89–006 

116TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 116–171 

SMALL BUSINESS REORGANIZATION ACT OF 2019 

JULY 23, 2019.—Committed to the Committee of the Whole House on the State of 

the Union and ordered to be printed 

Mr. NADLER, from the Committee on the Judiciary, 

submitted the following 

R E P O R T 

[To accompany H.R. 3311] 

The Committee on the Judiciary, to whom was referred the bill 

(H.R. 3311) to amend chapter 11 of title 11, United States Code, 

to address reorganization of small businesses, and for other purposes, having considered the same, report favorably thereon without amendment and recommend that the bill do pass. 

CONTENTS 

Page 

Purpose and Summary ............................................................................................ 1 

Background and Need for the Legislation ............................................................. 2 

Hearings ................................................................................................................... 4 

Committee Consideration ........................................................................................ 5 

Committee Votes ...................................................................................................... 5 

Committee Oversight Findings ............................................................................... 5 

New Budget Authority and Tax Expenditures and Congressional Budget Office Cost Estimate ................................................................................................ 5 

Duplication of Federal Programs ............................................................................ 5 

Performance Goals and Objectives ......................................................................... 5 

Advisory on Earmarks ............................................................................................. 6 

Section-by-Section Analysis .................................................................................... 6 

Changes in Existing Law Made by the Bill, as Reported ..................................... 9 

Purpose and Summary 

H.R. 3311, the ‘‘Small Business Reorganization Act of 2019,’’ 

would streamline the bankruptcy process by which small businesses debtors reorganize and rehabilitate their financial affairs. 

This bipartisan measure was introduced by Representative Ben 

Cline (R–VA) together with Antitrust, Commercial, and Administrative Law Subcommittee (ACAL Subcommittee) Chairman David 

N. Cicilline (D–RI), Full Committee Ranking Member Doug Collins 

(R–GA) and Representative Steve Cohen (D–TN) as original coVerDate Sep 11 2014 19:14 Jul 27, 2019 Jkt 089006 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\HR171.XXX HR171

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1Oversight of Bankruptcy Law and Legislative Proposals: Hearing Before the Subcomm. on 

Antitrust, Commercial, & Admin. Law of the H. Comm. on the Judiciary, 116th Cong. (2019) 

(prepared statement of Robert J. Keach, Am. Bankr. Inst.). 2 Id. (prepared statement of Thomas Small, Nat’l Bankr. Conf.). 3Letter from Marc A. Levinson, Chair, Am. Coll. of Bankr., and Mark D. Bloom, Pres., Am. 

Coll. of Bankr., to Rep. Jerrold Nadler (D–NY), Chair, H. Comm. on the Judiciary, and Rep. 

Doug Collins (R–GA), Ranking Member, H. Comm. on the Judiciary (June 14, 2019). 4Letter from John E. Waites, President, Nat’l Conf. of Bankr. Judges, to Rep. Jerrold Nadler 

(D–NY), Chair, H. Comm. on the Judiciary, and Rep. Doug Collins (R–GA), Ranking Member, 

H. Comm. on the Judiciary (June 21, 2019). 5 Am. Bankr. Inst., Final Report and Recommendations of the Commission to Study the Reform of Chapter 11, at 276 (2014) (quoting Deloitte Development LLC, Mid-Market Perspectives: 

America’s Economic Engine—Competing in Uncertain Times 4 (2011)). 6 Id. 

7 Chad Itar, What Percentage of Small Businesses Fail—And How Can You Avoid Being One 

of Them, Forbes: Community Voice (Oct. 25, 2018), https://www.forbes.com/sites/ 

forbesfinancecouncil/2018/10/25/what-percentage-of-small-businesses-fail-and-how-can-you-avoidbeing-one-of-them/#76f7489c43b5. 8 11 U.S.C. § 1129 (2019). 

9 11 U.S.C. § 1112(b) (2019). 

10 Id. 

sponsors. H.R. 3311 is supported by various nonpartisan organizations, including the American Bankruptcy Institute (ABI),1 the National Bankruptcy Conference (NBC),2 the American College of 

Bankruptcy,3 and the National Conference of Bankruptcy Judges.4

Background and Need for the Legislation 

BACKGROUND

Small businesses—typically family-owned businesses, startups, 

and other entrepreneurial ventures—‘‘form the backbone of the 

American economy.’’ 5 For example, it is estimated that ‘‘ ‘companies 

with 50 to 5,000 employees account for more employment than 

those with over 5,000.’ ’’ 6 By their very nature, however, the longevity of these businesses is limited. According to the Small Business Administration Office of Advocacy, approximately 20 percent 

of small businesses survive the first year, but by the five-year mark 

only 50 percent are still in business and by the ten-year mark only 

one-third survive.7

Chapter 11 is a form of bankruptcy relief that is typically used 

by businesses to reorganize their financial affairs. Under the protection of chapter 11, a debtor is given a ‘‘financial breathing spell’’ 

from most creditor collection efforts. This protection allows the 

chapter 11 debtor to continue its business operations while formulating a plan of reorganization to repay its creditors. In general, 

the chapter 11 process requires the debtor to propose a plan of reorganization pursuant to which the debtor commits to repay its 

creditors. It is similar to a contract that creditors can enforce in the 

bankruptcy court should the debtor fail to adhere to the plan’s requirements. The plan is voted upon by the debtor’s creditors and 

the bankruptcy court must make certain findings (e.g., the plan 

was proposed in good faith and it complies with specified payment 

priorities). If the court is satisfied, then the plan is confirmed and 

the debtor is no longer in chapter 11.8

If a chapter 11 case is unsuccessful, the case is usually converted 

to one under chapter 7, which is a form of bankruptcy relief that 

provides for the orderly liquidation of the debtor’s assets for distribution to its creditors.9 Alternatively, the case may be dismissed, 

whichever is in the best interests of creditors and the bankruptcy 

estate.10


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11 H.R. Rep. No. 109–31, at 3 (2005); see, e.g., Susan Jensen-Conklin, Do Confirmed Chapter 

11 Plans Consummate? The Results of a Study and Analysis of the Law, 97 Com. L.J. 297, 325 

(1992) (finding that only 6.5% of debtors confirmed and completed a reorganization plan, seemingly making saving a business under Chapter 11 very unlikely). 12 Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, Pub. L. No. 109–8, 119 

Stat. 23, 59 (2005). 13The United States Trustee Program is a component of the U.S. Justice Department charged 

with maintaining the integrity of the bankruptcy system and, in pertinent part, supervising the 

administration of chapter 11 cases. 28 U.S.C. § 586(a)(3) (2019). 14 H.R. Rep. No. 109–31, at 19 (2005). 15 28 U.S.C. § 586(a)(7) (2019). In addition, the United States trustee is obligated to promptly 

seek dismissal or conversion of a chapter 11 case if material grounds for such relief exist. 28 

U.S.C. § 586(a)(8) (2019). 16 28 U.S.C. § 586(a)(1)–(b) (2019). 17 11 U.S.C. § 1104(a) (2019); 28 U.S.C. § 586(a)(2) (2019). 

Not surprisingly, while most chapter 11 business cases are filed 

by small business debtors, they are often ‘‘the least likely to reorganize successfully.’’ 11 While the Bankruptcy Code envisions that 

creditors will play a major role in monitoring these cases, this often 

does not occur, chiefly because creditors in these smaller cases do 

not have claims large enough to warrant the time and money to 

participate actively in these cases. 

In response to this concern, Congress passed legislation in 2005 

requiring heightened scrutiny of such cases and streamlining the 

reorganization process.12 The legislation sought to address ‘‘the 

special problems presented by small business cases by instituting 

a variety of time frames and enforcement mechanisms designed to 

weed out small business debtors who are not likely to reorganize. 

It also requires these cases to be more actively monitored by 

United States trustees 13 and the bankruptcy courts.’’ 14 Specifically, with respect to small business cases, the United States trustee is required to: 

(A) conduct an initial debtor interview as soon as practicable 

after the date of the order for relief but before the first meeting 

scheduled under section 341(a) of title 11, at which time the United 

States trustee shall— 

(i) begin to investigate the debtor’s viability; 

(ii) inquire about the debtor’s business plan; 

(iii) explain the debtor’s obligations to file monthly operating 

reports and other required reports; 

(iv) attempt to develop an agreed scheduling order; and 

(v) inform the debtor of other obligations; 

(B) if determined to be appropriate and advisable, visit the appropriate business premises of the debtor, ascertain the state of the 

debtor’s books and records, and verify that the debtor has filed its 

tax returns; and 

(C) review and monitor diligently the debtor’s activities, to determine as promptly as possible whether the debtor will be unable to 

confirm a plan[.] 15

The United States Trustee Program is also charged with appointing individuals from the private sector to serve as trustees in all 

consumer chapter 7 and chapter 13 bankruptcy cases as well as in 

family farmer chapter 12 cases.16 In addition, the Program may 

designate an individual to serve as trustee in a chapter 11 case for 

cause, including ‘‘fraud, dishonesty, incompetence, or gross mismanagement,’’ among other grounds.17


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18 Unofficial Tr. of Oversight of Bankruptcy Law and Legislative Proposals: Hearing Before the 

Subcomm. on Antitrust, Commercial, & Admin. Law of the H. Comm. on the Judiciary, 116th 

Cong. 27 (2019) (on file with H. Comm. on the Judiciary staff). 19 28 U.S.C. § 1409(b) (2019). 20Oversight of Bankruptcy Law and Legislative Proposals: Hearing Before the Subcomm. on 

Antitrust, Commercial, & Admin. Law of the H. Comm. on the Judiciary, 116th Cong. (2019). 

NEED FOR THE LEGISLATION

Notwithstanding the 2005 Amendments, small business chapter 

11 cases continue to encounter difficulty in successfully reorganizing. Based upon their respective reviews of this issue, the NBC 

and the ABI developed recommendations to improve the reorganization process for small business chapter 11 debtors. H.R. 3311 

is largely derived from these recommendations. As the bill’s sponsor, Representative Ben Cline (R–VA), explained at the hearing 

held by the Subcommittee on Antitrust, Commercial, and Administrative Law on June 25, 2019 at which H.R. 3311 was considered, 

the legislation allows these debtors ‘‘to file bankruptcy in a timely, 

cost-effective manner, and hopefully allows them to remain in business’’ which ‘‘not only benefits the owners, but employees, suppliers, customers, and others who rely on that business.’’ 18

The principal features of H.R. 3311 consist of the following: (1) 

requiring the appointment of an individual to serve as the trustee 

in a chapter 11 case filed by a small business debtor, who would 

perform many of the same duties required of a chapter 12 trustee; 

(2) requiring such private trustee to monitor the debtor’s progress 

toward confirmation of a reorganization plan; and (3) authorizing 

the court to confirm a plan over the objection of the debtor’s creditors, providing such 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 bill also includes two provisions, not limited to small business chapter 11 cases, pertaining to preferential transfers. In sum, 

it specifies an additional criterion that a trustee must consider before commencing an action to recover a preferential transfer (i.e., 

a transfer of property by the debtor made before the filing of the 

bankruptcy case preferential to a creditor and to the detriment of 

similarly situated creditors). The first provision would require the 

trustee to determine whether to exercise such authority based on 

reasonable due diligence in the circumstances of the case and take 

into account a party’s known or reasonably knowable affirmative 

defenses. The second provision concerns the venue where such preferential transfer actions may be commenced. Current law requires 

this type of action to be commenced in the district where the defendant resides if the amount sought to be recovered by the action 

is less than $13,650.19 H.R. 3311 would increase this monetary limit to $25,000. 

Hearings 

For the purposes of section 103(i) of H. Res. 6 of the 116th Congress, the following hearing was used to consider H.R. 3311: ‘‘Oversight of Bankruptcy Law and Legislative Proposals,’’ which was 

held on June 25, 2019.20 The hearing considered various legislative 

measures. Of pertinence to H.R. 3311, the following witnesses testified: Representative Ben Cline (R–VA), the bill’s sponsor; Robert J. 

Keach, on behalf of the American Bankruptcy Institute; and former 


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Bankruptcy Judge Thomas Small on behalf of the National Bankruptcy Conference. 

Committee Consideration 

On July 11, 2019, the Committee met in open session and ordered the bill, H.R. 3311, favorably reported without amendment 

by voice vote, a quorum being present. 

Committee Votes 

In compliance with clause 3(b) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that no rollcall 

votes occurred during the Committee’s consideration of H.R. 3311. 

Committee Oversight Findings 

In compliance with clause 3(c)(1) of rule XIII of the Rules of the 

House of Representatives, the Committee advises that the findings 

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report. 

New Budget Authority and Tax Expenditures and 

Congressional Budget Office Cost Estimate 

With respect to the requirements of clause 3(c)(2) of rule XIII of 

the Rules of the House of Representatives and section 308(a) of the 

Congressional Budget Act of 1974 and with respect to requirements 

of clause (3)(c)(3) of rule XIII of the Rules of the House of Representatives and section 402 of the Congressional Budget Act of 

1974, the Committee has requested but not received a cost estimate 

for this bill from the Director of the Congressional Budget Office. 

The Committee has requested but not received from the Director 

of the Congressional Budget Office a statement as to whether this 

bill contains any new budget authority, spending authority, credit 

authority, or an increase or decrease in revenues or tax expenditures. 

Duplication of Federal Programs 

No provision of H.R. 3311 establishes or reauthorizes a program 

of the federal government known to be duplicative of another federal program, a program that was included in any report from the 

Government Accountability Office to Congress pursuant to section 

21 of Public Law 111–139, or a program related to a program identified in the most recent Catalog of Federal Domestic Assistance. 

Performance Goals and Objectives 

The Committee states that pursuant to clause 3(c)(4) of rule XIII 

of the Rules of the House of Representatives, H.R. 3311 would 

streamline the bankruptcy process by which small businesses debtors reorganize and rehabilitate their financial affairs. 


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21 11 U.S.C. § 1202 (2019). 

Advisory on Earmarks 

In accordance with clause 9 of rule XXI of the Rules of the House 

of Representatives, H.R. 3311 does not contain any congressional 

earmarks, limited tax benefits, or limited tariff benefits as defined 

in clause 9(d), 9(e), or 9(f) of rule XXI. 

Section-by-Section Analysis 

The following discussion describes the bill as reported by the 

Committee. 

Sec. 1. Short title. Section 1 sets forth the short title of the bill 

as the ‘‘Small Business Reorganization Act of 2019.’’ 

Sec. 2. Reorganization of small business debtors. Section 2 adds 

a new subchapter V to chapter 11 of the Bankruptcy Code consisting of provisions devoted to small business debtors. 

New section 1181 specifies those provisions of the Bankruptcy 

Code that are inapplicable to subchapter V cases. 

New section 1182 defines the term debtor, for purposes of subchapter V, as a small business debtor. 

New section 1183 directs the United States trustee to appoint an 

individual serving as a standing trustee to serve as a trustee in 

any case under subchapter V. The trustee must perform many of 

the same duties performed by a chapter 12 trustee. In a chapter 

12 case, for example, the trustee serves as a fiduciary for creditors 

and is accountable for all property of the debtor as well as for ensuring the debtor makes the payments as required by debtor’s reorganization plan.21 Pursuant to section 1183, the trustee must participate in certain conferences and hearings concerning matters 

pertaining to the value of property subject to a lien, confirmation 

of a reorganization plan and its modification post-confirmation, and 

the sale of property of the estate. Among other duties, the trustee 

must ensure that the debtor commences making timely payments 

required under a confirmed plan. The trustee’s service terminates 

upon substantial consummation of the plan. 

New section 1184 sets forth the rights and powers of a subchapter V debtor in possession (i.e., the debtor remains in control 

of the bankruptcy case). 

New section 1185 provides that a subchapter V debtor may lose 

its status as a debtor in possession if the court finds, after notice 

and a hearing, that the debtor engaged in fraudulent, dishonest, or 

incompetent behavior or grossly mismanaged its financial affairs. 

New section 1186 concerns property of the estate. Subsection (a) 

provides that if a plan is confirmed, property of the estate includes 

all property acquired by the debtor after the date of commencement 

of the case, but before the case is closed, dismissed, or converted 

to a case under chapter 7, 12, or 13 of title 11, whichever occurs 

first. It also includes all earnings from services performed by the 

debtor during such period. Subsection (b) provides that the debtor 

remains in possession of all property of the estate unless the debtor 

is removed from possession. 

New section 1187 specifies various duties and reporting requirements of a subchapter V debtor. In addition, it clarifies that the 


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separate disclosure statement exemption applies unless the court 

orders otherwise. 

New section 1188 requires the court to hold a status conference 

to further the expeditious and economical resolution of a case 

under this subchapter not less than 60 days after the case is commenced, unless the court extends this period because such extension is needed as a result of circumstances for which the debtor 

should not justly be held accountable. In addition, this provision requires the debtor, not later than 14 days before the date of the status conference, to file with the court and serve on the trustee and 

all parties in interest a report that details the efforts the debtor 

has undertaken and will undertake to attain a consensual plan of 

reorganization. 

New section 1189 specifies that only the debtor may file a plan 

of reorganization under subchapter V. In addition, it directs the 

debtor to file such plan not later than 90 days after the case is 

filed, unless the court extends this period because of circumstances 

for which the debtor should not justly be held accountable. 

New section 1190 sets forth various requirements for the plan of 

reorganization, including a brief history of the business operations 

of the debtor; a liquidation analysis; and projections with respect 

to the ability of the debtor to make payments under the proposed 

plan of reorganization. In addition, the plan must provide for the 

submission of all or such portion of the future earnings or other future income of the debtor to the supervision and control of the 

trustee as is necessary for the execution of the plan. Section 1190 

permits the debtor to modify the rights of a holder of a claim secured only by a security interest in real property that is the principal residence of the debtor if the new value received in connection 

with the granting of the security interest was not used primarily 

to acquire the real property, but it was used primarily in connection with the small business of the debtor. 

New section 1191 specifies the criteria for confirming a plan. It 

permits the court to confirm a plan even if a class of claims or interests has rejected the plan providing that such 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. 

With respect to the condition that a plan be fair and equitable 

as to each class of claims or interests, section 1191 sets forth a rule 

of construction. As to a class of secured claims, the plan must satisfy one of three alternative requirements. First, the plan must ensure that the holders of such claims retain their liens and that they 

receive on account of their claims deferred cash payments totaling 

at least the allowed amount of their claims, as valued on the plan’s 

effective date. Second, if the plan contemplates the sale of property 

securing such claims, then the plan must provide that the claimants’ liens attach to the proceeds of such sale. Third, if the plan 

contemplates neither, then the plan must provide that the secured 

creditors receive the indubitable equivalent of their claims. 

In addition, the plan must provide that all of the projected disposable income of the debtor to be received in the three-year period, or such longer period not to exceed five years as the court may 

fix, beginning on the date that the first payment is due under the 

plan, will be applied to make payments under the plan. AlterVerDate Sep 11 2014 19:14 Jul 27, 2019 Jkt 089006 PO 00000 Frm 00007 Fmt 6659 Sfmt 6602 E:\HR\OC\HR171.XXX HR171

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natively, the value of the property to be distributed under the plan 

in the three-year period, or such longer period not to exceed five 

years as the court may fix—beginning on the date on which the 

first distribution is due under the plan—is not less than the projected disposable income of the debtor. 

As a further condition of confirmation, the court must find that: 

(1) the debtor will be able to make all payments under the plan; 

or (2) there is a reasonable likelihood that the debtor will be able 

to make all payments under the plan; and the plan provides appropriate remedies, which may include the liquidation of nonexempt 

assets, to protect the holders of claims or interests in the event 

that the payments are not made. 

Section 1191 defines ‘‘disposable income’’ to mean the income 

that is received by the debtor and that is not reasonably necessary 

to be expended for: (1) the maintenance or support of the debtor or 

a dependent of the debtor; (2) a domestic support obligation that 

first becomes payable after the date of the filing of the case; or (3) 

the payment of expenditures necessary for the continuation, preservation, or operation of the business of the debtor. 

Finally, with respect to the payment of administrative expenses 

(e.g., the debtor’s attorneys’ fees, the plan may provide for their 

payment through the plan. 

New section 1192 requires the court to grant the debtor a discharge as soon as practicable after completion by the debtor of all 

payments due within the first three years of the plan, or such 

longer period not to exceed five years as the court may fix. Such 

discharge pertains to all debts as provided under the plan except 

any debt: (1) on which the last payment is due after the first three 

years of the plan, or such other time not to exceed five years fixed 

by the court; or (2) that is otherwise nondischargeable. 

New section 1193 sets forth the criteria for modifying a plan preand post-confirmation. 

New section 1194 pertains to the trustee’s responsibilities for collecting and distributing payments made by the debtor pursuant to 

the plan. 

New section 1195 provides that a person is not disqualified for 

employment under section 327 of title 11 solely because that person 

holds a claim of less than $10,000 that arose prior to commencement of the case. 

Sec. 3. Preferences; venue of certain proceedings. Bankruptcy 

Code section 547(b) authorizes a trustee to avoid certain 

prepetition transfers of property that, in sum, are preferential to 

a creditor and to the detriment of similarly situated creditors. Subsection (a) amends section 547(b) to require the trustee to determine whether to exercise such authority based on reasonable due 

diligence in the circumstances of the case and taking into account 

a party’s known or reasonably knowable affirmative defenses. 

