Union Calendar No. 66

106TH CONGRESS

1ST SESSION H. R. 833

[Report No. 106–123]

A BILL

To amend title 11 of the United States Code, and

for other purposes.

APRIL 29, 1999

Reported from the Committee on the Judiciary with an

amendment

APRIL 29, 1999

Referral to the Committee on Banking and Financial

April 29, 1999Services extended for a period ending not later than

APRIL 29, 1999

Committee on Banking and Financial Services disprinted House on the State of the Union and ordered to be charged; committed to the Committee of the Whole
IB

Union Calendar No. 66

106TH CONGRESS

1ST SESSION H. R. 833

[Report No. 106–123]

To amend title 11 of the United States Code, and for other purposes.

IN THE HOUSE OF REPRESENTATIVES

FEBRUARY 24, 1999

Mr. GEKAS (for himself, Mr. BOUCHER, Mr. MCCOLLUM, Mr. MORAN of Virginia, Mr. ARMEY, Mr. FROST, Mr. MENENDEZ, Ms. PRYCE of Ohio,

Mrs. FOWLER, Mr. KENNEDY of Rhode Island, Mr. DREIER, Mr. CANADY

of Florida, Mr. GOODLATTE, Mr. CHABOT, Mr. BRYANT, Mr. ROTHMAN,

Mrs. BONO, Mr. ANDREWS, Mr. BAKER, Mr. BEREUTER, Mr.

CUNNINGHAM, Mr. DOOLEY of California, Ms. DUNN, Ms. HOOLEY of

Oregon, Mrs. KELLY, Mr. LARGENT, Mr. MALONEY of Connecticut, Mr.

RILEY, Mr. ROEMER, Mr. SESSIONS, Mr. SMITH of Washington, Mrs.

TAUSCHER, Ms. VELA ́ZQUEZ, Mr. WYNN, Mr. DAVIS of Virginia, Mr.

DAVIS of Florida, and Mr. HALL of Texas) introduced the following bill;

which was referred to the Committee on the Judiciary, and in addition

to the Committee on Banking and Financial Services, for a period to be

subsequently determined by the Speaker, in each case for consideration

of such provisions as fall within the jurisdiction of the committee concerned

APRIL 29, 1999

Additional sponsors: Mr. COOK, Mr. COOKSEY, Mr. ENGLISH, Mr. GOODE, Mr.

HILL of Montana, Mr. HILLEARY, Mr. METCALF, Mr. OXLEY, Mr.

ROYCE, Mr. SISISKY, Mr. STUMP, Mr. TANNER, Mr. TAUZIN, Mr. BARTON of Texas, Mr. BUYER, Mrs. CAPPS, Mr. EHRLICH, Mr. GRAHAM, Mr.

HUNTER, Mr. SMITH of Michigan, Mr. STRICKLAND, Mr. SUNUNU, Mr.

TALENT, Mr. BLILEY, Mr. BURTON of Indiana, Mr. CRANE, Mr. HOYER,

Mr. PICKETT, Mr. WELLER, Mr. BOEHNER, Mr. BLUMENAUER, Mr.

FOLEY, Mr. HOLDEN, Mr. ADERHOLT, Mr. JENKINS, Mr. CONDIT, Mr.

CRAMER, Mr. DEUTSCH, Mr. LINDER, Mrs. MYRICK, Mr. NETHERCUTT,

Mr. PETERSON of Pennsylvania, Mr. TERRY, Mr. WELDON of Florida,

Mr. BARR of Georgia, Ms. EDDIE BERNICE JOHNSON of Texas, Mr.

KLECZKA, Mrs. NORTHUP, Mr. PASTOR, Ms. BERKLEY, Mr.
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BLAGOJEVICH, Mr. LUCAS of Kentucky, Mr. SENSENBRENNER, Mr.

