligation, other than a default arising
        from failure to operate a nonresidential real property lease
        subject to section 365(b)(1)(A), compensates the holder of such
        claim or such interest (other than the debtor or an insider)
        for any actual pecuniary loss incurred by such holder as a
        result of such failure; and
          (E) does not otherwise alter the legal, equitable, or
        contractual rights to which such claim or interest entitles the
        holder of such claim or interest.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2633; Pub. L. 98-353, title
    III, Sec. 508, July 10, 1984, 98 Stat. 385; Pub. L. 103-394, title
    II, Sec. 213(d), Oct. 22, 1994, 108 Stat. 4126; Pub. L. 109-8,
    title III, Sec. 328(b), Apr. 20, 2005, 119 Stat. 100.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1124 of the House amendment is derived from a similar
    provision in the House bill and Senate amendment. The section
    defines the new concept of "impairment" of claims or interests; the
    concept differs significantly from the concept of "materially and
    adversely affected" under the Bankruptcy Act [former title 11].
    Section 1124(3) of the House amendment provides that a holder of a
    claim or interest is not impaired, if the plan provides that the
    holder will receive the allowed amount of the holder's claim, or in
    the case of an interest with a fixed liquidation preference or
    redemption price, the greater of such price. This adopts the
    position contained in the House bill and rejects the contrary
    standard contained in the Senate amendment.
      Section 1124(3) of the House amendment rejects a provision
    contained in section 1124(3)(B)(iii) of the House bill which would
    have considered a class of interest not to be impaired by virtue of
    the fact that the plan provided cash or property for the value of
    the holder's interest in the debtor.
      The effect of the House amendment is to permit an interest not to
    be impaired only if the interest has a fixed liquidation preference
    or redemption price. Therefore, a class of interests such as common
    stock, must either accept a plan under section 1129(a)(8), or the
    plan must satisfy the requirements of section 1129(b)(2)(C) in
    order for a plan to be confirmed.
      A compromise reflected in section 1124(2)(C) of the House
    amendment indicates that a class of claims is not impaired under
    the circumstances of section 1124(2) if damages are paid to rectify
    reasonable reliance engaged in by the holder of a claim or interest
    arising from the prepetition breach of a contractual provision,
    such as an ipso facto or bankruptcy clause, or law. Where the
    rights of third parties are concerned, such as in the case of lease
    premises which have been rerented to a third party, it is not
    intended that there will be adequate damages to compensate the
    third party.

                         SENATE REPORT NO. 95-989                     
      The basic concept underlying this section is not new. It rests
    essentially on Section 107 of Chapter X ([former] 11 U.S.C. 507),
    which states that creditors or stockholders or any class thereof
    "shall be deemed to be 'affected' by a plan only if their or its
    interest shall be materially and adversely affected thereby."
      This section is designated to indicate when contractual rights of
    creditors or interest holders are not materially affected. It
    specifies three ways in which the plan may leave a claim or
    interest unimpaired.
      First, the plan may propose not to alter the legal, equitable, or
    contractual rights to which the claim or interest entitled its
    holder.
      Second, a claim or interest is unimpaired by curing the effect of
    a default and reinstating the original terms of an obligation when
    maturity was brought on or accelerated by the default. The
    intervention of bankruptcy and the defaults represent a temporary
    crisis which the plan of reorganization is intended to clear away.
    The holder of a claim or interest who under the plan is restored to
    his original position, when others receive less or get nothing at
    all, is fortunate indeed and has no cause to complain. Curing of
    the default and the assumption of the debt in accordance with its
    terms is an important reorganization technique for dealing with a
    particular class of claims, especially secured claims.
      Third, a claim or interest is unimpaired if the plan provides for
    their payment in cash. In the case of a debt liability, the cash
    payment is for the allowed amount of the claim, which does not
    include a redemption premium. If it is an equity security with a
    fixed liquidation preference, such as a preferred stock, the
    allowed amount is such liquidation preference, with no redemption
    premium. With respect to any other equity security, such as a
    common stock, cash payment must be equal to the "value of such
    holder's interest in the debtor."
      Section 1124 does not include payment "in property" other than
    cash. Except for a rare case, claims or interests are not by their
    terms payable in property, but a plan may so provide and those
    affected thereby may accept or reject the proposed plan. They may
    not be forced to accept a plan declaring the holders' claims or
    interests to be "unimpaired."

                          HOUSE REPORT NO. 95-595                      
      This section is new. It is designed to indicate when contractual
    rights of creditors or interest holders are not materially
    affected. The section specifies three ways in which the plan may
    leave a claim or interest unimpaired.
      First, the plan may propose not to alter the legal, equitable, or
    contractual rights to which the claim or interest entitled its
    holder.
      Second, the plan is permitted to reinstate a claim or interest
    and thus leave it unimpaired. Reinstatement consists of curing any
    default (other than a default under an ipso facto or bankruptcy
    clause) and reinstatement of the maturity of the claim or interest.
    Further, the plan may not otherwise alter any legal, equitable, or
    contractual right to which the claim or interest entitles its
    holder.
      Third, the plan may leave a claim or interest unimpaired by
    paying its amount in full other than in securities of the debtor,
    an affiliate of the debtor participating in a joint plan, or a
    successor to the debtor. These securities are excluded because
    determination of their value would require a valuation of the
    business being reorganized. Use of them to pay a creditor or equity
    security holder without his consent may be done only under section
    1129(b) and only after a valuation of the debtor. Under this
    paragraph, the plan must pay the allowed amount of the claim in
    full, in cash or other property, or, in the case of an equity
    security, must pay the greatest of any fixed liquidation preference
    to which the terms of the equity security entitle its holder, any
    fixed price at which the debtor, under the terms of the equity
    security may redeem such equity security, and the value, as of the
    effective date of the plan, of the holder's interest in the debtor.
    The value of the holder's interest need not be determined precisely
    by valuing the debtor's business if such value is clearly below
    redemption or liquidation preference values. If such value would
    require a full-scale valuation of the business, then such interest
    should be treated as impaired. But, if the debtor corporation is
    clearly insolvent, then the value of the common stock holder's
    interest in the debtor is zero, and offering them nothing under the
    plan of reorganization will not impair their rights.
      "Value, as of the effective date of the plan," as used in
    paragraph (3) and in proposed 11 U.S.C. 1179(a)(7)(B), 1129(a)(9),
    1129(b), 1172(2), 1325(a)(4), 1325(a)(5)(B), and 1328(b), indicates
    that the promised payment under the plan must be discounted to
    present value as of the effective date of the plan. The discounting
    should be based only on the unpaid balance of the amount due under
    the plan, until that amount, including interest, is paid in full.

                                AMENDMENTS                            
      2005 - Par. (2)(A). Pub. L. 109-8, Sec. 328(b)(1), inserted "or
    of a kind that section 365(b)(2) expressly does not require to be
    cured" before semicolon at end.
      Par. (2)(D), (E). Pub. L. 109-8, Sec. 328(b)(2)-(4), added
    subpar. (D) and redesignated former subpar. (D) as (E).
      1994 - Par. (3). Pub. L. 103-394 struck out par. (3) which read
    as follows: "provides that, on the effective date of the plan, the
    holder of such claim or interest receives, on account of such claim
    or interest, cash equal to - 
        "(A) with respect to a claim, the allowed amount of such claim;
      or
        "(B) with respect to an interest, if applicable, the greater of
      - 
          "(i) any fixed liquidation preference to which the terms of
        any security representing such interest entitle the holder of
        such interest; or
          "(ii) any fixed price at which the debtor, under the terms of
        such security, may redeem such security from such holder."
      1984 - Par. (2)(A). Pub. L. 98-353, Sec. 508(1), amended subpar.
    (A) generally. Prior to amendment, subpar. (A) read as follows:
    "cures any such default, other than a default of a kind specified
    in section 365(b)(2) of this title, that occurred before or after
    the commencement of the case under this title;".
      Par. (3)(B)(i). Pub. L. 98-353, Sec. 508(2), substituted "or" for
    "and".

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, and not applicable with respect to cases commenced under this
    title before such effective date, except as otherwise provided, see
    section 1501 of Pub. L. 109-8, set out as a note under section 101
    of this title.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1125                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER II - THE PLAN

-HEAD-
    Sec. 1125. Postpetition disclosure and solicitation

-STATUTE-
      (a) In this section - 
        (1) "adequate information" means information of a kind, and in
      sufficient detail, as far as is reasonably practicable in light
      of the nature and history of the debtor and the condition of the
      debtor's books and records, including a discussion of the
      potential material Federal tax consequences of the plan to the
      debtor, any successor to the debtor, and a hypothetical investor
      typical of the holders of claims or interests in the case, that
      would enable such a hypothetical investor of the relevant class
      to make an informed judgment about the plan, but adequate
      information need not include such information about any other
      possible or proposed plan and in determining whether a disclosure
      statement provides adequate information, the court shall consider
      the complexity of the case, the benefit of additional information
      to creditors and other parties in interest, and the cost of
      providing additional information; and
        (2) "investor typical of holders of claims or interests of the
      relevant class" means investor having - 
          (A) a claim or interest of the relevant class;
          (B) such a relationship with the debtor as the holders of
        other claims or interests of such class generally have; and
          (C) such ability to obtain such information from sources
        other than the disclosure required by this section as holders
        of claims or interests in such class generally have.

      (b) An acceptance or rejection of a plan may not be solicited
    after the commencement of the case under this title from a holder
    of a claim or interest with respect to such claim or interest,
    unless, at the time of or before such solicitation, there is
    transmitted to such holder the plan or a summary of the plan, and a
    written disclosure statement approved, after notice and a hearing,
    by the court as containing adequate information. The court may
    approve a disclosure statement without a valuation of the debtor or
    an appraisal of the debtor's assets.
      (c) The same disclosure statement shall be transmitted to each
    holder of a claim or interest of a particular class, but there may
    be transmitted different disclosure statements, differing in
    amount, detail, or kind of information, as between classes.
      (d) Whether a disclosure statement required under subsection (b)
    of this section contains adequate information is not governed by
    any otherwise applicable nonbankruptcy law, rule, or regulation,
    but an agency or official whose duty is to administer or enforce
    such a law, rule, or regulation may be heard on the issue of
    whether a disclosure statement contains adequate information. Such
    an agency or official may not appeal from, or otherwise seek review
    of, an order approving a disclosure statement.
      (e) A person that solicits acceptance or rejection of a plan, in
    good faith and in compliance with the applicable provisions of this
    title, or that participates, in good faith and in compliance with
    the applicable provisions of this title, in the offer, issuance,
    sale, or purchase of a security, offered or sold under the plan, of
    the debtor, of an affiliate participating in a joint plan with the
    debtor, or of a newly organized successor to the debtor under the
    plan, is not liable, on account of such solicitation or
    participation, for violation of any applicable law, rule, or
    regulation governing solicitation of acceptance or rejection of a
    plan or the offer, issuance, sale, or purchase of securities.
      (f) Notwithstanding subsection (b), in a small business case - 
        (1) the court may determine that the plan itself provides
      adequate information and that a separate disclosure statement is
      not necessary;
        (2) the court may approve a disclosure statement submitted on
      standard forms approved by the court or adopted under section
      2075 of title 28; and
        (3)(A) the court may conditionally approve a disclosure
      statement subject to final approval after notice and a hearing;
        (B) acceptances and rejections of a plan may be solicited based
      on a conditionally approved disclosure statement if the debtor
      provides adequate information to each holder of a claim or
      interest that is solicited, but a conditionally approved
      disclosure statement shall be mailed not later than 25 days
      before the date of the hearing on confirmation of the plan; and
        (C) the hearing on the disclosure statement may be combined
      with the hearing on confirmation of a plan.

      (g) Notwithstanding subsection (b), an acceptance or rejection of
    the plan may be solicited from a holder of a claim or interest if
    such solicitation complies with applicable nonbankruptcy law and if
    such holder was solicited before the commencement of the case in a
    manner complying with applicable nonbankruptcy law.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2633; Pub. L. 98-353, title
    III, Sec. 509, July 10, 1984, 98 Stat. 385; Pub. L. 103-394, title
    II, Sec. 217(e), Oct. 22, 1994, 108 Stat. 4127; Pub. L. 109-8,
    title IV, Secs. 408, 431, title VII, Sec. 717, Apr. 20, 2005, 119
    Stat. 106, 109, 131.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1125 of the House amendment is derived from section 1125
    of the House bill and Senate amendment except with respect to
    section 1125(f) of the Senate amendment. It will not be necessary
    for the court to consider the report of the examiner prior to
    approval of a disclosure statement. The investigation of the
    examiner is to proceed on an independent basis from the procedure
    of the reorganization under chapter 11. In order to ensure that the
    examiner's report will be expeditious and fair, the examiner is
    precluded from serving as a trustee in the case or from
    representing a trustee if a trustee is appointed, whether the case
    remains in chapter 11 or is converted to chapter 7 or 13.

                         SENATE REPORT NO. 95-989                     
      This section extends disclosure requirements in connection with
    solicitations to all cases under chapter 11. Heretofore this
    subject was dealt with by the Bankruptcy Act [former title 11]
    mainly in the special contexts of railroad reorganizations and
    chapter X [chapter 10 of former title 11] cases.
      Subsection (a) defines (1) the subject matter of disclosure as
    "adequate information" and relates the standard of adequacy to an
    (2) "investor typical of holders or claims or interests of the
    relevant class." "Investor" is used broadly here, for it will
    almost always include a trade creditor or other creditors who
    originally had no investment intent or interest. It refers to the
    investment-type decision by those called upon to accept a plan to
    modify their claims or interests, which typically will involve
    acceptance of new securities or of a cash payment in lieu thereof.
      Both the kind and form of information are left essentially to the
    judicial discretion of the court, guided by the specification in
    subparagraph (a)(1) that it be of a kind and in sufficient detail
    that a reasonable and typical investor can make an informed
    judgment about the plan. The information required will necessarily
    be governed by the circumstances of the case.
      Reporting and audit standards devised for solvent and continuing
    businesses do not necessarily fit a debtor in reorganization.
    Subsection (a)(1) expressly incorporates consideration of the
    nature and history of the debtor and the condition of its books and
    records into the determination of what is reasonably practicable to
    supply. These factors are particularly pertinent to historical data
    and to discontinued operations of no future relevance.
      A plan is necessarily predicated on knowledge of the assets and
    liabilities being dealt with and on factually supported
    expectations as to the future course of the business sufficient to
    meet the feasibility standard in section 1130(a)(11) of this title.
    It may thus be necessary to provide estimates or judgments for that
    purpose. Yet it remains practicable to describe, in such detail as
    may be relevant and needed, the basis for the plan and the data on
    which supporters of the plan rely.
      Subsection (b) establishes the jurisdiction of the court over
    this subject by prohibiting solicitation of acceptance or rejection
    of a plan after the commencement of the case, unless the person
    solicited receives, before or at the time of the solicitation, a
    written disclosure statement approved by the court, after notice
    and hearing, as containing adequate information. As under present
    law, determinations of value, by appraisal or otherwise, are not
    required if not needed to accomplish the purpose specified in
    subsection (a)(1).
      Subsection (c) requires that the same disclosure statement be
    transmitted to each member of a class. It recognizes that the
    information needed for an informed judgment about the plan may
    differ among classes. A class whose rights under the plan center on
    a particular fund or asset would have no use for an extensive
    description of other matters that could not affect them.
      Subsection (d) relieves the court of the need to follow any
    otherwise applicable Federal or state law in determining the
    adequacy of the information contained in the disclosure statement
    submitted for its approval. It authorizes an agency or official,
    Federal or state, charged with administering cognate laws so
    preempted to advise the court on the adequacy of proposed
    disclosure statement. But they are not authorized to appeal the
    court's decision.
      Solicitations with respect to a plan do not involve just mere
    requests for opinions. Acceptance of the plan vitally affects
    creditors and shareholders, and most frequently the solicitation
    involves an offering of securities in exchange for claims or
    interests. The present bankruptcy statute [former title 11] has
    exempted such offerings under each of its chapters from the
    registration and disclosure requirements of the Securities Act of
    1933 [15 U.S.C. 77a et seq.], an exemption also continued by
    section 1145(a)(2) of this title. The extension of the disclosure
    requirements to all chapter 11 cases justifies the coordinate
    extension of these exemptions. By the same token, no valid purpose
    is served not to exempt from the requirements of similar state laws
    in a matter under the exclusive jurisdiction of the Federal
    bankruptcy laws.
      Subsection (e) exonerates any person who, in good faith and in
    compliance with this title, solicits or participates in the offer,
    issuance, sale or purchase, under the plan, of a security from any
    liability, on account of such solicitation or participation, for
    violation of any law, rule, or regulation governing the offer,
    issuance, sale, or purchase of securities. This exoneration is
    coordinate with the exemption from Federal or State registration or
    licensing requirements provided by section 1145 of this title.
      In the nonpublic case, the court, when approving the disclosure
    statement, has before it the texts of the plan, a proposed
    disclosure document, and such other information the plan proponents
    and other interested parties may present at the hearing. In the
    final analysis the exoneration which subsection (e) grants must
    depend on the good faith of the plan proponents and of those who
    participate in the preparation of the disclosure statement and in
    the solicitation. Subsection (e) does not affect civil or criminal
    liability for defects and inadequacies that are beyond the limits
    of the exoneration that good faith provides.
      Section 1125 applies to public companies as well, subject to the
    qualifications of subsection (f). In case of a public company no
    solicitations of acceptance is permitted unless authorized by the
    court upon or after approval of the plan pursuant to section
    1128(c). In addition to the documents specified in subsection (b),
    subsection (f) requires transmission of the opinion and order of
    the court approving the plan and, if filed, the advisory report of
    the Securities and Exchange Commission or a summary thereof
    prepared by the Commission.

                          HOUSE REPORT NO. 95-595                      
      This section is new. It is the heart of the consolidation of the
    various reorganization chapters found in current law. It requires
    disclosure before solicitation of acceptances of a plan or
    reorganization.
      Subsection (a) contains two definitions. First, "adequate
    information" is defined to mean information of a kind, and
    insufficient detail, as far as is reasonably practical in light of
    the nature and history of the debtor and the condition of the
    debtor's books and records, that would enable a hypothetical
    reasonable investor typical of holders of claims or interests of
    the relevant class to make an informed judgment about the plan.
    Second, "investor typical of holders of claims or interests of the
    relevant class" is defined to mean an investor having a claim or
    interest of the relevant class, having such a relationship with the
    debtor as the holders of other claims or interests of the relevant
    class have, and having such ability to obtain information from
    sources other than the disclosure statement as holders of claims or
    interests of the relevant class have, and having such ability to
    obtain information from sources other than the disclosure statement
    as holders of claims or interests of the relevant class have. That
    is, the hypothetical investor against which the disclosure is
    measured must not be an insider if other members of the class are
    not insiders, and so on. In other words, the adequacy of disclosure
    is measured against the typical investor, not an extraordinary one.
      The Supreme Court's rulemaking power will not extend to
    rulemaking that will prescribe what constitutes adequate
    information. That standard is a substantive standard. Precisely
    what constitutes adequate information in any particular instance
    will develop on a case-by-case basis. Courts will take a practical
    approach as to what is necessary under the circumstances of each
    case, such as the cost of preparation of the statements, the need
    for relative speed in solicitation and confirmation, and, of
    course, the need for investor protection. There will be a balancing
    of interests in each case. In reorganization cases, there is
    frequently great uncertainty. Therefore the need for flexibility is
    greatest.
      Subsection (b) is the operative subsection. It prohibits
    solicitation of acceptances or rejections of a plan after the
    commencement of the case unless, at the time of the solicitation or
    before, there is transmitted to the solicitee the plan or a summary
    of the plan, and a written disclosure statement approved by the
    court as containing adequate information. The subsection permits
    approval of the statement without the necessity of a valuation of
    the debtor or an appraisal of the debtor's assets. However, in some
    cases, a valuation or appraisal will be necessary to develop
    adequate information. The court will be able to determine what is
    necessary in light of the facts and circumstances of each
    particular case.
      Subsection (c) requires that the same disclosure statement go to
    all members of a particular class, but permits different disclosure
    to different classes.
      Subsection (d) excepts the disclosure statements from the
    requirements of the securities laws (such as section 14 of the 1934
    Act [15 U.S.C. 78n] and section 5 of the 1933 Act [15 U.S.C. 77e]),
    and from similar State securities laws (blue sky laws, for
    example). The subsection permits an agency or official whose duty
    is to administer or enforce such laws (such as the Securities and
    Exchange Commission or State Corporation Commissioners) to appear
    and be heard on the issue of whether a disclosure statement
    contains adequate information, but the agencies and officials are
    not granted the right of appeal from an adverse determination in
    any capacity. They may join in an appeal by a true party in
    interest, however.
      Subsection (e) is a safe harbor provision, and is necessary to
    make the exemption provided by subsection (d) effective. Without
    it, a creditor that solicited an acceptance or rejection in
    reliance on the court's approval of a disclosure statement would be
    potentially liable under antifraud sections designed to enforce the
    very sections of the securities laws from which subsection (d)
    excuses compliance. The subsection protects only persons that
    solicit in good faith and in compliance with the applicable
    provisions of the reorganization chapter. It provides protection
    from legal liability as well as from equitable liability based on
    an injunctive action by the SEC or other agency or official.