Section 1409 of title 28 of the U.S. Code sets forth the criteria 

for the venue of certain proceedings arising in connection with a 

bankruptcy case. With respect to an action to recover a debt 

against a noninsider of less than $13,650, such proceeding must be 

commenced in the district court for the district where the defendant resides. Subsection (b) would increase this monetary limit to 

$25,000. 


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Sec. 4. Conforming amendments. Section 4 makes a series of conforming amendments to the Bankruptcy Code. 

Sec. 5. Effective date. Section 5 provides that the Act and its 

amendments take effect 180 days after the date of enactment. 

Changes in Existing Law Made by the Bill, as Reported 

In compliance with clause 3(e) of rule XIII of the Rules of the 

House of Representatives, changes in existing law made by the bill, 

as reported, are shown as follows (existing law proposed to be omitted is enclosed in black brackets, new matter is printed in italic, 

and existing law in which no change is proposed is shown in 

roman): 

TITLE 11, UNITED STATES CODE 

* * * * * * * 

CHAPTER 1—GENERAL PROVISIONS 

* * * * * * * 

§ 101. Definitions 

In this title the following definitions shall apply: 

(1) The term ‘‘accountant’’ means accountant authorized 

under applicable law to practice public accounting, and includes professional accounting association, corporation, or partnership, if so authorized. 

(2) The term ‘‘affiliate’’ means— 

(A) entity that directly or indirectly owns, controls, or 

holds with power to vote, 20 percent or more of the outstanding voting securities of the debtor, other than an entity that holds such securities— 

(i) in a fiduciary or agency capacity without sole discretionary power to vote such securities; or 

(ii) solely to secure a debt, if such entity has not in 

fact exercised such power to vote; 

(B) corporation 20 percent or more of whose outstanding 

voting securities are directly or indirectly owned, controlled, or held with power to vote, by the debtor, or by an 

entity that directly or indirectly owns, controls, or holds 

with power to vote, 20 percent or more of the outstanding 

voting securities of the debtor, other than an entity that 

holds such securities— 

(i) in a fiduciary or agency capacity without sole discretionary power to vote such securities; or 

(ii) solely to secure a debt, if such entity has not in 

fact exercised such power to vote; 

(C) person whose business is operated under a lease or 

operating agreement by a debtor, or person substantially 

all of whose property is operated under an operating 

agreement with the debtor; or 

(D) entity that operates the business or substantially all 

of the property of the debtor under a lease or operating 

agreement. 


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(3) The term ‘‘assisted person’’ means any person whose 

debts consist primarily of consumer debts and the value of 

whose nonexempt property is less than $150,000. 

(4) The term ‘‘attorney’’ means attorney, professional law association, corporation, or partnership, authorized under applicable law to practice law. 

(4A) The term ‘‘bankruptcy assistance’’ means any goods or 

services sold or otherwise provided to an assisted person with 

the express or implied purpose of providing information, advice, counsel, document preparation, or filing, or attendance at 

a creditors’ meeting or appearing in a case or proceeding on behalf of another or providing legal representation with respect 

to a case or proceeding under this title. 

(5) The term ‘‘claim’’ means— 

(A) right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured; or 

(B) right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, 

whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, 

disputed, undisputed, secured, or unsecured. 

(6) The term ‘‘commodity broker’’ means futures commission 

merchant, foreign futures commission merchant, clearing organization, leverage transaction merchant, or commodity options 

dealer, as defined in section 761 of this title, with respect to 

which there is a customer, as defined in section 761 of this 

title. 

(7) The term ‘‘community claim’’ means claim that arose before the commencement of the case concerning the debtor for 

which property of the kind specified in section 541(a)(2) of this 

title is liable, whether or not there is any such property at the 

time of the commencement of the case. 

(7A) The term ‘‘commercial fishing operation’’ means— 

(A) the catching or harvesting of fish, shrimp, lobsters, 

urchins, seaweed, shellfish, or other aquatic species or 

products of such species; or 

(B) for purposes of section 109 and chapter 12, aquaculture activities consisting of raising for market any species or product described in subparagraph (A). 

(7B) The term ‘‘commercial fishing vessel’’ means a vessel 

used by a family fisherman to carry out a commercial fishing 

operation. 

(8) The term ‘‘consumer debt’’ means debt incurred by an individual primarily for a personal, family, or household purpose. 

(9) The term ‘‘corporation’’— 

(A) includes— 

(i) association having a power or privilege that a private corporation, but not an individual or a partnership, possesses; 

(ii) partnership association organized under a law 

that makes only the capital subscribed responsible for 

the debts of such association; 

(iii) joint-stock company; 


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(iv) unincorporated company or association; or 

(v) business trust; but 

(B) does not include limited partnership. 

(10) The term ‘‘creditor’’ means— 

(A) entity that has a claim against the debtor that arose 

at the time of or before the order for relief concerning the 

debtor; 

(B) entity that has a claim against the estate of a kind 

specified in section 348(d), 502(f), 502(g), 502(h) or 502(i) 

of this title; or 

(C) entity that has a community claim. 

(10A) The term ‘‘current monthly income’’— 

(A) means the average monthly income from all sources 

that the debtor receives (or in a joint case the debtor and 

the debtor’s spouse receive) without regard to whether 

such income is taxable income, derived during the 6-month 

period ending on— 

(i) the last day of the calendar month immediately 

preceding the date of the commencement of the case if 

the debtor files the schedule of current income required by section 521(a)(1)(B)(ii); or 

(ii) the date on which current income is determined 

by the court for purposes of this title if the debtor does 

not file the schedule of current income required by section 521(a)(1)(B)(ii); and 

(B) includes any amount paid by any entity other than 

the debtor (or in a joint case the debtor and the debtor’s 

spouse), on a regular basis for the household expenses of 

the debtor or the debtor’s dependents (and in a joint case 

the debtor’s spouse if not otherwise a dependent), but excludes benefits received under the Social Security Act, payments to victims of war crimes or crimes against humanity 

on account of their status as victims of such crimes, and 

payments to victims of international terrorism (as defined 

in section 2331 of title 18) or domestic terrorism (as defined in section 2331 of title 18) on account of their status 

as victims of such terrorism. 

(11) The term ‘‘custodian’’ means— 

(A) receiver or trustee of any of the property of the debtor, appointed in a case or proceeding not under this title; 

(B) assignee under a general assignment for the benefit 

of the debtor’s creditors; or 

(C) trustee, receiver, or agent under applicable law, or 

under a contract, that is appointed or authorized to take 

charge of property of the debtor for the purpose of enforcing a lien against such property, or for the purpose of general administration of such property for the benefit of the 

debtor’s creditors. 

(12) The term ‘‘debt’’ means liability on a claim. 

(12A) The term ‘‘debt relief agency’’ means any person who 

provides any bankruptcy assistance to an assisted person in return for the payment of money or other valuable consideration, 

or who is a bankruptcy petition preparer under section 110, 

but does not include— 


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(A) any person who is an officer, director, employee, or 

agent of a person who provides such assistance or of the 

bankruptcy petition preparer; 

(B) a nonprofit organization that is exempt from taxation under section 501(c)(3) of the Internal Revenue Code 

of 1986; 

(C) a creditor of such assisted person, to the extent that 

the creditor is assisting such assisted person to restructure 

any debt owed by such assisted person to the creditor; 

(D) a depository institution (as defined in section 3 of the 

Federal Deposit Insurance Act) or any Federal credit union 

or State credit union (as those terms are defined in section 

101 of the Federal Credit Union Act), or any affiliate or 

subsidiary of such depository institution or credit union; or 

(E) an author, publisher, distributor, or seller of works 

subject to copyright protection under title 17, when acting 

in such capacity. 

(13) The term ‘‘debtor’’ means person or municipality concerning which a case under this title has been commenced. 

(13A) The term ‘‘debtor’s principal residence’’— 

(A) means a residential structure if used as the principal 

residence by the debtor, including incidental property, 

without regard to whether that structure is attached to 

real property; and 

(B) includes an individual condominium or cooperative 

unit, a mobile or manufactured home, or trailer if used as 

the principal residence by the debtor. 

(14) The term ‘‘disinterested person’’ means a person that— 

(A) is not a creditor, an equity security holder, or an insider; 

(B) is not and was not, within 2 years before the date 

of the filing of the petition, a director, officer, or employee 

of the debtor; and 

(C) does not have an interest materially adverse to the 

interest of the estate or of any class of creditors or equity 

security holders, by reason of any direct or indirect relationship to, connection with, or interest in, the debtor, or 

for any other reason. 

(14A) The term ‘‘domestic support obligation’’ means a debt 

that accrues before, on, or after the date of the order for relief 

in a case under this title, including interest that accrues on 

that debt as provided under applicable nonbankruptcy law notwithstanding any other provision of this title, that is— 

(A) owed to or recoverable by— 

(i) a spouse, former spouse, or child of the debtor or 

such child’s parent, legal guardian, or responsible relative; or 

(ii) a governmental unit; 

(B) in the nature of alimony, maintenance, or support 

(including assistance provided by a governmental unit) of 

such spouse, former spouse, or child of the debtor or such 

child’s parent, without regard to whether such debt is expressly so designated; 


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(C) established or subject to establishment before, on, or 

after the date of the order for relief in a case under this 

title, by reason of applicable provisions of— 

(i) a separation agreement, divorce decree, or property settlement agreement; 

(ii) an order of a court of record; or 

(iii) a determination made in accordance with applicable nonbankruptcy law by a governmental unit; and 

(D) not assigned to a nongovernmental entity, unless 

that obligation is assigned voluntarily by the spouse, 

former spouse, child of the debtor, or such child’s parent, 

legal guardian, or responsible relative for the purpose of 

collecting the debt. 

(15) The term ‘‘entity’’ includes person, estate, trust, governmental unit, and United States trustee. 

(16) The term ‘‘equity security’’ means— 

(A) share in a corporation, whether or not transferable 

or denominated ‘‘stock’’, or similar security; 

(B) interest of a limited partner in a limited partnership; 

or 

(C) warrant or right, other than a right to convert, to 

purchase, sell, or subscribe to a share, security, or interest 

of a kind specified in subparagraph (A) or (B) of this paragraph. 

(17) The term ‘‘equity security holder’’ means holder of an equity security of the debtor. 

(18) The term ‘‘family farmer’’ means— 

(A) individual or individual and spouse engaged in a 

farming operation whose aggregate debts do not exceed 

$3,237,000 and not less than 50 percent of whose aggregate noncontingent, liquidated debts (excluding a debt for 

the principal residence of such individual or such individual and spouse unless such debt arises out of a farming 

operation), on the date the case is filed, arise out of a 

farming operation owned or operated by such individual or 

such individual and spouse, and such individual or such 

individual and spouse receive from such farming operation 

more than 50 percent of such individual’s or such individual and spouse’s gross income for— 

(i) the taxable year preceding; or 

(ii) each of the 2d and 3d taxable years preceding; 

the taxable year in which the case concerning such individual or such individual and spouse was filed; or 

(B) corporation or partnership in which more than 50 

percent of the outstanding stock or equity is held by one 

family, or by one family and the relatives of the members 

of such family, and such family or such relatives conduct 

the farming operation, and 

(i) more than 80 percent of the value of its assets 

consists of assets related to the farming operation; 

(ii) its aggregate debts do not exceed $3,237,000 and 

not less than 50 percent of its aggregate noncontingent, liquidated debts (excluding a debt for one dwelling which is owned by such corporation or partnership 

and which a shareholder or partner maintains as a 


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principal residence, unless such debt arises out of a 

farming operation), on the date the case is filed, arise 

out of the farming operation owned or operated by 

such corporation or such partnership; and 

(iii) if such corporation issues stock, such stock is 

not publicly traded. 

(19) The term ‘‘family farmer with regular annual income’’ 

means family farmer whose annual income is sufficiently stable and regular to enable such family farmer to make payments under a plan under chapter 12 of this title. 

(19A) The term ‘‘family fisherman’’ means— 

(A) an individual or individual and spouse engaged in a 

commercial fishing operation— (i) whose aggregate debts do not exceed $1,500,000

and not less than 80 percent of whose aggregate noncontingent, liquidated debts (excluding a debt for the 

principal residence of such individual or such individual and spouse, unless such debt arises out of a 

commercial fishing operation), on the date the case is 

filed, arise out of a commercial fishing operation 

owned or operated by such individual or such individual and spouse; and 

(ii) who receive from such commercial fishing operation more than 50 percent of such individual’s or 

such individual’s and spouse’s gross income for the 

taxable year preceding the taxable year in which the 

case concerning such individual or such individual and 

spouse was filed; or 

(B) a corporation or partnership— 

(i) in which more than 50 percent of the outstanding 

stock or equity is held by— 

(I) 1 family that conducts the commercial fishing operation; or 

(II) 1 family and the relatives of the members of 

such family, and such family or such relatives conduct the commercial fishing operation; and 

(ii)(I) more than 80 percent of the value of its assets 

consists of assets related to the commercial fishing operation; 

(II) its aggregate debts do not exceed $1,500,000 

and not less than 80 percent of its aggregate noncontingent, liquidated debts (excluding a debt for 

1 dwelling which is owned by such corporation or 

partnership and which a shareholder or partner 

maintains as a principal residence, unless such 

debt arises out of a commercial fishing operation), 

on the date the case is filed, arise out of a commercial fishing operation owned or operated by 

such corporation or such partnership; and 

(III) if such corporation issues stock, such stock 

is not publicly traded. 

(19B) The term ‘‘family fisherman with regular annual income’’ means a family fisherman whose annual income is sufficiently stable and regular to enable such family fisherman to 

make payments under a plan under chapter 12 of this title. 


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(20) The term ‘‘farmer’’ means (except when such term appears in the term ‘‘family farmer’’) person that received more 

than 80 percent of such person’s gross income during the taxable year of such person immediately preceding the taxable 

year of such person during which the case under this title concerning such person was commenced from a farming operation 

owned or operated by such person. 

(21) The term ‘‘farming operation’’ includes farming, tillage 

of the soil, dairy farming, ranching, production or raising of 

crops, poultry, or livestock, and production of poultry or livestock products in an unmanufactured state. 

(21A) The term ‘‘farmout agreement’’ means a written agreement in which— 

(A) the owner of a right to drill, produce, or operate liquid or gaseous hydrocarbons on property agrees or has 

agreed to transfer or assign all or a part of such right to 

another entity; and 

(B) such other entity (either directly or through its 

agents or its assigns), as consideration, agrees to perform 

drilling, reworking, recompleting, testing, or similar or related operations, to develop or produce liquid or gaseous 

hydrocarbons on the property. 

(21B) The term ‘‘Federal depository institutions regulatory 

agency’’ means— 

(A) with respect to an insured depository institution (as 

defined in section 3(c)(2) of the Federal Deposit Insurance 

Act) for which no conservator or receiver has been appointed, the appropriate Federal banking agency (as defined in section 3(q) of such Act); 

(B) with respect to an insured credit union (including an 

insured credit union for which the National Credit Union 

Administration has been appointed conservator or liquidating agent), the National Credit Union Administration; 

(C) with respect to any insured depository institution for 

which the Resolution Trust Corporation has been appointed conservator or receiver, the Resolution Trust Corporation; and 

(D) with respect to any insured depository institution for 

which the Federal Deposit Insurance Corporation has been 

appointed conservator or receiver, the Federal Deposit Insurance Corporation. 

(22) The term ‘‘financial institution’’ means— 

(A) a Federal reserve bank, or an entity that is a commercial or savings bank, industrial savings bank, savings 

and loan association, trust company, federally-insured 

credit union, or receiver, liquidating agent, or conservator 

for such entity and, when any such Federal reserve bank, 

receiver, liquidating agent, conservator or entity is acting 

as agent or custodian for a customer (whether or not a 

‘‘customer’’, as defined in section 741) in connection with 

a securities contract (as defined in section 741) such customer; or 

(B) in connection with a securities contract (as defined 

in section 741) an investment company registered under 

the Investment Company Act of 1940. 


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(22A) The term ‘‘financial participant’’ means— 

(A) an entity that, at the time it enters into a securities 

contract, commodity contract, swap agreement, repurchase 

agreement, or forward contract, or at the time of the date 

of the filing of the petition, has one or more agreements 

or transactions described in paragraph (1), (2), (3), (4), (5), 

or (6) of section 561(a) with the debtor or any other entity 

(other than an affiliate) of a total gross dollar value of not 

less than $1,000,000,000 in notional or actual principal 

amount outstanding (aggregated across counterparties) at 

such time or on any day during the 15-month period preceding the date of the filing of the petition, or has gross 

mark-to-market positions of not less than $100,000,000 

(aggregated across counterparties) in one or more such 

agreements or transactions with the debtor or any other 

entity (other than an affiliate) at such time or on any day 

during the 15-month period preceding the date of the filing 

of the petition; or 

(B) a clearing organization (as defined in section 402 of 

the Federal Deposit Insurance Corporation Improvement 

Act of 1991). 

(23) The term ‘‘foreign proceeding’’ means a collective judicial 

or administrative proceeding in a foreign country, including an 

interim proceeding, under a law relating to insolvency or adjustment of debt in which proceeding the assets and affairs of 

the debtor are subject to control or supervision by a foreign 

court, for the purpose of reorganization or liquidation. 

(24) The term ‘‘foreign representative’’ means a person or 

body, including a person or body appointed on an interim basis, 

authorized in a foreign proceeding to administer the reorganization or the liquidation of the debtor’s assets or affairs or 

to act as a representative of such foreign proceeding. 

(25) The term ‘‘forward contract’’ means— 

(A) a contract (other than a commodity contract, as defined in section 761) for the purchase, sale, or transfer of 

a commodity, as defined in section 761(8) of this title, or 

any similar good, article, service, right, or interest which 

is presently or in the future becomes the subject of dealing 

in the forward contract trade, or product or byproduct 

thereof, with a maturity date more than two days after the 

date the contract is entered into, including, but not limited 

to, a repurchase or reverse repurchase transaction (whether or not such repurchase or reverse repurchase transaction is a ‘‘repurchase agreement’’, as defined in this section) consignment, lease, swap, hedge transaction, deposit, 

loan, option, allocated transaction, unallocated transaction, 

or any other similar agreement; 

(B) any combination of agreements or transactions referred to in subparagraphs (A) and (C); 

(C) any option to enter into an agreement or transaction 

referred to in subparagraph (A) or (B); 

(D) a master agreement that provides for an agreement 

or transaction referred to in subparagraph (A), (B), or (C), 

together with all supplements to any such master agreement, without regard to whether such master agreement 


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provides for an agreement or transaction that is not a forward contract under this paragraph, except that such master agreement shall be considered to be a forward contract 

under this paragraph only with respect to each agreement 

or transaction under such master agreement that is referred to in subparagraph (A), (B), or (C); or 

(E) any security agreement or arrangement, or other 

credit enhancement related to any agreement or transaction referred to in subparagraph (A), (B), (C), or (D), including any guarantee or reimbursement obligation by or 

to a forward contract merchant or financial participant in 

connection with any agreement or transaction referred to 

in any such subparagraph, but not to exceed the damages 

in connection with any such agreement or transaction, 

measured in accordance with section 562. 

(26) The term ‘‘forward contract merchant’’ means a Federal 

reserve bank, or an entity the business of which consists in 

whole or in part of entering into forward contracts as or with 

merchants in a commodity (as defined in section 761) or any 

similar good, article, service, right, or interest which is presently or in the future becomes the subject of dealing in the forward contract trade. 

(27) The term ‘‘governmental unit’’ means United States; 

State; Commonwealth; District; Territory; municipality; foreign 

state; department, agency, or instrumentality of the United 

States (but not a United States trustee while serving as a 

trustee in a case under this title), a State, a Commonwealth, 

a District, a Territory, a municipality, or a foreign state; or 

other foreign or domestic government. 

(27A) The term ‘‘health care business’’— 

(A) means any public or private entity (without regard 

to whether that entity is organized for profit or not for 

profit) that is primarily engaged in offering to the general 

public facilities and services for— 

(i) the diagnosis or treatment of injury, deformity, or 

disease; and 

(ii) surgical, drug treatment, psychiatric, or obstetric 

care; and 

(B) includes— 

(i) any— 

(I) general or specialized hospital; 

(II) ancillary ambulatory, emergency, or surgical 

treatment facility; 

(III) hospice; 

(IV) home health agency; and 

(V) other health care institution that is similar 

to an entity referred to in subclause (I), (II), (III), 

or (IV); and 

(ii) any long-term care facility, including any— 

(I) skilled nursing facility; 

(II) intermediate care facility; 

(III) assisted living facility; 

(IV) home for the aged; 

(V) domiciliary care facility; and 


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(VI) health care institution that is related to a 

facility referred to in subclause (I), (II), (III), (IV), 

or (V), if that institution is primarily engaged in 

offering room, board, laundry, or personal assistance with activities of daily living and incidentals 

to activities of daily living. 