BURR of North Carolina, Mr. NEY, Mr. SANDLIN, Mr. BOYD, Mr. COLLINS, Mr. GORDON, Mr. MCINTOSH, Mr. SCARBOROUGH, Mr. BARCIA,

Mrs. CHENOWETH, Mr. UPTON, Mr. CAMP, Mr. SIMPSON, Mr. CASTLE,

Mr. JOHN, Mr. NORWOOD, and Mr. SWEENEY

Deleted sponsor: Mr. BRADY of Pennsylvania (added March 23, 1999; deleted

April 28, 1999)

APRIL 29, 1999

Reported from the Committee on the Judiciary with an amendment

[Strike out all after the enacting clause and insert the part printed in italic]

APRIL 29, 1999

Referral to the Committee on Banking and Financial Services extended for

a period ending not later than April 29, 1999

APRIL 29, 1999

Committee on Banking and Financial Services discharged; committed to the

Committee of the Whole House on the State of the Union and ordered

to be printed

[For text of introduced bill, see copy of bill as introduced on February 24, 1999]

A BILL

To amend title 11 of the United States Code, and for other

purposes.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

4 (a) SHORT TITLE.—This Act may be cited as the

5 ‘‘Bankruptcy Reform Act of 1999’’.

6 (b) TABLE OF CONTENTS.—The table of contents of this

7 Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—CONSUMER BANKRUPTCY PROVISIONS

Subtitle A—Needs based bankruptcy

Sec. 101. Conversion.

Sec. 102. Dismissal or conversion.
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Sec. 103. Notice of alternatives.

Sec. 104. Debtor financial management training test program.

Subtitle B—Consumer Bankruptcy Protections

Sec. 105. Definitions.

Sec. 106. Enforcement.

Sec. 107. Sense of the congress.

Sec. 108. Discouraging abusive reaffirmation practices.

Sec. 109. Promotion of alternative dispute resolution.

Sec. 110. Enhanced disclosure for credit extensions secured by a dwelling.

Sec. 111. Dual use debit card.

Sec. 112. Enhanced disclosures under an open-end credit plan.

Sec. 113. Protection of savings earmarked for the postsecondary education of children.

Sec. 114. Effect of discharge.

Sec. 115. Limiting trustee liability.

Sec. 116. Reinforce the fresh start.

Sec. 117. Discouraging bad faith repeat filings.

Sec. 118. Curbing abusive filings.

Sec. 119. Debtor retention of personal property security.

Sec. 120. Relief from the automatic stay when the debtor does not complete intended surrender of consumer debt collateral.

Sec. 121. Giving secured creditors fair treatment in chapter 13.

Sec. 122. Restraining abusive purchases on secured credit.

Sec. 123. Fair valuation of collateral.

Sec. 124. Domiciliary requirements for exemptions.

Sec. 125. Restrictions on certain exempt property obtained through fraud.

Sec. 126. Rolling stock equipment.

Sec. 127. Discharge under chapter 13.

Sec. 128. Bankruptcy judgeships.

Sec. 129. Additional amendments to title 11, United States Code.

Sec. 130. Amendment to section 1325 of title 11, United States Code.

Sec. 131. Application of the codebtor stay only when the stay protects the debtor.

Sec. 132. Adequate protection for investors.

Sec. 133. Limitation on luxury goods.

Sec. 134. Giving debtors the ability to keep leased personal property by assumption.

Sec. 135. Adequate protection of lessors and purchase money secured creditors.

Sec. 136. Automatic stay.

Sec. 137. Extend period between bankruptcy discharges.

Sec. 138. Definition of domestic support obligation.

Sec. 139. Priorities for claims for domestic support obligations.

Sec. 140. Requirements to obtain confirmation and discharge in cases involving

domestic support obligations.

Sec. 141. Exceptions to automatic stay in domestic support obligation proceedings.

Sec. 142. Nondischargeability of certain debts for alimony, maintenance, and

support.

Sec. 143. Continued liability of property.

Sec. 144. Protection of domestic support claims against preferential transfer motions.

Sec. 145. Clarification of meaning of household goods.