                                AMENDMENTS                            
      2005 - Subsec. (a)(1). Pub. L. 109-8, Sec. 717, inserted
    "including a discussion of the potential material Federal tax
    consequences of the plan to the debtor, any successor to the
    debtor, and a hypothetical investor typical of the holders of
    claims or interests in the case," after "records," and substituted
    "such a hypothetical investor" for "a hypothetical reasonable
    investor typical of holders of claims or interests".
      Pub. L. 109-8, Sec. 431(1), inserted before semicolon "and in
    determining whether a disclosure statement provides adequate
    information, the court shall consider the complexity of the case,
    the benefit of additional information to creditors and other
    parties in interest, and the cost of providing additional
    information".
      Subsec. (f). Pub. L. 109-8, Sec. 431(2), added subsec. (f) and
    struck out former subsec. (f) which read as follows:
    "Notwithstanding subsection (b), in a case in which the debtor has
    elected under section 1121(e) to be considered a small business - 
        "(1) the court may conditionally approve a disclosure statement
      subject to final approval after notice and a hearing;
        "(2) acceptances and rejections of a plan may be solicited
      based on a conditionally approved disclosure statement as long as
      the debtor provides adequate information to each holder of a
      claim or interest that is solicited, but a conditionally approved
      disclosure statement shall be mailed at least 10 days prior to
      the date of the hearing on confirmation of the plan; and
        "(3) a hearing on the disclosure statement may be combined with
      a hearing on confirmation of a plan."
      Subsec. (g). Pub. L. 109-8, Sec. 408, added subsec. (g).
      1994 - Subsec. (f). Pub. L. 103-394 added subsec. (f).
      1984 - Subsec. (a)(1). Pub. L. 98-353, Sec. 509(a)(1), inserted
    ", but adequate information need not include such information about
    any other possible or proposed plan".
      Subsec. (a)(2)(B). Pub. L. 98-353, Sec. 509(a)(2), inserted "the"
    after "with".
      Subsec. (a)(2)(C). Pub. L. 98-353, Sec. 509(a)(3), inserted "of"
    after "holders".
      Subsec. (d). Pub. L. 98-353, Sec. 509(b), inserted "required
    under subsection (b) of this section" and ", or otherwise seek
    review of,".
      Subsec. (e). Pub. L. 98-353, Sec. 509(c), inserted "acceptance or
    rejection of a plan" after "solicits", and "solicitation of
    acceptance or rejection of a plan or" after "governing".

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, and not applicable with respect to cases commenced under this
    title before such effective date, except as otherwise provided, see
    section 1501 of Pub. L. 109-8, set out as a note under section 101
    of this title.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1126                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER II - THE PLAN

-HEAD-
    Sec. 1126. Acceptance of plan

-STATUTE-
      (a) The holder of a claim or interest allowed under section 502
    of this title may accept or reject a plan. If the United States is
    a creditor or equity security holder, the Secretary of the Treasury
    may accept or reject the plan on behalf of the United States.
      (b) For the purposes of subsections (c) and (d) of this section,
    a holder of a claim or interest that has accepted or rejected the
    plan before the commencement of the case under this title is deemed
    to have accepted or rejected such plan, as the case may be, if - 
        (1) the solicitation of such acceptance or rejection was in
      compliance with any applicable nonbankruptcy law, rule, or
      regulation governing the adequacy of disclosure in connection
      with such solicitation; or
        (2) if there is not any such law, rule, or regulation, such
      acceptance or rejection was solicited after disclosure to such
      holder of adequate information, as defined in section 1125(a) of
      this title.

      (c) A class of claims has accepted a plan if such plan has been
    accepted by creditors, other than any entity designated under
    subsection (e) of this section, that hold at least two-thirds in
    amount and more than one-half in number of the allowed claims of
    such class held by creditors, other than any entity designated
    under subsection (e) of this section, that have accepted or
    rejected such plan.
      (d) A class of interests has accepted a plan if such plan has
    been accepted by holders of such interests, other than any entity
    designated under subsection (e) of this section, that hold at least
    two-thirds in amount of the allowed interests of such class held by
    holders of such interests, other than any entity designated under
    subsection (e) of this section, that have accepted or rejected such
    plan.
      (e) On request of a party in interest, and after notice and a
    hearing, the court may designate any entity whose acceptance or
    rejection of such plan was not in good faith, or was not solicited
    or procured in good faith or in accordance with the provisions of
    this title.
      (f) Notwithstanding any other provision of this section, a class
    that is not impaired under a plan, and each holder of a claim or
    interest of such class, are conclusively presumed to have accepted
    the plan, and solicitation of acceptances with respect to such
    class from the holders of claims or interests of such class is not
    required.
      (g) Notwithstanding any other provision of this section, a class
    is deemed not to have accepted a plan if such plan provides that
    the claims or interests of such class do not entitle the holders of
    such claims or interests to receive or retain any property under
    the plan on account of such claims or interests.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2634; Pub. L. 98-353, title
    III, Sec. 510, July 10, 1984, 98 Stat. 386.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1126 of the House amendment deletes section 1126(e) as
    contained in the House bill. Section 105 of the bill constitutes
    sufficient power in the court to designate exclusion of a
    creditor's claim on the basis of a conflict of interest. Section
    1126(f) of the House amendment adopts a provision contained in
    section 1127(f) of the Senate bill indicating that a class that is
    not impaired under a plan is deemed to have accepted a plan and
    solicitation of acceptances from such class is not required.

                         SENATE REPORT NO. 95-989                     
      Subsection (a) of this section permits the holder of a claim or
    interest allowed under section 502 to accept or reject a proposed
    plan of reorganization. The subsection also incorporates a
    provision now found in section 199 of chapter X [section 599 of
    former title 11] that authorizes the Secretary of the Treasury to
    accept or reject a plan on behalf of the United States when the
    United States is a creditor or equity security holder.
      Subsection (b) governs acceptances and rejections of plans
    obtained before commencement of a reorganization for a nonpublic
    company. Paragraph (3) expressly states that subsection (b) does
    not apply to a public company.
      Prepetition solicitation is a common practice under chapter XI
    [chapter 11 of former title 11] today, and chapter IX [chapter 9 of
    former title 11] current makes explicit provision for it. Section
    1126(b) counts a prepetition acceptance or rejection toward the
    required amounts and number of acceptances only if the solicitation
    of the acceptance or rejection was in compliance with any
    applicable nonbankruptcy law, rule, or regulation governing the
    adequacy of disclosure in connection with such solicitation. If
    there is not any such applicable law, rule, or regulation, then the
    acceptance or rejection is counted only if it was solicited after
    disclosure of adequate information, to the holder, as defined in
    section 1125(a)(1). This permits the court to ensure that the
    requirements of section 1125 are not avoided by prepetition
    solicitation.
      Subsection (c) specifies the required amount and number of
    acceptances for a class of creditors. A class of creditors has
    accepted a plan if at least two-thirds in amount and more than one-
    half in number of the allowed claims of the class that are voted
    are cast in favor of the plan. The amount and number are computed
    on the basis of claims actually voted for or against the plan, not
    as under chapter X [chapter 10 of former title 11] on the basis of
    the allowed claims in the class. Subsection (f) excludes from all
    these calculations claims not voted in good faith, and claims
    procured or solicited not in good faith or not in accordance with
    the provisions of this title.
      Subsection (c) requires that the same disclosure statement be
    transmitted to each member of a class. It recognizes that the
    information needed for an informed judgment about the plan may
    differ among classes. A class whose rights under the plan center on
    a particular fund or asset would have no use for an extensive
    description of other matters that could not affect them.
      Subsection (d) relieves the court of the need to follow any
    otherwise applicable Federal or state law in determining the
    adequacy of the information contained in the disclosure statement
    submitted for its approval. It authorizes an agency or official,
    Federal or state, charged with administering cognate laws so pre-
    empted to advise the court on the adequacy of proposed disclosure
    statement. But they are not authorized to appeal the court's
    decision.
      Solicitations with respect to a plan do not involve just mere
    requests for opinions. Acceptance of the plan vitally affects
    creditors and shareholders, and most frequently the solicitation
    involves an offering of securities in exchange for claims or
    interests. The present Bankruptcy Act [former title 11] has
    exempted such offerings under each of its chapters from the
    registration and disclosure requirements of the Securities Act of
    1933 [15 U.S.C. 77a et seq.], an exemption also continued by
    section 1145 of this title. The extension of the disclosure
    requirements to all chapter 11 cases is justified by the
    integration of the separate chapters into the single chapter 11. By
    the same token, no valid purpose is served by failing to provide
    exemption from the requirements of similar state laws in a matter
    under the exclusive jurisdiction of the Federal bankruptcy laws.
      Under subsection (d), with respect to a class of equity
    securities, it is sufficient for acceptance of the plan if the
    amount of securities voting for the plan is at least two-thirds of
    the total actually voted.
      Subsection (e) provides that no acceptances are required from any
    class whose claims or interests are unimpaired under the plan or in
    the order confirming the plan.
      Subsection (g) provides that any class denied participation under
    the plan is conclusively deemed to have rejected the plan. There is
    obviously no need to submit a plan for a vote by a class that is to
    receive nothing. But under subsection (g) the excluded class is
    like a class that has not accepted, and is a dissenting class for
    purposes of confirmation under section 1130.

                                AMENDMENTS                            
      1984 - Subsec. (b)(2). Pub. L. 98-353, Sec. 510(a), substituted
    "1125(a)" for "1125(a)(1)".
      Subsec. (d). Pub. L. 98-353, Sec. 510(b), inserted a comma after
    "such interests".
      Subsec. (f). Pub. L. 98-353, Sec. 510(c), substituted ", and each
    holder of a claim or interest of such class, are conclusively
    presumed" for "is deemed", "solicitation" for "solicititation", and
    "interests" for "interest".
      Subsec. (g). Pub. L. 98-353, Sec. 510(d), substituted "receive or
    retain any property" for "any payment or compensation".

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1127                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER II - THE PLAN

-HEAD-
    Sec. 1127. Modification of plan

-STATUTE-
      (a) The proponent of a plan may modify such plan at any time
    before confirmation, but may not modify such plan so that such plan
    as modified fails to meet the requirements of sections 1122 and
    1123 of this title. After the proponent of a plan files a
    modification of such plan with the court, the plan as modified
    becomes the plan.
      (b) The proponent of a plan or the reorganized debtor may modify
    such plan at any time after confirmation of such plan and before
    substantial consummation of such plan, but may not modify such plan
    so that such plan as modified fails to meet the requirements of
    sections 1122 and 1123 of this title. Such plan as modified under
    this subsection becomes the plan only if circumstances warrant such
    modification and the court, after notice and a hearing, confirms
    such plan as modified, under section 1129 of this title.
      (c) The proponent of a modification shall comply with section
    1125 of this title with respect to the plan as modified.
      (d) Any holder of a claim or interest that has accepted or
    rejected a plan is deemed to have accepted or rejected, as the case
    may be, such plan as modified, unless, within the time fixed by the
    court, such holder changes such holder's previous acceptance or
    rejection.
      (e) If the debtor is an individual, the plan may be modified at
    any time after confirmation of the plan but before the completion
    of payments under the plan, whether or not the plan has been
    substantially consummated, upon request of the debtor, the trustee,
    the United States trustee, or the holder of an allowed unsecured
    claim, to - 
        (1) increase or reduce the amount of payments on claims of a
      particular class provided for by the plan;
        (2) extend or reduce the time period for such payments; or
        (3) alter the amount of the distribution to a creditor whose
      claim is provided for by the plan to the extent necessary to take
      account of any payment of such claim made other than under the
      plan.

      (f)(1) Sections 1121 through 1128 and the requirements of section
    1129 apply to any modification under subsection (a).
      (2) The plan, as modified, shall become the plan only after there
    has been disclosure under section 1125 as the court may direct,
    notice and a hearing, and such modification is approved.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2635; Pub. L. 98-353, title
    III, Sec. 511, July 10, 1984, 98 Stat. 386; Pub. L. 109-8, title
    III, Sec. 321(e), Apr. 20, 2005, 119 Stat. 96.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1127(a) of the House amendment adopts a provision
    contained in the House bill permitting only the proponent of a plan
    to modify the plan and rejecting the alternative of open
    modification contained in the Senate amendment.

                         SENATE REPORT NO. 95-989                     
      Under subsection (a) the proponent may file a proposal to modify
    a plan prior to confirmation. In the case of a public company the
    modifying proposal may be filed prior to approval.
      Subsection (b) provides that a party in interest eligible to file
    a plan may file instead of a plan a proposal to modify a plan filed
    by another. Under subsection (c) a party in interest objecting to
    some feature of a plan may submit a proposal to modify the plan to
    meet the objection.
      After a plan has been confirmed, but before its substantial
    consummation, a plan may be modified by leave of court, which
    subsection (d) provides shall be granted for good cause. Subsection
    (e) provides that a proposal to modify a plan is subject to the
    disclosure requirements of section 1125 and as provided in
    subsection (f). It provides that a creditor or stockholder who
    voted for or against a plan is deemed to have accepted or rejected
    the modifying proposal. But if the modification materially and
    adversely affects any of their interests, they must be afforded an
    opportunity to change their vote in accordance with the disclosure
    and solicitation requirements of section 1125.
      Under subsection (g) a plan, if modified prior to confirmation,
    shall be confirmed if it meets the requirements of section 1130.

                          HOUSE REPORT NO. 95-595                      
      Subsection (a) permits the proponent of a plan to modify it at
    any time before confirmation, subject, of course, to the
    requirements of sections 1122 and 1123, governing classification
    and contents of a plan. After the proponent of a plan files a
    modification with the court, the plan as modified becomes the plan,
    and is to be treated the same as an original plan.
      Subsection (b) permits modification of a plan after confirmation
    under certain circumstances. The modification must be proposed
    before substantial consummation of the plan. The requirements of
    sections 1122 and 1123 continue to apply. The plan as modified
    under this subsection becomes the plan only if the court confirms
    the plan as modified under section 1129 and the circumstances
    warrant the modification.
      Subsection (c) requires the proponent of a modification to comply
    with the disclosure provisions of section 1125. Of course, if the
    modification were sufficiently minor, the court might determine
    that additional disclosure was not required under the
    circumstances.
      Subsection (d) simplifies modification procedure by deeming any
    creditor or equity security holder that has already accepted or
    rejected the plan to have accepted or rejected the modification,
    unless, within the time fixed by the court, the creditor or equity
    security holder changes this previous acceptance or rejection.

                                AMENDMENTS                            
      2005 - Subsecs. (e), (f). Pub. L. 109-8 added subsecs. (e) and
    (f).
      1984 - Subsec. (a). Pub. L. 98-353, Sec. 511(a), inserted "of a
    plan" after "After the proponent", and "of such plan" after
    "modification".
      Subsec. (b). Pub. L. 98-353, Sec. 511(b), substituted
    "circumstances warrant such modification and the court, after
    notice and a hearing, confirms such plan as modified, under section
    1129 of this title" for "the court, after notice and a hearing,
    confirms such plan, as modified, under section 1129 of this title,
    and circumstances warrant such modification".

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, and not applicable with respect to cases commenced under this
    title before such effective date, except as otherwise provided, see
    section 1501 of Pub. L. 109-8, set out as a note under section 101
    of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1128                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER II - THE PLAN

-HEAD-
    Sec. 1128. Confirmation hearing

-STATUTE-
      (a) After notice, the court shall hold a hearing on confirmation
    of a plan.
      (b) A party in interest may object to confirmation of a plan.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2635.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                         SENATE REPORT NO. 95-989                     
      [Section 1129 (enacted as section 1128)] Subsection (a) requires
    that there be a hearing in every case on the confirmation of the
    plan. Notice is required.
      Subsection (b) permits any party in interest to object to the
    confirmation of the plan. The Securities and Exchange Commission
    and indenture trustees, as parties in interest under section 1109,
    may object to confirmation of the plan.

-End-



-CITE-
    11 USC Sec. 1129                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER II - THE PLAN

-HEAD-
    Sec. 1129. Confirmation of plan

-STATUTE-
      (a) The court shall confirm a plan only if all of the following
    requirements are met:
        (1) The plan complies with the applicable provisions of this
      title.
        (2) The proponent of the plan complies with the applicable
      provisions of this title.
        (3) The plan has been proposed in good faith and not by any
      means forbidden by law.
        (4) Any payment made or to be made by the proponent, by the
      debtor, or by a person issuing securities or acquiring property
      under the plan, for services or for costs and expenses in or in
      connection with the case, or in connection with the plan and
      incident to the case, has been approved by, or is subject to the
      approval of, the court as reasonable.
        (5)(A)(i) The proponent of the plan has disclosed the identity
      and affiliations of any individual proposed to serve, after
      confirmation of the plan, as a director, officer, or voting
      trustee of the debtor, an affiliate of the debtor participating
      in a joint plan with the debtor, or a successor to the debtor
      under the plan; and
        (ii) the appointment to, or continuance in, such office of such
      individual, is consistent with the interests of creditors and
      equity security holders and with public policy; and
        (B) the proponent of the plan has disclosed the identity of any
      insider that will be employed or retained by the reorganized
      debtor, and the nature of any compensation for such insider.
        (6) Any governmental regulatory commission with jurisdiction,
      after confirmation of the plan, over the rates of the debtor has
      approved any rate change provided for in the plan, or such rate
      change is expressly conditioned on such approval.
        (7) With respect to each impaired class of claims or interests -
       
          (A) each holder of a claim or interest of such class - 
            (i) has accepted the plan; or
            (ii) will receive or retain under the plan on account of
          such claim or interest property of a value, as of the
          effective date of the plan, that is not less than the amount
          that such holder would so receive or retain if the debtor
          were liquidated under chapter 7 of this title on such date;
          or

          (B) if section 1111(b)(2) of this title applies to the claims
        of such class, each holder of a claim of such class will
        receive or retain under the plan on account of such claim
        property of a value, as of the effective date of the plan, that
        is not less than the value of such holder's interest in the
        estate's interest in the property that secures such claims.

        (8) With respect to each class of claims or interests - 
          (A) such class has accepted the plan; or
          (B) such class is not impaired under the plan.

        (9) Except to the extent that the holder of a particular claim
      has agreed to a different treatment of such claim, the plan
      provides that - 
          (A) with respect to a claim of a kind specified in section
        507(a)(2) or 507(a)(3) of this title, on the effective date of
        the plan, the holder of such claim will receive on account of
        such claim cash equal to the allowed amount of such claim;
          (B) with respect to a class of claims of a kind specified in
        section 507(a)(1), 507(a)(4), 507(a)(5), 507(a)(6), or
        507(a)(7) of this title, each holder of a claim of such class
        will receive - 
            (i) if such class has accepted the plan, deferred cash
          payments of a value, as of the effective date of the plan,
          equal to the allowed amount of such claim; or
            (ii) if such class has not accepted the plan, cash on the
          effective date of the plan equal to the allowed amount of
          such claim;

          (C) with respect to a claim of a kind specified in section
        507(a)(8) of this title, the holder of such claim will receive
        on account of such claim regular installment payments in cash -
        
            (i) of a total value, as of the effective date of the plan,
          equal to the allowed amount of such claim;
            (ii) over a period ending not later than 5 years after the
          date of the order for relief under section 301, 302, or 303;
          and
            (iii) in a manner not less favorable than the most favored
          nonpriority unsecured claim provided for by the plan (other
          than cash payments made to a class of creditors under section
          1122(b)); and

          (D) with respect to a secured claim which would otherwise
        meet the description of an unsecured claim of a governmental
        unit under section 507(a)(8), but for the secured status of
        that claim, the holder of that claim will receive on account of
        that claim, cash payments, in the same manner and over the same
        period, as prescribed in subparagraph (C).

        (10) If a class of claims is impaired under the plan, at least
      one class of claims that is impaired under the plan has accepted
      the plan, determined without including any acceptance of the plan
      by any insider.
        (11) Confirmation of the plan is not likely to be followed by
      the liquidation, or the need for further financial
      reorganization, of the debtor or any successor to the debtor
      under the plan, unless such liquidation or reorganization is
      proposed in the plan.
        (12) All fees payable under section 1930 of title 28, as
      determined by the court at the hearing on confirmation of the
      plan, have been paid or the plan provides for the payment of all
      such fees on the effective date of the plan.
        (13) The plan provides for the continuation after its effective
      date of payment of all retiree benefits, as that term is defined
      in section 1114 of this title, at the level established pursuant
      to subsection (e)(1)(B) or (g) of section 1114 of this title, at
      any time prior to confirmation of the plan, for the duration of
      the period the debtor has obligated itself to provide such
      benefits.
        (14) If the debtor is required by a judicial or administrative
      order, or by statute, to pay a domestic support obligation, the
      debtor has paid all amounts payable under such order or such
      statute for such obligation that first become payable after the
      date of the filing of the petition.
        (15) In a case in which the debtor is an individual and in
      which the holder of an allowed unsecured claim objects to the
      confirmation of the plan - 
          (A) the value, as of the effective date of the plan, of the
        property to be distributed under the plan on account of such
        claim is not less than the amount of such claim; or
          (B) the value of the property to be distributed under the
        plan is not less than the projected disposable income of the
        debtor (as defined in section 1325(b)(2)) to be received during
        the 5-year period beginning on the date that the first payment
        is due under the plan, or during the period for which the plan
        provides payments, whichever is longer.

        (16) All transfers of property of the plan shall be made in
      accordance with any applicable provisions of nonbankruptcy law
      that govern the transfer of property by a corporation or trust
      that is not a moneyed, business, or commercial corporation or
      trust.

      (b)(1) Notwithstanding section 510(a) of this title, if all of
    the applicable requirements of subsection (a) of this section other
    than paragraph (8) are met with respect to a plan, the court, on
    request of the proponent of the plan, shall confirm the plan
    notwithstanding the requirements of such paragraph if the plan does
    not discriminate unfairly, and is fair and equitable, with respect
    to each class of claims or interests that is impaired under, and
    has not accepted, the plan.
      (2) For the purpose of this subsection, the condition that a plan
    be fair and equitable with respect to a class includes the
    following requirements:
        (A) With respect to a class of secured claims, the plan
      provides - 
          (i)(I) that the holders of such claims retain the liens
        securing such claims, whether the property subject to such
        liens is retained by the debtor or transferred to another
        entity, to the extent of the allowed amount of such claims; and
          (II) that each holder of a claim of such class receive on
        account of such claim deferred cash payments totaling at least
        the allowed amount of such claim, of a value, as of the
        effective date of the plan, of at least the value of such
        holder's interest in the estate's interest in such property;
          (ii) for the sale, subject to section 363(k) of this title,
        of any property that is subject to the liens securing such
        claims, free and clear of such liens, with such liens to attach
        to the proceeds of such sale, and the treatment of such liens
        on proceeds under clause (i) or (iii) of this subparagraph; or
          (iii) for the realization by such holders of the indubitable
        equivalent of such claims.

        (B) With respect to a class of unsecured claims - 
          (i) the plan provides that each holder of a claim of such
        class receive or retain on account of such claim property of a
        value, as of the effective date of the plan, equal to the
        allowed amount of such claim; or
          (ii) the holder of any claim or interest that is junior to
        the claims of such class will not receive or retain under the
        plan on account of such junior claim or interest any property,
        except that in a case in which the debtor is an individual, the
        debtor may retain property included in the estate under section
        1115, subject to the requirements of subsection (a)(14) of this
        section.