(27B) The term ‘‘incidental property’’ means, with respect to 

a debtor’s principal residence— 

(A) property commonly conveyed with a principal residence in the area where the real property is located; 

(B) all easements, rights, appurtenances, fixtures, rents, 

royalties, mineral rights, oil or gas rights or profits, water 

rights, escrow funds, or insurance proceeds; and 

(C) all replacements or additions. 

(28) The term ‘‘indenture’’ means mortgage, deed of trust, or 

indenture, under which there is outstanding a security, other 

than a voting-trust certificate, constituting a claim against the 

debtor, a claim secured by a lien on any of the debtor’s property, or an equity security of the debtor. 

(29) The term ‘‘indenture trustee’’ means trustee under an 

indenture. 

(30) The term ‘‘individual with regular income’’ means individual whose income is sufficiently stable and regular to enable 

such individual to make payments under a plan under chapter 

13 of this title, other than a stockbroker or a commodity 

broker. 

(31) The term ‘‘insider’’ includes— 

(A) if the debtor is an individual— 

(i) relative of the debtor or of a general partner of 

the debtor; 

(ii) partnership in which the debtor is a general 

partner; 

(iii) general partner of the debtor; or 

(iv) corporation of which the debtor is a director, officer, or person in control; 

(B) if the debtor is a corporation— 

(i) director of the debtor; 

(ii) officer of the debtor; 

(iii) person in control of the debtor; 

(iv) partnership in which the debtor is a general 

partner; 

(v) general partner of the debtor; or 

(vi) relative of a general partner, director, officer, or 

person in control of the debtor; 

(C) if the debtor is a partnership— 

(i) general partner in the debtor; 

(ii) relative of a general partner in, general partner 

of, or person in control of the debtor; 

(iii) partnership in which the debtor is a general 

partner; 

(iv) general partner of the debtor; or 

(v) person in control of the debtor; 

(D) if the debtor is a municipality, elected official of the 

debtor or relative of an elected official of the debtor; 


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(E) affiliate, or insider of an affiliate as if such affiliate 

were the debtor; and 

(F) managing agent of the debtor. 

(32) The term ‘‘insolvent’’ means— 

(A) with reference to an entity other than a partnership 

and a municipality, financial condition such that the sum 

of such entity’s debts is greater than all of such entity’s 

property, at a fair valuation, exclusive of— 

(i) property transferred, concealed, or removed with 

intent to hinder, delay, or defraud such entity’s creditors; and 

(ii) property that may be exempted from property of 

the estate under section 522 of this title; 

(B) with reference to a partnership, financial condition 

such that the sum of such partnership’s debts is greater 

than the aggregate of, at a fair valuation— 

(i) all of such partnership’s property, exclusive of 

property of the kind specified in subparagraph (A)(i) of 

this paragraph; and 

(ii) the sum of the excess of the value of each general partner’s nonpartnership property, exclusive of 

property of the kind specified in subparagraph (A) of 

this paragraph, over such partner’s nonpartnership 

debts; and 

(C) with reference to a municipality, financial condition 

such that the municipality is— 

(i) generally not paying its debts as they become due 

unless such debts are the subject of a bona fide dispute; or 

(ii) unable to pay its debts as they become due. 

(33) The term ‘‘institution-affiliated party’’— 

(A) with respect to an insured depository institution (as 

defined in section 3(c)(2) of the Federal Deposit Insurance 

Act), has the meaning given it in section 3(u) of the Federal Deposit Insurance Act; and 

(B) with respect to an insured credit union, has the 

meaning given it in section 206(r) of the Federal Credit 

Union Act. 

(34) The term ‘‘insured credit union’’ has the meaning given 

it in section 101(7) of the Federal Credit Union Act. 

(35) The term ‘‘insured depository institution’’— 

(A) has the meaning given it in section 3(c)(2) of the 

Federal Deposit Insurance Act; and 

(B) includes an insured credit union (except in the case 

of paragraphs (21B) and (33)(A) of this subsection). 

(35A) The term ‘‘intellectual property’’ means— 

(A) trade secret; 

(B) invention, process, design, or plant protected under 

title 35; 

(C) patent application; 

(D) plant variety; 

(E) work of authorship protected under title 17; or 

(F) mask work protected under chapter 9 of title 17; 

to the extent protected by applicable nonbankruptcy law. 


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(36) The term ‘‘judicial lien’’ means lien obtained by judgment, levy, sequestration, or other legal or equitable process or 

proceeding. 

(37) The term ‘‘lien’’ means charge against or interest in 

property to secure payment of a debt or performance of an obligation. 

(38) The term ‘‘margin payment’’ means, for purposes of the 

forward contract provisions of this title, payment or deposit of 

cash, a security or other property, that is commonly known in 

the forward contract trade as original margin, initial margin, 

maintenance margin, or variation margin, including mark-tomarket payments, or variation payments. 

(38A) The term ‘‘master netting agreement’’— 

(A) means an agreement providing for the exercise of 

rights, including rights of netting, setoff, liquidation, termination, acceleration, or close out, under or in connection 

with one or more contracts that are described in any one 

or more of paragraphs (1) through (5) of section 561(a), or 

any security agreement or arrangement or other credit enhancement related to one or more of the foregoing, including any guarantee or reimbursement obligation related to 

1 or more of the foregoing; and 

(B) if the agreement contains provisions relating to 

agreements or transactions that are not contracts described in paragraphs (1) through (5) of section 561(a), 

shall be deemed to be a master netting agreement only 

with respect to those agreements or transactions that are 

described in any one or more of paragraphs (1) through (5) 

of section 561(a). 

(38B) The term ‘‘master netting agreement participant’’ 

means an entity that, at any time before the date of the filing 

of the petition, is a party to an outstanding master netting 

agreement with the debtor. 

(39) The term ‘‘mask work’’ has the meaning given it in section 901(a)(2) of title 17. 

(39A) The term ‘‘median family income’’ means for any 

year— 

(A) the median family income both calculated and reported by the Bureau of the Census in the then most recent year; and 

(B) if not so calculated and reported in the then current 

year, adjusted annually after such most recent year until 

the next year in which median family income is both calculated and reported by the Bureau of the Census, to reflect the percentage change in the Consumer Price Index 

for All Urban Consumers during the period of years occurring after such most recent year and before such current 

year. 

(40) The term ‘‘municipality’’ means political subdivision or 

public agency or instrumentality of a State. 

(40A) The term ‘‘patient’’ means any individual who obtains 

or receives services from a health care business. 

(40B) The term ‘‘patient records’’ means any record relating 

to a patient, including a written document or a record recorded 

in a magnetic, optical, or other form of electronic medium. 


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(41) The term ‘‘person’’ includes individual, partnership, and 

corporation, but does not include governmental unit, except 

that a governmental unit that— 

(A) acquires an asset from a person— 

(i) as a result of the operation of a loan guarantee 

agreement; or 

(ii) as receiver or liquidating agent of a person; 

(B) is a guarantor of a pension benefit payable by or on 

behalf of the debtor or an affiliate of the debtor; or 

(C) is the legal or beneficial owner of an asset of— 

(i) an employee pension benefit plan that is a governmental plan, as defined in section 414(d) of the Internal Revenue Code of 1986; or 

(ii) an eligible deferred compensation plan, as defined in section 457(b) of the Internal Revenue Code of 

1986; 

shall be considered, for purposes of section 1102 of this title, 

to be a person with respect to such asset or such benefit. 

(41A) The term ‘‘personally identifiable information’’ 

means— 

(A) if provided by an individual to the debtor in connection with obtaining a product or a service from the debtor 

primarily for personal, family, or household purposes— 

(i) the first name (or initial) and last name of such 

individual, whether given at birth or time of adoption, 

or resulting from a lawful change of name; 

(ii) the geographical address of a physical place of 

residence of such individual; 

(iii) an electronic address (including an e-mail address) of such individual; 

(iv) a telephone number dedicated to contacting such 

individual at such physical place of residence; 

(v) a social security account number issued to such 

individual; or 

(vi) the account number of a credit card issued to 

such individual; or 

(B) if identified in connection with 1 or more of the items 

of information specified in subparagraph (A)— 

(i) a birth date, the number of a certificate of birth 

or adoption, or a place of birth; or 

(ii) any other information concerning an identified 

individual that, if disclosed, will result in contacting or 

identifying such individual physically or electronically. 

(42) The term ‘‘petition’’ means petition filed under section 

301, 302, 303 and 1504 of this title, as the case may be, commencing a case under this title. 

(42A) The term ‘‘production payment’’ means a term overriding royalty satisfiable in cash or in kind— 

(A) contingent on the production of a liquid or gaseous 

hydrocarbon from particular real property; and 

(B) from a specified volume, or a specified value, from 

the liquid or gaseous hydrocarbon produced from such 

property, and determined without regard to production 

costs. 


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(43) The term ‘‘purchaser’’ means transferee of a voluntary 

transfer, and includes immediate or mediate transferee of such 

a transferee. 

(44) The term ‘‘railroad’’ means common carrier by railroad 

engaged in the transportation of individuals or property or 

owner of trackage facilities leased by such a common carrier. 

(45) The term ‘‘relative’’ means individual related by affinity 

or consanguinity within the third degree as determined by the 

common law, or individual in a step or adoptive relationship 

within such third degree. 

(46) The term ‘‘repo participant’’ means an entity that, at 

any time before the filing of the petition, has an outstanding 

repurchase agreement with the debtor. 

(47) The term ‘‘repurchase agreement’’ (which definition also 

applies to a reverse repurchase agreement)— 

(A) means— 

(i) an agreement, including related terms, which 

provides for the transfer of one or more certificates of 

deposit, mortgage related securities (as defined in section 3 of the Securities Exchange Act of 1934), mortgage loans, interests in mortgage related securities or 

mortgage loans, eligible bankers’ acceptances, qualified foreign government securities (defined as a security that is a direct obligation of, or that is fully guaranteed by, the central government of a member of the 

Organization for Economic Cooperation and Development), or securities that are direct obligations of, or 

that are fully guaranteed by, the United States or any 

agency of the United States against the transfer of 

funds by the transferee of such certificates of deposit, 

eligible bankers’ acceptances, securities, mortgage 

loans, or interests, with a simultaneous agreement by 

such transferee to transfer to the transferor thereof 

certificates of deposit, eligible bankers’ acceptance, securities, mortgage loans, or interests of the kind described in this clause, at a date certain not later than 

1 year after such transfer or on demand, against the 

transfer of funds; 

(ii) any combination of agreements or transactions 

referred to in clauses (i) and (iii); 

(iii) an option to enter into an agreement or transaction referred to in clause (i) or (ii); 

(iv) a master agreement that provides for an agreement or transaction referred to in clause (i), (ii), or 

(iii), together with all supplements to any such master 

agreement, without regard to whether such master 

agreement provides for an agreement or transaction 

that is not a repurchase agreement under this paragraph, except that such master agreement shall be 

considered to be a repurchase agreement under this 

paragraph only with respect to each agreement or 

transaction under the master agreement that is referred to in clause (i), (ii), or (iii); or 

(v) any security agreement or arrangement or other 

credit enhancement related to any agreement or transVerDate Sep 11 2014 19:14 Jul 27, 2019 Jkt 089006 PO 00000 Frm 00022 Fmt 6659 Sfmt 6602 E:\HR\OC\HR171.XXX HR171

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action referred to in clause (i), (ii), (iii), or (iv), including any guarantee or reimbursement obligation by or 

to a repo participant or financial participant in connection with any agreement or transaction referred to 

in any such clause, but not to exceed the damages in 

connection with any such agreement or transaction, 

measured in accordance with section 562 of this title; 

and 

(B) does not include a repurchase obligation under a participation in a commercial mortgage loan. 

(48) The term ‘‘securities clearing agency’’ means person that 

is registered as a clearing agency under section 17A of the Securities Exchange Act of 1934, or exempt from such registration under such section pursuant to an order of the Securities 

and Exchange Commission, or whose business is confined to 

the performance of functions of a clearing agency with respect 

to exempted securities, as defined in section 3(a)(12) of such 

Act for the purposes of such section 17A. 

(48A) The term ‘‘securities self regulatory organization’’ 

means either a securities association registered with the Securities and Exchange Commission under section 15A of the Securities Exchange Act of 1934 or a national securities exchange 

registered with the Securities and Exchange Commission 

under section 6 of the Securities Exchange Act of 1934. 

(49) The term ‘‘security’’— 

(A) includes— 

(i) note; 

(ii) stock; 

(iii) treasury stock; 

(iv) bond; 

(v) debenture; 

(vi) collateral trust certificate; 

(vii) pre-organization certificate or subscription; 

(viii) transferable share; 

(ix) voting-trust certificate; 

(x) certificate of deposit; 

(xi) certificate of deposit for security; 

(xii) investment contract or certificate of interest or 

participation in a profit-sharing agreement or in an 

oil, gas, or mineral royalty or lease, if such contract or 

interest is required to be the subject of a registration 

statement filed with the Securities and Exchange 

Commission under the provisions of the Securities Act 

of 1933, or is exempt under section 3(b) of such Act 

from the requirement to file such a statement; 

(xiii) interest of a limited partner in a limited partnership; 

(xiv) other claim or interest commonly known as ‘‘security’’; and 

(xv) certificate of interest or participation in, temporary or interim certificate for, receipt for, or warrant 

or right to subscribe to or purchase or sell, a security; 

but 

(B) does not include— 


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(i) currency, check, draft, bill of exchange, or bank 

letter of credit; 

(ii) leverage transaction, as defined in section 761 of 

this title; 

(iii) commodity futures contract or forward contract; 

(iv) option, warrant, or right to subscribe to or purchase or sell a commodity futures contract; 

(v) option to purchase or sell a commodity; 

(vi) contract or certificate of a kind specified in subparagraph (A)(xii) of this paragraph that is not required to be the subject of a registration statement 

filed with the Securities and Exchange Commission 

and is not exempt under section 3(b) of the Securities 

Act of 1933 from the requirement to file such a statement; or 

(vii) debt or evidence of indebtedness for goods sold 

and delivered or services rendered. 

(50) The term ‘‘security agreement’’ means agreement that 

creates or provides for a security interest. 

(51) The term ‘‘security interest’’ means lien created by an 

agreement. 

(51A) The term ‘‘settlement payment’’ means, for purposes of 

the forward contract provisions of this title, a preliminary settlement payment, a partial settlement payment, an interim 

settlement payment, a settlement payment on account, a final 

settlement payment, a net settlement payment, or any other 

similar payment commonly used in the forward contract trade. 

(51B) The term ‘‘single asset real estate’’ means real property 

constituting a single property or project, other than residential 

real property with fewer than 4 residential units, which generates substantially all of the gross income of a debtor who is 

not a family farmer and on which no substantial business is 

being conducted by a debtor other than the business of operating the real property and activities incidental thereto. 

(51C) The term ‘‘small business case’’ means a case filed 

under chapter 11 of this title in which the debtor is a small 

business debtor and has not elected that subchapter V of chapter 11 of this title shall apply. 

(51D) The term ‘‘small business debtor’’— 

(A) subject to subparagraph (B), means a person engaged in commercial or business activities (including any 

affiliate of such person that is also a debtor under this title 

and excluding a person whose primary activity is the business of owning øor operating real property or activities incidental thereto¿ single asset real estate) that has aggregate noncontingent liquidated secured and unsecured 

debts as of the date of the filing of the petition or the date 

of the order for relief in an amount not more than 

$2,000,000 (excluding debts owed to 1 or more affiliates or 

insiders) øfor a case in which the United States trustee 

has not appointed under section 1102(a)(1) a committee of 

unsecured creditors or where the court has determined 

that the committee of unsecured creditors is not sufficiently active and representative to provide effective oversight of the debtor; and¿ not less than 50 percent of which 


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25 

arose from the commercial or business activities of the debtor; and 

(B) ødoes not include any member¿ does not include— 

(i) any member of a group of affiliated debtors that 

has aggregate noncontingent liquidated secured and 

unsecured debts in an amount greater than $2,000,000 

(excluding debt owed to 1 or more affiliates or insiders)ø.¿; 

(ii) any debtor that is a corporation subject to the reporting requirements under section 13 or 15(d) of the 

Securities Exchange Act of 1934 (15 U.S.C. 78m, 

78o(d)); or 

(iii) any corporation that— 

(I) is subject to the reporting requirements under 

section 13 or 15(d) of the Securities Exchange Act 

of 1934 (15 U.S.C. 78m, 78o(d)); and 

(II) is an affiliate of a debtor. 

(52) The term ‘‘State’’ includes the District of Columbia and 

Puerto Rico, except for the purpose of defining who may be a 

debtor under chapter 9 of this title. 

(53) The term ‘‘statutory lien’’ means lien arising solely by 

force of a statute on specified circumstances or conditions, or 

lien of distress for rent, whether or not statutory, but does not 

include security interest or judicial lien, whether or not such 

interest or lien is provided by or is dependent on a statute and 

whether or not such interest or lien is made fully effective by 

statute. 

(53A) The term ‘‘stockbroker’’ means person— 

(A) with respect to which there is a customer, as defined 

in section 741 of this title; and 

(B) that is engaged in the business of effecting transactions in securities— 

(i) for the account of others; or 

(ii) with members of the general public, from or for 

such person’s own account. 

(53B) The term ‘‘swap agreement’’— 

(A) means— 

(i) any agreement, including the terms and conditions incorporated by reference in such agreement, 

which is— 

(I) an interest rate swap, option, future, or forward agreement, including a rate floor, rate cap, 

rate collar, cross-currency rate swap, and basis 

swap; 

(II) a spot, same day-tomorrow, tomorrow-next, 

forward, or other foreign exchange, precious metals, or other commodity agreement; 

(III) a currency swap, option, future, or forward 

agreement; 

(IV) an equity index or equity swap, option, future, or forward agreement; 

(V) a debt index or debt swap, option, future, or 

forward agreement; 

(VI) a total return, credit spread or credit swap, 

option, future, or forward agreement; 


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(VII) a commodity index or a commodity swap, 

option, future, or forward agreement; 

(VIII) a weather swap, option, future, or forward agreement; 

(IX) an emissions swap, option, future, or forward agreement; or 

(X) an inflation swap, option, future, or forward 

agreement; 

(ii) any agreement or transaction that is similar to 

any other agreement or transaction referred to in this 

paragraph and that— 

(I) is of a type that has been, is presently, or in 

the future becomes, the subject of recurrent dealings in the swap or other derivatives markets (including terms and conditions incorporated by reference therein); and 

(II) is a forward, swap, future, option, or spot 

transaction on one or more rates, currencies, commodities, equity securities, or other equity instruments, debt securities or other debt instruments, 

quantitative measures associated with an occurrence, extent of an occurrence, or contingency associated with a financial, commercial, or economic 

consequence, or economic or financial indices or 

measures of economic or financial risk or value; 

(iii) any combination of agreements or transactions 

referred to in this subparagraph; 

(iv) any option to enter into an agreement or transaction referred to in this subparagraph; 

(v) a master agreement that provides for an agreement or transaction referred to in clause (i), (ii), (iii), 

or (iv), together with all supplements to any such master agreement, and without regard to whether the 

master agreement contains an agreement or transaction that is not a swap agreement under this paragraph, except that the master agreement shall be considered to be a swap agreement under this paragraph 

only with respect to each agreement or transaction 

under the master agreement that is referred to in 

clause (i), (ii), (iii), or (iv); or 

(vi) any security agreement or arrangement or other 

credit enhancement related to any agreements or 

transactions referred to in clause (i) through (v), including any guarantee or reimbursement obligation by 

or to a swap participant or financial participant in 

connection with any agreement or transaction referred 

to in any such clause, but not to exceed the damages 

in connection with any such agreement or transaction, 

measured in accordance with section 562; and 

(B) is applicable for purposes of this title only, and shall 

not be construed or applied so as to challenge or affect the 

characterization, definition, or treatment of any swap 

agreement under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty 

for Bank Products Act of 2000, the securities laws (as such 


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term is defined in section 3(a)(47) of the Securities Exchange Act of 1934) and the Commodity Exchange Act. 

(53C) The term ‘‘swap participant’’ means an entity that, at 

any time before the filing of the petition, has an outstanding 

swap agreement with the debtor. 

(56A) The term ‘‘term overriding royalty’’ means an interest 

in liquid or gaseous hydrocarbons in place or to be produced 

from particular real property that entitles the owner thereof to 

a share of production, or the value thereof, for a term limited 

by time, quantity, or value realized. 

(53D) The term ‘‘timeshare plan’’ means and shall include 

that interest purchased in any arrangement, plan, scheme, or 

similar device, but not including exchange programs, whether 

by membership, agreement, tenancy in common, sale, lease, 

deed, rental agreement, license, right to use agreement, or by 

any other means, whereby a purchaser, in exchange for consideration, receives a right to use accommodations, facilities, or 

recreational sites, whether improved or unimproved, for a specific period of time less than a full year during any given year, 

but not necessarily for consecutive years, and which extends 

for a period of more than three years. A ‘‘timeshare interest’’ 

is that interest purchased in a timeshare plan which grants 

the purchaser the right to use and occupy accommodations, facilities, or recreational sites, whether improved or unimproved, 

pursuant to a timeshare plan. 