Sec. 146. Nondischargeable debts.

Sec. 147. Monetary limitation on certain exempt property.
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Sec. 148. Bankruptcy fees.

Sec. 149. Collection of child support.

Sec. 150. Excluding employee benefit plan participant contributions and other

property from the estate.

Sec. 151. Clarification of postpetition wages and benefits.

Sec. 152. Exceptions to automatic stay in domestic support obligation proceedings.

Sec. 153. Automatic stay inapplicable to certain proceedings against the debtor.

TITLE II—DISCOURAGING BANKRUPTCY ABUSE

Sec. 201. Reenactment of chapter 12.

Sec. 202. Meetings of creditors and equity security holders.

Sec. 203. Protection of retirement savings in bankruptcy.

Sec. 204. Protection of refinance of security interest.

Sec. 205. Executory contracts and unexpired leases.

Sec. 206. Creditors and equity security holders committees.

Sec. 207. Amendment to section 546 of title 11, United States Code.

Sec. 208. Limitation.

Sec. 209. Amendment to section 330(a) of title 11, United States Code.

Sec. 210. Postpetition disclosure and solicitation.

Sec. 211. Preferences.

Sec. 212. Venue of certain proceedings.

Sec. 213. Period for filing plan under chapter 11.

Sec. 214. Fees arising from certain ownership interests.

Sec. 215. Claims relating to insurance deposits in cases ancillary to foreign proceedings.

Sec. 216. Defaults based on nonmonetary obligations.

Sec. 217. Sharing of compensation.

Sec. 218. Priority for administrative expenses.

TITLE III—GENERAL BUSINESS BANKRUPTCY PROVISIONS

Sec. 301. Definition of disinterested person.

Sec. 302. Miscellaneous improvements.

Sec. 303. Extensions.

Sec. 304. Local filing of bankruptcy cases.

Sec. 305. Permitting assumption of contracts.

TITLE IV SMALL BUSINESS BANKRUPTCY PROVISIONS

Sec. 401. Flexible rules for disclosure Statement and plan.

Sec. 402. Definitions.

Sec. 403. Standard form disclosure Statement and plan.

Sec. 404. Uniform national reporting requirements.

Sec. 405. Uniform reporting rules and forms for small business cases.

Sec. 406. Duties in small business cases.

Sec. 407. Plan filing and confirmation deadlines.

Sec. 408. Plan confirmation deadline.

Sec. 409. Prohibition against extension of time.

Sec. 410. Duties of the United States trustee.

Sec. 411. Scheduling conferences.

Sec. 412. Serial filer provisions.

Sec. 413. Expanded grounds for dismissal or conversion and appointment of

trustee or examiner.
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Sec. 414. Study of operation of title 11 of the United States Code with respect

to small businesses.

Sec. 415. Payment of interest.

TITLE V—MUNICIPAL BANKRUPTCY PROVISIONS

Sec. 501. Petition and proceedings related to petition.

Sec. 502. Applicability of other sections to chapter 9.

TITLE VI—STREAMLINING THE BANKRUPTCY SYSTEM

Sec. 601. Creditor representation at first meeting of creditors.

Sec. 602. Audit procedures.

Sec. 603. Giving creditors fair notice in chapter 7 and 13 cases.

Sec. 604. Dismissal for failure to timely file schedules or provide required information.

Sec. 605. Adequate time to prepare for hearing on confirmation of the plan.

Sec. 606. Chapter 13 plans to have a 5-year duration in certain cases.

Sec. 607. Sense of the Congress regarding expansion of rule 9011 of the Federal

Rules of Bankruptcy Procedure.

Sec. 608. Elimination of certain fees payable in chapter 11 bankruptcy cases.

Sec. 609. Study of bankruptcy impact of credit extended to dependent students.

Sec. 610. Prompt relief from stay in individual cases.

Sec. 611. Stopping abusive conversions from chapter 13.

Sec. 612. Bankruptcy appeals.