        (C) With respect to a class of interests - 
          (i) the plan provides that each holder of an interest of such
        class receive or retain on account of such interest property of
        a value, as of the effective date of the plan, equal to the
        greatest of the allowed amount of any fixed liquidation
        preference to which such holder is entitled, any fixed
        redemption price to which such holder is entitled, or the value
        of such interest; or
          (ii) the holder of any interest that is junior to the
        interests of such class will not receive or retain under the
        plan on account of such junior interest any property.

      (c) Notwithstanding subsections (a) and (b) of this section and
    except as provided in section 1127(b) of this title, the court may
    confirm only one plan, unless the order of confirmation in the case
    has been revoked under section 1144 of this title. If the
    requirements of subsections (a) and (b) of this section are met
    with respect to more than one plan, the court shall consider the
    preferences of creditors and equity security holders in determining
    which plan to confirm.
      (d) Notwithstanding any other provision of this section, on
    request of a party in interest that is a governmental unit, the
    court may not confirm a plan if the principal purpose of the plan
    is the avoidance of taxes or the avoidance of the application of
    section 5 of the Securities Act of 1933. In any hearing under this
    subsection, the governmental unit has the burden of proof on the
    issue of avoidance.
      (e) In a small business case, the court shall confirm a plan that
    complies with the applicable provisions of this title and that is
    filed in accordance with section 1121(e) not later than 45 days
    after the plan is filed unless the time for confirmation is
    extended in accordance with section 1121(e)(3).

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2635; Pub. L. 98-353, title
    III, Sec. 512, July 10, 1984, 98 Stat. 386; Pub. L. 99-554, title
    II, Secs. 225, 283(v), Oct. 27, 1986, 100 Stat. 3102, 3118; Pub. L.
    100-334, Sec. 2(b), June 16, 1988, 102 Stat. 613; Pub. L. 103-394,
    title III, Sec. 304(h)(7), title V, Sec. 501(d)(32), Oct. 22, 1994,
    108 Stat. 4134, 4146; Pub. L. 109-8, title II, Sec. 213(1), title
    III, Sec. 321(c), title IV, Sec. 438, title VII, Sec. 710, title
    XII, Sec. 1221(b), title XV, Sec. 1502(a)(8), Apr. 20, 2005, 119
    Stat. 52, 95, 113, 127, 196, 216.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1129 of the House amendment relates to confirmation of a
    plan in a case under chapter 11. Section 1129(a)(3) of the House
    amendment adopts the position taken in the Senate amendment and
    section 1129(a)(5) takes the position adopted in the House bill.
    Section 1129(a)(7) adopts the position taken in the House bill in
    order to insure that the dissenting members of an accepting class
    will receive at least what they would otherwise receive under the
    best interest of creditors test; it also requires that even the
    members of a class that has rejected the plan be protected by the
    best interest of creditors test for those rare cramdown cases where
    a class of creditors would receive more on liquidation than under
    reorganization of the debtor. Section 1129(a)(7)(C) is discussed in
    connection with section 1129(b) and section 1111(b). Section
    1129(a)(8) of the House amendment adopts the provision taken in the
    House bill which permits confirmation of a plan as to a particular
    class without resort to the fair and equitable test if the class
    has accepted a plan or is unimpaired under the plan.
      Section 1129(a)(9) represents a compromise between a similar
    provision contained in the House bill and the Senate amendment.
    Under subparagraph (A) claims entitled to priority under section
    507(a)(1) or (2) are entitled to receive cash on the effective date
    of the plan equal to the amount of the claim. Under subparagraph
    (B) claims entitled to priority under section 507(a)(3), (4), or
    (5), are entitled to receive deferred cash payments of a present
    value as of the effective date of the plan equal to the amount of
    the claims if the class has accepted the plan or cash payments on
    the effective date of the plan otherwise. Tax claims entitled to
    priority under section 507(a)(6) of different governmental units
    may not be contained in one class although all claims of one such
    unit may be combined and such unit may be required to take deferred
    cash payments over a period not to exceed 6 years after the date of
    assessment of the tax with the present value equal to the amount of
    the claim.
      Section 1129(a)(10) is derived from section 1130(a)(12) of the
    Senate amendment.
      Section 1129(b) is new. Together with section 1111(b) and section
    1129(a)(7)(C), this section provides when a plan may be confirmed,
    notwithstanding the failure of an impaired class to accept the plan
    under section 1129(a)(8). Before discussing section 1129(b) an
    understanding of section 1111(b) is necessary. Section 1111(b)(1),
    the general rule that a secured claim is to be treated as a
    recourse claim in chapter 11 whether or not the claim is
    nonrecourse by agreement or applicable law. This preferred status
    for a nonrecourse loan terminates if the property securing the loan
    is sold under section 363 or is to be sold under the plan.
      The preferred status also terminates if the class of which the
    secured claim is a part elects application of section 1111(b)(2).
    Section 1111(b)(2) provides that an allowed claim is a secured
    claim to the full extent the claim is allowed rather than to the
    extent of the collateral as under section 506(a). A class may elect
    application of paragraph (2) only if the security is not of
    inconsequential value and, if the creditor is a recourse creditor,
    the collateral is not sold under section 363 or to be sold under
    the plan. Sale of property under section 363 or under the plan is
    excluded from treatment under section 1111(b) because of the
    secured party's right to bid in the full amount of his allowed
    claim at any sale of collateral under section 363(k) of the House
    amendment.
      As previously noted, section 1129(b) sets forth a standard by
    which a plan may be confirmed notwithstanding the failure of an
    impaired class to accept the plan.
      Paragraph (1) makes clear that this alternative confirmation
    standard, referred to as "cram down," will be called into play only
    on the request of the proponent of the plan. Under this cramdown
    test, the court must confirm the plan if the plan does not
    discriminate unfairly, and is "fair and equitable," with respect to
    each class of claims or interests that is impaired under, and has
    not accepted, the plan. The requirement of the House bill that a
    plan not "discriminate unfairly" with respect to a class is
    included for clarity; the language in the House report interpreting
    that requirement, in the context of subordinated debentures,
    applies equally under the requirements of section 1129(b)(1) of the
    House amendment.
      Although many of the factors interpreting "fair and equitable"
    are specified in paragraph (2), others, which were explicated in
    the description of section 1129(b) in the House report, were
    omitted from the House amendment to avoid statutory complexity and
    because they would undoubtedly be found by a court to be
    fundamental to "fair and equitable" treatment of a dissenting
    class. For example, a dissenting class should be assured that no
    senior class receives more than 100 percent of the amount of its
    claims. While that requirement was explicitly included in the House
    bill, the deletion is intended to be one of style and not one of
    substance.
      Paragraph (2) provides guidelines for a court to determine
    whether a plan is fair and equitable with respect to a dissenting
    class. It must be emphasized that the fair and equitable
    requirement applies only with respect to dissenting classes.
    Therefore, unlike the fair and equitable rule contained in chapter
    X [chapter 10 of former title 11] and section 77 of the Bankruptcy
    Act [section 205 of former title 11] under section 1129(b)(2),
    senior accepting classes are permitted to give up value to junior
    classes as long as no dissenting intervening class receives less
    than the amount of its claims in full. If there is no dissenting
    intervening class and the only dissent is from a class junior to
    the class to which value have been given up, then the plan may
    still be fair and equitable with respect to the dissenting class,
    as long as no class senior to the dissenting class has received
    more than 100 percent of the amount of its claims.
      Paragraph (2) contains three subparagraphs, each of which applies
    to a particular kind of class of claims or interests that is
    impaired and has not accepted the plan. Subparagraph (A) applies
    when a class of secured claims is impaired and has not accepted the
    plan. The provision applies whether or not section 1111(b) applies.
    The plan may be crammed down notwithstanding the dissent of a
    secured class only if the plan complies with clause (i), (ii), or
    (iii).
      Clause (i) permits cramdown if the dissenting class of secured
    claims will retain its lien on the property whether the property is
    retained by the debtor or transferred. It should be noted that the
    lien secures the allowed secured claim held by such holder. The
    meaning of "allowed secured claim" will vary depending on whether
    section 1111(b)(2) applies to such class.
      If section 1111(b)(2) applies then the "electing" class is
    entitled to have the entire allowed amount of the debt related to
    such property secured by a lien even if the value of the collateral
    is less than the amount of the debt. In addition, the plan must
    provide for the holder to receive, on account of the allowed
    secured claims, payments, either present or deferred, of a
    principal face amount equal to the amount of the debt and of a
    present value equal to the value of the collateral.
      For example, if a creditor loaned $15,000,000 to a debtor secured
    by real property worth $18,000,000 and the value of the real
    property had dropped to $12,000,000 by the date when the debtor
    commenced a proceeding under chapter 11, the plan could be
    confirmed notwithstanding the dissent of the creditor as long as
    the lien remains on the collateral to secure a $15,000,000 debt,
    the face amount of present or extended payments to be made to the
    creditor under the plan is at least $15,000,000, and the present
    value of the present or deferred payments is not less than
    $12,000,000. The House report accompanying the House bill described
    what is meant by "present value".
      Clause (ii) is self explanatory. Clause (iii) requires the court
    to confirm the plan notwithstanding the dissent of the electing
    secured class if the plan provides for the realization by the
    secured class of the indubitable equivalents of the secured claims.
    The standard of "indubitable equivalents" is taken from In re Murel
    Holding Corp., 75 F.2d 941 (2d Cir. 1935) (Learned Hand, Jr.).
      Abandonment of the collateral to the creditor would clearly
    satisfy indubitable equivalence, as would a lien on similar
    collateral. However, present cash payments less than the secured
    claim would not satisfy the standard because the creditor is
    deprived of an opportunity to gain from a future increase in value
    of the collateral. Unsecured notes as to the secured claim or
    equity securities of the debtor would not be the indubitable
    equivalent. With respect to an oversecured creditor, the secured
    claim will never exceed the allowed claim.
      Although the same language applies, a different result pertains
    with respect to a class of secured claims to which section
    1111(b)(2) does not apply. This will apply to all claims secured by
    a right of setoff. The court must confirm the plan notwithstanding
    the dissent of such a class of secured claims if any of three
    alternative requirements is met. Under clause (i) the plan may be
    confirmed if the class retains a right of setoff or a lien securing
    the allowed secured claims of the class and the holders will
    receive payments of a present value equal to the allowed amount of
    their secured claims. Contrary to electing classes of secured
    creditors who retain a lien under subparagraph (A)(i)(I) to the
    extent of the entire claims secured by such lien, nonelecting
    creditors retain a lien on collateral only to the extent of their
    allowed secured claims and not to the extent of any deficiency, and
    such secured creditors must receive present or deferred payments
    with a present value equal to the allowed secured claim, which in
    turn is only the equivalent of the value of the collateral under
    section 506(a).
      Any deficiency claim of a nonelecting class of secured claims is
    treated as an unsecured claim and is not provided for under
    subparagraph (A). The plan may be confirmed under clause (ii) if
    the plan proposes to sell the property free and clear of the
    secured party's lien as long as the lien will attach to the
    proceeds and will receive treatment under clause (i) or (iii).
    Clause (iii) permits confirmation if the plan provides for the
    realization by the dissenting nonelecting class of secured claims
    of the indubitable equivalent of the secured claims of such class.
      Contrary to an "electing" class to which section 1111(b)(2)
    applies, the nonelecting class need not be protected with respect
    to any future appreciation in value of the collateral since the
    secured claim of such a class is never undersecured by reason of
    section 506(a). Thus the lien secures only the value of interest of
    such creditor in the collateral. To the extent deferred payments
    exceed that amount, they represent interest. In the event of a
    subsequent default, the portion of the face amount of deferred
    payments representing unaccrued interest will not be secured by the
    lien.
      Subparagraph (B) applies to a dissenting class of unsecured
    claims. The court must confirm the plan notwithstanding the dissent
    of a class of impaired unsecured claims if the plan provides for
    such claims to receive property with a present value equal to the
    allowed amount of the claims. Unsecured claims may receive any kind
    of "property," which is used in its broadest sense, as long as the
    present value of the property given to the holders of unsecured
    claims is equal to the allowed amount of the claims. Some kinds of
    property, such as securities, may require difficult valuations by
    the court; in such circumstances the court need only determine that
    there is a reasonable likelihood that the property given the
    dissenting class of impaired unsecured claims equals the present
    value of such allowed claims.
      Alternatively, under clause (ii), the court must confirm the plan
    if the plan provides that holders of any claims or interests junior
    to the interests of the dissenting class of impaired unsecured
    claims will not receive any property under the plan on account of
    such junior claims or interests. As long as senior creditors have
    not been paid more than in full, and classes of equal claims are
    being treated so that the dissenting class of impaired unsecured
    claims is not being discriminated against unfairly, the plan may be
    confirmed if the impaired class of unsecured claims receives less
    than 100 cents on the dollar (or nothing at all) as long as no
    class junior to the dissenting class receives anything at all. Such
    an impaired dissenting class may not prevent confirmation of a plan
    by objection merely because a senior class has elected to give up
    value to a junior class that is higher in priority than the
    impaired dissenting class of unsecured claims as long as the above
    safeguards are met.
      Subparagraph (C) applies to a dissenting class of impaired
    interests. Such interests may include the interests of general or
    limited partners in a partnership, the interests of a sole
    proprietor in a proprietorship, or the interest of common or
    preferred stockholders in a corporation. If the holders of such
    interests are entitled to a fixed liquidation preference or fixed
    redemption price on account of such interests then the plan may be
    confirmed notwithstanding the dissent of such class of interests as
    long as it provides the holders property of a present value equal
    to the greatest of the fixed redemption price, or the value of such
    interests. In the event there is no fixed liquidation preference or
    redemption price, then the plan may be confirmed as long as it
    provides the holders of such interests property of a present value
    equal to the value of such interests. If the interests are "under
    water" then they will be valueless and the plan may be confirmed
    notwithstanding the dissent of that class of interests even if the
    plan provides that the holders of such interests will not receive
    any property on account of such interests.
      Alternatively, under clause (ii), the court must confirm the plan
    notwithstanding the dissent of a class of interests if the plan
    provides that holders of any interests junior to the dissenting
    class of interests will not receive or retain any property on
    account of such junior interests. Clearly, if there are no junior
    interests junior to the class of dissenting interests, then the
    condition of clause (ii) is satisfied. The safeguards that no claim
    or interest receive more than 100 percent of the allowed amount of
    such claim or interest and that no class be discriminated against
    unfairly will insure that the plan is fair and equitable with
    respect to the dissenting class of interests.
      Except to the extent of the treatment of secured claims under
    subparagraph (A) of this statement, the House report remains an
    accurate description of confirmation of section 1129(b). Contrary
    to the example contained in the Senate report, a senior class will
    not be able to give up value to a junior class over the dissent of
    an intervening class unless the intervening class receives the full
    amount, as opposed to value, of its claims or interests.
      One last point deserves explanation with respect to the
    admittedly complex subject of confirmation. Section 1129(a)(7)(C)
    in effect exempts secured creditors making an election under
    section 1111(b)(2) from application of the best interest of
    creditors test. In the absence of an election the amount such
    creditors receive in a plan of liquidation would be the value of
    their collateral plus any amount recovered on the deficiency in the
    case of a recourse loan. However, under section 1111(b)(2), the
    creditors are given an allowed secured claim to the full extent the
    claim is allowed and have no unsecured deficiency. Since section
    1129(b)(2)(A) makes clear that an electing class need receive
    payments of a present value only equal to the value of the
    collateral, it is conceivable that under such a "cram down" the
    electing creditors would receive nothing with respect to their
    deficiency. The advantage to the electing creditors is that they
    have a lien securing the full amount of the allowed claim so that
    if the value of the collateral increases after the case is closed,
    the deferred payments will be secured claims. Thus it is both
    reasonable and necessary to exempt such electing class from
    application of section 1129(a)(7) as a logical consequence of
    permitting election under section 1111(b)(2).
      Section 1131 of the Senate amendment is deleted as unnecessary in
    light of the protection given a secured creditor under section
    1129(b) of the House amendment.
      Payment of taxes in reorganizations: Under the provisions of
    section 1141 as revised by the House amendment, an individual in
    reorganization under chapter 11 will not be discharged from any
    debt, including prepetition tax liabilities, which are
    nondischargeable under section 523. Thus, an individual debtor
    whose plan of reorganization is confirmed under chapter 11 will
    remain liable for prepetition priority taxes, as defined in section
    507, and for tax liabilities which receive no priority but are
    nondischargeable under section 523, including no return, late
    return, and fraud liabilities.
      In the case of a partnership or a corporation in reorganization
    under chapter 11 of title 11, section 1141(d)(1) of the House
    amendment adopts a provision limiting the taxes that must be
    provided for in a plan before a plan can be confirmed to taxes
    which receive priority under section 507. In addition, the House
    amendment makes dischargeable, in effect, tax liabilities
    attributable to no return, late return, or fraud situations. The
    amendment thus does not adopt a shareholder continuity test such as
    was contained in section 1141(d)(2)(A)(iii) of the Senate
    amendment. However, the House amendment amends section 1106,
    relating to duties of the trustee, to require the trustee to
    furnish, on request of a tax authority and without personal
    liability, information available to the trustee concerning
    potential prepetition tax liabilities for unfiled returns of the
    debtor. Depending on the condition of the debtor's books and
    records, this information may include schedules and files available
    to the business. The House amendment also does not prohibit a tax
    authority from disallowing any tax benefit claimed after the
    reorganization if the item originated in a deduction, credit, or
    other item improperly reported before the reorganization occurred.
    It may also be appropriate for the Congress to consider in the
    future imposing civil or criminal liability on corporate officers
    for preparing a false or fraudulent tax return. The House amendment
    also contemplates that the Internal Revenue Service will monitor
    the relief from liabilities under this provision and advise the
    Congress if, and to the extent, any significant tax abuse may be
    resulting from the provision.
      Medium of payment of taxes: Federal, State, and local taxes
    incurred during the administration period of the estate, and during
    the "gap" period in an involuntary case, are to be paid solely in
    cash. Taxes relating to third priority wages are to be paid, under
    the general rules, in cash on the effective date of the plan, if
    the class has not accepted the plan, in an amount equal to the
    allowed amount of the claim. If the class has accepted the plan,
    the taxes must be paid in cash but the payments must be made at the
    time the wages are paid which may be paid in deferred periodic
    installments having a value, on the effective date of the plan,
    equal to the allowed amount of the tax claims. Prepetition taxes
    entitled to sixth priority under section 507(a)(6) also must be
    paid in cash, but the plan may also permit the debtor whether a
    corporation, partnership, or an individual, to pay the allowed
    taxes in installments over a period not to exceed 6 years following
    the date on which the tax authority assesses the tax liability,
    provided the value of the deferred payments representing principal
    and interest, as of the effective date of the plan, equals the
    allowed amount of the tax claim.
      The House amendment also modifies the provisions of both bills
    dealing with the time when tax liabilities of a debtor in
    reorganization may be assessed by the tax authority. The House
    amendment follows the Senate amendment in deleting the limitation
    in present law under which a priority tax assessed after a
    reorganization plan is confirmed must be assessed within 1 year
    after the date of the filing of the petition. The House amendment
    specifies broadly that after the bankruptcy court determines the
    liability of the estate for a prepetition tax or for an
    administration period tax, the governmental unit may thereafter
    assess the tax against the estate, debtor, or successor to the
    debtor. The party to be assessed will, of course, depend on whether
    the case is under chapter 7, 11, or 13, whether the debtor is an
    individual, partnership, or a corporation, and whether the court is
    determining an individual debtor's personal liability for a
    nondischargeable tax. Assessment of the tax may only be made,
    however, within the limits of otherwise applicable law, such as the
    statute of limitations under the tax law.
      Tax avoidance purpose: The House bill provided that no
    reorganization plan may be approved if the principal purpose of the
    plan is the avoidance of taxes. The Senate amendment modified the
    rule so that the bankruptcy court need make a determination of tax
    avoidance purpose only if it is asked to do so by the appropriate
    tax authority. Under the Senate amendment, if the tax authority
    does not request the bankruptcy court to rule on the purpose of the
    plan, the tax authority would not be barred from later asserting a
    tax avoidance motive with respect to allowance of a deduction or
    other tax benefit claimed after the reorganization. The House
    amendment adopts the substance of the Senate amendment, but does
    not provide a basis by which a tax authority may collaterally
    attack confirmation of a plan of reorganization other than under
    section 1144.