(54) The term ‘‘transfer’’ means— 

(A) the creation of a lien; 

(B) the retention of title as a security interest; 

(C) the foreclosure of a debtor’s equity of redemption; or 

(D) each mode, direct or indirect, absolute or conditional, 

voluntary or involuntary, of disposing of or parting with— 

(i) property; or 

(ii) an interest in property. 

(54A) The term ‘‘uninsured State member bank’’ means a 

State member bank (as defined in section 3 of the Federal Deposit Insurance Act) the deposits of which are not insured by 

the Federal Deposit Insurance Corporation. 

(55) The term ‘‘United States’’, when used in a geographical 

sense, includes all locations where the judicial jurisdiction of 

the United States extends, including territories and possessions of the United States. 

* * * * * * * 

§ 103. Applicability of chapters 

(a) Except as provided in section 1161 of this title, chapters 1, 

3, and 5 of this title apply in a case under chapter 7, 11, 12, or 

13 of this title, and this chapter, sections 307, 362(o), 555 through 

557, and 559 through 562 apply in a case under chapter 15. 

(b) Subchapters I and II of chapter 7 of this title apply only in 

a case under such chapter. 

(c) Subchapter III of chapter 7 of this title applies only in a case 

under such chapter concerning a stockbroker. 

(d) Subchapter IV of chapter 7 of this title applies only in a case 

under such chapter concerning a commodity broker. 


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(e) SCOPE OF APPLICATION.—Subchapter V of chapter 7 of this 

title shall apply only in a case under such chapter concerning the 

liquidation of an uninsured State member bank, or a corporation 

organized under section 25A of the Federal Reserve Act, which operates, or operates as, a multilateral clearing organization pursuant to section 409 of the Federal Deposit Insurance Corporation 

Improvement Act of 1991. 

(f) Except as provided in section 901 of this title, only chapters 

1 and 9 of this title apply in a case under such chapter 9. 

(g) Except as provided in section 901 of this title, subchapters I, 

II, and III of chapter 11 of this title apply only in a case under 

such chapter. 

(h) Subchapter IV of chapter 11 of this title applies only in a case 

under such chapter concerning a railroad. 

(i) Subchapter V of chapter 11 of this title applies only in a case 

under chapter 11 in which a small business debtor elects that subchapter V of chapter 11 shall apply. 

ø(i)¿ (j) Chapter 13 of this title applies only in a case under such 

chapter. 

ø(j)¿ (k) Chapter 12 of this title applies only in a case under such 

chapter. 

ø(k)¿ (l) Chapter 15 applies only in a case under such chapter, 

except that— 

(1) sections 1505, 1513, and 1514 apply in all cases under 

this title; and 

(2) section 1509 applies whether or not a case under this 

title is pending. 

* * * * * * * 

CHAPTER 3—CASE ADMINISTRATION 

* * * * * * * 

SUBCHAPTER II—OFFICERS 

* * * * * * * 

§ 322. Qualification of trustee 

(a) Except as provided in subsection (b)(1), a person selected 

under section 701, 702, 703, 1104, 1163, 1183, 1202, or 1302 of this 

title to serve as trustee in a case under this title qualifies if before 

seven days after such selection, and before beginning official duties, 

such person has filed with the court a bond in favor of the United 

States conditioned on the faithful performance of such official duties. 

(b)(1) The United States trustee qualifies wherever such trustee 

serves as trustee in a case under this title. 

(2) The United States trustee shall determine— 

(A) the amount of a bond required to be filed under subsection (a) of this section; and 

(B) the sufficiency of the surety on such bond. 

(c) A trustee is not liable personally or on such trustee’s bond in 

favor of the United States for any penalty or forfeiture incurred by 

the debtor. 


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(d) A proceeding on a trustee’s bond may not be commenced after 

two years after the date on which such trustee was discharged. 

* * * * * * * 

§ 326. Limitation on compensation of trustee 

(a) In a case under chapter 7 or 11, other than a case under subchapter V of chapter 11,, the court may allow reasonable compensation under section 330 of this title of the trustee for the trustee’s 

services, payable after the trustee renders such services, not to exceed 25 percent on the first $5,000 or less, 10 percent on any 

amount in excess of $5,000 but not in excess of $50,000, 5 percent 

on any amount in excess of $50,000 but not in excess of $1,000,000, 

and reasonable compensation not to exceed 3 percent of such moneys in excess of $1,000,000, upon all moneys disbursed or turned 

over in the case by the trustee to parties in interest, excluding the 

debtor, but including holders of secured claims. 

(b) In a case under subchapter V of chapter 11 or chapter 12 or 

13 of this title, the court may not allow compensation for services 

or reimbursement of expenses of the United States trustee or of a 

standing trustee appointed under section 586(b) of title 28, but may 

allow reasonable compensation under section 330 of this title of a 

trustee appointed under section 1202(a) or 1302(a) of this title for 

the trustee’s services, payable after the trustee renders such services, not to exceed five percent upon all payments under the plan. 

(c) If more than one person serves as trustee in the case, the aggregate compensation of such persons for such service may not exceed the maximum compensation prescribed for a single trustee by 

subsection (a) or (b) of this section, as the case may be. 

(d) The court may deny allowance of compensation for services or 

reimbursement of expenses of the trustee if the trustee failed to 

make diligent inquiry into facts that would permit denial of allowance under section 328(c) of this title or, with knowledge of such 

facts, employed a professional person under section 327 of this title. 

* * * * * * * 

SUBCHAPTER III—ADMINISTRATION 

* * * * * * * 

§ 347. Unclaimed property 

(a) Ninety days after the final distribution under section 726, 

1194, 1226, or 1326 of this title in a case under chapter 7, subchapter V of chapter 11, 12, or 13 of this title, as the case may be, 

the trustee shall stop payment on any check remaining unpaid, and 

any remaining property of the estate shall be paid into the court 

and disposed of under chapter 129 of title 28. 

(b) Any security, money, or other property remaining unclaimed 

at the expiration of the time allowed in a case under chapter 9, 11, 

or 12 of this title for the presentation of a security or the performance of any other act as a condition to participation in the distribution under any plan confirmed under section 943(b), 1129, 1173, 

1194, or 1225 of this title, as the case may be, becomes the propVerDate Sep 11 2014 19:14 Jul 27, 2019 Jkt 089006 PO 00000 Frm 00029 Fmt 6659 Sfmt 6601 E:\HR\OC\HR171.XXX HR171

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erty of the debtor or of the entity acquiring the assets of the debtor 

under the plan, as the case may be. 

* * * * * * * 

SUBCHAPTER IV—ADMINISTRATIVE POWERS 

* * * * * * * 

§ 363. Use, sale, or lease of property 

(a) In this section, ‘‘cash collateral’’ means cash, negotiable instruments, documents of title, securities, deposit accounts, or other 

cash equivalents whenever acquired in which the estate and an entity other than the estate have an interest and includes the proceeds, products, offspring, rents, or profits of property and the fees, 

charges, accounts or other payments for the use or occupancy of 

rooms and other public facilities in hotels, motels, or other lodging 

properties subject to a security interest as provided in section 

552(b) of this title, whether existing before or after the commencement of a case under this title. 

(b)(1) The trustee, after notice and a hearing, may use, sell, or 

lease, other than in the ordinary course of business, property of the 

estate, except that if the debtor in connection with offering a product or a service discloses to an individual a policy prohibiting the 

transfer of personally identifiable information about individuals to 

persons that are not affiliated with the debtor and if such policy 

is in effect on the date of the commencement of the case, then the 

trustee may not sell or lease personally identifiable information to 

any person unless— 

(A) such sale or such lease is consistent with such policy; 

or 

(B) after appointment of a consumer privacy ombudsman 

in accordance with section 332, and after notice and a 

hearing, the court approves such sale or such lease— 

(i) giving due consideration to the facts, circumstances, and conditions of such sale or such lease; 

and 

(ii) finding that no showing was made that such sale 

or such lease would violate applicable nonbankruptcy 

law. 

(2) If notification is required under subsection (a) of section 

7A of the Clayton Act in the case of a transaction under this 

subsection, then— 

(A) notwithstanding subsection (a) of such section, the notification required by such subsection to be given by the debtor 

shall be given by the trustee; and 

(B) notwithstanding subsection (b) of such section, the required waiting period shall end on the 15th day after the date 

of the receipt, by the Federal Trade Commission and the Assistant Attorney General in charge of the Antitrust Division of 

the Department of Justice, of the notification required under 

such subsection (a), unless such waiting period is extended— 

(i) pursuant to subsection (e)(2) of such section, in the 

same manner as such subsection (e)(2) applies to a cash 

tender offer; 

(ii) pursuant to subsection (g)(2) of such section; or 


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(iii) by the court after notice and a hearing. 

(c)(1) If the business of the debtor is authorized to be operated 

under section 721, 1108, 1183, 1184, 1203, 1204, or 1304 of this 

title and unless the court orders otherwise, the trustee may enter 

into transactions, including the sale or lease of property of the estate, in the ordinary course of business, without notice or a hearing, and may use property of the estate in the ordinary course of 

business without notice or a hearing. 

(2) The trustee may not use, sell, or lease cash collateral 

under paragraph (1) of this subsection unless— 

(A) each entity that has an interest in such cash collateral 

consents; or 

(B) the court, after notice and a hearing, authorizes such 

use, sale, or lease in accordance with the provisions of this section. 

(3) Any hearing under paragraph (2)(B) of this subsection 

may be a preliminary hearing or may be consolidated with a 

hearing under subsection (e) of this section, but shall be scheduled in accordance with the needs of the debtor. If the hearing 

under paragraph (2)(B) of this subsection is a preliminary 

hearing, the court may authorize such use, sale, or lease only 

if there is a reasonable likelihood that the trustee will prevail 

at the final hearing under subsection (e) of this section. The 

court shall act promptly on any request for authorization under 

paragraph (2)(B) of this subsection. 

(4) Except as provided in paragraph (2) of this subsection, 

the trustee shall segregate and account for any cash collateral 

in the trustee’s possession, custody, or control. 

(d) The trustee may use, sell, or lease property under subsection 

(b) or (c) of this section— 

(1) in the case of a debtor that is a corporation or trust that 

is not a moneyed business, commercial corporation, or trust, 

only in accordance with nonbankruptcy law applicable to the 

transfer of property by a debtor that is such a corporation or 

trust; and 

(2) only to the extent not inconsistent with any relief granted 

under subsection (c), (d), (e), or (f) of section 362. 

(e) Notwithstanding any other provision of this section, at any 

time, on request of an entity that has an interest in property used, 

sold, or leased, or proposed to be used, sold, or leased, by the trustee, the court, with or without a hearing, shall prohibit or condition 

such use, sale, or lease as is necessary to provide adequate protection of such interest. This subsection also applies to property that 

is subject to any unexpired lease of personal property (to the exclusion of such property being subject to an order to grant relief from 

the stay under section 362). 

(f) The trustee may sell property under subsection (b) or (c) of 

this section free and clear of any interest in such property of an 

entity other than the estate, only if— 

(1) applicable nonbankruptcy law permits sale of such property free and clear of such interest; 

(2) such entity consents; 

(3) such interest is a lien and the price at which such property is to be sold is greater than the aggregate value of all 

liens on such property; 


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(4) such interest is in bona fide dispute; or 

(5) such entity could be compelled, in a legal or equitable 

proceeding, to accept a money satisfaction of such interest. 

(g) Notwithstanding subsection (f) of this section, the trustee may 

sell property under subsection (b) or (c) of this section free and 

clear of any vested or contingent right in the nature of dower or 

curtesy. 

(h) Notwithstanding subsection (f) of this section, the trustee 

may sell both the estate’s interest, under subsection (b) or (c) of 

this section, and the interest of any co-owner in property in which 

the debtor had, at the time of the commencement of the case, an 

undivided interest as a tenant in common, joint tenant, or tenant 

by the entirety, only if— 

(1) partition in kind of such property among the estate and 

such co-owners is impracticable; 

(2) sale of the estate’s undivided interest in such property 

would realize significantly less for the estate than sale of such 

property free of the interests of such co-owners; 

(3) the benefit to the estate of a sale of such property free 

of the interests of co-owners outweighs the detriment, if any, 

to such co-owners; and 

(4) such property is not used in the production, transmission, 

or distribution, for sale, of electric energy or of natural or synthetic gas for heat, light, or power. 

(i) Before the consummation of a sale of property to which subsection (g) or (h) of this section applies, or of property of the estate 

that was community property of the debtor and the debtor’s spouse 

immediately before the commencement of the case, the debtor’s 

spouse, or a co-owner of such property, as the case may be, may 

purchase such property at the price at which such sale is to be consummated. 

(j) After a sale of property to which subsection (g) or (h) of this 

section applies, the trustee shall distribute to the debtor’s spouse 

or the co-owners of such property, as the case may be, and to the 

estate, the proceeds of such sale, less the costs and expenses, not 

including any compensation of the trustee, of such sale, according 

to the interests of such spouse or co-owners, and of the estate. 

(k) At a sale under subsection (b) of this section of property that 

is subject to a lien that secures an allowed claim, unless the court 

for cause orders otherwise the holder of such claim may bid at such 

sale, and, if the holder of such claim purchases such property, such 

holder may offset such claim against the purchase price of such 

property. 

(l) Subject to the provisions of section 365, the trustee may use, 

sell, or lease property under subsection (b) or (c) of this section, or 

a plan under chapter 11, 12, or 13 of this title may provide for the 

use, sale, or lease of property, notwithstanding any provision in a 

contract, a lease, or applicable law that is conditioned on the insolvency or financial condition of the debtor, on the commencement of 

a case under this title concerning the debtor, or on the appointment 

of or the taking possession by a trustee in a case under this title 

or a custodian, and that effects, or gives an option to effect, a forfeiture, modification, or termination of the debtor’s interest in such 

property. 


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(m) The reversal or modification on appeal of an authorization 

under subsection (b) or (c) of this section of a sale or lease of property does not affect the validity of a sale or lease under such authorization to an entity that purchased or leased such property in 

good faith, whether or not such entity knew of the pendency of the 

appeal, unless such authorization and such sale or lease were 

stayed pending appeal. 

(n) The trustee may avoid a sale under this section if the sale 

price was controlled by an agreement among potential bidders at 

such sale, or may recover from a party to such agreement any 

amount by which the value of the property sold exceeds the price 

at which such sale was consummated, and may recover any costs, 

attorneys’ fees, or expenses incurred in avoiding such sale or recovering such amount. In addition to any recovery under the preceding 

sentence, the court may grant judgment for punitive damages in 

favor of the estate and against any such party that entered into 

such an agreement in willful disregard of this subsection. 

(o) Notwithstanding subsection (f), if a person purchases any interest in a consumer credit transaction that is subject to the Truth 

in Lending Act or any interest in a consumer credit contract (as defined in section 433.1 of title 16 of the Code of Federal Regulations 

(January 1, 2004), as amended from time to time), and if such interest is purchased through a sale under this section, then such 

person shall remain subject to all claims and defenses that are related to such consumer credit transaction or such consumer credit 

contract, to the same extent as such person would be subject to 

such claims and defenses of the consumer had such interest been 

purchased at a sale not under this section. 

(p) In any hearing under this section— 

(1) the trustee has the burden of proof on the issue of adequate protection; and 

(2) the entity asserting an interest in property has the burden of proof on the issue of the validity, priority, or extent of 

such interest. 

§ 364. Obtaining credit 

(a) If the trustee is authorized to operate the business of the 

debtor under section 721, 1108, 1183, 1184, 1203, 1204, or 1304 of 

this title, unless the court orders otherwise, the trustee may obtain 

unsecured credit and incur unsecured debt in the ordinary course 

of business allowable under section 503(b)(1) of this title as an administrative expense. 

(b) The court, after notice and a hearing, may authorize the 

trustee to obtain unsecured credit or to incur unsecured debt other 

than under subsection (a) of this section, allowable under section 

503(b)(1) of this title as an administrative expense. 

(c) If the trustee is unable to obtain unsecured credit allowable 

under section 503(b)(1) of this title as an administrative expense, 

the court, after notice and a hearing, may authorize the obtaining 

of credit or the incurring of debt— 

(1) with priority over any or all administrative expenses of 

the kind specified in section 503(b) or 507(b) of this title; 

(2) secured by a lien on property of the estate that is not otherwise subject to a lien; or 


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(3) secured by a junior lien on property of the estate that is 

subject to a lien. 

(d)(1) The court, after notice and a hearing, may authorize the 

obtaining of credit or the incurring of debt secured by a senior or 

equal lien on property of the estate that is subject to a lien only 

if— 

(A) the trustee is unable to obtain such credit otherwise; 

and 

(B) there is adequate protection of the interest of the 

holder of the lien on the property of the estate on which 

such senior or equal lien is proposed to be granted. 

(2) In any hearing under this subsection, the trustee has the 

burden of proof on the issue of adequate protection. 

(e) The reversal or modification on appeal of an authorization 

under this section to obtain credit or incur debt, or of a grant under 

this section of a priority or a lien, does not affect the validity of 

any debt so incurred, or any priority or lien so granted, to an entity 

that extended such credit in good faith, whether or not such entity 

knew of the pendency of the appeal, unless such authorization and 

the incurring of such debt, or the granting of such priority or lien, 

were stayed pending appeal. 

(f) Except with respect to an entity that is an underwriter as defined in section 1145(b) of this title, section 5 of the Securities Act 

of 1933, the Trust Indenture Act of 1939, 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 does not apply to the offer or sale under this section 

of a security that is not an equity security. 

* * * * * * * 

CHAPTER 5—CREDITORS, THE DEBTOR, AND THE 

ESTATE 

* * * * * * * 

SUBCHAPTER II—DEBTOR’S DUTIES AND BENEFITS 

* * * * * * * 

§ 523. Exceptions to discharge 

(a) A discharge under section 727, 1141, 1192, 1228(a), 1228(b), 

or 1328(b) of this title does not discharge an individual debtor from 

any debt— 

(1) for a tax or a customs duty— 

(A) of the kind and for the periods specified in section 

507(a)(3) or 507(a)(8) of this title, whether or not a claim 

for such tax was filed or allowed; 

(B) with respect to which a return, or equivalent report 

or notice, if required— 

(i) was not filed or given; or 

(ii) was filed or given after the date on which such 

return, report, or notice was last due, under applicable 

law or under any extension, and after two years before 

the date of the filing of the petition; or 


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(C) with respect to which the debtor made a fraudulent 

return or willfully attempted in any manner to evade or 

defeat such tax; 

(2) for money, property, services, or an extension, renewal, or 

refinancing of credit, to the extent obtained by— 

(A) false pretenses, a false representation, or actual 

fraud, other than a statement respecting the debtor’s or an 

insider’s financial condition; 

(B) use of a statement in writing— 

(i) that is materially false; 

(ii) respecting the debtor’s or an insider’s financial 

condition; 

(iii) on which the creditor to whom the debtor is liable for such money, property, services, or credit reasonably relied; and 

(iv) that the debtor caused to be made or published 

with intent to deceive; or 

(C)(i) for purposes of subparagraph (A)— 

(I) consumer debts owed to a single creditor and 

aggregating more than $500 for luxury goods or 

services incurred by an individual debtor on or 

within 90 days before the order for relief under 

this title are presumed to be nondischargeable; 

and 

(II) cash advances aggregating more than $750 

that are extensions of consumer credit under an 

open end credit plan obtained by an individual 

debtor on or within 70 days before the order for 

relief under this title, are presumed to be nondischargeable; and 

(ii) for purposes of this subparagraph— 

(I) the terms ‘‘consumer’’, ‘‘credit’’, and ‘‘open end 

credit plan’’ have the same meanings as in section 103 

of the Truth in Lending Act; and 

(II) the term ‘‘luxury goods or services’’ does not include goods or services reasonably necessary for the 

support or maintenance of the debtor or a dependent 

of the debtor; 

(3) neither listed nor scheduled under section 521(a)(1) of 

this title, with the name, if known to the debtor, of the creditor 

to whom such debt is owed, in time to permit— 

(A) if such debt is not of a kind specified in paragraph 

(2), (4), or (6) of this subsection, timely filing of a proof of 

claim, unless such creditor had notice or actual knowledge 

of the case in time for such timely filing; or 

(B) if such debt is of a kind specified in paragraph (2), 

(4), or (6) of this subsection, timely filing of a proof of 

claim and timely request for a determination of 

dischargeability of such debt under one of such paragraphs, unless such creditor had notice or actual knowledge of the case in time for such timely filing and request; 

(4) for fraud or defalcation while acting in a fiduciary capacity, embezzlement, or larceny; 

(5) for a domestic support obligation; 


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(6) for willful and malicious injury by the debtor to another 

entity or to the property of another entity; 

(7) to the extent such debt is for a fine, penalty, or forfeiture 

payable to and for the benefit of a governmental unit, and is 

not compensation for actual pecuniary loss, other than a tax 

penalty— 

(A) relating to a tax of a kind not specified in paragraph 

(1) of this subsection; or 

(B) imposed with respect to a transaction or event that 

occurred before three years before the date of the filing of 

the petition; 

(8) unless excepting such debt from discharge under this 

paragraph would impose an undue hardship on the debtor and 

the debtor’s dependents, for— 

(A)(i) an educational benefit overpayment or loan made, 

insured, or guaranteed by a governmental unit, or made 

under any program funded in whole or in part by a governmental unit or nonprofit institution; or 