Sec. 613. GAO study.

TITLE VII—BANKRUPTCY DATA

Sec. 701. Improved bankruptcy statistics.

Sec. 702. Uniform rules for the collection of bankruptcy data.

Sec. 703. Sense of the Congress regarding availability of bankruptcy data.

TITLE VIII—BANKRUPTCY TAX PROVISIONS

Sec. 801. Treatment of certain liens.

Sec. 802. Effective notice to government.

Sec. 803. Notice of request for a determination of taxes.

Sec. 804. Rate of interest on tax claims.

Sec. 805. Tolling of priority of tax claim time periods.

Sec. 806. Priority property taxes incurred.

Sec. 807. Chapter 13 discharge of fraudulent and other taxes.

Sec. 808. Chapter 11 discharge of fraudulent taxes.

Sec. 809. Stay of tax proceedings.

Sec. 810. Periodic payment of taxes in chapter 11 cases.

Sec. 811. Avoidance of statutory tax liens prohibited.

Sec. 812. Payment of taxes in the conduct of business.

Sec. 813. Tardily filed priority tax claims.

Sec. 814. Income tax returns prepared by tax authorities.

Sec. 815. Discharge of the estate’s liability for unpaid taxes.

Sec. 816. Requirement to file tax returns to confirm chapter 13 plans.

Sec. 817. Standards for tax disclosure.

Sec. 818. Setoff of tax refunds.

TITLE IX—ANCILLARY AND OTHER CROSS-BORDER CASES

Sec. 901. Amendment to add chapter 15 to title 11, United States Code.
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Sec. 902. Amendments to other chapters in title 11, United States Code.

TITLE X—FINANCIAL CONTRACT PROVISIONS

Sec. 1001. Treatment of certain agreements by conservators or ––receivers of insured depository institutions.

Sec. 1002. Authority of the corporation with respect to failed and failing institutions.

Sec. 1003. Amendments relating to transfers of qualified financial contracts.

Sec. 1004. Amendments relating to disaffirmance or repudiation of qualified financial contracts.

Sec. 1005. Clarifying amendment relating to master agreements.

Sec. 1006. Federal Deposit Insurance Corporation Improvement Act of 1991.

Sec. 1007. Bankruptcy Code amendments.

Sec. 1008. Recordkeeping requirements.

Sec. 1009. Exemptions from contemporaneous execution –––requirement.

Sec. 1010. Damage measure.

Sec. 1011. Sipc stay.

Sec. 1012. Asset-backed securitizations.

Sec. 1013. Federal Reserve collateral requirements.

Sec. 1014. Effective date; application of –––amendments.

TITLE XI—TECHNICAL CORRECTIONS

Sec. 1101. Definitions.

Sec. 1102. Adjustment of dollar amounts.

Sec. 1103. Extension of time.

Sec. 1104. Technical amendments.

Sec. 1105. Penalty for persons who negligently or fraudulently prepare bankruptcy petitions.

Sec. 1106. Limitation on compensation of professional persons.

Sec. 1107. Special tax provisions.

Sec. 1108. Effect of conversion.

Sec. 1109. Allowance of administrative expenses.

Sec. 1110. Priorities.

Sec. 1111. Exemptions.

Sec. 1112. Exceptions to discharge.

Sec. 1113. Effect of discharge.

Sec. 1114. Protection against discriminatory treatment.

Sec. 1115. Property of the estate.

Sec. 1116. Preferences.

Sec. 1117. Postpetition transactions.

Sec. 1118. Disposition of property of the estate.

Sec. 1119. General provisions.

Sec. 1120. Appointment of elected trustee.

Sec. 1121. Abandonment of railroad line.

Sec. 1122. Contents of plan.

Sec. 1123. Discharge under chapter 12.

Sec. 1124. Bankruptcy cases and proceedings.

Sec. 1125. Knowing disregard of bankruptcy law or rule.

Sec. 1126. Transfers made by nonprofit charitable corporations.