                         SENATE REPORT NO. 95-989                     
      [Section 1130 (enacted as section 1129)] Subsection (a)
    enumerates the requirement governing confirmation of a plan. The
    court is required to confirm a plan if and only if all of the
    requirements are met.
      Paragraph (1) requires that the plan comply with the applicable
    provisions of chapter 11, such as sections 1122 and 1123, governing
    classification and contents of plan.
      Paragraph (2) requires that the proponent of the plan comply with
    the applicable provisions of chapter 11, such as section 1125
    regarding disclosure.
      Paragraph (3) requires that the plan have been proposed in good
    faith, and not by any means forbidden by law.
      Paragraph (4) is derived from section 221 of chapter X [section
    621 of former title 11]. It requires that any payment made or
    promised by the proponent, the debtor, or person issuing securities
    or acquiring property under the plan, for services or for costs and
    expenses in, or in connection with the case, or in connection with
    the plan and incident to the case, be disclosed to the court. In
    addition, any payment made before confirmation must have been
    reasonable, and any payment to be fixed after confirmation must be
    subject to the approval of the court as reasonable.
      Paragraph (5) is also derived from section 221 of chapter X
    [section 621 of former title 11]. It requires the plan to disclose
    the identity and affiliations of any individual proposed to serve,
    after confirmation, as a director, officer, or voting trustee of
    the reorganized debtor. The appointment to or continuance in one of
    these offices by the individual must be consistent with the
    interests of creditors and equity security holders and with public
    policy. The plan must also disclose the identity of any insider
    that will be employed or retained by the reorganized debtor, and
    the nature of any compensation to be paid to the insider.
      Paragraph (6) permits confirmation only if any regulatory
    commission that will have jurisdiction over the debtor after
    confirmation of the plan has approved any rate change provided for
    in the plan. As an alternative, the rate change may be conditioned
    on such approval.
      Paragraph (7) provides that in the case of a public company the
    court shall confirm the plan if it finds the plan to be fair and
    equitable and the plan either (1) has been accepted by classes of
    claims or interests as provided in section 1126, or (2), if not so
    accepted, satisfies the requirements of subsection (b) of this
    section.
      Paragraphs (8) and (9) apply only in nonpublic cases. Paragraph
    (8) does not apply the fair and equitable standards in two
    situations. The first occurs if there is unanimous consent of all
    affected holders of claims and interests. It is also sufficient for
    purposes of confirmation if each holder of a claim or interest
    receives or retains consideration of a value, as of the effective
    date of the plan, that is not less than each would have or receive
    if the debtor were liquidated under chapter 7 of this title. This
    standard adapts the test of "best interest of creditors" as
    interpreted by the courts under chapter XI [chapter 11 of former
    title 11]. It is given broader application in chapter 11 of this
    title since a plan under chapter 11 may affect not only unsecured
    claims but secured claims and stock as well.
      Under paragraph (9)(A), if a class of claims or interests has not
    accepted the plan, the court will confirm the plan if, for the
    dissenting class and any class of equal rank, the negotiated plan
    provides in value no less than under a plan that is fair and
    equitable. Such review and determination are not required for any
    other classes that accepted the plan.
      Paragraph (9)(A) would permit a senior creditor to adjust his
    participation for the benefit of stockholders. In such a case,
    junior creditors, who have not been satisfied in full, may not
    object if, absent the "give-up", they are receiving all that a fair
    and equitable plan would give them. To illustrate, suppose the
    estate is valued at $1.5 million and claims and stock are:


                                              Claims and        Equity  
                                                 stock        (millions)
                                              (millions)                
    --------------------------------------------------------------------
    (1) Senior debt                                  $1.2           $1.2
    (2) Junior debt                                    .5             .3
    (3) Stock                                      ((!1))              -
                                             ---------------------------
      Total                                           1.7            1.5

      (!1) No value.
    --------------------------------------------------------------------

      Under the plan, the senior creditor gives up $100,000 in value
    for the benefit of stockholders as follows:


                                                               Millions 
    --------------------------------------------------------------------
    (1) Senior debt                                                 $1.1
    (2) Junior debt                                                   .3
    (3) Stock                                                         .1
                                                             -----------
      Total                                                          1.5
    --------------------------------------------------------------------

      If the junior creditors dissent, the court may nevertheless
    confirm the plan since under the fair and equitable standard they
    had an equity of only $300,000 and the allocation to equity
    security holders did not affect them.
      Paragraph (9)(A) provides a special alternative with respect to
    secured claims. A plan may be confirmed against a dissenting class
    of secured claims if the plan or order of confirmation provides for
    the realization of their security (1) by the retention of the
    property subject to such security; (2) by a sale of the property
    and transfer of the claim to the proceeds of sale if the secured
    creditors were permitted to bid at the sale and set off against the
    purchase price up to the allowed amount of their claims; or (3) by
    such other method that will assure them the realization of the
    indubitable equivalent of the allowed amount of their secured
    claims. The indubitable equivalent language is intended to follow
    the strict approach taken by Judge Learned Hand in In Re Murel
    Holding Corp. 75, F.2d 941 (2nd Cir. 1935).
      Paragraph (9)(B) provides that, if a class of claims or interests
    is excluded from participation under the plan, the court may
    nevertheless confirm the plan if it determines that no class on a
    parity with or junior to such participates under the plan. In the
    previous illustration, no confirmation would be permitted if the
    negotiated plan would grant a participation to stockholders but
    nothing for junior creditors. As noted elsewhere, by reason of
    section 1126(g), an excluded class is a dissenting class under
    section 1130.
      Paragraph (10) states that, to be confirmed, the plan must
    provide that each holder of a claim under section 507 will receive
    property, as therein noted, of a value equal to the allowed amount
    of the claim. There are two exceptions: (A) The holder thereof may
    agree to a different settlement in part or in whole; (B) where a
    debtor's business is reorganized under chapter 11, this provision
    requires that taxes entitled to priority (including administrative
    claims or taxes) must be paid in cash not later than 120 days after
    the plan is confirmed, unless the Secretary of the Treasury agrees
    to other terms or kinds of payment. The bill, as introduced,
    required full payment in cash within 60 days after the plan is
    confirmed.
      Paragraph (11) requires a determination regarding feasibility of
    the plan. It is a slight elaboration of the law that has developed
    in the application of the word "feasible" in Chapter X of the
    present Act [chapter 10 of former title 11].
      Paragraph (12) requires that at least one class must accept the
    plan, but any claims or interests held by insiders are not to be
    included for purposes of determining the number and amount of
    acceptances.
      Subsection (b) provides that if, in the case of a public company,
    the plan meets the requirements of subsection (a) (except
    paragraphs (8) and (9) which do not apply to such a company), the
    court is to confirm the plan if the plan or the order of
    confirmation provides adequate protection for the realization of
    the value of the claims or interests of each class not accepting
    the plan. The intent is to incorporate inclusively, as a guide to
    the meaning of subsection (a) the provisions of section 216(7)
    ([former] 11 U.S.C. 616(7)) with respect to claims and section
    216(8) ([former] 11 U.S.C. 616(8)) with respect to equity security
    interests.
      Under subsection (c) the court may confirm only one plan, unless
    the order of confirmation has been revoked under section 1144. If
    the requirements for confirmation are met with respect to more than
    one plan, the court shall consider the preferences of creditors and
    stockholders in deciding which plan to confirm.
      Subsection (d) provides that the bankruptcy court may not confirm
    a plan of reorganization if its principal purpose is the avoidance
    of taxes or the avoidance of section 5 of the Securities Act of
    1933 (15 U.S.C. 77e). This rules modifies a similar provision of
    present law (section 269 of the Bankruptcy Act [section 669 of
    former title 11]).

                          HOUSE REPORT NO. 95-595                      
      Paragraph (7) [of subsec. (a)] incorporates the former "best
    interest of creditors" test found in chapter 11, but spells out
    precisely what is intended. With respect to each class, the holders
    of the claims or interests of that class must receive or retain
    under the plan on account of those claims or interest property of a
    value, as of the effective date of the plan, that is not less than
    the amount that they would so receive or retain if the debtor were
    liquidated under chapter 7 on the effective date of the plan.
      In order to determine the hypothetical distribution in a
    liquidation, the court will have to consider the various
    subordination provisions of proposed 11 U.S.C. 510, 726(a)(3),
    726(a)(4), and the postponement provisions of proposed 11 U.S.C.
    724. Also applicable in appropriate cases will be the rules
    governing partnership distributions under proposed 11 U.S.C. 723,
    and distributions of community property under proposed 11 U.S.C.
    726(c). Under subparagraph (A), a particular holder is permitted to
    accept less than liquidation value, but his acceptance does not
    bind the class.
      Property under subparagraph (B) may include securities of the
    debtor. Thus, the provision will apply in cases in which the plan
    is confirmed under proposed 11 U.S.C. 1129(b).
      Paragraph (8) is central to the confirmation standards. It
    requires that each class either have accepted the plan or be
    unimpaired.
      Paragraph (9) augments the requirements of paragraph (8) by
    requiring payment of each priority claim in full. It permits
    payments over time and payment other than in cash, but payment in
    securities is not intended to be permitted without consent of the
    priority claimant even if the class has consented. It also permits
    a particular claimant to accept less than full payment.
      Subsection (b) permits the court to confirm a plan
    notwithstanding failure of compliance with paragraph (8) of
    subsection (a). The plan must comply with all other paragraphs of
    subsection (a), including paragraph (9). This subsection contains
    the so-called cramdown. It requires simply that the plan meet
    certain standards of fairness to dissenting creditors or equity
    security holders. The general principle of the subsection permits
    confirmation notwithstanding nonacceptance by an impaired class if
    that class and all below it in priority are treated according to
    the absolute priority rule. The dissenting class must be paid in
    full before any junior class may share under the plan. If it is
    paid in full, then junior classes may share. Treatment of classes
    of secured creditors is slightly different because they do not fall
    in the priority ladder, but the principle is the same.
      Specifically, the court may confirm a plan over the objection of
    a class of secured claims if the members of that class are
    unimpaired or if they are to receive under the plan property of a
    value equal to the allowed amount of their secured claims, as
    determined under proposed 11 U.S.C. 506(a). The property is to be
    valued as of the effective date of the plan, thus recognizing the
    time-value of money. As used throughout this subsection, "property"
    includes both tangible and intangible property, such as a security
    of the debtor or a successor to the debtor under a reorganization
    plan.
      The court may confirm over the dissent of a class of unsecured
    claims, including priority claims, only if the members of the class
    are unimpaired, if they will receive under the plan property of a
    value equal to the allowed amount of their unsecured claims, or if
    no class junior will share under the plan. That is, if the class is
    impaired, then they must be paid in full or, if paid less than in
    full, then no class junior may receive anything under the plan.
    This codifies the absolute priority rule from the dissenting class
    on down.
      With respect to classes of equity, the court may confirm over a
    dissent if the members of the class are unimpaired, if they receive
    their liquidation preference or redemption rights, if any, or if no
    class junior shares under the plan. This, too, is a codification of
    the absolute priority rule with respect to equity. If a partnership
    agreement subordinates limited partners to general partners to any
    degree, then the general principles of paragraph (3) of this
    subsection would apply to prevent the general partners from being
    squeezed out.
      One requirement applies generally to all classes before the court
    may confirm under this subsection. No class may be paid more than
    in full.
      The partial codification of the absolute priority rule here is
    not intended to deprive senior creditor of compensation for being
    required to take securities in the reorganized debtor that are of
    an equal priority with the securities offered to a junior class.
    Under current law, seniors are entitled to compensation for their
    loss of priority, and the increased risk put upon them by being
    required to give up their priority will be reflected in a lower
    value of the securities given to them than the value of comparable
    securities given to juniors that have not lost a priority position.
      Finally, the proponent must request use of this subsection. The
    court may not confirm notwithstanding nonacceptance unless the
    proponent requests and the court may then confirm only if
    subsection (b) is complied with. The court may not rewrite the
    plan.
      A more detailed explanation follows:
      The test to be applied by the court is set forth in the various
    paragraphs of section 1129(b). The elements of the test are new[,]
    departing from both the absolute priority rule and the best
    interests of creditors tests found under the Bankruptcy Act [former
    title 11]. The court is not permitted to alter the terms of the
    plan. It must merely decide whether the plan complies with the
    requirements of section 1129(b). If so, the plan is confirmed, if
    not the plan is denied confirmation.
      The procedure followed is simple. The court examines each class
    of claims or interests designated under section 1123(a)(1) to see
    if the requirements of section 1129(b) are met. If the class is a
    class of secured claims, then paragraph (1) contains two tests that
    must be complied with in order for confirmation to occur. First,
    under subparagraph (A), the court must be able to find that the
    consideration given under the plan on account of the secured claim
    does not exceed the allowed amount of the claim. This condition is
    not prescribed as a matter of law under section 1129(a), because if
    the secured claim is compensated in securities of the debtor, a
    valuation of the business would be necessary to determine the value
    of the consideration. While section 1129(a) does not contemplate a
    valuation of the debtor's business, such a valuation will almost
    always be required under section 1129(b) in order to determine the
    value of the consideration to be distributed under the plan. Once
    the valuation is performed, it becomes a simple matter to impose
    the criterion that no claim will be paid more than in full.
      Application of the test under subparagraph (A) also requires a
    valuation of the consideration "as of the effective date of the
    plan". This contemplates a present value analysis that will
    discount value to be received in the future; of course, if the
    interest rate paid is equivalent to the discount rate used, the
    present value and face future value will be identical. On the other
    hand, if no interest is proposed to be paid, the present value will
    be less than the face future value. For example, consider an
    allowed secured claim of $1,000 in a class by itself. One plan
    could propose to pay $1,000 on account of this claim as of the
    effective date of the plan. Another plan could propose to give a
    note with a $1,000 face amount due five years after the effective
    date of the plan on account of this claim. A third plan could
    propose to give a note in a face amount of $1,000 due five years
    from the effective date of the plan plus six percent annual
    interest commencing on the effective date of the plan on account of
    this claim. The first plan clearly meets the requirements of
    subparagraph (A) because the amount received on account of the
    second claim has an equivalent present value as of the effective
    date of the plan equal to the allowed amount of such claim.
      The second plan also meets the requirements of subparagraph (A)
    because the present value of the five years note as of the
    effective date of the plan will never exceed the allowed amount of
    the secured claim; the higher the discount rate, the less present
    value the note will have. Whether the third plan complies with
    subparagraph (A) depends on whether the discount rate is less than
    six percent. Normally, the interest rate used in the plan will be
    prima facie evidence of the discount rate because the interest rate
    will reflect an arms length determination of the risk of the
    security involved and feasibility considerations will tend to
    understate interest payments. If the court found the discount rate
    to be greater than or equal to the interest rate used in the plan,
    then subparagraph (A) would be complied with because the value of
    the note as of the effective date of the plan would not exceed the
    allowed amount of the second claim. If, however, the court found
    the discount rate to be less than the interest rate proposed under
    the plan, then the present value of the note would exceed $1,000
    and the plan would fail of confirmation. On the other hand, it is
    important to recognize that the future principal amount of a note
    in excess of the allowed amount of a secured claim may have a
    present value less than such allowed amount, if the interest rate
    under the plan is correspondingly less than the discount rate.
      Even if the requirements of subparagraph (A) are complied with,
    the class of secured claims must satisfy one of the three clauses
    in paragraph (B) in order to pass muster. It is sufficient for
    confirmation if the class has accepted the plan, or if the claims
    of the class are unimpaired, or if each holder of a secured claim
    in the class will receive property of a value as of the effective
    date of the plan equal to the allowed amount of such claim (unless
    he has agreed to accept less). It is important to note that under
    section 506(a), the allowed amount of the secured claim will not
    include any extent to which the amount of such claim exceeds the
    value of the property securing such claim. Thus, instead of
    focusing on secured creditors or unsecured creditors, the statute
    focuses on secured claims and unsecured claims.
      After the court has applied paragraph (1) to each class of
    secured claims, it then applies paragraph (2) to each class of
    unsecured claims. Again two separate components must be tested.
    Subparagraph (A) is identical with the test under section
    1129(b)(1)(A) insofar as the holder of an unsecured claim is not
    permitted to receive property of a value as of the effective date
    of the plan on account of such claim that is greater than the
    allowed amount of such claim. In addition, subparagraph (B)
    requires compliance with one of four conditions. The conditions in
    clauses (i)-(iii) mirror the conditions of acceptance unimpairment,
    or full value found in connection with secured claims in section
    1129(b)(1)(B).
      The condition contained in section 1129(b)(2)(B)(iv) provides
    another basis for confirming the plan with respect to a class of
    unsecured claims. It will be of greatest use when an impaired class
    that has not accepted the plan is to receive less than full value
    under the plan. The plan may be confirmed under clause (iv) in
    those circumstances if the class is not unfairly discriminated
    against with respect to equal classes and if junior classes will
    receive nothing under the plan. The second criterion is the easier
    to understand. It is designed to prevent a senior class from giving
    up consideration to a junior class unless every intermediate class
    consents, is paid in full, or is unimpaired. This gives
    intermediate creditors a great deal of leverage in negotiating with
    senior or secured creditors who wish to have a plan that gives
    value to equity. One aspect of this test that is not obvious is
    that whether one class is senior, equal, or junior to another class
    is relative and not absolute. Thus from the perspective of trade
    creditors holding unsecured claims, claims of senior and
    subordinated debentures may be entitled to share on an equal basis
    with the trade claims. However, from the perspective of the senior
    unsecured debt, the subordinated debentures are junior.
      This point illustrates the lack of precision in the first
    criterion which demands that a class not be unfairly discriminated
    against with respect to equal classes. From the perspective of
    unsecured trade claims, there is no unfair discrimination as long
    as the total consideration given all other classes of equal rank
    does not exceed the amount that would result from an exact aliquot
    distribution. Thus if trade creditors, senior debt, and subordinate
    debt are each owed $100 and the plan proposes to pay the trade debt
    $15, the senior debt $30, and the junior debt $0, the plan would
    not unfairly discriminate against the trade debt nor would any
    other allocation of consideration under the plan between the senior
    and junior debt be unfair as to the trade debt as long as the
    aggregate consideration is less than $30. The senior debt could
    take $25 and give up $5 to the junior debt and the trade debt would
    have no cause to complain because as far as it is concerned the
    junior debt is an equal class.
      However, in this latter case the senior debt would have been
    unfairly discriminated against because the trade debt was being
    unfairly over-compensated; of course the plan would also fail
    unless the senior debt was unimpaired, received full value, or
    accepted the plan, because from its perspective a junior class
    received property under the plan. Application of the test from the
    perspective of senior debt is best illustrated by the plan that
    proposes to pay trade debt $15, senior debt $25, and junior debt
    $0. Here the senior debt is being unfairly discriminated against
    with respect to the equal trade debt even though the trade debt
    receives less than the senior debt. The discrimination arises from
    the fact that the senior debt is entitled to the rights of the
    junior debt which in this example entitle the senior debt to share
    on a 2:1 basis with the trade debt.
      Finally, it is necessary to interpret the first criterion from
    the perspective of subordinated debt. The junior debt is subrogated
    to the rights of senior debt once the senior debt is paid in full.
    Thus, while the plan that pays trade debt $15, senior debt $25, and
    junior debt $0 is not unfairly discriminatory against the junior
    debt, a plan that proposes to pay trade debt $55, senior debt $100,
    and junior debt $1, would be unfairly discriminatory. In order to
    avoid discriminatory treatment against the junior debt, at least
    $10 would have to be received by such debt under those facts.
      The criterion of unfair discrimination is not derived from the
    fair and equitable rule or from the best interests of creditors
    test. Rather it preserves just treatment of a dissenting class from
    the class's own perspective.
      If each class of secured claims satisfies the requirements of
    section 1129(b)(1) and each class of unsecured claims satisfies the
    requirements of section 1129(b)(2), then the court must still see
    if each class of interests satisfies section 1129(b)(3) before the
    plan may be confirmed. Again, two separate criteria must be met.
    Under subparagraph (A) if the interest entitles the holder thereof
    to a fixed liquidation preference or if such interest may be
    redeemed at a fixed price, then the holder of such interest must
    not receive under the plan on account of such interest property of
    a value as of the effective date of the plan greater than the
    greater of these two values of the interest. Preferred stock would
    be an example of an interest likely to have liquidation preference
    or redemption price.
      If an interest such as most common stock or the interest of a
    general partnership has neither a fixed liquidation preference nor
    a fixed redemption price, then the criterion in subparagraph (A) is
    automatically fulfilled. In addition subparagraph (B) contains five
    clauses that impose alternative conditions of which at least one
    must be satisfied in order to warrant confirmation. The first two
    clauses contain requirements of acceptance or unimpairment similar
    to the first two clauses in paragraphs (1)(B) and (2)(B). Clause
    (iii) is similar to the unimpairment test contained in section
    1124(3)(B), except that it will apply to cover the issuance
    securities of the debtor of a value as of the effective date of the
    plan equal to the greater of any fixed liquidation preference or
    redemption price. The fourth clause allows confirmation if junior
    interests are not compensated under the plan and the fifth clause
    allows confirmation if there are no junior interests. These clauses
    recognized that as long as senior classes receive no more than full
    payment, the objection of a junior class will not defeat
    confirmation unless a class junior to it is receiving value under
    the plan and the objecting class is impaired. While a determination
    of impairment may be made under section 1124(3)(B)(iii) without a
    precise valuation of the business when common stock is clearly
    under water, once section 1129(b) is used, a more detailed
    valuation is a necessary byproduct. Thus, if no property is given
    to a holder of an interest under the plan, the interest should be
    clearly worthless in order to find unimpairment under section
    1124(3)(B)(iii) and section 1129(a)(8); otherwise, since a class of
    interests receiving no property is deemed to object under section
    1126(g), the more precise valuation of section 1129(b) should be
    used.
      If all of the requirements of section 1129(b) are complied with,
    then the court may confirm the plan subject to other limitations
    such as those found in section 1129(a) and (d).
      Subsection (c) of section 1129 governs confirmation when more
    than one plan meets the requirements of the section. The court must
    consider the preferences of creditors and equity security holders
    in determining which plan to confirm.
      Subsection (d) requires the court to deny confirmation if the
    principal purpose of the plan is the avoidance of taxes (through
    use of sections 346 and 1146, and applicable provisions of State
    law or the Internal Revenue Code [title 26] governing bankruptcy
    reorganizations) or the avoidance of section 5 of the Securities
    Act of 1933 [15 U.S.C. 77e] (through use of section 1145).

-REFTEXT-
                            REFERENCES IN TEXT                        
      Section 5 of the Securities Act of 1933, referred to in subsec.
    (d), is classified to section 77e of Title 15, Commerce and Trade.