(ii) an obligation to repay funds received as an educational benefit, scholarship, or stipend; or 

(B) any other educational loan that is a qualified education loan, as defined in section 221(d)(1) of the Internal 

Revenue Code of 1986, incurred by a debtor who is an individual; 

(9) for death or personal injury caused by the debtor’s operation of a motor vehicle, vessel, or aircraft if such operation 

was unlawful because the debtor was intoxicated from using 

alcohol, a drug, or another substance; 

(10) that was or could have been listed or scheduled by the 

debtor in a prior case concerning the debtor under this title or 

under the Bankruptcy Act in which the debtor waived discharge, or was denied a discharge under section 727(a)(2), (3), 

(4), (5), (6), or (7) of this title, or under section 14c(1), (2), (3), 

(4), (6), or (7) of such Act; 

(11) provided in any final judgment, unreviewable order, or 

consent order or decree entered in any court of the United 

States or of any State, issued by a Federal depository institutions regulatory agency, or contained in any settlement agreement entered into by the debtor, arising from any act of fraud 

or defalcation while acting in a fiduciary capacity committed 

with respect to any depository institution or insured credit 

union; 

(12) for malicious or reckless failure to fulfill any commitment by the debtor to a Federal depository institutions regulatory agency to maintain the capital of an insured depository 

institution, except that this paragraph shall not extend any 

such commitment which would otherwise be terminated due to 

any act of such agency; 

(13) for any payment of an order of restitution issued under 

title 18, United States Code; 

(14) incurred to pay a tax to the United States that would 

be nondischargeable pursuant to paragraph (1); 

(14A) incurred to pay a tax to a governmental unit, other 

than the United States, that would be nondischargeable under 

paragraph (1); 


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(14B) incurred to pay fines or penalties imposed under Federal election law; 

(15) to a spouse, former spouse, or child of the debtor and 

not of the kind described in paragraph (5) that is incurred by 

the debtor in the course of a divorce or separation or in connection with a separation agreement, divorce decree or other order 

of a court of record, or a determination made in accordance 

with State or territorial law by a governmental unit; 

(16) for a fee or assessment that becomes due and payable 

after the order for relief to a membership association with respect to the debtor’s interest in a unit that has condominium 

ownership, in a share of a cooperative corporation, or a lot in 

a homeowners association, for as long as the debtor or the 

trustee has a legal, equitable, or possessory ownership interest 

in such unit, such corporation, or such lot, but nothing in this 

paragraph shall except from discharge the debt of a debtor for 

a membership association fee or assessment for a period arising before entry of the order for relief in a pending or subsequent bankruptcy case; 

(17) for a fee imposed on a prisoner by any court for the filing of a case, motion, complaint, or appeal, or for other costs 

and expenses assessed with respect to such filing, regardless of 

an assertion of poverty by the debtor under subsection (b) or 

(f)(2) of section 1915 of title 28 (or a similar non-Federal law), 

or the debtor’s status as a prisoner, as defined in section 

1915(h) of title 28 (or a similar non-Federal law); 

(18) owed to a pension, profit-sharing, stock bonus, or other 

plan established under section 401, 403, 408, 408A, 414, 457, 

or 501(c) of the Internal Revenue Code of 1986, under— 

(A) a loan permitted under section 408(b)(1) of the Employee Retirement Income Security Act of 1974, or subject 

to section 72(p) of the Internal Revenue Code of 1986; or 

(B) a loan from a thrift savings plan permitted under 

subchapter III of chapter 84 of title 5, that satisfies the requirements of section 8433(g) of such title; 

but nothing in this paragraph may be construed to provide 

that any loan made under a governmental plan under section 

414(d), or a contract or account under section 403(b), of the Internal Revenue Code of 1986 constitutes a claim or a debt 

under this title; or 

(19) that— 

(A) is for— 

(i) the violation of any of the Federal securities laws 

(as that term is defined in section 3(a)(47) of the Securities Exchange Act of 1934), any of the State securities laws, or any regulation or order issued under such 

Federal or State securities laws; or 

(ii) common law fraud, deceit, or manipulation in 

connection with the purchase or sale of any security; 

and 

(B) results, before, on, or after the date on which the petition was filed, from— 

(i) any judgment, order, consent order, or decree entered in any Federal or State judicial or administrative proceeding; 


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(ii) any settlement agreement entered into by the 

debtor; or 

(iii) any court or administrative order for any damages, fine, penalty, citation, restitutionary payment, 

disgorgement payment, attorney fee, cost, or other 

payment owed by the debtor. 

For purposes of this subsection, the term ‘‘return’’ means a return 

that satisfies the requirements of applicable nonbankruptcy law 

(including applicable filing requirements). Such term includes a return prepared pursuant to section 6020(a) of the Internal Revenue 

Code of 1986, or similar State or local law, or a written stipulation 

to a judgment or a final order entered by a nonbankruptcy tribunal, but does not include a return made pursuant to section 

6020(b) of the Internal Revenue Code of 1986, or a similar State 

or local law. 

(b) Notwithstanding subsection (a) of this section, a debt that 

was excepted from discharge under subsection (a)(1), (a)(3), or 

(a)(8) of this section, under section 17a(1), 17a(3), or 17a(5) of the 

Bankruptcy Act, under section 439A of the Higher Education Act 

of 1965, or under section 733(g) of the Public Health Service Act 

in a prior case concerning the debtor under this title, or under the 

Bankruptcy Act, is dischargeable in a case under this title unless, 

by the terms of subsection (a) of this section, such debt is not dischargeable in the case under this title. 

(c)(1) Except as provided in subsection (a)(3)(B) of this section, 

the debtor shall be discharged from a debt of a kind specified in 

paragraph (2), (4), or (6) of subsection (a) of this section, unless, on 

request of the creditor to whom such debt is owed, and after notice 

and a hearing, the court determines such debt to be excepted from 

discharge under paragraph (2), (4), or (6), as the case may be, of 

subsection (a) of this section. 

(2) Paragraph (1) shall not apply in the case of a Federal depository institutions regulatory agency seeking, in its capacity 

as conservator, receiver, or liquidating agent for an insured depository institution, to recover a debt described in subsection 

(a)(2), (a)(4), (a)(6), or (a)(11) owed to such institution by an institution-affiliated party unless the receiver, conservator, or 

liquidating agent was appointed in time to reasonably comply, 

or for a Federal depository institutions regulatory agency acting in its corporate capacity as a successor to such receiver, 

conservator, or liquidating agent to reasonably comply, with 

subsection (a)(3)(B) as a creditor of such institution-affiliated 

party with respect to such debt. 

(d) If a creditor requests a determination of dischargeability of a 

consumer debt under subsection (a)(2) of this section, and such 

debt is discharged, the court shall grant judgment in favor of the 

debtor for the costs of, and a reasonable attorney’s fee for, the proceeding if the court finds that the position of the creditor was not 

substantially justified, except that the court shall not award such 

costs and fees if special circumstances would make the award unjust. 

(e) Any institution-affiliated party of an insured depository institution shall be considered to be acting in a fiduciary capacity with 

respect to the purposes of subsection (a)(4) or (11). 


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§ 524. Effect of discharge 

(a) A discharge in a case under this title— 

(1) voids any judgment at any time obtained, to the extent 

that such judgment is a determination of the personal liability 

of the debtor with respect to any debt discharged under section 

727, 944, 1141, 1192, 1228, or 1328 of this title, whether or not 

discharge of such debt is waived; 

(2) operates as an injunction against the commencement or 

continuation of an action, the employment of process, or an act, 

to collect, recover or offset any such debt as a personal liability 

of the debtor, whether or not discharge of such debt is waived; 

and 

(3) operates as an injunction against the commencement or 

continuation of an action, the employment of process, or an act, 

to collect or recover from, or offset against, property of the 

debtor of the kind specified in section 541(a)(2) of this title that 

is acquired after the commencement of the case, on account of 

any allowable community claim, except a community claim 

that is excepted from discharge under section 523, 1192, 

1228(a)(1), or 1328(a)(1), or that would be so excepted, determined in accordance with the provisions of sections 523(c) and 

523(d) of this title, in a case concerning the debtor’s spouse 

commenced on the date of the filing of the petition in the case 

concerning the debtor, whether or not discharge of the debt 

based on such community claim is waived. 

(b) Subsection (a)(3) of this section does not apply if— 

(1)(A) the debtor’s spouse is a debtor in a case under this 

title, or a bankrupt or a debtor in a case under the Bankruptcy 

Act, commenced within six years of the date of the filing of the 

petition in the case concerning the debtor; and 

(B) the court does not grant the debtor’s spouse a discharge in such case concerning the debtor’s spouse; or 

(2)(A) the court would not grant the debtor’s spouse a discharge in a case under chapter 7 of this title concerning such 

spouse commenced on the date of the filing of the petition in 

the case concerning the debtor; and 

(B) a determination that the court would not so grant 

such discharge is made by the bankruptcy court within the 

time and in the manner provided for a determination 

under section 727 of this title of whether a debtor is granted a discharge. 

(c) An agreement between a holder of a claim and the debtor, the 

consideration for which, in whole or in part, is based on a debt that 

is dischargeable in a case under this title is enforceable only to any 

extent enforceable under applicable nonbankruptcy law, whether or 

not discharge of such debt is waived, only if— 

(1) such agreement was made before the granting of the discharge under section 727, 1141, 1192, 1228, or 1328 of this 

title; 

(2) the debtor received the disclosures described in subsection (k) at or before the time at which the debtor signed the 

agreement; 

(3) such agreement has been filed with the court and, if applicable, accompanied by a declaration or an affidavit of the atVerDate Sep 11 2014 19:14 Jul 27, 2019 Jkt 089006 PO 00000 Frm 00039 Fmt 6659 Sfmt 6601 E:\HR\OC\HR171.XXX HR171

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torney that represented the debtor during the course of negotiating an agreement under this subsection, which states that— 

(A) such agreement represents a fully informed and voluntary agreement by the debtor; 

(B) such agreement does not impose an undue hardship 

on the debtor or a dependent of the debtor; and 

(C) the attorney fully advised the debtor of the legal effect and consequences of— 

(i) an agreement of the kind specified in this subsection; and 

(ii) any default under such an agreement; 

(4) the debtor has not rescinded such agreement at any time 

prior to discharge or within sixty days after such agreement is 

filed with the court, whichever occurs later, by giving notice of 

rescission to the holder of such claim; 

(5) the provisions of subsection (d) of this section have been 

complied with; and 

(6)(A) in a case concerning an individual who was not represented by an attorney during the course of negotiating an 

agreement under this subsection, the court approves such 

agreement as— 

(i) not imposing an undue hardship on the debtor or 

a dependent of the debtor; and 

(ii) in the best interest of the debtor. 

(B) Subparagraph (A) shall not apply to the extent that 

such debt is a consumer debt secured by real property. 

(d) In a case concerning an individual, when the court has determined whether to grant or not to grant a discharge under section 

727, 1141, 1192, 1228, or 1328 of this title, the court may hold a 

hearing at which the debtor shall appear in person. At any such 

hearing, the court shall inform the debtor that a discharge has 

been granted or the reason why a discharge has not been granted. 

If a discharge has been granted and if the debtor desires to make 

an agreement of the kind specified in subsection (c) of this section 

and was not represented by an attorney during the course of negotiating such agreement, then the court shall hold a hearing at 

which the debtor shall appear in person and at such hearing the 

court shall— 

(1) inform the debtor— 

(A) that such an agreement is not required under this 

title, under nonbankruptcy law, or under any agreement 

not made in accordance with the provisions of subsection 

(c) of this section; and 

(B) of the legal effect and consequences of— 

(i) an agreement of the kind specified in subsection 

(c) of this section; and 

(ii) a default under such an agreement; and 

(2) determine whether the agreement that the debtor desires 

to make complies with the requirements of subsection (c)(6) of 

this section, if the consideration for such agreement is based 

in whole or in part on a consumer debt that is not secured by 

real property of the debtor. 

(e) Except as provided in subsection (a)(3) of this section, discharge of a debt of the debtor does not affect the liability of any 

other entity on, or the property of any other entity for, such debt. 


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(f) Nothing contained in subsection (c) or (d) of this section prevents a debtor from voluntarily repaying any debt. 

(g)(1)(A) After notice and hearing, a court that enters an order 

confirming a plan of reorganization under chapter 11 may issue, in 

connection with such order, an injunction in accordance with this 

subsection to supplement the injunctive effect of a discharge under 

this section. 

(B) An injunction may be issued under subparagraph (A) 

to enjoin entities from taking legal action for the purpose 

of directly or indirectly collecting, recovering, or receiving 

payment or recovery with respect to any claim or demand 

that, under a plan of reorganization, is to be paid in whole 

or in part by a trust described in paragraph (2)(B)(i), except such legal actions as are expressly allowed by the injunction, the confirmation order, or the plan of reorganization. 

(2)(A) Subject to subsection (h), if the requirements of subparagraph (B) are met at the time an injunction described in 

paragraph (1) is entered, then after entry of such injunction, 

any proceeding that involves the validity, application, construction, or modification of such injunction, or of this subsection 

with respect to such injunction, may be commenced only in the 

district court in which such injunction was entered, and such 

court shall have exclusive jurisdiction over any such proceeding 

without regard to the amount in controversy. 

(B) The requirements of this subparagraph are that— 

(i) the injunction is to be implemented in connection with a 

trust that, pursuant to the plan of reorganization— 

(I) is to assume the liabilities of a debtor which at the 

time of entry of the order for relief has been named as a 

defendant in personal injury, wrongful death, or propertydamage actions seeking recovery for damages allegedly 

caused by the presence of, or exposure to, asbestos or asbestos-containing products; 

(II) is to be funded in whole or in part by the securities 

of 1 or more debtors involved in such plan and by the obligation of such debtor or debtors to make future payments, 

including dividends; 

(III) is to own, or by the exercise of rights granted under 

such plan would be entitled to own if specified contingencies occur, a majority of the voting shares of— 

(aa) each such debtor; 

(bb) the parent corporation of each such debtor; or 

(cc) a subsidiary of each such debtor that is also a 

debtor; and 

(IV) is to use its assets or income to pay claims and demands; and 

(ii) subject to subsection (h), the court determines that— 

(I) the debtor is likely to be subject to substantial future 

demands for payment arising out of the same or similar 

conduct or events that gave rise to the claims that are addressed by the injunction; 

(II) the actual amounts, numbers, and timing of such future demands cannot be determined; 


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(III) pursuit of such demands outside the procedures 

prescribed by such plan is likely to threaten the plan’s 

purpose to deal equitably with claims and future demands; 

(IV) as part of the process of seeking confirmation of 

such plan— 

(aa) the terms of the injunction proposed to be 

issued under paragraph (1)(A), including any provisions barring actions against third parties pursuant to 

paragraph (4)(A), are set out in such plan and in any 

disclosure statement supporting the plan; and 

(bb) a separate class or classes of the claimants 

whose claims are to be addressed by a trust described 

in clause (i) is established and votes, by at least 75 

percent of those voting, in favor of the plan; and 

(V) subject to subsection (h), pursuant to court orders or 

otherwise, the trust will operate through mechanisms such 

as structured, periodic, or supplemental payments, pro 

rata distributions, matrices, or periodic review of estimates 

of the numbers and values of present claims and future demands, or other comparable mechanisms, that provide reasonable assurance that the trust will value, and be in a financial position to pay, present claims and future demands that involve similar claims in substantially the 

same manner. 

(3)(A) If the requirements of paragraph (2)(B) are met and 

the order confirming the plan of reorganization was issued or 

affirmed by the district court that has jurisdiction over the reorganization case, then after the time for appeal of the order 

that issues or affirms the plan— 

(i) the injunction shall be valid and enforceable and may not 

be revoked or modified by any court except through appeal in 

accordance with paragraph (6); 

(ii) no entity that pursuant to such plan or thereafter becomes a direct or indirect transferee of, or successor to any assets of, a debtor or trust that is the subject of the injunction 

shall be liable with respect to any claim or demand made 

against such entity by reason of its becoming such a transferee 

or successor; and 

(iii) no entity that pursuant to such plan or thereafter makes 

a loan to such a debtor or trust or to such a successor or transferee shall, by reason of making the loan, be liable with respect 

to any claim or demand made against such entity, nor shall 

any pledge of assets made in connection with such a loan be 

upset or impaired for that reason; 

(B) Subparagraph (A) shall not be construed to— 

(i) imply that an entity described in subparagraph (A)(ii) or 

(iii) would, if this paragraph were not applicable, necessarily 

be liable to any entity by reason of any of the acts described 

in subparagraph (A); 

(ii) relieve any such entity of the duty to comply with, or of 

liability under, any Federal or State law regarding the making 

of a fraudulent conveyance in a transaction described in subparagraph (A)(ii) or (iii); or 

(iii) relieve a debtor of the debtor’s obligation to comply with 

the terms of the plan of reorganization, or affect the power of 


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the court to exercise its authority under sections 1141 and 

1142 to compel the debtor to do so. 

(4)(A)(i) Subject to subparagraph (B), an injunction described 

in paragraph (1) shall be valid and enforceable against all entities that it addresses. 

(ii) Notwithstanding the provisions of section 524(e), such an injunction may bar any action directed against a third party who is 

identifiable from the terms of such injunction (by name or as part 

of an identifiable group) and is alleged to be directly or indirectly 

liable for the conduct of, claims against, or demands on the debtor 

to the extent such alleged liability of such third party arises by reason of— 

(I) the third party’s ownership of a financial interest in the 

debtor, a past or present affiliate of the debtor, or a predecessor in interest of the debtor; 

(II) the third party’s involvement in the management of the 

debtor or a predecessor in interest of the debtor, or service as 

an officer, director or employee of the debtor or a related party; 

(III) the third party’s provision of insurance to the debtor or 

a related party; or 

(IV) the third party’s involvement in a transaction changing 

the corporate structure, or in a loan or other financial transaction affecting the financial condition, of the debtor or a related party, including but not limited to— 

(aa) involvement in providing financing (debt or equity), 

or advice to an entity involved in such a transaction; or 

(bb) acquiring or selling a financial interest in an entity 

as part of such a transaction. 

(iii) As used in this subparagraph, the term ‘‘related party’’ 

means— 

(I) a past or present affiliate of the debtor; 

(II) a predecessor in interest of the debtor; or 

(III) any entity that owned a financial interest in— 

(aa) the debtor; 

(bb) a past or present affiliate of the debtor; or 

(cc) a predecessor in interest of the debtor. 

(B) Subject to subsection (h), if, under a plan of reorganization, 

a kind of demand described in such plan is to be paid in whole or 

in part by a trust described in paragraph (2)(B)(i) in connection 

with which an injunction described in paragraph (1) is to be implemented, then such injunction shall be valid and enforceable with 

respect to a demand of such kind made, after such plan is confirmed, against the debtor or debtors involved, or against a third 

party described in subparagraph (A)(ii), if— 

(i) as part of the proceedings leading to issuance of such injunction, the court appoints a legal representative for the purpose of protecting the rights of persons that might subsequently assert demands of such kind, and 

(ii) the court determines, before entering the order confirming such plan, that identifying such debtor or debtors, or 

such third party (by name or as part of an identifiable group), 

in such injunction with respect to such demands for purposes 

of this subparagraph is fair and equitable with respect to the 

persons that might subsequently assert such demands, in light 


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of the benefits provided, or to be provided, to such trust on behalf of such debtor or debtors or such third party. 

(5) In this subsection, the term ‘‘demand’’ means a demand 

for payment, present or future, that— 

(A) was not a claim during the proceedings leading to the 

confirmation of a plan of reorganization; 

(B) arises out of the same or similar conduct or events that 

gave rise to the claims addressed by the injunction issued 

under paragraph (1); and 

(C) pursuant to the plan, is to be paid by a trust described 

in paragraph (2)(B)(i). 

(6) Paragraph (3)(A)(i) does not bar an action taken by or at 

the direction of an appellate court on appeal of an injunction 

issued under paragraph (1) or of the order of confirmation that 

relates to the injunction. 

(7) This subsection does not affect the operation of section 

1144 or the power of the district court to refer a proceeding 

under section 157 of title 28 or any reference of a proceeding 

made prior to the date of the enactment of this subsection. 

(h) APPLICATION TO EXISTING INJUNCTIONS.—For purposes of subsection (g)— 

(1) subject to paragraph (2), if an injunction of the kind described in subsection (g)(1)(B) was issued before the date of the 

enactment of this Act, as part of a plan of reorganization confirmed by an order entered before such date, then the injunction shall be considered to meet the requirements of subsection 

(g)(2)(B) for purposes of subsection (g)(2)(A), and to satisfy subsection (g)(4)(A)(ii), if— 

(A) the court determined at the time the plan was confirmed that the plan was fair and equitable in accordance 

with the requirements of section 1129(b); 

(B) as part of the proceedings leading to issuance of such 

injunction and confirmation of such plan, the court had appointed a legal representative for the purpose of protecting 

the rights of persons that might subsequently assert demands described in subsection (g)(4)(B) with respect to 

such plan; and 

(C) such legal representative did not object to confirmation of such plan or issuance of such injunction; and 

(2) for purposes of paragraph (1), if a trust described in subsection (g)(2)(B)(i) is subject to a court order on the date of the 

enactment of this Act staying such trust from settling or paying further claims— 

(A) the requirements of subsection (g)(2)(B)(ii)(V) shall 

not apply with respect to such trust until such stay is lifted or dissolved; and 

(B) if such trust meets such requirements on the date 

such stay is lifted or dissolved, such trust shall be considered to have met such requirements continuously from the 

date of the enactment of this Act. 