Sec. 1127. Prohibition on certain actions for failure to incur finance charges.

Sec. 1128. Protection of valid purchase money security interests.

Sec. 1129. Trustees.
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TITLE XII—GENERAL EFFECTIVE DATE; APPLICATION OF

AMENDMENTS

Sec. 1201. Effective date; application of amendments.

1 TITLE I—CONSUMER

2 BANKRUPTCY PROVISIONS

3 Subtitle A—Needs based

4 bankruptcy

5 SEC. 101. CONVERSION.

6 Section 706(c) of title 11, United States Code, is

7 amended by inserting ‘‘or consents to’’ after ‘‘requests’’.

8 SEC. 102. DISMISSAL OR CONVERSION.

9 (a) IN GENERAL.—Section 707 of title 11, United

10 States Code, is amended—

11 (1) by striking the section heading and inserting

12 the following:

13 ‘‘§ 707. Dismissal of a case or conversion to a case

14 under chapter 13’’;

15 and

16 (2) in subsection (b)—

17 (A) by inserting ‘‘(1)’’ after ‘‘(b)’’; and

18 (B) in paragraph (1), as redesignated by

19 subparagraph (A) of this paragraph—

20 (i) in the first sentence—

21 (I) by striking ‘‘but not at the re22 quest or suggestion of’’ and inserting

23 ‘‘the trustee, or’’;
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1 (II) by inserting ‘‘, or, with the

2 debtor’s consent, convert such a case to

3 a case under chapter 13 of this title,’’

4 after ‘‘consumer debts’’; and

5 (III) by striking ‘‘substantial

6 abuse’’ and inserting ‘‘abuse’’; and

7 (ii) by striking the second and third

8 sentences and inserting the following:

9 ‘‘(2)(A)(i) In considering under paragraph (1) whether

10 the granting of relief would be an abuse of the provisions

11 of this chapter, the court shall presume abuse exists if the

12 debtor’s current monthly income less estimated administra13 tive expenses and reasonable attorneys’ fees, and amounts

14 set forth in clauses (ii) for monthly expenses (which shall

15 include, if applicable, the continuation of actual expenses

16 of a dependent child under the age of 18 for tuition, books,

17 and required fees at a private elementary or secondary

18 school, not exceeding $10,000 per year, which amount shall

19 be adjusted pursuant to section 104(b)), (iii) for monthly

20 payments on account of secured debts, and (iv) for monthly

21 unsecured priority debt payments, and multiplied by 60

22 months is not less than $6,000.

23 ‘‘(ii) The debtor’s monthly expenses shall be the debt24 or’s applicable monthly expense amounts specified under

25 the National Standards and Local Standards, and the debt-
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1 or’s applicable monthly expenses for the categories specifi2 cally listed as Other Necessary Expenses issued by the Inter3 nal Revenue Service for the area in which the debtor resides,

4 as in effect on the date of the entry of the order for relief,

5 for the debtor, the dependents of the debtor, and the spouse

6 of the debtor in a joint case, if the spouse is not otherwise

7 a dependent. In addition, if it is demonstrated that it is

8 reasonable and necessary, the debtor may also subtract an

9 allowance of up to 5% of the food and clothing categories

10 as specified by the National Standards issued by the Inter11 nal Revenue Service. Notwithstanding any other provision

12 of this clause, the debtor’s monthly expenses shall not in13 clude any payments for debts.

14 ‘‘(iii) The debtor’s average monthly payments on ac15 count of secured debts shall be calculated as the total of all

16 amounts scheduled as contractually due to secured creditors

17 in each month of the 60 months following the date of the

18 petition, and dividing that total by 60 months.

19 ‘‘(iv) The debtor’s monthly unsecured priority debt

20 payments (including payments for priority child support

21 and alimony claims) shall be calculated as the total amount

22 of unsecured debts entitled to priority, and dividing the

23 total by 60 months.