-MISC2-
                                AMENDMENTS                            
      2005 - Subsec. (a)(9)(A). Pub. L. 109-8, Sec. 1502(a)(8)(A),
    substituted "507(a)(2) or 507(a)(3)" for "507(a)(1) or 507(a)(2)".
      Subsec. (a)(9)(B). Pub. L. 109-8, Sec. 1502(a)(8)(B), substituted
    "507(a)(1)" for "507(a)(3)".
      Subsec. (a)(9)(C). Pub. L. 109-8, Sec. 710(2), substituted
    "regular installment payments in cash - " and cls. (i) to (iii) for
    "deferred cash payments, over a period not exceeding six years
    after the date of assessment of such claim, of a value, as of the
    effective date of the plan, equal to the allowed amount of such
    claim."
      Subsec. (a)(9)(D). Pub. L. 109-8, Sec. 710(1), (3), added subpar.
    (D).
      Subsec. (a)(14). Pub. L. 109-8, Sec. 213(1), added par. (14).
      Subsec. (a)(15). Pub. L. 109-8, Sec. 321(c)(1), added par. (15).
      Subsec. (a)(16). Pub. L. 109-8, Sec. 1221(b), added par. (16).
      Subsec. (b)(2)(B)(ii). Pub. L. 109-8, Sec. 321(c)(2), inserted
    before period at end ", except that in a case in which the debtor
    is an individual, the debtor may retain property included in the
    estate under section 1115, subject to the requirements of
    subsection (a)(14) of this section".
      Subsec. (e). Pub. L. 109-8, Sec. 438, added subsec. (e).
      1994 - Subsec. (a)(4). Pub. L. 103-394, Sec. 501(d)(32)(A)(i),
    substituted period for semicolon at end.
      Subsec. (a)(9)(B). Pub. L. 103-394, Sec. 304(h)(7)(i),
    substituted ", 507(a)(6), or 507(a)(7)" for "or 507(a)(6)".
      Subsec. (a)(9)(C). Pub. L. 103-394, Sec. 304(h)(7)(ii),
    substituted "507(a)(8)" for "507(a)(7)".
      Subsec. (a)(12). Pub. L. 103-394, Sec. 501(d)(32)(A)(ii),
    inserted "of title 28" after "section 1930".
      Subsec. (d). Pub. L. 103-394, Sec. 501(d)(32)(B), struck out "(15
    U.S.C. 77e)" after "Act of 1933".
      1988 - Subsec. (a)(13). Pub. L. 100-334 added par. (13).
      1986 - Subsec. (a)(7). Pub. L. 99-554, Sec. 283(v)(1), struck out
    "of" after "to".
      Subsec. (a)(9)(B). Pub. L. 99-554, Sec. 283(v)(2), inserted
    reference to section 507(a)(6).
      Subsec. (a)(9)(C). Pub. L. 99-554, Sec. 283(v)(3), substituted
    "507(a)(7)" for "507(a)(6)".
      Subsec. (a)(12). Pub. L. 99-554, Sec. 225, added par. (12).
      1984 - Subsec. (a)(1), (2). Pub. L. 98-353, Sec. 512(a)(1), (2),
    substituted "title" for "chapter".
      Subsec. (a)(4). Pub. L. 98-353, Sec. 512(a)(3), amended par. (4)
    generally. Prior to amendment, par. (4) read as follows: "(A) Any
    payment made or promised by the proponent, by the debtor, or by a
    person issuing securities or acquiring property under the plan, for
    services or for costs and expenses in, or in connection with, the
    case, or in connection with the plan and incident to the case, has
    been disclosed to the court; and (B)(i) any such payment made
    before confirmation of the plan is reasonable; or (ii) if such
    payment is to be fixed after confirmation of the plan, such payment
    is subject to the approval of the court as reasonable."
      Subsec. (a)(5)(A)(ii). Pub. L. 98-353, Sec. 512(a)(4),
    substituted "; and" for the period at the end.
      Subsec. (a)(5)(B). Pub. L. 98-353, Sec. 512(a)(5), substituted
    "the" for "The".
      Subsec. (a)(6). Pub. L. 98-353, Sec. 512(a)(6), inserted
    "governmental" after "Any".
      Subsec. (a)(7). Pub. L. 98-353, Sec. 512(a)(7)(A), substituted
    "of each impaired class of claims or interests" for "each class".
      Subsec. (a)(7)(B). Pub. L. 98-353, Sec. 512(a)(7)(B), substituted
    "holder's" for "creditor's".
      Subsec. (a)(8). Pub. L. 98-353, Sec. 512(a)(8), inserted "of
    claims or interests" after "each class".
      Subsec. (a)(10). Pub. L. 98-353, Sec. 512(a)(9), substituted "If
    a class of claims is impaired under the plan, at least one class of
    claims that is impaired under the plan has accepted the plan,
    determined without including any acceptance of the plan by any
    insider" for "At least one class of claims has accepted the plan,
    determined without including any acceptance of the plan by any
    insider holding a claim of such class".
      Subsec. (b)(2)(A)(i)(I), (ii). Pub. L. 98-353, Sec. 512(b)(1),
    substituted "liens" for "lien" wherever appearing.
      Subsec. (b)(2)(B)(ii). Pub. L. 98-353, Sec. 512(b)(2), inserted
    "under the plan" after "retain".
      Subsec. (b)(2)(C)(i). Pub. L. 98-353, Sec. 512(b)(3), substituted
    "interest" for "claim", and "or the value" for "and the value".
      Subsec. (d). Pub. L. 98-353, Sec. 512(c), inserted "the
    application of" and provisions requiring that in any hearing under
    this subsection, the governmental unit has the burden of proof on
    the issue of avoidance.

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by section 1221(b) of Pub. L. 109-8 applicable to cases
    pending under this title on Apr. 20, 2005, or filed under this
    title on or after Apr. 20, 2005, with certain exceptions, see
    section 1221(d) of Pub. L. 109-8, set out as a note under section
    363 of this title.
      Amendment by sections 213(1), 321(c), 438, 710, and 1502(a)(8) of
    Pub. L. 109-8 effective 180 days after Apr. 20, 2005, and not
    applicable with respect to cases commenced under this title before
    such effective date, except as otherwise provided, see section 1501
    of Pub. L. 109-8, set out as a note under section 101 of this
    title.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

                     EFFECTIVE DATE OF 1988 AMENDMENT                 
      Amendment by Pub. L. 100-334 effective June 16, 1988, but not
    applicable to cases commenced under this title before that date,
    see section 4 of Pub. L. 100-334, set out as an Effective Date note
    under section 1114 of this title.

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Effective date and applicability of amendment by section 225 of
    Pub. L. 99-554 dependent upon the judicial district involved, see
    section 302(d), (e) of Pub. L. 99-554, set out as a note under
    section 581 of Title 28, Judiciary and Judicial Procedure.
      Amendment by section 283 of Pub. L. 99-554 effective 30 days
    after Oct. 27, 1986, see section 302(a) of Pub. L. 99-554.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-


-CITE-
    11 USC SUBCHAPTER III - POSTCONFIRMATION MATTERS            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER III - POSTCONFIRMATION MATTERS

-HEAD-
                 SUBCHAPTER III - POSTCONFIRMATION MATTERS             

-End-



-CITE-
    11 USC Sec. 1141                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER III - POSTCONFIRMATION MATTERS

-HEAD-
    Sec. 1141. Effect of confirmation

-STATUTE-
      (a) Except as provided in subsections (d)(2) and (d)(3) of this
    section, the provisions of a confirmed plan bind the debtor, any
    entity issuing securities under the plan, any entity acquiring
    property under the plan, and any creditor, equity security holder,
    or general partner in the debtor, whether or not the claim or
    interest of such creditor, equity security holder, or general
    partner is impaired under the plan and whether or not such
    creditor, equity security holder, or general partner has accepted
    the plan.
      (b) Except as otherwise provided in the plan or the order
    confirming the plan, the confirmation of a plan vests all of the
    property of the estate in the debtor.
      (c) Except as provided in subsections (d)(2) and (d)(3) of this
    section and except as otherwise provided in the plan or in the
    order confirming the plan, after confirmation of a plan, the
    property dealt with by the plan is free and clear of all claims and
    interests of creditors, equity security holders, and of general
    partners in the debtor.
      (d)(1) Except as otherwise provided in this subsection, in the
    plan, or in the order confirming the plan, the confirmation of a
    plan - 
        (A) discharges the debtor from any debt that arose before the
      date of such confirmation, and any debt of a kind specified in
      section 502(g), 502(h), or 502(i) of this title, whether or not -
      
          (i) a proof of the claim based on such debt is filed or
        deemed filed under section 501 of this title;
          (ii) such claim is allowed under section 502 of this title;
        or
          (iii) the holder of such claim has accepted the plan; and

        (B) terminates all rights and interests of equity security
      holders and general partners provided for by the plan.

      (2) A discharge under this chapter does not discharge a debtor
    who is an individual from any debt excepted from discharge under
    section 523 of this title.
      (3) The confirmation of a plan does not discharge a debtor if - 
        (A) the plan provides for the liquidation of all or
      substantially all of the property of the estate;
        (B) the debtor does not engage in business after consummation
      of the plan; and
        (C) the debtor would be denied a discharge under section 727(a)
      of this title if the case were a case under chapter 7 of this
      title.

      (4) The court may approve a written waiver of discharge executed
    by the debtor after the order for relief under this chapter.
      (5) In a case in which the debtor is an individual - 
        (A) unless after notice and a hearing the court orders
      otherwise for cause, confirmation of the plan does not discharge
      any debt provided for in the plan until the court grants a
      discharge on completion of all payments under the plan;
        (B) at any time after the confirmation of the plan, and after
      notice and a hearing, the court may grant a discharge to the
      debtor who has not completed payments under the plan if - 
          (i) the value, as of the effective date of the plan, of
        property actually distributed under the plan on account of each
        allowed unsecured claim is not less than the amount that would
        have been paid on such claim if the estate of the debtor had
        been liquidated under chapter 7 on such date; and
          (ii) modification of the plan under section 1127 is not
        practicable; and

        (C) unless after notice and a hearing held not more than 10
      days before the date of the entry of the order granting the
      discharge, the court finds that there is no reasonable cause to
      believe that - 
          (i) section 522(q)(1) may be applicable to the debtor; and
          (ii) there is pending any proceeding in which the debtor may
        be found guilty of a felony of the kind described in section
        522(q)(1)(A) or liable for a debt of the kind described in
        section 522(q)(1)(B).

        (6) Notwithstanding paragraph (1), the confirmation of a plan
      does not discharge a debtor that is a corporation from any debt -
      
          (A) of a kind specified in paragraph (2)(A) or (2)(B) of
        section 523(a) that is owed to a domestic governmental unit, or
        owed to a person as the result of an action filed under
        subchapter III of chapter 37 of title 31 or any similar State
        statute; or
          (B) for a tax or customs duty with respect to which the
        debtor - 
            (i) made a fraudulent return; or
            (ii) willfully attempted in any manner to evade or to
          defeat such tax or such customs duty.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2638; Pub. L. 98-353, title
    III, Sec. 513, July 10, 1984, 98 Stat. 387; Pub. L. 109-8, title
    III, Secs. 321(d), 330(b), title VII, Sec. 708, Apr. 20, 2005, 119
    Stat. 95, 101, 126.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1141(d) of the House amendment is derived from a
    comparable provision contained in the Senate amendment. However,
    section 1141(d)(2) of the House amendment is derived from the House
    bill as preferable to the Senate amendment. It is necessary for a
    corporation or partnership undergoing reorganization to be able to
    present its creditors with a fixed list of liabilities upon which
    the creditors or third parties can make intelligent decisions.
    Retaining an exception for discharge with respect to
    nondischargeable taxes would leave an undesirable uncertainty
    surrounding reorganizations that is unacceptable. Section
    1141(d)(3) is derived from the Senate amendment. Section 1141(d)(4)
    is likewise derived from the Senate amendment.

                         SENATE REPORT NO. 95-989                     
      Subsection (a) of this section makes the provisions of a
    confirmed plan binding on the debtor, any entity issuing securities
    under the plan, any entity acquiring property under the plan, and
    any creditor, equity security holder, or general partner in the
    debtor, whether or not the claim or interest of the creditor,
    equity security holder, or partner is impaired under the plan and
    whether or not he has accepted the plan. There are two exceptions,
    enumerated in paragraph (2) and (3) of subsection (d).
      Unless the plan or the order confirming the plan provides
    otherwise, the confirmation of a plan vests all of the property of
    the estate in the debtor and releases it from all claims and
    interests of creditors, equity security holders and general
    partners.
      Subsection (d) contains the discharge for a reorganized debtor.
    Paragraph (1) specifies that the confirmation of a plan discharges
    the debtor from any debt that arose before the date of the order
    for relief unless the plan or the order confirming the plan
    provides otherwise. The discharge is effective against those claims
    whether or not proof of the claim is filed (or deemed filed), and
    whether or not the claim is allowed. The discharge also terminates
    all rights and interests of equity security holders and general
    partners provided for by the plan. The paragraph permits the plan
    or the order confirming the plan to provide otherwise, and excepts
    certain debts from the discharge as provided in paragraphs (2) and
    (3).
      Paragraph (2) of subsection (d) makes clear what taxes remain
    nondischargeable in the case of a corporate debtor emerging from a
    reorganization under chapter 11. Nondischargeable taxes in such a
    reorganization are the priority taxes (under section 507) and tax
    payments which come due during and after the proceeding under a
    deferred or part-payment agreement which the debtor had entered
    into with the tax authority before the bankruptcy proceedings
    began. On the other hand, a corporation which is taken over by its
    creditors through a plan of reorganization will not continue to be
    liable for nonpriority taxes arising from the corporation's
    prepetition fraud, failure to file a return, or failure to file a
    timely return, since the creditors who take over the reorganized
    company should not bear the burden of acts for which the creditors
    were not at fault.
      Paragraph (3) specifies that the debtor is not discharged by the
    confirmation of a plan if the plan is a liquidating plan and if the
    debtor would be denied discharge in a liquidation case under
    section 727. Specifically, if all or substantially all of the
    distribution under the plan is of all or substantially all of the
    property of the estate or the proceeds of it, if the business, if
    any, of the debtor does not continue, and if the debtor would be
    denied a discharge under section 727 (such as if the debtor were
    not an individual or if he had committed an act that would lead to
    a denial of discharge), the chapter 11 discharge is not granted.
      Paragraph (4) authorizes the court to approve a waiver of
    discharge by the debtor.

                          HOUSE REPORT NO. 95-595                      
      Paragraph (2) [of subsec. (d)] makes applicable to an individual
    debtor the general exceptions to discharge that are enumerated in
    section 523(a) of the bankruptcy code.

                                AMENDMENTS                            
      2005 - Subsec. (d)(2). Pub. L. 109-8, Sec. 321(d)(1), substituted
    "A discharge under this chapter does not discharge a debtor who is
    an individual" for "The confirmation of a plan does not discharge
    an individual debtor".
      Subsec. (d)(5). Pub. L. 109-8, Sec. 321(d)(2), added par. (5).
      Subsec. (d)(5)(C). Pub. L. 109-8, Sec. 330(b), added subpar. (C).
      Subsec. (d)(6). Pub. L. 109-8, Sec. 708, added par. (6).
      1984 - Subsec. (a). Pub. L. 98-353, Sec. 513(a), substituted "any
    creditor, equity security holder, or general partner in" for "any
    creditor or equity security holder of, or general partner in,".
      Subsec. (c). Pub. L. 98-353, Sec. 513(b), amended subsec. (c)
    generally. Prior to amendment, subsec. (c) read as follows: "After
    confirmation of a plan, the property dealt with by the plan is free
    and clear of all claims and interests of creditors, of equity
    security holders, and of general partners in the debtor, except as
    otherwise provided in the plan or in the order confirming the
    plan."

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendments by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, with amendments by sections 321(d) and 708 of Pub. L. 109-8
    not applicable with respect to cases commenced under this title
    before such effective date, except as otherwise provided, and
    amendment by section 330(b) of Pub. L. 109-8 applicable with
    respect to cases commenced under this title on or after Apr. 20,
    2005, see section 1501 of Pub. L. 109-8, set out as a note under
    section 101 of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1142                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER III - POSTCONFIRMATION MATTERS

-HEAD-
    Sec. 1142. Implementation of plan

-STATUTE-
      (a) Notwithstanding any otherwise applicable nonbankruptcy law,
    rule, or regulation relating to financial condition, the debtor and
    any entity organized or to be organized for the purpose of carrying
    out the plan shall carry out the plan and shall comply with any
    orders of the court.
      (b) The court may direct the debtor and any other necessary party
    to execute or deliver or to join in the execution or delivery of
    any instrument required to effect a transfer of property dealt with
    by a confirmed plan, and to perform any other act, including the
    satisfaction of any lien, that is necessary for the consummation of
    the plan.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2639; Pub. L. 98-353, title
    III, Sec. 514(a), (c), (d), July 10, 1984, 98 Stat. 387.)


-MISC1-
                                AMENDMENTS                            
      1984 - Pub. L. 98-353, Sec. 514(a), substituted "Implementation"
    for "Execution" in section catchline.
      Subsec. (a). Pub. L. 98-353, Sec. 514(c), struck out the comma
    after "shall carry out the plan".
      Subsec. (b). Pub. L. 98-353, Sec. 514(d), inserted "a" after
    "by".

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1143                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER III - POSTCONFIRMATION MATTERS

-HEAD-
    Sec. 1143. Distribution

-STATUTE-
      If a plan requires presentment or surrender of a security or the
    performance of any other act as a condition to participation in
    distribution under the plan, such action shall be taken not later
    than five years after the date of the entry of the order of
    confirmation. Any entity that has not within such time presented or
    surrendered such entity's security or taken any such other action
    that the plan requires may not participate in distribution under
    the plan.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2639.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                         SENATE REPORT NO. 95-989                     
      Section 1143 fixes a 5-year limitation on presentment or
    surrender of securities or the performance of any other act that is
    a condition to participation in distribution under the plan. The 5
    years runs from the date of the entry of the order of confirmation.
    Any entity that does not take the appropriate action with the 5-
    year period is barred from participation in the distribution under
    the plan.

-End-



-CITE-
    11 USC Sec. 1144                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER III - POSTCONFIRMATION MATTERS

-HEAD-
    Sec. 1144. Revocation of an order of confirmation

-STATUTE-
      On request of a party in interest at any time before 180 days
    after the date of the entry of the order of confirmation, and after
    notice and a hearing, the court may revoke such order if and only
    if such order was procured by fraud. An order under this section
    revoking an order of confirmation shall - 
        (1) contain such provisions as are necessary to protect any
      entity acquiring rights in good faith reliance on the order of
      confirmation; and
        (2) revoke the discharge of the debtor.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2639; Pub. L. 98-353, title
    III, Sec. 515, July 10, 1984, 98 Stat. 387.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                         SENATE REPORT NO. 95-989                     
      If an order of confirmation was procured by fraud, then the court
    may revoke the order on request of a party in interest if the
    request is made before 180 days after the date of the entry of the
    order of confirmation. The order revoking the order of confirmation
    must revoke the discharge of the debtor, and contain such
    provisions as are necessary to protect any entity acquiring rights
    in good faith reliance on the order of confirmation.

                                AMENDMENTS                            
      1984 - Pub. L. 98-353 inserted "if and only" after "revoke such
    order".

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1145                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER III - POSTCONFIRMATION MATTERS

-HEAD-
    Sec. 1145. Exemption from securities laws

-STATUTE-
      (a) Except with respect to an entity that is an underwriter as
    defined in subsection (b) of this section, section 5 of the
    Securities Act of 1933 and any State or local law requiring
    registration for offer or sale of a security or registration or
    licensing of an issuer of, underwriter of, or broker or dealer in,
    a security do not apply to - 
        (1) the offer or sale under a plan of a security of the debtor,
      of an affiliate participating in a joint plan with the debtor, or
      of a successor to the debtor under the plan - 
          (A) in exchange for a claim against, an interest in, or a
        claim for an administrative expense in the case concerning, the
        debtor or such affiliate; or
          (B) principally in such exchange and partly for cash or
        property;

        (2) the offer of a security through any warrant, option, right
      to subscribe, or conversion privilege that was sold in the manner
      specified in paragraph (1) of this subsection, or the sale of a
      security upon the exercise of such a warrant, option, right, or
      privilege;
        (3) the offer or sale, other than under a plan, of a security
      of an issuer other than the debtor or an affiliate, if - 
          (A) such security was owned by the debtor on the date of the
        filing of the petition;
          (B) the issuer of such security is - 
            (i) required to file reports under section 13 or 15(d) of
          the Securities Exchange Act of 1934; and
            (ii) in compliance with the disclosure and reporting
          provision of such applicable section; and

          (C) such offer or sale is of securities that do not exceed - 
            (i) during the two-year period immediately following the
          date of the filing of the petition, four percent of the
          securities of such class outstanding on such date; and
            (ii) during any 180-day period following such two-year
          period, one percent of the securities outstanding at the
          beginning of such 180-day period; or

        (4) a transaction by a stockbroker in a security that is
      executed after a transaction of a kind specified in paragraph (1)
      or (2) of this subsection in such security and before the
      expiration of 40 days after the first date on which such security
      was bona fide offered to the public by the issuer or by or
      through an underwriter, if such stockbroker provides, at the time
      of or before such transaction by such stockbroker, a disclosure
      statement approved under section 1125 of this title, and, if the
      court orders, information supplementing such disclosure
      statement.

      (b)(1) Except as provided in paragraph (2) of this subsection and
    except with respect to ordinary trading transactions of an entity
    that is not an issuer, an entity is an underwriter under section
    2(11) of the Securities Act of 1933,(!1) if such entity - 

        (A) purchases a claim against, interest in, or claim for an
      administrative expense in the case concerning, the debtor, if
      such purchase is with a view to distribution of any security
      received or to be received in exchange for such a claim or
      interest;
        (B) offers to sell securities offered or sold under the plan
      for the holders of such securities;
        (C) offers to buy securities offered or sold under the plan
      from the holders of such securities, if such offer to buy is - 
          (i) with a view to distribution of such securities; and
          (ii) under an agreement made in connection with the plan,
        with the consummation of the plan, or with the offer or sale of
        securities under the plan; or

        (D) is an issuer, as used in such section 2(11), with respect
      to such securities.

      (2) An entity is not an underwriter under section 2(11) of the
    Securities Act of 1933 (!1) or under paragraph (1) of this
    subsection with respect to an agreement that provides only for - 
        (A)(i) the matching or combining of fractional interests in
      securities offered or sold under the plan into whole interests;
      or
        (ii) the purchase or sale of such fractional interests from or
      to entities receiving such fractional interests under the plan;
      or
        (B) the purchase or sale for such entities of such fractional
      or whole interests as are necessary to adjust for any remaining
      fractional interests after such matching.