(i) The willful failure of a creditor to credit payments received 

under a plan confirmed under this title, unless the order confirming the plan is revoked, the plan is in default, or the creditor 

has not received payments required to be made under the plan in 

the manner required by the plan (including crediting the amounts 


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required under the plan), shall constitute a violation of an injunction under subsection (a)(2) if the act of the creditor to collect and 

failure to credit payments in the manner required by the plan 

caused material injury to the debtor. 

(j) Subsection (a)(2) does not operate as an injunction against an 

act by a creditor that is the holder of a secured claim, if— 

(1) such creditor retains a security interest in real property 

that is the principal residence of the debtor; 

(2) such act is in the ordinary course of business between the 

creditor and the debtor; and 

(3) such act is limited to seeking or obtaining periodic payments associated with a valid security interest in lieu of pursuit of in rem relief to enforce the lien. 

(k)(1) The disclosures required under subsection (c)(2) shall consist of the disclosure statement described in paragraph (3), completed as required in that paragraph, together with the agreement 

specified in subsection (c), statement, declaration, motion and order 

described, respectively, in paragraphs (4) through (8), and shall be 

the only disclosures required in connection with entering into such 

agreement. 

(2) Disclosures made under paragraph (1) shall be made 

clearly and conspicuously and in writing. The terms ‘‘Amount 

Reaffirmed’’ and ‘‘Annual Percentage Rate’’ shall be disclosed 

more conspicuously than other terms, data or information provided in connection with this disclosure, except that the 

phrases ‘‘Before agreeing to reaffirm a debt, review these important disclosures’’ and ‘‘Summary of Reaffirmation Agreement’’ may be equally conspicuous. Disclosures may be made 

in a different order and may use terminology different from 

that set forth in paragraphs (2) through (8), except that the 

terms ‘‘Amount Reaffirmed’’ and ‘‘Annual Percentage Rate’’ 

must be used where indicated. 

(3) The disclosure statement required under this paragraph 

shall consist of the following: 

(A) The statement: ‘‘Part A: Before agreeing to reaffirm a 

debt, review these important disclosures:’’; 

(B) Under the heading ‘‘Summary of Reaffirmation Agreement’’, the statement: ‘‘This Summary is made pursuant to the 

requirements of the Bankruptcy Code’’; 

(C) The ‘‘Amount Reaffirmed’’, using that term, which shall 

be— 

(i) the total amount of debt that the debtor agrees to reaffirm by entering into an agreement of the kind specified 

in subsection (c), and 

(ii) the total of any fees and costs accrued as of the date 

of the disclosure statement, related to such total amount. 

(D) In conjunction with the disclosure of the ‘‘Amount Reaffirmed’’, the statements— 

(i) ‘‘The amount of debt you have agreed to reaffirm’’; 

and 

(ii) ‘‘Your credit agreement may obligate you to pay additional amounts which may come due after the date of this 

disclosure. Consult your credit agreement.’’. 

(E) The ‘‘Annual Percentage Rate’’, using that term, which 

shall be disclosed as— 


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(i) if, at the time the petition is filed, the debt is an extension of credit under an open end credit plan, as the 

terms ‘‘credit’’ and ‘‘open end credit plan’’ are defined in 

section 103 of the Truth in Lending Act, then— 

(I) the annual percentage rate determined under 

paragraphs (5) and (6) of section 127(b) of the Truth 

in Lending Act, as applicable, as disclosed to the debtor in the most recent periodic statement prior to entering into an agreement of the kind specified in subsection (c) or, if no such periodic statement has been 

given to the debtor during the prior 6 months, the annual percentage rate as it would have been so disclosed at the time the disclosure statement is given to 

the debtor, or to the extent this annual percentage 

rate is not readily available or not applicable, then 

(II) the simple interest rate applicable to the 

amount reaffirmed as of the date the disclosure statement is given to the debtor, or if different simple interest rates apply to different balances, the simple interest rate applicable to each such balance, identifying 

the amount of each such balance included in the 

amount reaffirmed, or 

(III) if the entity making the disclosure elects, to 

disclose the annual percentage rate under subclause 

(I) and the simple interest rate under subclause (II); 

or 

(ii) if, at the time the petition is filed, the debt is an extension of credit other than under an open end credit plan, 

as the terms ‘‘credit’’ and ‘‘open end credit plan’’ are defined in section 103 of the Truth in Lending Act, then— 

(I) the annual percentage rate under section 

128(a)(4) of the Truth in Lending Act, as disclosed to 

the debtor in the most recent disclosure statement 

given to the debtor prior to the entering into an agreement of the kind specified in subsection (c) with respect to the debt, or, if no such disclosure statement 

was given to the debtor, the annual percentage rate as 

it would have been so disclosed at the time the disclosure statement is given to the debtor, or to the extent 

this annual percentage rate is not readily available or 

not applicable, then 

(II) the simple interest rate applicable to the 

amount reaffirmed as of the date the disclosure statement is given to the debtor, or if different simple interest rates apply to different balances, the simple interest rate applicable to each such balance, identifying 

the amount of such balance included in the amount reaffirmed, or 

(III) if the entity making the disclosure elects, to 

disclose the annual percentage rate under (I) and the 

simple interest rate under (II). 

(F) If the underlying debt transaction was disclosed as a 

variable rate transaction on the most recent disclosure given 

under the Truth in Lending Act, by stating ‘‘The interest rate 

on your loan may be a variable interest rate which changes 


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from time to time, so that the annual percentage rate disclosed 

here may be higher or lower.’’. 

(G) If the debt is secured by a security interest which has 

not been waived in whole or in part or determined to be void 

by a final order of the court at the time of the disclosure, by 

disclosing that a security interest or lien in goods or property 

is asserted over some or all of the debts the debtor is reaffirming and listing the items and their original purchase price that 

are subject to the asserted security interest, or if not a purchase-money security interest then listing by items or types 

and the original amount of the loan. 

(H) At the election of the creditor, a statement of the repayment schedule using 1 or a combination of the following— 

(i) by making the statement: ‘‘Your first payment in the amount of $lll is due on lll but the future payment amount may be different. Consult your reaffirmation 

agreement or credit agreement, as applicable.’’, and stating 

the amount of the first payment and the due date of that 

payment in the places provided; 

(ii) by making the statement: ‘‘Your payment schedule 

will be:’’, and describing the repayment schedule with the 

number, amount, and due dates or period of payments 

scheduled to repay the debts reaffirmed to the extent then 

known by the disclosing party; or 

(iii) by describing the debtor’s repayment obligations 

with reasonable specificity to the extent then known by the 

disclosing party. 

(I) The following statement: ‘‘Note: When this disclosure refers to what a creditor‘may’do, it does not use the word‘may’to 

give the creditor specific permission. The word‘may’is used to 

tell you what might occur if the law permits the creditor to 

take the action. If you have questions about your reaffirming 

a debt or what the law requires, consult with the attorney who 

helped you negotiate this agreement reaffirming a debt. If you 

don’t have an attorney helping you, the judge will explain the 

effect of your reaffirming a debt when the hearing on the reaffirmation agreement is held.’’. 

(J)(i) The following additional statements: 

‘‘Reaffirming a debt is a serious financial decision. 

The law requires you to take certain steps to make 

sure the decision is in your best interest. If these steps 

are not completed, the reaffirmation agreement is not 

effective, even though you have signed it. 

‘‘1. Read the disclosures in this Part A carefully. 

Consider the decision to reaffirm carefully. Then, if 

you want to reaffirm, sign the reaffirmation agreement in Part B (or you may use a separate agreement 

you and your creditor agree on). 

‘‘2. Complete and sign Part D and be sure you can 

afford to make the payments you are agreeing to make 

and have received a copy of the disclosure statement 

and a completed and signed reaffirmation agreement. 

‘‘3. If you were represented by an attorney during 

the negotiation of your reaffirmation agreement, the 

attorney must have signed the certification in Part C. 


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‘‘4. If you were not represented by an attorney during the negotiation of your reaffirmation agreement, 

you must have completed and signed Part E. 

‘‘5. The original of this disclosure must be filed with 

the court by you or your creditor. If a separate reaffirmation agreement (other than the one in Part B) has 

been signed, it must be attached. 

‘‘6. If you were represented by an attorney during 

the negotiation of your reaffirmation agreement, your 

reaffirmation agreement becomes effective upon filing 

with the court unless the reaffirmation is presumed to 

be an undue hardship as explained in Part D. 

‘‘7. If you were not represented by an attorney during the negotiation of your reaffirmation agreement, it 

will not be effective unless the court approves it. The 

court will notify you of the hearing on your reaffirmation agreement. You must attend this hearing in bankruptcy court where the judge will review your reaffirmation agreement. The bankruptcy court must approve your reaffirmation agreement as consistent with 

your best interests, except that no court approval is 

required if your reaffirmation agreement is for a consumer debt secured by a mortgage, deed of trust, security deed, or other lien on your real property, like your 

home. 

‘‘Your right to rescind (cancel) your reaffirmation 

agreement. You may rescind (cancel) your reaffirmation agreement at any time before the bankruptcy 

court enters a discharge order, or before the expiration 

of the 60-day period that begins on the date your reaffirmation agreement is filed with the court, whichever 

occurs later. To rescind (cancel) your reaffirmation 

agreement, you must notify the creditor that your reaffirmation agreement is rescinded (or canceled). 

‘‘What are your obligations if you reaffirm the debt? 

A reaffirmed debt remains your personal legal obligation. It is not discharged in your bankruptcy case. 

That means that if you default on your reaffirmed 

debt after your bankruptcy case is over, your creditor 

may be able to take your property or your wages. Otherwise, your obligations will be determined by the reaffirmation agreement which may have changed the 

terms of the original agreement. For example, if you 

are reaffirming an open end credit agreement, the 

creditor may be permitted by that agreement or applicable law to change the terms of that agreement in the 

future under certain conditions. 

‘‘Are you required to enter into a reaffirmation 

agreement by any law? No, you are not required to reaffirm a debt by any law. Only agree to reaffirm a 

debt if it is in your best interest. Be sure you can afford the payments you agree to make. 

‘‘What if your creditor has a security interest or 

lien? Your bankruptcy discharge does not eliminate 

any lien on your property. A‘lien’is often referred to as 


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a security interest, deed of trust, mortgage or security 

deed. Even if you do not reaffirm and your personal liability on the debt is discharged, because of the lien 

your creditor may still have the right to take the property securing the lien if you do not pay the debt or default on it. If the lien is on an item of personal property that is exempt under your State’s law or that the 

trustee has abandoned, you may be able to redeem the 

item rather than reaffirm the debt. To redeem, you 

must make a single payment to the creditor equal to 

the amount of the allowed secured claim, as agreed by 

the parties or determined by the court.’’. 

(ii) In the case of a reaffirmation under subsection (m)(2), 

numbered paragraph 6 in the disclosures required by clause (i) 

of this subparagraph shall read as follows: 

‘‘6. If you were represented by an attorney during 

the negotiation of your reaffirmation agreement, your 

reaffirmation agreement becomes effective upon filing 

with the court.’’. 

(4) The form of such agreement required under this paragraph shall consist of the following: 

‘‘Part B: Reaffirmation Agreement. I (we) agree to reaffirm 

the debts arising under the credit agreement described below. 

‘‘Brief description of credit agreement: 

‘‘Description of any changes to the credit agreement made as 

part of this reaffirmation agreement: 

‘‘Signature: Date: 

‘‘Borrower: 

‘‘Co-borrower, if also reaffirming these debts: 

‘‘Accepted by creditor: 

‘‘Date of creditor acceptance:’’. 

(5) The declaration shall consist of the following: 

(A) The following certification: 

‘‘Part C: Certification by Debtor’s Attorney (If Any). 

‘‘I hereby certify that (1) this agreement represents a fully 

informed and voluntary agreement by the debtor; (2) this 

agreement does not impose an undue hardship on the debtor 

or any dependent of the debtor; and (3) I have fully advised the 

debtor of the legal effect and consequences of this agreement 

and any default under this agreement. 

‘‘Signature of Debtor’s Attorney: Date:’’. 

(B) If a presumption of undue hardship has been established 

with respect to such agreement, such certification shall state 

that, in the opinion of the attorney, the debtor is able to make 

the payment. 

(C) In the case of a reaffirmation agreement under subsection (m)(2), subparagraph (B) is not applicable. 

(6)(A) The statement in support of such agreement, which 

the debtor shall sign and date prior to filing with the court, 

shall consist of the following: 

‘‘Part D: Debtor’s Statement in Support of Reaffirmation 

Agreement. 

‘‘1. I believe this reaffirmation agreement will not impose an 

undue hardship on my dependents or me. I can afford to make 

the payments on the reaffirmed debt because my monthly inVerDate Sep 11 2014 19:14 Jul 27, 2019 Jkt 089006 PO 00000 Frm 00049 Fmt 6659 Sfmt 6601 E:\HR\OC\HR171.XXX HR171

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come (take home pay plus any other income received) is 

$lll, and my actual current monthly expenses including 

monthly payments on post-bankruptcy debt and other reaffirmation agreements total $lll, leaving $lll to make the 

required payments on this reaffirmed debt. I understand that 

if my income less my monthly expenses does not leave enough 

to make the payments, this reaffirmation agreement is presumed to be an undue hardship on me and must be reviewed 

by the court. However, this presumption may be overcome if I 

explain to the satisfaction of the court how I can afford to 

make the payments here: lll. ‘‘2. I received a copy of the Reaffirmation Disclosure 

Statement in Part A and a completed and signed reaffirmation agreement.’’. 

(B) Where the debtor is represented by an attorney and is reaffirming a debt owed to a creditor defined in section 19(b)(1)(A)(iv) 

of the Federal Reserve Act, the statement of support of the reaffirmation agreement, which the debtor shall sign and date prior to filing with the court, shall consist of the following: 

‘‘I believe this reaffirmation agreement is in my financial 

interest. I can afford to make the payments on the reaffirmed debt. I received a copy of the Reaffirmation Disclosure Statement in Part A and a completed and signed 

reaffirmation agreement.’’. 

(7) The motion that may be used if approval of such agreement by the court is required in order for it to be effective, 

shall be signed and dated by the movant and shall consist of 

the following: 

‘‘Part E: Motion for Court Approval (To be completed only if 

the debtor is not represented by an attorney.). I (we), the debtor(s), affirm the following to be true and correct: 

‘‘I am not represented by an attorney in connection with this 

reaffirmation agreement. 

‘‘I believe this reaffirmation agreement is in my best interest 

based on the income and expenses I have disclosed in my 

Statement in Support of this reaffirmation agreement, and because (provide any additional relevant reasons the court should 

consider): 

‘‘Therefore, I ask the court for an order approving this reaffirmation agreement.’’. 

(8) The court order, which may be used to approve such 

agreement, shall consist of the following: 

‘‘Court Order: The court grants the debtor’s motion and approves the reaffirmation agreement described above.’’. 

(l) Notwithstanding any other provision of this title the following 

shall apply: 

(1) A creditor may accept payments from a debtor before and 

after the filing of an agreement of the kind specified in subsection (c) with the court. 

(2) A creditor may accept payments from a debtor under 

such agreement that the creditor believes in good faith to be 

effective. 

(3) The requirements of subsections (c)(2) and (k) shall be 

satisfied if disclosures required under those subsections are 

given in good faith. 


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(m)(1) Until 60 days after an agreement of the kind specified in 

subsection (c) is filed with the court (or such additional period as 

the court, after notice and a hearing and for cause, orders before 

the expiration of such period), it shall be presumed that such 

agreement is an undue hardship on the debtor if the debtor’s 

monthly income less the debtor’s monthly expenses as shown on 

the debtor’s completed and signed statement in support of such 

agreement required under subsection (k)(6)(A) is less than the 

scheduled payments on the reaffirmed debt. This presumption shall 

be reviewed by the court. The presumption may be rebutted in 

writing by the debtor if the statement includes an explanation that 

identifies additional sources of funds to make the payments as 

agreed upon under the terms of such agreement. If the presumption is not rebutted to the satisfaction of the court, the court may 

disapprove such agreement. No agreement shall be disapproved 

without notice and a hearing to the debtor and creditor, and such 

hearing shall be concluded before the entry of the debtor’s discharge. 

(2) This subsection does not apply to reaffirmation agreements where the creditor is a credit union, as defined in section 19(b)(1)(A)(iv) of the Federal Reserve Act. 

* * * * * * * 

SUBCHAPTER III—THE ESTATE 

* * * * * * * 

§ 547. Preferences 

(a) In this section— 

(1) ‘‘inventory’’ means personal property leased or furnished, 

held for sale or lease, or to be furnished under a contract for 

service, raw materials, work in process, or materials used or 

consumed in a business, including farm products such as crops 

or livestock, held for sale or lease; 

(2) ‘‘new value’’ means money or money’s worth in goods, 

services, or new credit, or release by a transferee of property 

previously transferred to such transferee in a transaction that 

is neither void nor voidable by the debtor or the trustee under 

any applicable law, including proceeds of such property, but 

does not include an obligation substituted for an existing obligation; 

(3) ‘‘receivable’’ means right to payment, whether or not such 

right has been earned by performance; and 

(4) a debt for a tax is incurred on the day when such tax is 

last payable without penalty, including any extension. 

(b) Except as provided in subsections (c) and (i) of this section, 

the trustee may, based on reasonable due diligence in the circumstances of the case and taking into account a party’s known or 

reasonably knowable affirmative defenses under subsection (c), 

avoid any transfer of an interest of the debtor in property— 

(1) to or for the benefit of a creditor; 

(2) for or on account of an antecedent debt owed by the debtor before such transfer was made; 

(3) made while the debtor was insolvent; 

(4) made— 


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(A) on or within 90 days before the date of the filing of 

the petition; or 

(B) between ninety days and one year before the date of 

the filing of the petition, if such creditor at the time of 

such transfer was an insider; and 

(5) that enables such creditor to receive more than such creditor would receive if— 

(A) the case were a case under chapter 7 of this title; 

(B) the transfer had not been made; and 

(C) such creditor received payment of such debt to the 

extent provided by the provisions of this title. 

(c) The trustee may not avoid under this section a transfer— 

(1) to the extent that such transfer was— 

(A) intended by the debtor and the creditor to or for 

whose benefit such transfer was made to be a contemporaneous exchange for new value given to the debtor; and 

(B) in fact a substantially contemporaneous exchange; 

(2) to the extent that such transfer was in payment of a debt 

incurred by the debtor in the ordinary course of business or financial affairs of the debtor and the transferee, and such 

transfer was— 

(A) made in the ordinary course of business or financial 

affairs of the debtor and the transferee; or 

(B) made according to ordinary business terms; 

(3) that creates a security interest in property acquired by 

the debtor— 

(A) to the extent such security interest secures new 

value that was— 

(i) given at or after the signing of a security agreement that contains a description of such property as 

collateral; 

(ii) given by or on behalf of the secured party under 

such agreement; 

(iii) given to enable the debtor to acquire such property; and 

(iv) in fact used by the debtor to acquire such property; and 

(B) that is perfected on or before 30 days after the debtor receives possession of such property; 

(4) to or for the benefit of a creditor, to the extent that, after 

such transfer, such creditor gave new value to or for the benefit of the debtor— 

(A) not secured by an otherwise unavoidable security interest; and 

(B) on account of which new value the debtor did not 

make an otherwise unavoidable transfer to or for the benefit of such creditor; 

(5) that creates a perfected security interest in inventory or 

a receivable or the proceeds of either, except to the extent that 

the aggregate of all such transfers to the transferee caused a 

reduction, as of the date of the filing of the petition and to the 

prejudice of other creditors holding unsecured claims, of any 

amount by which the debt secured by such security interest exceeded the value of all security interests for such debt on the 

later of— 


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(A)(i) with respect to a transfer to which subsection 

(b)(4)(A) of this section applies, 90 days before the date of 

the filing of the petition; or 

(ii) with respect to a transfer to which subsection 

(b)(4)(B) of this section applies, one year before the 

date of the filing of the petition; or 

(B) the date on which new value was first given under 

the security agreement creating such security interest; 

(6) that is the fixing of a statutory lien that is not avoidable 

under section 545 of this title; 

(7) to the extent such transfer was a bona fide payment of 

a debt for a domestic support obligation; 

(8) if, in a case filed by an individual debtor whose debts are 

primarily consumer debts, the aggregate value of all property 

that constitutes or is affected by such transfer is less than 

$600; or 

(9) if, in a case filed by a debtor whose debts are not primarily consumer debts, the aggregate value of all property that 

constitutes or is affected by such transfer is less than $5,000. 