      (3) An entity other than an entity of the kind specified in
    paragraph (1) of this subsection is not an underwriter under
    section 2(11) of the Securities Act of 1933 (!1) with respect to
    any securities offered or sold to such entity in the manner
    specified in subsection (a)(1) of this section.
      (c) An offer or sale of securities of the kind and in the manner
    specified under subsection (a)(1) of this section is deemed to be a
    public offering.
      (d) The Trust Indenture Act of 1939 does not apply to a note
    issued under the plan that matures not later than one year after
    the effective date of the plan.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2639; Pub. L. 98-353, title
    III, Sec. 516, July 10, 1984, 98 Stat. 387; Pub. L. 103-394, title
    V, Sec. 501(d)(33), Oct. 22, 1994, 108 Stat. 4146.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1145 of the House amendment deletes a provision contained
    in section 1145(a)(1) of the House bill in favor of a more adequate
    provision contained in section 364(f) of the House amendment. In
    addition, section 1145(d) has been added to indicate that the Trust
    Indenture Act [15 U.S.C. 77aaa et seq.] does not apply to a
    commercial note issued under a plan, if the note matures not later
    than 1 year after the effective date of the plan. Some commercial
    notes receive such an exemption under 304(a)(4) of the Trust
    Indenture Act of 1939 (15 U.S.C. Sec. 77ddd(a)(4)) and others may
    receive protection by incorporation by reference into the Trust
    Indenture Act of securities exempt under section 3a(3), (7), (9),
    or (10) of the Securities Act of 1933 [15 U.S.C. 77c(a)(3), (7),
    (9), (10)].
      In light of the amendments made to the Securities Act of 1933 [15
    U.S.C. 77a et seq.] in title III of the House amendment to H.R.
    8200, a specific exemption from the Trust Indenture Act [15 U.S.C.
    77aaa et seq.] is required in order to create certainty regarding
    plans of reorganization. Section 1145(d) is not intended to imply
    that commercial notes issued under a plan that matures more than 1
    year after the effective date of the plan are automatically covered
    by the Trust Indenture Act of 1939 since such notes may fall within
    another exemption thereto.
      One other point with respect to Section 1145 deserves comment.
    Section 1145(a)(3) grants a debtor in possession or trustee in
    chapter 11 an extremely narrow portfolio security exemption from
    section 5 of the Securities Act of 1933 [15 U.S.C. 77e] or any
    comparable State law. The provision was considered by Congress and
    adopted after much study. The exemption is reasonable and is more
    restrictive than comparable provisions under the Securities Act [15
    U.S.C. 77a et seq.] relating to the estates of decedents.
    Subsequent to passage of H.R. 8200 by the House of Representatives,
    the Securities and Exchange Commission promulgated Rule 148 to
    treat with this problem under existing law. Members of Congress
    received opinions from attorneys indicating dissatisfaction with
    the Commission's rule although the rule has been amended, the
    ultimate limitation of 1 percent promulgated by the Commission is
    wholly unacceptable.
      The Commission rule would permit a trustee or debtor in
    possession to distribute securities at the rate of 1 percent every
    6 months. Section 1145(a)(3) permits the trustee to distribute 4
    percent of the securities during the 2-year period immediately
    following the date of the filing of the petition. In addition, the
    security must be of a reporting company under section 13 of the
    Securities and Exchange Act of 1934 [15 U.S.C. 78m], and must be in
    compliance with all applicable requirements for the continuing of
    trading in the security on the date that the trustee offers or
    sells the security.
      With these safeguards the trustee or debtor in possession should
    be able to distribute 4 percent of the securities of a class at any
    time during the 2-year period immediately following the date of the
    filing of the petition in the interests of expediting bankruptcy
    administration. The same rationale that applies in expeditiously
    terminating decedents' estates applies no less to an estate under
    title 11.

                         SENATE REPORT NO. 95-989                     
      This section, derived from similar provisions found in sections
    264, 393, and 518 of the Bankruptcy Act [sections 664, 793, and 918
    of former title 11], provides a limited exemption from the
    securities laws for securities issued under a plan of
    reorganization and for certain other securities. Subsection (a)
    exempts from the requirements of section 5 of the Securities Act of
    1933 [15 U.S.C. 77e] and from any State or local law requiring
    registration or licensing of an issuer of, underwriter of, or
    broker or dealer in, a security, the offer or sale of certain
    securities.
      Paragraph (1) of subsection (a) exempts the offer or sale under
    section 364 of any security that is not an equity security or
    convertible into an equity security. This paragraph is designed to
    facilitate the issuance of certificates of indebtedness, and should
    be read in light of the amendment made in section 306 of title III
    to section 3(a)(7) of the 1933 act [15 U.S.C. 77c(a)(7)].
      Paragraph (2) of subsection (a) exempts the offer or sale of any
    security of the debtor, a successor to the debtor, or an affiliate
    in a joint plan, distributed under a plan if such security is
    exchanged in principal part for securities of the debtor or for
    allowed claims or administrative expenses. This exemption is
    carried over from present law, except as to administrative claims,
    but is limited to prevent distribution of securities to other than
    claim holders or equity security holders of the debtor or the
    estate.
      Paragraph (3) of subsection (a) exempts the offer or sale of any
    security that arises from the exercise of a subscription right or
    from the exercise of a conversion privilege when such subscription
    right or conversion privilege was issued under a plan. This
    exemption is necessary in order to enhance the marketability of
    subscription rights or conversion privileges, including warrants,
    offered or sold under a plan. This is present law.
      Paragraph (4) of subsection (a) exempts sales of portfolio
    securities, excluding securities of the debtor or its affiliate,
    owned by the debtor on the date of the filing of the petition. The
    purpose of this exemption is to allow the debtor or trustee to sell
    or distribute, without allowing manipulation schemes, restricted
    portfolio securities held or acquired by the debtor. Subparagraph
    (B) of section 1145(a)(4) limits the exemption to securities of a
    company that is required to file reports under section 13 of the
    Securities Act [15 U.S.C. 78m] and that is in compliance with all
    requirements for the continuance of trading those securities. This
    limitation effectively prevents selling into the market "cats and
    dogs" of a nonreporting company. Subparagraph (C) places a
    limitation on the amount of restricted securities that may be
    distributed. During the case, the trustee may sell up to 4 percent
    of each class of restricted securities at any time during the first
    2 years and 1 percent during any 180-day period thereafter. This
    relaxation of the resale rules for debtors in holding restricted
    securities is similar to but less extensive than the relaxation in
    SEC Rule 114(c)(3)(v) for the estates of deceased holders of
    securities.
      Paragraph (5) contains an exemption for brokers and dealers
    (stockbrokers, as defined in title 11) akin to the exemption
    provided by section 4(3)(A) of the Securities Act of 1933 [15
    U.S.C. 77d(3)(A)]. Instead of being required to supply a
    prospectus, however, the stockbroker is required to supply the
    approved disclosure statement, and if the court orders, information
    supplementing the disclosure statement. Under present law, the
    stockholder is not required to supply anything.
      Subsection (b) is new. The subsection should be read in light of
    the amendment in section 306 of title III to the 1933 act [15
    U.S.C. 77c(a)(7), (9), (10)]. It specifies the standards under
    which a creditor, equity security holder, or other entity acquiring
    securities under the plan may resell them. The Securities Act
    places limitations on sales by underwriters. This subsection
    defines who is an underwriter, and thus restricted, and who is free
    to resell. Paragraph (1) enumerates real underwriters that
    participate in a classical underwriting. A person is an underwriter
    if he purchases a claim against, interest in, or claim for an
    administrative expense in the case concerning, the debtor, with a
    view to distribution or interest. This provision covers the
    purchase of a certificate of indebtedness issued under proposed 11
    U.S.C. 364 and purchased from the debtor, if the purchase of the
    certificate was with a view to distribution.
      A person is also an underwriter if he offers to sell securities
    offered or sold under the plan for the holders of such securities,
    or offers to buy securities offered or sold under the plan from the
    holders of such securities, if the offer to buy is with a view to
    distribution of the securities and under an agreement made in
    connection with the plan, with the consummation of the plan or with
    the offer or sale of securities under the plan. Finally, a person
    is an underwriter if he is an issuer, as used in section 2(11) of
    the Securities Act of 1933 [15 U.S.C. 77b(11)].
      Paragraph (2) of subsection (b) exempts from the definition of
    underwriter any entity to the extent that any agreement that would
    bring the entity under the definition in paragraph (1) provides
    only for the matching combination of fractional interests in the
    covered securities or the purchase or sale of fractional interests.
    This paragraph and paragraph (1) are modeled after former rule 133
    of the Securities and Exchange Commission.
      Paragraph (3) specifies that if an entity is not an underwriter
    under the provisions of paragraph (1), as limited by paragraph (2),
    then the entity is not an underwriter for the purposes of the
    Securities Act of 1933 [15 U.S.C. 77a et seq.] with respect to the
    covered securities, that is, those offered or sold in an exempt
    transaction specified in subsection (a)(2). This makes clear that
    the current definition of underwriter in section 2(11) of the
    Securities Act of 1933 [15 U.S.C. 77b(11)] does not apply to such a
    creditor. The definition in that section technically applies to any
    person that purchases securities with "a view to distribution." If
    literally applied, it would prevent any creditor in a bankruptcy
    case from selling securities received without filing a registration
    statement or finding another exemption.
      Subsection (b) is a first run transaction exemption and does not
    exempt a creditor that, for example, some years later becomes an
    underwriter by reacquiring securities originally issued under a
    plan.
      Subsection (c) makes an offer or sale of securities under the
    plan in an exempt transaction (as specified in subsection (a)(2)) a
    public offering, in order to prevent characterization of the
    distribution as a "private placement" which would result in
    restrictions, under rule 144 of the SEC, on the resale of the
    securities.

-REFTEXT-
                            REFERENCES IN TEXT                        
      Section 5 of the Securities Act of 1933, referred to in subsec.
    (a), is classified to section 77e of Title 15, Commerce and Trade.
      Sections 13 and 15(d) of the Securities Exchange Act of 1934,
    referred to in subsec. (a)(3)(B)(i), are classified to sections 78m
    and 78o(d), respectively, of Title 15, Commerce and Trade.
      Section 2(11) of the Securities Act of 1933, referred to in
    subsec. (b), was redesignated section 2(a)(11) of the Act by Pub.
    L. 104-290, title I, Sec. 106(a)(1), Oct. 11, 1996, 110 Stat. 3424,
    and is classified to section 77b(a)(11) of Title 15, Commerce and
    Trade.
      The Trust Indenture Act of 1939, referred to in subsec. (d), is
    title III of act May 27, 1933, ch. 38, as added Aug. 3, 1939, ch.
    411, 53 Stat. 1149, as amended, which is classified generally to
    subchapter III (Sec. 77aaa et seq.) of chapter 2A of Title 15,
    Commerce and Trade. For complete classification of this Act to the
    Code, see section 77aaa of Title 15 and Tables.


-MISC2-
                                AMENDMENTS                            
      1994 - Subsec. (a). Pub. L. 103-394, Sec. 501(d)(33)(A), in
    introductory provisions struck out "(15 U.S.C. 77e)" after "Act of
    1933" and substituted "do not apply" for "does not apply" and in
    par. (3)(B)(i) struck out "(15 U.S.C. 78m or 78o(d))" after "Act of
    1934".
      Subsec. (b)(1). Pub. L. 103-394, Sec. 501(d)(33)(B), struck out
    "(15 U.S.C. 77b(11))" after "Act of 1933".
      Subsec. (d). Pub. L. 103-394, Sec. 501(d)(33)(C), struck out "(15
    U.S.C. 77aaa et seq.)" after "Act of 1939".
      1984 - Subsec. (a)(3)(B)(i). Pub. L. 98-353, Sec. 516(a)(1),
    inserted "or 15(d)" after "13", and "or 78o(d)" after "78m".
      Subsec. (a)(3)(B)(ii). Pub. L. 98-353, Sec. 516(a)(2), amended
    cl. (ii) generally. Prior to amendment, cl. (ii) read as follows:
    "in compliance with all applicable requirements for the continuance
    of trading in such security on the date of such offer or sale;
    and".
      Subsec. (a)(4). Pub. L. 98-353, Sec. 516(a)(3), substituted
    "stockbroker" for "stockholder" in two places.
      Subsec. (b)(1). Pub. L. 98-353, Sec. 516(b)(1), inserted "and
    except with respect to ordinary trading transactions of an entity
    that is not an issuer".
      Subsec. (b)(1)(C). Pub. L. 98-353, Sec. 516(b)(2), substituted
    "from" for "for".
      Subsec. (b)(2)(A)(i). Pub. L. 98-353, Sec. 516(b)(3), substituted
    "or combining" for "combination".
      Subsec. (b)(2)(A)(ii). Pub. L. 98-353, Sec. 516(b)(4),
    substituted "from or to" for "among".
      Subsec. (d). Pub. L. 98-353, Sec. 516(c), struck out "commercial"
    before "note".

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-FOOTNOTE-
    (!1) See References in Text note below.


-End-



-CITE-
    11 USC Sec. 1146                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER III - POSTCONFIRMATION MATTERS

-HEAD-
    Sec. 1146. Special tax provisions

-STATUTE-
      (a) The issuance, transfer, or exchange of a security, or the
    making or delivery of an instrument of transfer under a plan
    confirmed under section 1129 of this title, may not be taxed under
    any law imposing a stamp tax or similar tax.
      (b) The court may authorize the proponent of a plan to request a
    determination, limited to questions of law, by a State or local
    governmental unit charged with responsibility for collection or
    determination of a tax on or measured by income, of the tax
    effects, under section 346 of this title and under the law imposing
    such tax, of the plan. In the event of an actual controversy, the
    court may declare such effects after the earlier of - 
        (1) the date on which such governmental unit responds to the
      request under this subsection; or
        (2) 270 days after such request.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2641; Pub. L. 98-353, title
    III, Sec. 517, July 10, 1984, 98 Stat. 388; Pub. L. 109-8, title
    VII, Sec. 719(b)(3), Apr. 20, 2005, 119 Stat. 133.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1146 of the House amendment represents a compromise
    between the House bill and Senate amendment.
      Special tax provisions: reorganization: The House bill provided
    rules on the effect of bankruptcy on the taxable year of the debtor
    and on tax return filing requirements for State and local taxes
    only. The House bill also exempted from State or local stamp taxes
    the issuance, transfer, or exchange of a security, or the making or
    delivery of an instrument of transfer under a plan. The House bill
    also authorized the bankruptcy court to declare the tax effects of
    a reorganization plan after the proponent of the plan had requested
    a ruling from State or local tax authority and either had received
    an unfavorable ruling or the tax authority had not issued a ruling
    within 270 days.
      The Senate amendment deleted the rules concerning the taxable
    years of the debtor and tax return filing requirements since the
    Federal rules were to be considered in the next Congress. It
    broadened the rule exempting transfers of securities to include
    Federal stamp or similar taxes, if any. In addition, the Senate
    amendment deleted the provision which permitted the bankruptcy
    court to determine the tax effects of a plan.
      The House amendment retains the State and local rules in the
    House bill with one modification. Under the House amendment, the
    power of the bankruptcy court to declare the tax effects of the
    plan is limited to issues of law and not to questions of fact such
    as the allowance of specific deductions. Thus, the bankruptcy court
    could declare whether the reorganization qualified for taxfree
    status under State or local tax rules, but it could not declare the
    dollar amount of any tax attributes that survive the
    reorganization.

                         SENATE REPORT NO. 95-989                     
      Section 1146 provides special tax rules applicable to Title 11
    reorganizations. Subsection (a) provides that the taxable period of
    an individual debtor terminates on the date of the order for
    relief, unless the case has been converted into a reorganization
    from a liquidation proceeding.
      Subsection (b) requires the trustee of the estate of an
    individual debtor in a reorganization to file a tax return for each
    taxable period while the case is pending after the order for
    relief. For corporations in chapter 11, the trustee is required to
    file the tax returns due while the case is pending (sec.
    346(c)(2)).
      Subsection (c) exempts from Federal, State, or local stamp taxes
    the issuance, transfer, or exchange of a security, or the making or
    delivery of an instrument of transfer under a plan. This subsection
    is derived from section 267 of the present Bankruptcy Act [section
    667 of former title 11].
      Subsection (d) permits the court to authorize the proponent of a
    reorganization plan to request from the Internal Revenue Service
    (or State or local tax authority) an advance ruling on the tax
    effects of the proposed plan. If a ruling is not obtained within
    270 days after the request was made, or if a ruling is obtained but
    the proponent of the plan disagrees with the ruling, the bankruptcy
    court may resolve the dispute and determine the tax effects of the
    proposed plan.
      Subsection (e) provides that prepetition taxes which are
    nondischargeable in a reorganization, and all taxes arising during
    the administration period of the case, may be assessed and
    collected from the debtor or the debtor's successor in a
    reorganization (see sec. 505(c) of the bill).

                          HOUSE REPORT NO. 95-595                      
      Section 1146 of title 11 specifies five subsections which embody
    special tax provisions that apply in a case under chapter 11 of
    title 11. Subsection (a) indicates that the tax year of an
    individual debtor terminates on the date of the order for relief
    under chapter 11. Termination of the taxable year of the debtor
    commences the tax period of the estate. If the case was converted
    from chapter 7 of title 11 then the estate is created as a separate
    taxable entity dating from the order for relief under chapter 7. If
    multiple conversion of the case occurs, then the estate is treated
    as a separate taxable entity on the date of the order for relief
    under the first chapter under which the estate is a separate
    taxable entity.
      Subsection (d) permits the court to authorize the proponent of a
    plan to request a taxing authority to declare the tax effects of
    such plan. In the event of an actual controversy, the court may
    declare the tax effects of the plan of reorganization at any time
    after the earlier of action by such taxing authority or 270 days
    after the request. Such a declaration, unless appealed, becomes a
    final judgment and binds any tax authority that was requested by
    the proponent to determine the tax effects of the plan.

                                AMENDMENTS                            
      2005 - Pub. L. 109-8 redesignated subsecs. (c) and (d) as (a) and
    (b), respectively, and struck out former subsecs. (a) and (b) which
    read as follows:
      "(a) For the purposes of any State or local law imposing a tax on
    or measured by income, the taxable period of a debtor that is an
    individual shall terminate on the date of the order for relief
    under this chapter, unless the case was converted under section 706
    of this title.
      "(b) The trustee shall make a State or local tax return of income
    for the estate of an individual debtor in a case under this chapter
    for each taxable period after the order for relief under this
    chapter during which the case is pending."
      1984 - Subsec. (c). Pub. L. 98-353, Sec. 517(a), struck out
    "State or local" before "law imposing a stamp tax".
      Subsec. (d)(1). Pub. L. 98-353, Sec. 517(b), substituted "or" for
    "and".

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, and not applicable with respect to cases commenced under this
    title before such effective date, except as otherwise provided, see
    section 1501 of Pub. L. 109-8, set out as a note under section 101
    of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-


-CITE-
    11 USC SUBCHAPTER IV - RAILROAD REORGANIZATION              01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
                  SUBCHAPTER IV - RAILROAD REORGANIZATION              

-End-



-CITE-
    11 USC Sec. 1161                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1161. Inapplicability of other sections

-STATUTE-
      Sections 341, 343, 1102(a)(1), 1104, 1105, 1107, 1129(a)(7), and
    1129(c) of this title do not apply in a case concerning a railroad.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2641.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                         SENATE REPORT NO. 95-989                     
      This section makes inapplicable sections of the bill which are
    either inappropriate in railroad reorganizations, or relate to
    matters which are otherwise dealt with in subchapter IV.

-End-



-CITE-
    11 USC Sec. 1162                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1162. Definition

-STATUTE-
      In this subchapter, "Board" means the "Surface Transportation
    Board".

-SOURCE-
    (Added Pub. L. 104-88, title III, Sec. 302(1), Dec. 29, 1995, 109
    Stat. 943.)


-MISC1-
                             PRIOR PROVISIONS                         
      A prior section 1162, Pub. L. 95-598, Nov. 6, 1978, 92 Stat.
    2641, defined "Commission", prior to repeal by Pub. L. 104-88,
    title III, Sec. 302(1), Dec. 29, 1995, 109 Stat. 943.

                              EFFECTIVE DATE                          
      Section effective Jan. 1, 1996, see section 2 of Pub. L. 104-88,
    set out as a note under section 701 of Title 49, Transportation.

-End-



-CITE-
    11 USC Sec. 1163                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1163. Appointment of trustee

-STATUTE-
      As soon as practicable after the order for relief the Secretary
    of Transportation shall submit a list of five disinterested persons
    that are qualified and willing to serve as trustees in the case.
    The United States trustee shall appoint one of such persons to
    serve as trustee in the case.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2641; Pub. L. 99-554, title
    II, Sec. 226, Oct. 27, 1986, 100 Stat. 3102.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1163 of the House amendment represents a compromise
    between the House bill and Senate amendment with respect to the
    appointment of a trustee in a railroad reorganization. As soon as
    practicable after the order for relief, the Secretary of
    Transportation is required to submit a list of five disinterested
    persons who are qualified to serve as trustee and the court will
    than appoint one trustee from the list to serve as trustee in the
    case.
      The House amendment deletes section 1163 of the Senate amendment
    in order to cover intrastate railroads in a case under subchapter
    IV of chapter 11. The bill does not confer jurisdiction on the
    Interstate Commerce Commission with respect to intrastate
    railroads.

                         SENATE REPORT NO. 95-989                     
      [Section 1166 (enacted as section 1163)] Requires the court to
    appoint a trustee in every case. Since the trustee may employ
    whatever help he needs, multiple trusteeships are unnecessary and
    add to the cost of administration. The present requirement of
    section 77(c)(1) [section 205(c)(1) of former title 11] that the
    trustee be approved by the Interstate Commerce Commission is
    unnecessary, since the trustee will be selected either from the
    panel established under section 606(f) of title 28, or someone
    certified by the Director of the Administrative Office of the
    United States Courts as qualified to become a member of that panel.

                          HOUSE REPORT NO. 95-595                      
      [Section 1162] This section [enacted as section 1163] requires
    the appointment of an independent trustee in a railroad
    reorganization case. The court may appoint one or more
    disinterested persons to serve as trustee in the case.

                                AMENDMENTS                            
      1986 - Pub. L. 99-554 amended section generally, substituting
    "relief the Secretary" for "relief, the Secretary" and "The United
    States trustee shall appoint" for "The court shall appoint".

                     EFFECTIVE DATE OF 1986 AMENDMENT                 
      Effective date and applicability of amendment by Pub. L. 99-554
    dependent upon the judicial district involved, see section 302(d),
    (e) of Pub. L. 99-554, set out as a note under section 581 of Title
    28, Judiciary and Judicial Procedure.

-End-



-CITE-
    11 USC Sec. 1164                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1164. Right to be heard

-STATUTE-
      The Board, the Department of Transportation, and any State or
    local commission having regulatory jurisdiction over the debtor may
    raise and may appear and be heard on any issue in a case under this
    chapter, but may not appeal from any judgment, order, or decree
    entered in the case.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2641; Pub. L. 104-88, title
    III, Sec. 302(2), Dec. 29, 1995, 109 Stat. 943.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1164 of the Senate amendment is deleted as a matter to be
    left to the Rules of Bankruptcy Procedure. It is anticipated that
    the rules will require a petition in a railroad reorganization to
    be filed with the Interstate Commerce Commission and the Secretary
    of Transportation in a case concerning an interstate railroad.
      Section 1164 of the House amendment is derived from section 1163
    of the House bill. The section makes clear that the Interstate
    Commerce Commission, the Department of Transportation, and any
    State or local commission having regulatory jurisdiction over the
    debtor may raise and appear and be heard on any issue in a case
    under subchapter IV of chapter 11, but may not appeal from any
    judgment, order, or decree in the case. As under section 1109 of
    title 11, such intervening parties are not parties in interest.

                          HOUSE REPORT NO. 95-595                      
      [Section 1163] This section [enacted as section 1164] gives the
    same right to raise, and appear and be heard on, any issue in a
    railroad reorganization case to the Interstate Commerce Commission,
    the Department of Transportation, and any State or local commission
    having regulatory jurisdiction over the debtor as is given to the
    SEC and indenture trustees under section 1109 in ordinary
    reorganization cases. The right of appeal is denied the ICC, the
    Department of Transportation, and State and local regulatory
    agencies, the same as it is denied the SEC.

                                AMENDMENTS                            
      1995 - Pub. L. 104-88 substituted "Board" for "Commission".

                     EFFECTIVE DATE OF 1995 AMENDMENT                 
      Amendment by Pub. L. 104-88 effective Jan. 1, 1996, see section 2
    of Pub. L. 104-88, set out as an Effective Date note under section
    701 of Title 49, Transportation.

-End-



-CITE-
    11 USC Sec. 1165                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1165. Protection of the public interest

-STATUTE-
      In applying sections 1166, 1167, 1169, 1170, 1171, 1172, 1173,
    and 1174 of this title, the court and the trustee shall consider
    the public interest in addition to the interests of the debtor,
    creditors, and equity security holders.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2641.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1165 of the House amendment represents a modification of
    sections 1165 and 1167 of the Senate amendment requiring the court
    and the trustee to consider the broad, general public interest in
    addition to the interests of the debtor, creditors, and equity
    security holders in applying specific sections of the subchapter.

                         SENATE REPORT NO. 95-989                     
      Section 1165 requires the court, in consideration of the relief
    to be granted upon the filing of an involuntary petition, to take
    into account the "public interest" in the preservation of the
    debtor's rail service. This is an important factor in railroad
    reorganization, which distinguishes them from other business
    reorganizations. Hence, this section modifies the provisions in
    sections 303 and 305 that govern generally when the business of a
    debtor may continue to operate, when relief under the Act sought
    should be granted, and when the petition should be dismissed.
      Section 1167 [enacted as section 1165] imposes on the trustee the
    obligations, in addition to his other duties and responsibilities,
    to take into account the "public interest" in the preservation of
    the debtor's rail service.

-End-



-CITE-
    11 USC Sec. 1166                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1166. Effect of subtitle IV of title 49 and of Federal, State,
      or local regulations

-STATUTE-
      Except with respect to abandonment under section 1170 of this
    title, or merger, modification of the financial structure of the
    debtor, or issuance or sale of securities under a plan, the trustee
    and the debtor are subject to the provisions of subtitle IV of
    title 49 that are applicable to railroads, and the trustee is
    subject to orders of any Federal, State, or local regulatory body
    to the same extent as the debtor would be if a petition commencing
    the case under this chapter had not been filed, but - 
        (1) any such order that would require the expenditure, or the
      incurring of an obligation for the expenditure, of money from the
      estate is not effective unless approved by the court; and
        (2) the provisions of this chapter are subject to section
      601(b) of the Regional Rail Reorganization Act of 1973.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2642; Pub. L. 97-449, Sec.
    5(a)(2), Jan. 12, 1983, 96 Stat. 2442; Pub. L. 98-353, title III,
    Sec. 518, July 10, 1984, 98 Stat. 388; Pub. L. 103-394, title V,
    Sec. 501(d)(34), Oct. 22, 1994, 108 Stat. 4146.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1166 of the House amendment is derived from sections 1164
    and 1165 of the House bill. An alternative proposal contained in
    section 1168(1) of the Senate bill is rejected as violative of the
    principle of equal treatment of all creditors under title 11.

                         SENATE REPORT NO. 95-989                     
      Section 1168 [enacted as section 1166] makes the trustee subject
    to the Interstate Commerce Act [49 U.S.C. 10101 et seq.] and to
    lawful orders of the Interstate Commerce Commission, the U.S.
    Department of Transportation, and State and regulatory bodies. The
    approval of the court is required, however, if the order requires
    the expenditure of money or the incurring of an expenditure other
    than the payment of certain interline accounts. The limitation of
    "lawful orders" of State commissions to those involving "safety,
    location of tracks, and terminal facilities," which is contained in
    present section 77(c)(2) [section 205(c)(2) of former title 11], is
    eliminated.
      Subsection (1) further provides that the debtor must pay in cash
    all amounts owed other carriers for current balances owed for
    interline freight, passenger and per diem, including incentive per
    diem, for periods both prior and subsequent to the filing of the
    petition, without the necessity of court approval.
      Subsection (2) makes the provisions of the chapter subject to
    section 601(b) of the Regional Rail Reorganization Act [45 U.S.C.
    791(b)], which excludes the Interstate Commerce Commission from any
    participation in the reorganization of certain northeast railroads
    that have transferred their rail properties to Consolidated Rail
    Corporation (Conrail).

                          HOUSE REPORT NO. 95-595                      
      Section 1164 [enacted as section 1166] makes the debtor railroad
    subject to the provisions of the Interstate Commerce Act [49 U.S.C.
    10101 et seq.] that are applicable to railroads, and the trustee
    subject to the orders of the Interstate Commerce Commission to the
    same extent as the debtor would have been if the case had not been
    commenced. There are several exceptions. The section does not apply
    with respect to abandonment of rail lines, which is provided for
    under section 1169, or with respect to merger under a plan,
    modification of the financial structure of the debtor by reason of
    the plan, or the issuance or sale of securities under a plan.
    Further, the orders of the ICC are not effective if the order would
    require the expenditure or the incurring of an obligation for the
    expenditure of money from the estate, unless approved by the court,
    and the provisions of this chapter are subject to section 601(b) of
    the Regional Rail Reorganization Act of 1973 [45 U.S.C. 791(b)].
      [Section 1165 (enacted as section 1166)] The same rules apply
    with respect to Federal, State, or local regulations. The trustee
    is subject to the orders of a Federal, State, or local regulatory
    body to the same extent as the debtor would be if the case had not
    been commenced. However, any order that would require the
    expenditure, or the incurring of an obligation for the expenditure,
    of money is not effective under [until] approved by the court.

-REFTEXT-
                            REFERENCES IN TEXT                        
      Section 601(b) of the Regional Rail Reorganization Act of 1973,
    referred to in par. (2), is classified to section 791(b) of Title
    45, Railroads.


-MISC2-
                                AMENDMENTS                            
      1994 - Par. (2). Pub. L. 103-394 struck out "(45 U.S.C. 791(b))"
    after "Act of 1973".
      1984 - Pub. L. 98-353 directed substitution of "subtitle IV of
    title 49" for "the Interstate Commerce Act (49 U.S.C. 1 et seq.)",
    which substitution had previously been made by Pub. L. 97-449.
      1983 - Pub. L. 97-449 substituted "subtitle IV of title 49" for
    "Interstate Commerce Act" in section catchline, and "subtitle IV of
    title 49" for "the Interstate Commerce Act (49 U.S.C. 1 et seq.)"
    in text.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1167                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1167. Collective bargaining agreements

-STATUTE-
      Notwithstanding section 365 of this title, neither the court nor
    the trustee may change the wages or working conditions of employees
    of the debtor established by a collective bargaining agreement that
    is subject to the Railway Labor Act except in accordance with
    section 6 of such Act.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2642; Pub. L. 103-394,
    title V, Sec. 501(d)(35), Oct. 22, 1994, 108 Stat. 4146.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                         SENATE REPORT NO. 95-989                     
      Section 1176 [enacted as section 1167] is derived from present
    section 77(n) [section 205(n) of former title 11]. It provides that
    notwithstanding the general section governing the rejection of
    executory contracts (section 365), neither the court nor the
    trustee may change the wages or working conditions of employees of
    the debtor established by a collective bargaining agreement that is
    subject to the Railway Labor Act [45 U.S.C. 151 et seq.], except in
    accordance with section 6 of that Act [45 U.S.C. 156]. As reported
    by the subcommittee this section provided that wages and salaries
    of rail employees could not be affected by the trustee, but that
    work rules could be rejected by the trustee. The reorganization
    court was given the authority to review the trustee's decisions and
    to settle any disputes arising from the rejection. This provision
    was withdrawn by the full committee, and hearings will be conducted
    next year by the Human Resources Committee in the area of rail
    labor contracts and the trustee's ability to reject them in a
    bankruptcy situation.

                          HOUSE REPORT NO. 95-595                      
      Section 1167 is derived from present section 77(n) [section
    205(n) of former title 11]. It provides that notwithstanding the
    general section governing the rejection of executory contracts
    (section 365), neither the court nor the trustee may change the
    wages or working conditions of employees of the debtor established
    by a collective bargaining agreement that is subject to the Railway
    Labor Act [45 U.S.C. 151 et seq.], except in accordance with
    section 6 of that Act [45 U.S.C. 156]. The subject of railway labor
    is too delicate and has too long a history for this code to upset
    established relationships. The balance has been struck over the
    years. This provision continues that balance unchanged.

-REFTEXT-
                            REFERENCES IN TEXT                        
      The Railway Labor Act, referred to in text, is act May 20, 1926,
    ch. 347, 44 Stat. 577, as amended, which is classified principally
    to chapter 8 (Sec. 151 et seq.) of Title 45, Railroads. Section 6
    of the Act is classified to section 156 of Title 45. For complete
    classification of this Act to the Code, see section 151 of Title 45
    and Tables.


-MISC2-
                                AMENDMENTS                            
      1994 - Pub. L. 103-394 struck out "(45 U.S.C. 151 et seq.)" after
    "Railway Labor Act" and "(45 U.S.C. 156)" after "such Act".

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1168                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1168. Rolling stock equipment

-STATUTE-
      (a)(1) The right of a secured party with a security interest in
    or of a lessor or conditional vendor of equipment described in
    paragraph (2) to take possession of such equipment in compliance
    with an equipment security agreement, lease, or conditional sale
    contract, and to enforce any of its other rights or remedies under
    such security agreement, lease, or conditional sale contract, to
    sell, lease, or otherwise retain or dispose of such equipment, is
    not limited or otherwise affected by any other provision of this
    title or by any power of the court, except that right to take
    possession and enforce those other rights and remedies shall be
    subject to section 362, if - 
        (A) before the date that is 60 days after the date of
      commencement of a case under this chapter, the trustee, subject
      to the court's approval, agrees to perform all obligations of the
      debtor under such security agreement, lease, or conditional sale
      contract; and
        (B) any default, other than a default of a kind described in
      section 365(b)(2), under such security agreement, lease, or
      conditional sale contract - 
          (i) that occurs before the date of commencement of the case
        and is an event of default therewith is cured before the
        expiration of such 60-day period;
          (ii) that occurs or becomes an event of default after the
        date of commencement of the case and before the expiration of
        such 60-day period is cured before the later of - 
            (I) the date that is 30 days after the date of the default
          or event of the default; or
            (II) the expiration of such 60-day period; and

          (iii) that occurs on or after the expiration of such 60-day
        period is cured in accordance with the terms of such security
        agreement, lease, or conditional sale contract, if cure is
        permitted under that agreement, lease, or conditional sale
        contract.

      (2) The equipment described in this paragraph - 
        (A) is rolling stock equipment or accessories used on rolling
      stock equipment, including superstructures or racks, that is
      subject to a security interest granted by, leased to, or
      conditionally sold to a debtor; and
        (B) includes all records and documents relating to such
      equipment that are required, under the terms of the security
      agreement, lease, or conditional sale contract, that is to be
      surrendered or returned by the debtor in connection with the
      surrender or return of such equipment.

      (3) Paragraph (1) applies to a secured party, lessor, or
    conditional vendor acting in its own behalf or acting as trustee or
    otherwise in behalf of another party.
      (b) The trustee and the secured party, lessor, or conditional
    vendor whose right to take possession is protected under subsection
    (a) may agree, subject to the court's approval, to extend the 60-
    day period specified in subsection (a)(1).
      (c)(1) In any case under this chapter, the trustee shall
    immediately surrender and return to a secured party, lessor, or
    conditional vendor, described in subsection (a)(1), equipment
    described in subsection (a)(2), if at any time after the date of
    commencement of the case under this chapter such secured party,
    lessor, or conditional vendor is entitled pursuant to subsection
    (a)(1) to take possession of such equipment and makes a written
    demand for such possession of the trustee.
      (2) At such time as the trustee is required under paragraph (1)
    to surrender and return equipment described in subsection (a)(2),
    any lease of such equipment, and any security agreement or
    conditional sale contract relating to such equipment, if such
    security agreement or conditional sale contract is an executory
    contract, shall be deemed rejected.
      (d) With respect to equipment first placed in service on or prior
    to October 22, 1994, for purposes of this section - 
        (1) the term "lease" includes any written agreement with
      respect to which the lessor and the debtor, as lessee, have
      expressed in the agreement or in a substantially contemporaneous
      writing that the agreement is to be treated as a lease for
      Federal income tax purposes; and
        (2) the term "security interest" means a purchase-money
      equipment security interest.

      (e) With respect to equipment first placed in service after
    October 22, 1994, for purposes of this section, the term "rolling
    stock equipment" includes rolling stock equipment that is
    substantially rebuilt and accessories used on such equipment.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2642; Pub. L. 98-353, title
    III, Sec. 519, July 10, 1984, 98 Stat. 388; Pub. L. 103-394, title
    II, Sec. 201(b), Oct. 22, 1994, 108 Stat. 4120; Pub. L. 106-181,
    title VII, Sec. 744(a), Apr. 5, 2000, 114 Stat. 175.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1168 of the House amendment incorporates a provision
    contained in section 1166 of the House bill instead of the
    provision contained in section 1175 of the Senate amendment for the
    reasons stated in connection with the discussion of section 1110 of
    the House amendment.

                         SENATE REPORT NO. 95-989                     
      Section 1175 [enacted as section 1168] continues the protection
    accorded in present section 77(j) [section 205(j) of former title
    11] to the rights of holders of purchase-money equipment security,
    and of lessors or conditional vendors of railroad rolling stock,
    but accords to the trustee a limited period within which to assume
    the debtor's obligation and to cure any defaults. The rights of
    such lenders are not affected by the automatic stay and related
    provisions of sections 362 and 363, or by any power of the court,
    unless (1) within 60 days after the commencement of the case (or
    such longer period as may be agreed to by the secured party, lessor
    or conditional vendor) the trustees, with the approval of the
    court, agrees to perform all of the debtor's obligations under the
    security agreement, lease or conditional sale contract, and (2) all
    defaults are cured within the 60-day period. Defaults described in
    section 365(b)(2) - defaults which are breaches of provisions
    relating to the insolvency or financial condition of the debtor, or
    the commencement of a case under this title, or the appointment of
    a trustee - are for obvious reasons, excepted.

                          HOUSE REPORT NO. 95-595                      
      [Section 1166] This section [enacted as section 1168], derived
    with changes from the last sentence of present section 77(j)
    [section 205(j) of former title 11], protects the interests of
    rolling stock equipment financers, while providing the trustee with
    some opportunity to cure defaults, agree to make payments, and
    retain and use the equipment. The provision is parallel to section
    1110, concerning aircraft equipment and vessels.

                                AMENDMENTS                            
      2000 - Pub. L. 106-181 amended section catchline and text
    generally, substituting present provisions consisting of subsecs.
    (a) to (e) for former subsecs. (a) to (d) which contained somewhat
    similar provisions.
      1994 - Pub. L. 103-394 amended section generally. Prior to
    amendment, section read as follows:
      "(a) The right of a secured party with a purchase-money equipment
    security interest in, or of a lessor or conditional vendor of,
    whether as trustee or otherwise, rolling stock equipment or
    accessories used on such equipment, including superstructures and
    racks, that are subject to a purchase-money equipment security
    interest granted by, leased to, or conditionally sold to, the
    debtor to take possession of such equipment in compliance with the
    provisions of a purchase-money equipment security agreement, lease,
    or conditional sale contract, as the case may be, is not affected
    by section 362 or 363 of this title or by any power of the court to
    enjoin such taking of possession, unless - 
        "(1) before 60 days after the date of the commencement of a
      case under this chapter, the trustee, subject to the court's
      approval, agrees to perform all obligations of the debtor under
      such security agreement, lease, or conditional sale contract, as
      the case may be; and
        "(2) any default, other than a default of a kind specified in
      section 365(b)(2) of this title, under such security agreement,
      lease, or conditional sale contract, as the case may be - 
          "(A) that occurred before such date and is an event of
        default therewith is cured before the expiration of such 60-day
        period; and
          "(B) that occurs or becomes an event of default after such
        date is cured before the later of - 
            "(i) 30 days after the date of such default or event of
          default; and
            "(ii) the expiration of such 60-day period.
      "(b) The trustee and the secured party, lessor, or conditional
    vendor, as the case may be, whose right to take possession is
    protected under subsection (a) of this section, may agree, subject
    to the court's approval, to extend the 60-day period specified in
    subsection (a)(1) of this section."
      1984 - Subsec. (b). Pub. L. 98-353 inserted a comma after
    "approval".

                     EFFECTIVE DATE OF 2000 AMENDMENT                 
      Amendment by Pub. L. 106-181 applicable only to fiscal years
    beginning after Sept. 30, 1999, see section 3 of Pub. L. 106-181,
    set out as a note under section 106 of Title 49, Transportation.

                     EFFECTIVE DATE OF 1994 AMENDMENT                 
      Amendment by Pub. L. 103-394 effective Oct. 22, 1994, and not
    applicable with respect to cases commenced under this title before
    Oct. 22, 1994, see section 702 of Pub. L. 103-394, set out as a
    note under section 101 of this title.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1169                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1169. Effect of rejection of lease of railroad line

-STATUTE-
      (a) Except as provided in subsection (b) of this section, if a
    lease of a line of railroad under which the debtor is the lessee is
    rejected under section 365 of this title, and if the trustee,
    within such time as the court fixes, and with the court's approval,
    elects not to operate the leased line, the lessor under such lease,
    after such approval, shall operate the line.
      (b) If operation of such line by such lessor is impracticable or
    contrary to the public interest, the court, on request of such
    lessor, and after notice and a hearing, shall order the trustee to
    continue operation of such line for the account of such lessor
    until abandonment is ordered under section 1170 of this title, or
    until such operation is otherwise lawfully terminated, whichever
    occurs first.
      (c) During any such operation, such lessor is deemed a carrier
    subject to the provisions of subtitle IV of title 49 that are
    applicable to railroads.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2643; Pub. L. 97-449, Sec.
    5(a)(3), Jan. 12, 1983, 96 Stat. 2442; Pub. L. 98-353, title III,
    Sec. 520, July 10, 1984, 98 Stat. 388.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1169 of the Senate amendment is deleted from the House
    amendment as unnecessary since 28 U.S.C. 1407 treating with the
    judicial panel on multi-district litigation will apply by its terms
    to cases under title 11.

                         SENATE REPORT NO. 95-989                     
      Section 1177 [enacted as section 1169] continues, essentially
    without change, the provisions relating to the rejection by the
    trustee of a lease of a line of railroad now contained in section
    77(c)(6) [section 205(c)(6) of former title 11]. Subsection (a)
    requires the lessor of a line of railroad to operate it if the
    lease is rejected by the trustee and the trustee, with the approval
    of the court, elects not to operate the leased line. Subsection
    (b), however, further provides that if operation by the lessor is
    impractical or contrary to the public interest, the court shall
    require the trustee to operate the line for the account of the
    lessor until the operation is lawfully terminated. Subsection (c)
    provides that during such operation, the lessor is a carrier
    subject to the Interstate Commerce Act [49 U.S.C. 10101 et seq.].

                          HOUSE REPORT NO. 95-595                      
      [Section 1168] This section [enacted as section 1169] governs the
    effect of the rejection by the trustee of an unexpired lease of
    railroad line under which the debtor is the lessee. If the trustee
    rejects such a lease, and if the trustee, within such time as the
    court allows, and with the approval of the court, elects not to
    operate the leased line, then the lessor under the lease must
    operate the line.
      Subsection (b) excuses the lessor from the requirement to operate
    the line under certain circumstances. If operation of the line by
    the lessor is impracticable or contrary to the public interest, the
    court, on request of the lessor, must order the trustee to continue
    operation of the line for the account of the lessor until
    abandonment is ordered under section 1169, governing abandonments
    generally, or until the operation is otherwise lawfully terminated,
    such as by an order of the ICC.
      Subsection (c) deems the lessor a carrier subject to the
    provisions of the Interstate Commerce Act [49 U.S.C. 10101 et seq.]
    during the operation of the line before abandonment.

                                AMENDMENTS                            
      1984 - Subsec. (c). Pub. L. 98-353 directed substitution of
    "subtitle IV of title 49" for "the Interstate Commerce Act (49
    U.S.C. 1 et seq.)", which substitution had previously been made by
    Pub. L. 97-449.
      1983 - Subsec. (c). Pub. L. 97-449 substituted "subtitle IV of
    title 49" for "the Interstate Commerce Act (49 U.S.C. Sec. 1 et
    seq.)".

-End-



-CITE-
    11 USC Sec. 1170                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1170. Abandonment of railroad line

-STATUTE-
      (a) The court, after notice and a hearing, may authorize the
    abandonment of all or a portion of a railroad line if such
    abandonment is - 
        (1)(A) in the best interest of the estate; or
        (B) essential to the formulation of a plan; and
        (2) consistent with the public interest.