(d) The trustee may avoid a transfer of an interest in property 

of the debtor transferred to or for the benefit of a surety to secure 

reimbursement of such a surety that furnished a bond or other obligation to dissolve a judicial lien that would have been avoidable 

by the trustee under subsection (b) of this section. The liability of 

such surety under such bond or obligation shall be discharged to 

the extent of the value of such property recovered by the trustee 

or the amount paid to the trustee. 

(e)(1) For the purposes of this section— 

(A) a transfer of real property other than fixtures, but 

including the interest of a seller or purchaser under a contract for the sale of real property, is perfected when a bona 

fide purchaser of such property from the debtor against 

whom applicable law permits such transfer to be perfected 

cannot acquire an interest that is superior to the interest 

of the transferee; and 

(B) a transfer of a fixture or property other than real 

property is perfected when a creditor on a simple contract 

cannot acquire a judicial lien that is superior to the interest of the transferee. 

(2) For the purposes of this section, except as provided in 

paragraph (3) of this subsection, a transfer is made— 

(A) at the time such transfer takes effect between the transferor and the transferee, if such transfer is perfected at, or 

within 30 days after, such time, except as provided in subsection (c)(3)(B); 

(B) at the time such transfer is perfected, if such transfer is 

perfected after such 30 days; or 

(C) immediately before the date of the filing of the petition, 

if such transfer is not perfected at the later of— 

(i) the commencement of the case; or 

(ii) 30 days after such transfer takes effect between the 

transferor and the transferee. 

(3) For the purposes of this section, a transfer is not made 

until the debtor has acquired rights in the property transferred. 


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(f) For the purposes of this section, the debtor is presumed to 

have been insolvent on and during the 90 days immediately preceding the date of the filing of the petition. 

(g) For the purposes of this section, the trustee has the burden 

of proving the avoidability of a transfer under subsection (b) of this 

section, and the creditor or party in interest against whom recovery 

or avoidance is sought has the burden of proving the nonavoidability of a transfer under subsection (c) of this section. 

(h) The trustee may not avoid a transfer if such transfer was 

made as a part of an alternative repayment schedule between the 

debtor and any creditor of the debtor created by an approved nonprofit budget and credit counseling agency. 

(i) If the trustee avoids under subsection (b) a transfer made between 90 days and 1 year before the date of the filing of the petition, by the debtor to an entity that is not an insider for the benefit 

of a creditor that is an insider, such transfer shall be considered 

to be avoided under this section only with respect to the creditor 

that is an insider. 

* * * * * * * 

§ 557. Expedited determination of interests in, and abandonment or other disposition of grain assets 

(a) This section applies only in a case concerning a debtor that 

owns or operates a grain storage facility and only with respect to 

grain and the proceeds of grain. This section does not affect the application of any other section of this title to property other than 

grain and proceeds of grain. 

(b) In this section— 

(1) ‘‘grain’’ means wheat, corn, flaxseed, grain sorghum, barley, oats, rye, soybeans, other dry edible beans, or rice; 

(2) ‘‘grain storage facility’’ means a site or physical structure 

regularly used to store grain for producers, or to store grain acquired from producers for resale; and 

(3) ‘‘producer’’ means an entity which engages in the growing 

of grain. 

(c)(1) Notwithstanding sections 362, 363, 365, and 554 of this 

title, on the court’s own motion the court may, and on the request 

of the trustee or an entity that claims an interest in grain or the 

proceeds of grain the court shall, expedite the procedures for the 

determination of interests in and the disposition of grain and the 

proceeds of grain, by shortening to the greatest extent feasible such 

time periods as are otherwise applicable for such procedures and 

by establishing, by order, a timetable having a duration of not to 

exceed 120 days for the completion of the applicable procedure 

specified in subsection (d) of this section. Such time periods and 

such timetable may be modified by the court, for cause, in accordance with subsection (f) of this section. 

(2) The court shall determine the extent to which such time 

periods shall be shortened, based upon— 

(A) any need of an entity claiming an interest in such grain 

or the proceeds of grain for a prompt determination of such interest; 

(B) any need of such entity for a prompt disposition of such 

grain; 

(C) the market for such grain; 


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(D) the conditions under which such grain is stored; 

(E) the costs of continued storage or disposition of such 

grain; 

(F) the orderly administration of the estate; 

(G) the appropriate opportunity for an entity to assert an interest in such grain; and 

(H) such other considerations as are relevant to the need to 

expedite such procedures in the case. 

(d) The procedures that may be expedited under subsection (c) of 

this section include— 

(1) the filing of and response to— 

(A) a claim of ownership; 

(B) a proof of claim; 

(C) a request for abandonment; 

(D) a request for relief from the stay of action against 

property under section 362(a) of this title; 

(E) a request for determination of secured status; 

(F) a request for determination of whether such grain or 

the proceeds of grain— 

(i) is property of the estate; 

(ii) must be turned over to the estate; or 

(iii) may be used, sold, or leased; and 

(G) any other request for determination of an interest in 

such grain or the proceeds of grain; 

(2) the disposition of such grain or the proceeds of grain, before or after determination of interests in such grain or the 

proceeds of grain, by way of— 

(A) sale of such grain; 

(B) abandonment; 

(C) distribution; or 

(D) such other method as is equitable in the case; 

(3) subject to sections 701, 702, 703, 1104, 1183, 1202, and 

1302 of this title, the appointment of a trustee or examiner and 

the retention and compensation of any professional person required to assist with respect to matters relevant to the determination of interests in or disposition of such grain or the proceeds of grain; and 

(4) the determination of any dispute concerning a matter 

specified in paragraph (1), (2), or (3) of this subsection. 

(e)(1) Any governmental unit that has regulatory jurisdiction 

over the operation or liquidation of the debtor or the debtor’s business shall be given notice of any request made or order entered 

under subsection (c) of this section. 

(2) Any such governmental unit may raise, and may appear 

and be heard on, any issue relating to grain or the proceeds 

of grain in a case in which a request is made, or an order is 

entered, under subsection (c) of this section. 

(3) The trustee shall consult with such governmental unit before taking any action relating to the disposition of grain in the 

possession, custody, or control of the debtor or the estate. 

(f) The court may extend the period for final disposition of grain 

or the proceeds of grain under this section beyond 120 days if the 

court finds that— 

(1) the interests of justice so require in light of the complexity of the case; and 


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(2) the interests of those claimants entitled to distribution of 

grain or the proceeds of grain will not be materially injured by 

such additional delay. 

(g) Unless an order establishing an expedited procedure under 

subsection (c) of this section, or determining any interest in or approving any disposition of grain or the proceeds of grain, is stayed 

pending appeal— 

(1) the reversal or modification of such order on appeal does 

not affect the validity of any procedure, determination, or disposition that occurs before such reversal or modification, 

whether or not any entity knew of the pendency of the appeal; 

and 

(2) neither the court nor the trustee may delay, due to the 

appeal of such order, any proceeding in the case in which such 

order is issued. 

(h)(1) The trustee may recover from grain and the proceeds of 

grain the reasonable and necessary costs and expenses allowable 

under section 503(b) of this title attributable to preserving or disposing of grain or the proceeds of grain, but may not recover from 

such grain or the proceeds of grain any other costs or expenses. 

(2) Notwithstanding section 326(a) of this title, the dollar 

amounts of money specified in such section include the value, 

as of the date of disposition, of any grain that the trustee distributes in kind. 

(i) In all cases where the quantity of a specific type of grain held 

by a debtor operating a grain storage facility exceeds ten thousand 

bushels, such grain shall be sold by the trustee and the assets 

thereof distributed in accordance with the provisions of this section. 

* * * * * * * 

CHAPTER 11—REORGANIZATION 

SUBCHAPTER I—OFFICERS AND ADMINISTRATION 

Sec. 

1101. Definitions for this chapter. 

* * * * * * * 

SUBCHAPTER V—SMALL BUSINESS DEBTOR REORGANIZATION

1181. Inapplicability of other sections. 

1182. Definitions. 

1183. Trustee. 

1184. Rights and powers of a debtor in possession. 

1185. Removal of debtor in possession. 

1186. Property of the estate. 

1187. Duties and reporting requirements of debtors. 

1188. Status conference. 

1189. Filing of the plan. 

1190. Contents of plan. 

1191. Confirmation of plan. 

1192. Discharge. 

1193. Modification of plan. 

1194. Payments. 

1195. Transactions with professionals. 

SUBCHAPTER I—OFFICERS AND ADMINISTRATION 

* * * * * * * 


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§ 1102. Creditors’ and equity security holders’ committees 

(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. 

ø(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.¿ 

(3) Unless the court for cause orders otherwise, a committee 

of creditors may not be appointed in a small business case or 

a case under subchapter V of this chapter. 

(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). 

* * * * * * * 


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SUBCHAPTER III—POSTCONFIRMATION MATTERS 

* * * * * * * 

§ 1146. Special tax provisions 

(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 or 1191 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. 

* * * * * * * 

SUBCHAPTER V—SMALL BUSINESS DEBTOR 

REORGANIZATION 

§ 1181. Inapplicability of other sections 

(a) IN GENERAL.—Sections 105(d), 1101(1), 1104, 1105, 1106, 

1107, 1108, 1115, 1116, 1121, 1123(a)(8), 1123(c), 1127, 1129(a)(15), 

1129(b), 1129(c), 1129(e), and 1141(d)(5) of this title do not apply 

in a case under this subchapter. 

(b) COURT AUTHORITY.—Unless the court for cause orders otherwise, paragraphs (1), (2), and (4) of section 1102(a) and sections 

1102(b), 1103, and 1125 of this title do not apply in a case under 

this subchapter. 

(c) SPECIAL RULE FOR DISCHARGE.—If a plan is confirmed under 

section 1191(b) of this title, section 1141(d) of this title shall not 

apply, except as provided in section 1192 of this title. 

§ 1182. Definitions 

In this subchapter: 

(1) DEBTOR.—The term ‘‘debtor’’ means a small business debtor. 

(2) DEBTOR IN POSSESSION.—The term ‘‘debtor in possession’’ 

means the debtor, unless removed as debtor in possession under 

section 1185(a) of this title. 

§ 1183. Trustee 

(a) IN GENERAL.—If the United States trustee has appointed an 

individual under section 586(b) of title 28 to serve as standing trustee in cases under this subchapter, and if such individual qualifies 

as a trustee under section 322 of this title, then that individual 

shall serve as trustee in any case under this subchapter. Otherwise, 

the United States trustee shall appoint 1 disinterested person to 

serve as trustee in the case or the United States trustee may serve 

as trustee in the case, as necessary. 

(b) DUTIES.—The trustee shall— 


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(1) perform the duties specified in paragraphs (2), (5), (6), (7), 

and (9) of section 704(a) of this title; 

(2) perform the duties specified in paragraphs (3), (4), and (7) 

of section 1106(a) of this title, if the court, for cause and on request of a party in interest, the trustee, or the United States 

trustee, so orders; 

(3) appear and be heard at the status conference under section 1188 of this title and any hearing that concerns— 

(A) the value of property subject to a lien; 

(B) confirmation of a plan filed under this subchapter; 

(C) modification of the plan after confirmation; or 

(D) the sale of property of the estate; 

(4) ensure that the debtor commences making timely payments required by a plan confirmed under this subchapter; 

(5) if the debtor ceases to be a debtor in possession, perform 

the duties specified in section 704(a)(8) and paragraphs (1), (2), 

and (6) of section 1106(a) of this title, including operating the 

business of the debtor; 

(6) if there is a claim for a domestic support obligation with 

respect to the debtor, perform the duties specified in section 

704(c) of this title; and 

(7) facilitate the development of a consensual plan of reorganization. 

(c) TERMINATION OF TRUSTEE SERVICE.— 

(1) IN GENERAL.—If the plan of the debtor is confirmed under 

section 1191(a) of this title, the service of the trustee in the case 

shall terminate when the plan has been substantially consummated, except that the United States trustee may reappoint 

a trustee as needed for performance of duties under subsection 

(b)(3)(C) of this section and section 1185(a) of this title. 

(2) SERVICE OF NOTICE OF SUBSTANTIAL CONSUMMATION.— 

Not later than 14 days after the plan of the debtor is substantially consummated, the debtor shall file with the court and 

serve on the trustee, the United States trustee, and all parties 

in interest notice of such substantial consummation. 

§ 1184. Rights and powers of a debtor in possession 

Subject to such limitations or conditions as the court may prescribe, 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 functions and duties, except the duties 

specified in paragraphs (2), (3), and (4) of section 1106(a) of this 

title, of a trustee serving in a case under this chapter, including operating the business of the debtor. 

§ 1185. Removal of debtor in possession 

(a) IN GENERAL.—On request of a party in interest, and after notice and a hearing, the court shall order that the debtor shall not 

be a debtor in possession for cause, including fraud, dishonesty, incompetence, or gross mismanagement of the affairs of the debtor, either before or after the date of commencement of the case, or for failure to perform the obligations of the debtor under a plan confirmed 

under this subchapter. 


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(b) REINSTATEMENT.—On request of a party in interest, and after 

notice and a hearing, the court may reinstate the debtor in possession. 

§ 1186. Property of the estate 

(a) INCLUSIONS.—If a plan is confirmed under section 1191(b) of 

this title, property of the estate includes, in addition to the property 

specified in section 541 of this title— 

(1) all property of the kind specified in that section that the 

debtor acquires after the date of commencement of the case but 

before the case is closed, dismissed, or converted to a case under 

chapter 7, 12, or 13 of this title, whichever occurs first; and 

(2) earnings from services performed by the debtor after the 

date of commencement of the case but before the case is closed, 

dismissed, or converted to a case under chapter 7, 12, or 13 of 

this title, whichever occurs first. 

(b) DEBTOR REMAINING IN POSSESSION.—Except as provided in 

section 1185 of this title, a plan confirmed under this subchapter, 

or an order confirming a plan under this subchapter, the debtor 

shall remain in possession of all property of the estate. 

§ 1187. Duties and reporting requirements of debtors 

(a) FILING REQUIREMENTS.—Upon electing to be a debtor under 

this subchapter, the debtor shall file the documents required by subparagraphs (A) and (B) of section 1116(1) of this title. 

(b) OTHER APPLICABLE PROVISIONS.—A debtor, in addition to the 

duties provided in this title and as otherwise required by law, shall 

comply with the requirements of section 308 and paragraphs (2), 

(3), (4), (5), (6), and (7) of section 1116 of this title. 

(c) SEPARATE DISCLOSURE STATEMENT EXEMPTION.—If the court 

orders under section 1181(b) of this title that section 1125 of this 

title applies, section 1125(f) of this title shall apply. 

§ 1188. Status conference 

(a) IN GENERAL.—Except as provided in subsection (b), not later 

than 60 days after the entry of the order for relief under this chapter, the court shall hold a status conference to further the expeditious and economical resolution of a case under this subchapter. 

(b) EXCEPTION.—The court may extend the period of time for holding a status conference under subsection (a) if the need for an extension is attributable to circumstances for which the debtor should not 

justly be held accountable. 

(c) REPORT.—Not later than 14 days before the date of the status 

conference under subsection (a), the debtor shall file with the court 

and serve on the trustee and all parties in interest a report that details the efforts the debtor has undertaken and will undertake to attain a consensual plan of reorganization. 

§ 1189. Filing of the plan 

(a) WHO MAY FILE A PLAN.—Only the debtor may file a plan 

under this subchapter. 

(b) DEADLINE.—The debtor shall file a plan not later than 90 

days after the order for relief under this chapter, except that the 

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utable to circumstances for which the debtor should not justly be 

held accountable. 

§ 1190. Contents of plan 

A plan filed under this subchapter— 

(1) shall include— 

(A) a brief history of the business operations of the debtor; 

(B) a liquidation analysis; and 

(C) projections with respect to the ability of the debtor to 

make payments under the proposed plan of reorganization; 

(2) shall provide for the submission of all or such portion of 

the future earnings or other future income of the debtor to the 

supervision and control of the trustee as is necessary for the execution of the plan; and 

(3) notwithstanding section 1123(b)(5) of this title, may modify the rights of the holder of a claim secured only by a security 

interest in real property that is the principal residence of the 

debtor if the new value received in connection with the granting 

of the security interest was— 

(A) not used primarily to acquire the real property; and 

(B) used primarily in connection with the small business 

of the debtor. 

§ 1191. Confirmation of plan 

(a) TERMS.—The court shall confirm a plan under this subchapter 

only if all of the requirements of section 1129(a), other than paragraph (15) of that section, of this title are met. 

(b) EXCEPTION.—Notwithstanding section 510(a) of this title, if all 

of the applicable requirements of section 1129(a) of this title, other 

than paragraphs (8), (10), and (15) of that section, are met with respect to a plan, the court, on request of the debtor, shall confirm the 

plan notwithstanding the requirements of such paragraphs 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. 

(c) RULE OF CONSTRUCTION.—For purposes of this section, the 

condition that a plan be fair and equitable with respect to each 

class of claims or interests includes the following requirements: 

(1) With respect to a class of secured claims, the plan meets 

the requirements of section 1129(b)(2)(A) of this title. 

(2) As of the effective date of the plan— 

(A) the plan provides that all of the projected disposable 

income of the debtor to be received in the 3-year period, or 

such longer period not to exceed 5 years as the court may 

fix, beginning on the date that the first payment is due 

under the plan will be applied to make payments under the 

plan; or 

(B) the value of the property to be distributed under the 

plan in the 3-year period, or such longer period not to exceed 5 years as the court may fix, beginning on the date on 

which the first distribution is due under the plan is not less 

than the projected disposable income of the debtor. 

(3)(A)(i) The debtor will be able to make all payments under 

the plan; or 


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(ii) there is a reasonable likelihood that the debtor will be 

able to make all payments under the plan; and 

(B) the plan provides appropriate remedies, which may include the liquidation of nonexempt assets, to protect the holders 

of claims or interests in the event that the payments are not 

made. 

(d) DISPOSABLE INCOME.—For purposes of this section, the term 

‘‘disposable income’’ means the income that is received by the debtor 

and that is not reasonably necessary to be expended— 

(1) for— 

(A) the maintenance or support of the debtor or a dependent of the debtor; or 

(B) a domestic support obligation that first becomes payable after the date of the filing of the petition; or 

(2) for the payment of expenditures necessary for the continuation, preservation, or operation of the business of the debtor. 

(e) SPECIAL RULE.—Notwithstanding section 1129(a)(9)(A) of this 

title, a plan that provides for the payment through the plan of a 

claim of a kind specified in paragraph (2) or (3) of section 507(a) 

of this title may be confirmed under subsection (b) of this section. 

§ 1192. Discharge 

If the plan of the debtor is confirmed under section 1191(b) of this 

title, as soon as practicable after completion by the debtor of all payments due within the first 3 years of the plan, or such longer period 

not to exceed 5 years as the court may fix, unless the court approves 

a written waiver of discharge executed by the debtor after the order 

for relief under this chapter, the court shall grant the debtor a discharge of all debts provided in section 1141(d)(1)(A) of this title, 

and all other debts allowed under section 503 of this title and provided for in the plan, except any debt— 

(1) on which the last payment is due after the first 3 years 

of the plan, or such other time not to exceed 5 years fixed by 

the court; or 

(2) of the kind specified in section 523(a) of this title. 

§ 1193. Modification of plan 

(a) MODIFICATION BEFORE CONFIRMATION.—The debtor may modify a plan at any time before confirmation, but may not modify the 

plan so that the plan as modified fails to meet the requirements of 

sections 1122 and 1123 of this title, with the exception of subsection 

(a)(8) of such section 1123. After the modification is filed with the 

court, the plan as modified becomes the plan. 

(b) MODIFICATION AFTER CONFIRMATION.—If a plan has been confirmed under section 1191(a) of this title, the debtor may modify the 

plan at any time after confirmation of the plan and before substantial consummation of the plan, but may not modify the plan so that 

the plan as modified fails to meet the requirements of sections 1122 

and 1123 of this title, with the exception of subsection (a)(8) of such 

section 1123. The plan, as modified under this subsection, becomes 

the plan only if circumstances warrant the modification and the 

court, after notice and a hearing, confirms the plan as modified 

under section 1191(a) of this title. 

(c) CERTAIN OTHER MODIFICATIONS.—If a plan has been confirmed under section 1191(b) of this title, the debtor may modify the 


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plan at any time within 3 years, or such longer time not to exceed 

5 years, as fixed by the court, but may not modify the plan so that 

the plan as modified fails to meet the requirements of section 

1191(b) of this title. The 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 1191(b) of this title. 

(d) HOLDERS OF A CLAIM OR INTEREST.—If a plan has been confirmed under section 1191(a) of this title, any holder of a claim or 

interest that has accepted or rejected the plan is deemed to have accepted or rejected, as the case may be, the plan as modified, unless, 

within the time fixed by the court, such holder changes the previous 

acceptance or rejection of the holder. 

§ 1194. Payments 

(a) RETENTION AND DISTRIBUTION BY TRUSTEE.—Payments and 

funds received by the trustee shall be retained by the trustee until 

confirmation or denial of confirmation of a plan. If a plan is confirmed, the trustee shall distribute any such payment in accordance 

with the plan. If a plan is not confirmed, the trustee shall return 

any such payments to the debtor after deducting— 

(1) any unpaid claim allowed under section 503(b) of this 

title; 

(2) any payment made for the purpose of providing adequate 

protection of an interest in property due to the holder of a secured claim; and 

(3) any fee owing to the trustee. 