      (b) If, except for the pendency of the case under this chapter,
    such abandonment would require approval by the Board under a law of
    the United States, the trustee shall initiate an appropriate
    application for such abandonment with the Board. The court may fix
    a time within which the Board shall report to the court on such
    application.
      (c) After the court receives the report of the Board, or the
    expiration of the time fixed under subsection (b) of this section,
    whichever occurs first, the court may authorize such abandonment,
    after notice to the Board, the Secretary of Transportation, the
    trustee, any party in interest that has requested notice, any
    affected shipper or community, and any other entity prescribed by
    the court, and a hearing.
      (d)(1) Enforcement of an order authorizing such abandonment shall
    be stayed until the time for taking an appeal has expired, or, if
    an appeal is timely taken, until such order has become final.
      (2) If an order authorizing such abandonment is appealed, the
    court, on request of a party in interest, may authorize suspension
    of service on a line or a portion of a line pending the
    determination of such appeal, after notice to the Board, the
    Secretary of Transportation, the trustee, any party in interest
    that has requested notice, any affected shipper or community, and
    any other entity prescribed by the court, and a hearing. An
    appellant may not obtain a stay of the enforcement of an order
    authorizing such suspension by the giving of a supersedeas bond or
    otherwise, during the pendency of such appeal.
      (e)(1) In authorizing any abandonment of a railroad line under
    this section, the court shall require the rail carrier to provide a
    fair arrangement at least as protective of the interests of
    employees as that established under section 11326(a) of title 49.
      (2) Nothing in this subsection shall be deemed to affect the
    priorities or timing of payment of employee protection which might
    have existed in the absence of this subsection.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2643; Pub. L. 96-448, title
    II, Sec. 227(a), Oct. 14, 1980, 94 Stat. 1931; Pub. L. 98-353,
    title III, Sec. 521, July 10, 1984, 98 Stat. 388; Pub. L. 104-88,
    title III, Sec. 302(2), Dec. 29, 1995, 109 Stat. 943; Pub. L. 109-
    8, title XII, Sec. 1217, Apr. 20, 2005, 119 Stat. 195.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                         SENATE REPORT NO. 95-989                     
      Subsection (a) of section 1178 [enacted as section 1170] permits
    the court to authorize the abandonment of a railroad line if the
    abandonment is consistent with the public interest and either in
    the best interest of the estate or essential to the formulation of
    a plan. This avoids the normal abandonment requirements of
    generally applicable railroad regulatory law.
      Subsection (b) permits some participation by the Interstate
    Commerce Commission in the abandonment process. The Commission's
    role, however, is only advisory. The Commission will represent the
    public interest, while the trustee and various creditors and equity
    security holders will represent the interests of those who have
    invested money in the enterprise. The court will balance the
    various interests and make an appropriate decision. The subsection
    specifies that if, except for the pendency of the railroad
    reorganization case, the proposed abandonment would require
    Commission approval, then the trustee, with the approval of the
    court, must initiate an application for the abandonment with the
    Commission. The court may then fix a time within which the
    Commission must report to the court on the application.
      Subsection (c) permits the court to act after it has received the
    report of the Commission or the time fixed under subsection (b) has
    expired, whichever occurs first. The court may then authorize the
    abandonment after notice and a hearing. The notice must go to the
    Commission, the Secretary of Transportation, the trustee, and party
    in interest that has requested notice, any affected shipper or
    community, and any other entity that the court specifies.
      Subsection (d) stays the enforcement of an abandonment until the
    time for taking an appeal has expired, or if an appeal has been
    taken, until the order has become final. However, the court may,
    and after notice and a hearing, on request of a party in interest
    authorize termination of service on the line or a portion of the
    line pending the determination of the appeal. The notice required
    is the same as that required under subsection (c). If the court
    authorizes termination of service pending determination of the
    appeal, an appellant may not obtain a stay of the enforcement of
    the order authorizing termination, either by the giving of a
    supersedeas bond or otherwise, during the pendency of the appeal.

                                AMENDMENTS                            
      2005 - Subsec. (e)(1). Pub. L. 109-8 substituted "section
    11326(a)" for "section 11347".
      1995 - Subsecs. (b), (c), (d)(2). Pub. L. 104-88 substituted
    "Board" for "Commission" wherever appearing.
      1984 - Subsec. (a). Pub. L. 98-353, Sec. 521(a), inserted "of all
    or a portion" after "the abandonment".
      Subsec. (c). Pub. L. 98-353, Sec. 521(b), inserted a comma after
    "abandonment".
      Subsec. (d)(2). Pub. L. 98-353, Sec. 521(c), substituted "such
    abandonment" for "the abandonment of a railroad line", and
    "suspension" for "termination" in two places.
      1980 - Subsec. (e). Pub. L. 96-448 added subsec. (e).

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, and not applicable with respect to cases commenced under this
    title before such effective date, except as otherwise provided, see
    section 1501 of Pub. L. 109-8, set out as a note under section 101
    of this title.

                     EFFECTIVE DATE OF 1995 AMENDMENT                 
      Amendment by Pub. L. 104-88 effective Jan. 1, 1996, see section 2
    of Pub. L. 104-88, set out as an Effective Date note under section
    701 of Title 49, Transportation.

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

                     EFFECTIVE DATE OF 1980 AMENDMENT                 
      Section 710 of Pub. L. 96-448 provided that:
      "(a) Except as provided in subsections (b), (c), and (d) of this
    section, the provisions of this Act and the amendments made by this
    Act [see Tables for classification] shall take effect on October 1,
    1980.
      "(b) Section 206 of this Act [enacting former section 10712 of
    Title 49, Transportation] shall take effect on January 1, 1981.
      "(c) Section 218(b) of this Act [amending former section 10705 of
    Title 49] shall take effect on October 1, 1983.
      "(d) Section 701 of this Act [enacting section 1018 of Title 45,
    Railroads, and amending sections 231f, 825, 906, 913, 914, 1002,
    1005, 1007, and 1008 of Title 45] shall take effect on the date of
    enactment of this Act [Oct. 14, 1980]."

-End-



-CITE-
    11 USC Sec. 1171                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1171. Priority claims

-STATUTE-
      (a) There shall be paid as an administrative expense any claim of
    an individual or of the personal representative of a deceased
    individual against the debtor or the estate, for personal injury to
    or death of such individual arising out of the operation of the
    debtor or the estate, whether such claim arose before or after the
    commencement of the case.
      (b) Any unsecured claim against the debtor that would have been
    entitled to priority if a receiver in equity of the property of the
    debtor had been appointed by a Federal court on the date of the
    order for relief under this title shall be entitled to the same
    priority in the case under this chapter.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2643; Pub. L. 98-353, title
    III, Sec. 522, July 10, 1984, 98 Stat. 388.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1171 of the House amendment is derived from section 1170
    of the House bill in lieu of section 1173(a)(9) of the Senate
    amendment.

                          HOUSE REPORT NO. 95-595                      
      [Section 1170] This section [enacted as section 1171] is derived
    from current law. Subsection (a) grants an administrative expense
    priority to the claim of any individual (or of the personal
    representative of a deceased individual) against the debtor or the
    estate for personal injury to or death of the individual arising
    out of the operation of the debtor railroad or the estate, whether
    the claim arose before or after commencement of the case. The
    priority under current law, found in section 77(n) [section 205(n)
    of former title 11], applies only to employees of the debtor. This
    subsection expands the protection provided.
      Subsection (b) follows present section 77(b) of the Bankruptcy
    Act [section 205(b) of former title 11] by giving priority to any
    unsecured claims that would be entitled to priority if a receiver
    in equity of the property of the debtor had been appointed by a
    Federal court on the date of the order for relief under the
    bankruptcy laws. As under current law, the courts will determine
    the precise contours of the priority recognized by this subsection
    in each case.

                                AMENDMENTS                            
      1984 - Subsec. (b). Pub. L. 98-353 substituted "the same" for
    "such".

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1172                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1172. Contents of plan

-STATUTE-
      (a) In addition to the provisions required or permitted under
    section 1123 of this title, a plan - 
        (1) shall specify the extent to and the means by which the
      debtor's rail service is proposed to be continued, and the extent
      to which any of the debtor's rail service is proposed to be
      terminated; and
        (2) may include a provision for - 
          (A) the transfer of any or all of the operating railroad
        lines of the debtor to another operating railroad; or
          (B) abandonment of any railroad line in accordance with
        section 1170 of this title.

      (b) If, except for the pendency of the case under this chapter,
    transfer of, or operation of or over, any of the debtor's rail
    lines by an entity other than the debtor or a successor to the
    debtor under the plan would require approval by the Board under a
    law of the United States, then a plan may not propose such a
    transfer or such operation unless the proponent of the plan
    initiates an appropriate application for such a transfer or such
    operation with the Board and, within such time as the court may
    fix, not exceeding 180 days, the Board, with or without a hearing,
    as the Board may determine, and with or without modification or
    condition, approves such application, or does not act on such
    application. Any action or order of the Board approving, modifying,
    conditioning, or disapproving such application is subject to review
    by the court only under sections 706(2)(A), 706(2)(B), 706(2)(C),
    and 706(2)(D) of title 5.
      (c)(1) In approving an application under subsection (b) of this
    section, the Board shall require the rail carrier to provide a fair
    arrangement at least as protective of the interests of employees as
    that established under section 11326(a) of title 49.
      (2) Nothing in this subsection shall be deemed to affect the
    priorities or timing of payment of employee protection which might
    have existed in the absence of this subsection.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2644; Pub. L. 96-448, title
    II, Sec. 227(b), Oct. 14, 1980, 94 Stat. 1931; Pub. L. 104-88,
    title III, Sec. 302(2), Dec. 29, 1995, 109 Stat. 943; Pub. L. 109-
    8, title XII, Sec. 1218, Apr. 20, 2005, 119 Stat. 195.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1172 of the House amendment is derived from section 1171
    of the House bill in preference to section 1170 of the Senate
    amendment with the exception that section 1170(4) of the Senate
    amendment is incorporated into section 1172(a)(1) of the House
    amendment.
      Section 1172(b) of the House amendment is derived from section
    1171(c) of the Senate amendment. The section gives the Interstate
    Commerce Commission the exclusive power to approve or disapprove
    the transfer of, or operation of or over, any of the debtor's rail
    lines over which the Commission has jurisdiction, subject to review
    under the Administrative Procedures Act [5 U.S.C. 551 et seq. and
    701 et seq.]. The section does not apply to a transfer of railroad
    lines to a successor of the debtor under a plan of reorganization
    by merger or otherwise.
      The House amendment deletes section 1171(a) of the Senate
    amendment as a matter to be determined by the Rules of Bankruptcy
    Procedure. It is anticipated that the rules will specify the period
    of time, such as 18 months, within which a trustee must file with
    the court a proposed plan of reorganization for the debtor or a
    report why a plan cannot be formulated. Incorporation by reference
    of section 1121 in section 1161 of title 11 means that a party in
    interest will also have a right to file a plan of reorganization.
    This differs from the position taken in the Senate amendment which
    would have permitted the Interstate Commerce Commission to file a
    plan of reorganization.

                         SENATE REPORT NO. 95-989                     
      Section 1170 adds to the general provisions required or permitted
    in reorganization plans by section 1123. Subsection (1) requires
    that a reorganization plan under the railroad subchapter specify
    the means by which the value of the claims of creditors and the
    interests of equity holders which are materially and adversely
    affected by the plan are to be realized. Subsection (2) permits a
    plan to include provisions for the issuance of warrants. Subsection
    (3) requires that the plan provide for fixed charges by probable
    earnings for their payment. Subsection (4) requires that the plan
    specify the means by which, and the extent to which, the debtor's
    rail service is to be continued, and shall identify any rail
    service to be terminated. Subsection (5) permits other appropriate
    provisions not inconsistent with the chapter. With the exception of
    subsection (4), the requirements are comparable to those of present
    section 77(b) [section 205(b) of former title 11]; subsection (4)
    emphasizes the public interest in the preservation of rail
    transportation.
      Section 1171 imposes on the court, rather than the Interstate
    Commerce Commission, as in present section 77 [section 205 of
    former title 11], the responsibility for the plan of
    reorganization. The Commission is empowered to make final decisions
    subject only to review by the court under the standards of the
    Administrative Procedure Act [5 U.S.C. 551 et seq. and 701 et seq.]
    as to any part of the plan which deals with transportation matters,
    such as the grant of operating rights of or over, or transfer of,
    the debtor's rail lines to other carriers.
      Subsection (a) requires the trustee to file a plan of
    reorganization within 18 months after the petition is filed, and
    permits the court, for good cause shown, to extend such time limit.
    Subsection (b) permits a plan to be proposed by any interested
    person, and permits the trustee to revise his plan at any time
    before it is approved by the court.
      Subsections (c), (d) and (e) require the court, when a plan is
    submitted by the trustee or, if the court deems it worthy of
    consideration, a plan submitted is proposed by any other person
    proposes the transfer of, or operation of or over, any of the
    debtor's lines by other carriers, to refer to such provisions of
    the plan to the Interstate Commerce Commission. The Commission,
    within 240 days, and after a hearing if the Commission so
    determines, is to report to the court the effects of such
    provisions of the plan in the light of national transportation
    policy and sections 5(3)(f)(A), (B), and (D), (F)-(I) of the
    Interstate Commerce Act [49 U.S.C. 11350(b)(1), (2), (4), (6)-(9)].
    The report of the Commission is conclusive in all further hearings
    on the plan by the court, subject only to review pursuant to 5
    U.S.C. 706(2)(A)-(D).

                          HOUSE REPORT NO. 95-595                      
      [Section 1171 (enacted as section 1172)] A plan in a railroad
    reorganization case may include provisions in addition to those
    required and permitted under an ordinary reorganization plan. It
    may provide for the transfer of any or all of the operating
    railroad lines of the debtor to another operating railroad.
      Paragraph (1) contemplates a liquidating plan for the debtor's
    rail lines, much as occurred in the Penn Central case by transfer
    of operating lines to ConRail. Such a liquidating plan is not per
    se contrary to the public interest, and the court will have to
    determine on a case-by-case basis, with the guidance of the
    Interstate Commerce Commission and of other parties in interest,
    whether the particular plan proposed is in the public interest, as
    required under proposed 11 U.S.C. 1172(3).
      The plan may also provide for abandonment in accordance with
    section 1169, governing abandonment generally. Neither of these
    provisions in a plan, transfer or abandonment of lines, requires
    ICC approval. Confirmation of the plan by the court authorizes the
    debtor to comply with the plan in accordance with section 1142(a)
    notwithstanding any bankruptcy law to the contrary.

                                AMENDMENTS                            
      2005 - Subsec. (c)(1). Pub. L. 109-8 substituted "section
    11326(a)" for "section 11347".
      1995 - Subsecs. (b), (c)(1). Pub. L. 104-88 substituted "Board"
    for "Commission" wherever appearing.
      1980 - Subsec. (c). Pub. L. 96-448 added subsec. (c).

                     EFFECTIVE DATE OF 2005 AMENDMENT                 
      Amendment by Pub. L. 109-8 effective 180 days after Apr. 20,
    2005, and not applicable with respect to cases commenced under this
    title before such effective date, except as otherwise provided, see
    section 1501 of Pub. L. 109-8, set out as a note under section 101
    of this title.

                     EFFECTIVE DATE OF 1995 AMENDMENT                 
      Amendment by Pub. L. 104-88 effective Jan. 1, 1996, see section 2
    of Pub. L. 104-88, set out as an Effective Date note under section
    701 of Title 49, Transportation.

                     EFFECTIVE DATE OF 1980 AMENDMENT                 
      Amendment by Pub. L. 96-448 effective Oct. 1, 1980, see section
    710(a) of Pub. L. 96-448, set out as a note under section 1170 of
    this title.

                       NONAPPLICATION OF SUBSEC. (C)                   
      For provision that subsec. (c) of this section does not apply to
    Amtrak and its employees, see section 142(d) of Pub. L. 105-134,
    set out in an Employee Protection Reforms note under section 24706
    of Title 49, Transportation.

-End-



-CITE-
    11 USC Sec. 1173                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1173. Confirmation of plan

-STATUTE-
      (a) The court shall confirm a plan if - 
        (1) the applicable requirements of section 1129 of this title
      have been met;
        (2) each creditor or equity security holder will receive or
      retain under the plan property of a value, as of the effective
      date of the plan, that is not less than the value of property
      that each such creditor or equity security holder would so
      receive or retain if all of the operating railroad lines of the
      debtor were sold, and the proceeds of such sale, and the other
      property of the estate, were distributed under chapter 7 of this
      title on such date;
        (3) in light of the debtor's past earnings and the probable
      prospective earnings of the reorganized debtor, there will be
      adequate coverage by such prospective earnings of any fixed
      charges, such as interest on debt, amortization of funded debt,
      and rent for leased railroads, provided for by the plan; and
        (4) the plan is consistent with the public interest.

      (b) If the requirements of subsection (a) of this section are met
    with respect to more than one plan, the court shall confirm the
    plan that is most likely to maintain adequate rail service in the
    public interest.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2644; Pub. L. 98-353, title
    III, Sec. 523, July 10, 1984, 98 Stat. 388.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1173 of the House amendment concerns confirmation of a
    plan of railroad reorganization and is derived from section 1172 of
    the House bill as modified. In particular, section 1173(a)(3) of
    the House amendment is derived from section 1170(3) of the Senate
    amendment. Section 1173(b) is derived from section 1173(a)(8) of
    the Senate amendment.

                         SENATE REPORT NO. 95-989                     
      Section 1173 adapts the provisions dealing with reorganization
    plans generally contained in section 1130 to the particular
    requirements of railroad reorganization plans, as set out in
    present section 77(e) [section 205(e) of former title 11].
    Subsection (a) specifies the findings which the court must make
    before approving a plan: (1) The plan complies with the applicable
    provisions of the chapter; (2) the proponent of the plan complies
    with the applicable provisions of the chapter; (3) the plan has
    been proposed in good faith; (4) any payments for services or for
    costs or expenses in connection with the case or the plan are
    disclosed to the court and are reasonable, or, if to be paid later,
    are subject to the approval of the court as reasonable; (5) the
    proponent of the plan has disclosed the identity and affiliations
    of the individuals who will serve as directors, officers, or voting
    trustees, such appointments or continuations in office are
    consistent with the interests of creditors, equity security
    holders, and the proponent the public, and has disclosed the
    identity and compensation of any insider who will be employed or
    retained under the plan; (6) that rate changes proposed in the plan
    have been approved by the appropriate regulatory commission, or
    that the plan is contingent on such approval; (7) that confirmation
    of the plan is not likely to be followed by further reorganization
    or liquidation, unless it is contemplated by the plan; (8) that the
    plan, if there is more than one, is the one most likely to maintain
    adequate rail service and (9) that the plan provides the priority
    traditionally accorded by section 77(b) [section 205(b) of former
    title 11] to claims by rail creditors for necessary services
    rendered during the 6 months preceding the filing of the petition
    in bankruptcy.
      Subsection (b) continues the present power of the court in
    section 77(e) [section 205(e) of former title 11] to confirm a plan
    over the objections of creditors or equity security holders who are
    materially and adversely affected. The subsection also confirms the
    authority of the court to approve a transfer of all or part of a
    debtor's property or its merger over the objections of equity
    security holders if it finds (1) that the "public interest" in
    continued rail transportation outweighs any adverse effect on
    creditors and equity security holders, and (2) that the plan is
    fair and equitable, affords due recognition to the rights of each
    class, and does not discriminate unfairly against any class.
      Subsection (c) permits modification of a plan confirmed by a
    final order only for fraud.

                          HOUSE REPORT NO. 95-595                      
      [Section 1172] This section [enacted as section 1173] requires
    the court to confirm a plan if the applicable requirements of
    section 1129 (relating to confirmation of reorganization plans
    generally) are met, if the best interest test is met, and if the
    plan is compatible with the public interest.
      The test in this paragraph is similar to the test prescribed for
    ordinary corporate reorganizations. However, since a railroad
    cannot liquidate its assets and sell them for scrap to satisfy its
    creditors, the test focuses on the value of the railroad as a going
    concern. That is, the test is based on what the assets, sold as
    operating rail lines, would bring.
      The public interest requirement, found in current law, will now
    be decided by the court, with the ICC representing the public
    interest before the court, rather than in the first instance by the
    ICC. Liquidation of the debtor is not, per se, contrary to the
    public interest.

                                AMENDMENTS                            
      1984 - Subsec. (a)(4). Pub. L. 98-353 substituted "consistent"
    for "compatible".

                     EFFECTIVE DATE OF 1984 AMENDMENT                 
      Amendment by Pub. L. 98-353 effective with respect to cases filed
    90 days after July 10, 1984, see section 552(a) of Pub. L. 98-353,
    set out as a note under section 101 of this title.

-End-



-CITE-
    11 USC Sec. 1174                                            01/03/2007

-EXPCITE-
    TITLE 11 - BANKRUPTCY
    CHAPTER 11 - REORGANIZATION
    SUBCHAPTER IV - RAILROAD REORGANIZATION

-HEAD-
    Sec. 1174. Liquidation

-STATUTE-
      On request of a party in interest and after notice and a hearing,
    the court may, or, if a plan has not been confirmed under section
    1173 of this title before five years after the date of the order
    for relief, the court shall, order the trustee to cease the
    debtor's operation and to collect and reduce to money all of the
    property of the estate in the same manner as if the case were a
    case under chapter 7 of this title.

-SOURCE-
    (Pub. L. 95-598, Nov. 6, 1978, 92 Stat. 2644.)


-MISC1-
                       HISTORICAL AND REVISION NOTES                   

                          LEGISLATIVE STATEMENTS                      
      Section 1174 of the House amendment represents a compromise
    between the House bill and Senate amendment on the issue of
    liquidation of a railroad. The provision permits a party in
    interest at any time to request liquidation. In addition, if a plan
    has not been confirmed under section 1173 of the House amendment
    before 5 years after the date of order for relief, the court must
    order the trustee to cease the debtor's operation and to collect
    and reduce to money all of the property of the estate in the same
    manner as if the case were a case under chapter 7 of title 11. The
    approach differs from the conversion to chapter 7 under section
    1174 of the Senate bill in order to make special provisions
    contained in subchapter IV of chapter 11 applicable to liquidation.
    However, maintaining liquidation in the context of chapter 11 is
    not intended to delay liquidation of the railroad to a different
    extent than if the case were converted to chapter 7.
      Although the House amendment does not adopt provisions contained
    in sections 1170(1), (2), (3), or (5), of the Senate amendment such
    provisions are contained explicitly or implicitly in section 1123
    of the House amendment.

                         SENATE REPORT NO. 95-989                     
      Section 1174 permits the court to convert the case to a
    liquidation under chapter 7 if the court finds that the debtor
    cannot be reorganized, or if various time limits specified in the
    subchapter are not met. Section 77 [section 205 of former title 11]
    does not authorize a liquidation of a railroad under the Bankruptcy
    Act [former title 11]. If the railroad is not reorganizable, the
    only action open to the court is to dismiss the petition, which
    would in all likelihood be followed by a State court receivership,
    with all of its attendant disadvantages. If reorganization is
    impossible, the debtor should be liquidated under the Bankruptcy
    Act.

-End-