(b) OTHER PLANS.—If a plan is confirmed under section 1191(b) 

of this title, except as otherwise provided in the plan or in the order 

confirming the plan, the trustee shall make payments to creditors 

under the plan. 

(c) PAYMENTS PRIOR TO CONFIRMATION.—Prior to confirmation of 

a plan, the court, after notice and a hearing, may authorize the 

trustee to make payments to the holder of a secured claim for the 

purpose of providing adequate protection of an interest in property. 

§ 1195. Transactions with professionals 

Notwithstanding section 327(a) of this title, a person is not disqualified for employment under section 327 of this title, by a debtor 

solely because that person holds a claim of less than $10,000 that 

arose prior to commencement of the case. 

* * * * * * * 

TITLE 28, UNITED STATES CODE 

* * * * * * * 

PART II—DEPARTMENT OF JUSTICE 

* * * * * * * 

CHAPTER 39—UNITED STATES TRUSTEES 

* * * * * * * 


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§ 586. Duties; supervision by Attorney General 

(a) Each United States trustee, within the region for which such 

United States trustee is appointed, shall— 

(1) establish, maintain, and supervise a panel of private 

trustees that are eligible and available to serve as trustees in 

cases under chapter 7 of title 11; 

(2) serve as and perform the duties of a trustee in a case 

under title 11 when required under title 11 to serve as trustee 

in such a case; 

(3) supervise the administration of cases and trustees in 

cases under chapter 7, 11 (including subchapter V of chapter 

11), 12, 13, or 15 of title 11 by, whenever the United States 

trustee considers it to be appropriate— 

(A)(i) reviewing, in accordance with procedural guidelines adopted by the Executive Office of the United States 

Trustee (which guidelines shall be applied uniformly by 

the United States trustee except when circumstances warrant different treatment), applications filed for compensation and reimbursement under section 330 of title 11; and 

(ii) filing with the court comments with respect to 

such application and, if the United States Trustee considers it to be appropriate, objections to such application; 

(B) monitoring plans and disclosure statements filed in 

cases under chapter 11 of title 11 and filing with the court, 

in connection with hearings under sections 1125 and 1128 

of such title, comments with respect to such plans and disclosure statements; 

(C) monitoring plans filed under chapters 12 and 13 of 

title 11 and filing with the court, in connection with hearings under sections 1224, 1229, 1324, and 1329 of such 

title, comments with respect to such plans; 

(D) taking such action as the United States trustee 

deems to be appropriate to ensure that all reports, schedules, and fees required to be filed under title 11 and this 

title by the debtor are properly and timely filed; 

(E) monitoring creditors’ committees appointed under 

title 11; 

(F) notifying the appropriate United States attorney of 

matters which relate to the occurrence of any action which 

may constitute a crime under the laws of the United 

States and, on the request of the United States attorney, 

assisting the United States attorney in carrying out prosecutions based on such action; 

(G) monitoring the progress of cases under title 11 and 

taking such actions as the United States trustee deems to 

be appropriate to prevent undue delay in such progress; 

(H) in small business cases (as defined in section 101 of 

title 11), performing the additional duties specified in title 

11 pertaining to such cases; and 

(I) monitoring applications filed under section 327 of 

title 11 and, whenever the United States trustee deems it 

to be appropriate, filing with the court comments with respect to the approval of such applications; 


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(4) deposit or invest under section 345 of title 11 money received as trustee in cases under title 11; 

(5) perform the duties prescribed for the United States trustee under title 11 and this title, and such duties consistent with 

title 11 and this title as the Attorney General may prescribe; 

(6) make such reports as the Attorney General directs, including the results of audits performed under section 603(a) of 

the Bankruptcy Abuse Prevention and Consumer Protection 

Act of 2005; 

(7) in each of such small business cases— 

(A) conduct an initial debtor interview as soon as practicable after the date of the order for relief but before the 

first meeting scheduled under section 341(a) of title 11, at 

which time the United States trustee shall— 

(i) begin to investigate the debtor’s viability; 

(ii) inquire about the debtor’s business plan; 

(iii) explain the debtor’s obligations to file monthly 

operating reports and other required reports; 

(iv) attempt to develop an agreed scheduling order; 

and 

(v) inform the debtor of other obligations; 

(B) if determined to be appropriate and advisable, visit 

the appropriate business premises of the debtor, ascertain 

the state of the debtor’s books and records, and verify that 

the debtor has filed its tax returns; and 

(C) review and monitor diligently the debtor’s activities, 

to determine as promptly as possible whether the debtor 

will be unable to confirm a plan; and 

(8) in any case in which the United States trustee finds material grounds for any relief under section 1112 of title 11, 

apply promptly after making that finding to the court for relief. 

(b) If the number of cases under subchapter V of chapter 11 or 

chapter 12 or 13 of title 11 commenced in a particular region so 

warrants, the United States trustee for such region may, subject to 

the approval of the Attorney General, appoint one or more individuals to serve as standing trustee, or designate one or more assistant United States trustees to serve in cases under such chapter. 

The United States trustee for such region shall supervise any such 

individual appointed as standing trustee in the performance of the 

duties of standing trustee. 

(c) Each United States trustee shall be under the general supervision of the Attorney General, who shall provide general coordination and assistance to the United States trustees. 

(d)(1) The Attorney General shall prescribe by rule qualifications 

for membership on the panels established by United States trustees under paragraph (a)(1) of this section, and qualifications for appointment under subsection (b) of this section to serve as standing 

trustee in cases under subchapter V of chapter 11 or chapter 12 or 

13 of title 11. The Attorney General may not require that an individual be an attorney in order to qualify for appointment under 

subsection (b) of this section to serve as standing trustee in cases 

under subchapter V of chapter 11 or chapter 12 or 13 of title 11. 

(2) A trustee whose appointment under subsection (a)(1) or under 

subsection (b) is terminated or who ceases to be assigned to cases 

filed under title 11, United States Code, may obtain judicial review 


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of the final agency decision by commencing an action in the district 

court of the United States for the district for which the panel to 

which the trustee is appointed under subsection (a)(1), or in the 

district court of the United States for the district in which the 

trustee is appointed under subsection (b) resides, after first exhausting all available administrative remedies, which if the trustee 

so elects, shall also include an administrative hearing on the 

record. Unless the trustee elects to have an administrative hearing 

on the record, the trustee shall be deemed to have exhausted all 

administrative remedies for purposes of this paragraph if the agency fails to make a final agency decision within 90 days after the 

trustee requests administrative remedies. The Attorney General 

shall prescribe procedures to implement this paragraph. The decision of the agency shall be affirmed by the district court unless it 

is unreasonable and without cause based on the administrative 

record before the agency. 

(e)(1) The Attorney General, after consultation with a United 

States trustee that has appointed an individual under subsection 

(b) of this section to serve as standing trustee in cases under subchapter V of chapter 11 or chapter 12 or 13 of title 11, shall fix— 

(A) a maximum annual compensation for such individual 

consisting of— 

(i) an amount not to exceed the highest annual rate of 

basic pay in effect for level V of the Executive Schedule; 

and 

(ii) the cash value of employment benefits comparable to 

the employment benefits provided by the United States to 

individuals who are employed by the United States at the 

same rate of basic pay to perform similar services during 

the same period of time; and 

(B) a percentage fee not to exceed— 

(i) in the case of a debtor who is not a family farmer, ten 

percent; or 

(ii) in the case of a debtor who is a family farmer, the 

sum of— 

(I) not to exceed ten percent of the payments made 

under the plan of such debtor, with respect to payments in an aggregate amount not to exceed $450,000; 

and 

(II) three percent of payments made under the plan 

of such debtor, with respect to payments made after 

the aggregate amount of payments made under the 

plan exceeds $450,000; 

based on such maximum annual compensation and the actual, necessary expenses incurred by such individual as standing trustee. 

(2) Such individual shall collect such percentage fee from all payments received by such individual under plans in the cases under 

subchapter V of chapter 11 or chapter 12 or 13 of title 11 for which 

such individual serves as standing trustee. Such individual shall 

pay to the United States trustee, and the United States trustee 

shall deposit in the United States Trustee System Fund— 

(A) any amount by which the actual compensation of such individual exceeds 5 per centum upon all payments received 

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ter 12 or 13 of title 11 for which such individual serves as 

standing trustee; and 

(B) any amount by which the percentage for all such cases 

exceeds— 

(i) such individual’s actual compensation for such cases, 

as adjusted under subparagraph (A) of paragraph (1); plus 

(ii) the actual, necessary expenses incurred by such individual as standing trustee in such cases. Subject to the approval of the Attorney General, any or all of the interest 

earned from the deposit of payments under plans by such 

individual may be utilized to pay actual, necessary expenses without regard to the percentage limitation contained in subparagraph (d)(1)(B) of this section. 

(3) After first exhausting all available administrative remedies, an individual appointed under subsection (b) may obtain 

judicial review of final agency action to deny a claim of actual, 

necessary expenses under this subsection by commencing an 

action in the district court of the United States for the district 

where the individual resides. The decision of the agency shall 

be affirmed by the district court unless it is unreasonable and 

without cause based upon the administrative record before the 

agency. 

(4) The Attorney General shall prescribe procedures to implement this subsection. 

(5) In the event that the services of the trustee in a case under 

subchapter V of chapter 11 of title 11 are terminated by dismissal 

or conversion of the case, or upon substantial consummation of a 

plan under section 1183(c)(1) of that title, the court shall award 

compensation to the trustee consistent with services performed by 

the trustee and the limits on the compensation of the trustee established pursuant to paragraph (1) of this subsection. 

(f)(1) The United States trustee for each district is authorized to 

contract with auditors to perform audits in cases designated by the 

United States trustee, in accordance with the procedures established under section 603(a) of the Bankruptcy Abuse Prevention 

and Consumer Protection Act of 2005. 

(2)(A) The report of each audit referred to in paragraph (1) 

shall be filed with the court and transmitted to the United 

States trustee. Each report shall clearly and conspicuously 

specify any material misstatement of income or expenditures 

or of assets identified by the person performing the audit. In 

any case in which a material misstatement of income or expenditures or of assets has been reported, the clerk of the district court (or the clerk of the bankruptcy court if one is certified under section 156(b) of this title) shall give notice of the 

misstatement to the creditors in the case. 

(B) If a material misstatement of income or expenditures or of 

assets is reported, the United States trustee shall— 

(i) report the material misstatement, if appropriate, to the 

United States Attorney pursuant to section 3057 of title 18; 

and 

(ii) if advisable, take appropriate action, including but not 

limited to commencing an adversary proceeding to revoke the 

debtor’s discharge pursuant to section 727(d) of title 11. 

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§ 589b. Bankruptcy data 

(a) RULES.—The Attorney General shall, within a reasonable 

time after the effective date of this section, issue rules requiring 

uniform forms for (and from time to time thereafter to appropriately modify and approve)— 

(1) final reports by trustees in cases under subchapter V of 

chapter 11 and chapters 7, 12, and 13 of title 11; and 

(2) periodic reports by debtors in possession or trustees in 

cases under chapter 11 of title 11. 

(b) REPORTS.—Each report referred to in subsection (a) shall be 

designed (and the requirements as to place and manner of filing 

shall be established) so as to facilitate compilation of data and 

maximum possible access of the public, both by physical inspection 

at one or more central filing locations, and by electronic access 

through the Internet or other appropriate media. 

(c) REQUIRED INFORMATION.—The information required to be filed 

in the reports referred to in subsection (b) shall be that which is 

in the best interests of debtors and creditors, and in the public interest in reasonable and adequate information to evaluate the efficiency and practicality of the Federal bankruptcy system. In 

issuing rules proposing the forms referred to in subsection (a), the 

Attorney General shall strike the best achievable practical balance 

between— 

(1) the reasonable needs of the public for information about 

the operational results of the Federal bankruptcy system; 

(2) economy, simplicity, and lack of undue burden on persons 

with a duty to file reports; and 

(3) appropriate privacy concerns and safeguards. 

(d) FINAL REPORTS.—The uniform forms for final reports required 

under subsection (a) for use by trustees under subchapter V of 

chapter 11 and chapters 7, 12, and 13 of title 11 shall, in addition 

to such other matters as are required by law or as the Attorney 

General in the discretion of the Attorney General shall propose, include with respect to a case under such title— 

(1) information about the length of time the case was pending; 

(2) assets abandoned; 

(3) assets exempted; 

(4) receipts and disbursements of the estate; 

(5) expenses of administration, including for use under section 707(b), actual costs of administering cases under subchapter V of chapter 11 and chapter 13 of title 11; 

(6) claims asserted; 

(7) claims allowed; and 

(8) distributions to claimants and claims discharged without 

payment, 

in each case by appropriate category and, in cases under subchapter V of chapter 11 and chapters 12 and 13 of title 11, date 

of confirmation of the plan, each modification thereto, and defaults 

by the debtor in performance under the plan. 

(e) PERIODIC REPORTS.—The uniform forms for periodic reports 

required under subsection (a) for use by trustees or debtors in possession under chapter 11 of title 11 shall, in addition to such other 

matters as are required by law or as the Attorney General in the 

discretion of the Attorney General shall propose, include— 


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(1) information about the industry classification, published 

by the Department of Commerce, for the businesses conducted 

by the debtor; 

(2) length of time the case has been pending; 

(3) number of full-time employees as of the date of the order 

for relief and at the end of each reporting period since the case 

was filed; 

(4) cash receipts, cash disbursements and profitability of the 

debtor for the most recent period and cumulatively since the 

date of the order for relief; 

(5) compliance with title 11, whether or not tax returns and 

tax payments since the date of the order for relief have been 

timely filed and made; 

(6) all professional fees approved by the court in the case for 

the most recent period and cumulatively since the date of the 

order for relief (separately reported, for the professional fees 

incurred by or on behalf of the debtor, between those that 

would have been incurred absent a bankruptcy case and those 

not); and 

(7) plans of reorganization filed and confirmed and, with respect thereto, by class, the recoveries of the holders, expressed 

in aggregate dollar values and, in the case of claims, as a percentage of total claims of the class allowed. 

* * * * * * * 

PART IV—JURISDICTION AND VENUE 

* * * * * * * 

CHAPTER 87—DISTRICT COURTS; VENUE 

* * * * * * * 

§ 1409. Venue of proceedings arising under title 11 or arising 

in or related to cases under title 11 

(a) Except as otherwise provided in subsections (b) and (d), a proceeding arising under title 11 or arising in or related to a case 

under title 11 may be commenced in the district court in which 

such case is pending. 

(b) Except as provided in subsection (d) of this section, a trustee 

in a case under title 11 may commence a proceeding arising in or 

related to such case to recover a money judgment of or property 

worth less than $1,000 or a consumer debt of less than $15,000, or 

a debt (excluding a consumer debt) against a noninsider of less 

than ø$10,000¿ $25,000, only in the district court for the district 

in which the defendant resides. 

(c) Except as provided in subsection (b) of this section, a trustee 

in a case under title 11 may commence a proceeding arising in or 

related to such case as statutory successor to the debtor or creditors under section 541 or 544(b) of title 11 in the district court for 

the district where the State or Federal court sits in which, under 

applicable nonbankruptcy venue provisions, the debtor or creditors, 

as the case may be, may have commenced an action on which such 

proceeding is based if the case under title 11 had not been commenced. 


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(d) A trustee may commence a proceeding arising under title 11 

or arising in or related to a case under title 11 based on a claim 

arising after the commencement of such case from the operation of 

the business of the debtor only in the district court for the district 

where a State or Federal court sits in which, under applicable nonbankruptcy venue provisions, an action on such claim may have 

been brought. 

(e) A proceeding arising under title 11 or arising in or related to 

a case under title 11, based on a claim arising after the commencement of such case from the operation of the business of the debtor, 

may be commenced against the representative of the estate in such 

case in the district court for the district where the State or Federal 

court sits in which the party commencing such proceeding may, 

under applicable nonbankruptcy venue provisions, have brought an 

action on such claim, or in the district court in which such case is 

pending. 

* * * * * * * 

PART V—PROCEDURE 

* * * * * * * 

CHAPTER 123—FEES AND COSTS 

* * * * * * * 

§ 1930. Bankruptcy fees 

(a) The parties commencing a case under title 11 shall pay to the 

clerk of the district court or the clerk of the bankruptcy court, if 

one has been certified pursuant to section 156(b) of this title, the 

following filing fees: 

(1) For a case commenced under— 

(A) chapter 7 of title 11, $245, and 

(B) chapter 13 of title 11, $235. 

(2) For a case commenced under chapter 9 of title 11, equal 

to the fee specified in paragraph (3) for filing a case under 

chapter 11 of title 11. The amount by which the fee payable 

under this paragraph exceeds $300 shall be deposited in the 

fund established under section 1931 of this title. 

(3) For a case commenced under chapter 11 of title 11 that 

does not concern a railroad, as defined in section 101 of title 

11, $1,167. 

(4) For a case commenced under chapter 11 of title 11 concerning a railroad, as so defined, $1,000. 

(5) For a case commenced under chapter 12 of title 11, $200. 

(6)(A) Except as provided in subparagraph (B), in addition to 

the filing fee paid to the clerk, a quarterly fee shall be paid to 

the United States trustee, for deposit in the Treasury, in each 

case under chapter 11 of title 11, other than under subchapter 

V, for each quarter (including any fraction thereof) until the 

case is converted or dismissed, whichever occurs first. The fee 

shall be $325 for each quarter in which disbursements total 

less than $15,000; $650 for each quarter in which disbursements total $15,000 or more but less than $75,000; $975 for 

each quarter in which disbursements total $75,000 or more but 


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less than $150,000; $1,625 for each quarter in which disbursements total $150,000 or more but less than $225,000; $1,950 

for each quarter in which disbursements total $225,000 or 

more but less than $300,000; $4,875 for each quarter in which 

disbursements total $300,000 or more but less than $1,000,000; 

$6,500 for each quarter in which disbursements total 

$1,000,000 or more but less than $2,000,000; $9,750 for each 

quarter in which disbursements total $2,000,000 or more but 

less than $3,000,000; $10,400 for each quarter in which disbursements total $3,000,000 or more but less than $5,000,000; 

$13,000 for each quarter in which disbursements total 

$5,000,000 or more but less than $15,000,000; $20,000 for each 

quarter in which disbursements total $15,000,000 or more but 

less than $30,000,000; $30,000 for each quarter in which disbursements total more than $30,000,000. The fee shall be payable on the last day of the calendar month following the calendar quarter for which the fee is owed. 

(B) During each of fiscal years 2018 through 2022, if the balance in the United States Trustee System Fund as of September 30 of the most recent full fiscal year is less than 

$200,000,000, the quarterly fee payable for a quarter in which 

disbursements equal or exceed $1,000,000 shall be the lesser of 

1 percent of such disbursements or $250,000. 

(7) In districts that are not part of a United States trustee 

region as defined in section 581 of this title, the Judicial Conference of the United States may require the debtor in a case 

under chapter 11 of title 11 to pay fees equal to those imposed 

by paragraph (6) of this subsection. Such fees shall be deposited as offsetting receipts to the fund established under section 

1931 of this title and shall remain available until expended. 

An individual commencing a voluntary case or a joint case under 

title 11 may pay such fee in installments. For converting, on request of the debtor, a case under chapter 7, or 13 of title 11, to a 

case under chapter 11 of title 11, the debtor shall pay to the clerk 

of the district court or the clerk of the bankruptcy court, if one has 

been certified pursuant to section 156(b) of this title, a fee of the 

amount equal to the difference between the fee specified in paragraph (3) and the fee specified in paragraph (1). 

(b) The Judicial Conference of the United States may prescribe 

additional fees in cases under title 11 of the same kind as the Judicial Conference prescribes under section 1914(b) of this title. 

(c) Upon the filing of any separate or joint notice of appeal or application for appeal or upon the receipt of any order allowing, or 

notice of the allowance of, an appeal or a writ of certiorari $5 shall 

be paid to the clerk of the court, by the appellant or petitioner. 

(d) Whenever any case or proceeding is dismissed in any bankruptcy court for want of jurisdiction, such court may order the payment of just costs. 

(e) The clerk of the court may collect only the fees prescribed 

under this section. 

(f)(1) Under the procedures prescribed by the Judicial Conference 

of the United States, the district court or the bankruptcy court may 

waive the filing fee in a case under chapter 7 of title 11 for an individual if the court determines that such individual has income less 

than 150 percent of the income official poverty line (as defined by 


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the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget Reconciliation 

Act of 1981) applicable to a family of the size involved and is unable to pay that fee in installments. For purposes of this paragraph, the term ‘‘filing fee’’ means the filing fee required by subsection (a), or any other fee prescribed by the Judicial Conference 

under subsections (b) and (c) that is payable to the clerk upon the 

commencement of a case under chapter 7. 

(2) The district court or the bankruptcy court may waive for 

such debtors other fees prescribed under subsections (b) and 

(c). 

(3) This subsection does not restrict the district court or the 

bankruptcy court from waiving, in accordance with Judicial 

Conference policy, fees prescribed under this section for other 

debtors and creditors. 

* * * * * * * 

Æ 


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