24 ‘‘(v) For the purposes of this subsection, a family or

25 household shall consist of the debtor, the debtor’s spouse, and
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1 the debtor’s dependents, but not a legally separated spouse

2 unless the spouse files a joint case with the debtor.

3 ‘‘(B) In any proceeding brought under this subsection,

4 the presumption of abuse may be rebutted only by dem5 onstrating extraordinary circumstances that require addi6 tional expenses or adjustment of current monthly income.

7 In order to establish extraordinary circumstances, the debt8 or must itemize each additional expense or adjustment of

9 income and provide documentation for such expenses or ad10 justment of income and a detailed explanation of the ex11 traordinary circumstances which make such expenses or ad12 justment of income necessary and reasonable. The debtor

13 shall attest under oath to the accuracy of any information

14 provided to demonstrate that additional expenses or adjust15 ment to income are required. The presumption of abuse may

16 be rebutted only if such additional expenses or adjustments

17 to income cause the debtor’s current monthly income less

18 estimated administrative expenses and reasonable attor19 neys’ fees, and the amounts set forth in clauses (ii), (iii),

20 and (iv) of subparagraph (A) when multiplied by 60 to be

21 less than $6,000.

22 ‘‘(C) As part of the schedule of current income and

23 expenditures required under section 521 of this title, the

24 debtor shall include a statement of the debtor’s current

25 monthly income, and the calculations which determine
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1 whether a presumption arises under subparagraph (A)(i),

2 showing how each amount is calculated. The bankruptcy

3 rules promulgated under section 2075 of title 28, United

4 States Code, shall prescribe a form for such statement and

5 may provide general rules on its content.

6 ‘‘(D) No judge, United States trustee, panel trustee,

7 bankruptcy administrator or other party in interest shall

8 bring a motion under this paragraph if the debtor and the

9 debtor’s spouse combined, as of the date of the order for re10 lief, have current monthly total income equal to or less than

11 the regional median household monthly income calculated

12 on a semiannual basis for a household of equal size. How13 ever, for a household of more than 4 individuals, the median

14 income shall be that of a household of 4 individuals plus

15 $583 for each additional member of that household.

16 ‘‘(3) In considering under paragraph (1) whether the

17 granting of relief would be an abuse of the provisions of

18 this chapter in a case in which the presumption in para19 graph (2)(A)(i) does not apply or has been rebutted, the

20 court shall consider—

21 ‘‘(A) whether the debtor filed the petition in bad

22 faith; or

23 ‘‘(B) the totality of the circumstances (including

24 whether the debtor seeks to reject a personal services

25 contract and the financial need for such rejection as
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1 sought by the debtor) of the debtor’s financial situa2 tion demonstrates abuse.

3 ‘‘(4)(A) If a panel trustee appointed under section

4 586(a)(1) of title 28 or bankruptcy administrator brings

5 a motion for dismissal or conversion under this subsection

6 and the court grants that motion and finds that the action

7 of the counsel for the debtor in filing under this chapter

8 violated Rule 9011, the court shall assess damages which

9 may include ordering:

10 ‘‘(i) the counsel for the debtor to reimburse the

11 trustee for all reasonable costs in prosecuting the mo12 tion, including reasonable attorneys’ fees.

13 ‘‘(ii) the assessment of an appropriate civil pen14 alty against the counsel for the debtor; and

15 ‘‘(iii) the payment of the civil penalty to the

16 panel trustee, bankruptcy administrator or the

17 United States trustee.

18 ‘‘(B) In the case of a petition filed under sections 301,

19 302, or 303 of this title and supporting lists, schedules and

20 documents filed under section 521(a)(1) of this title, the sig21 nature of an attorney on the petition shall constitute a cer22 tificate that the attorney has—

23 ‘‘(i) performed a reasonable investigation into

24 the circumstances that gave rise to the petition; and
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1 ‘‘(ii) determined that the petition, lists, sched2 ules, and documents—

3 ‘‘(I) are well grounded in fact; and

4 ‘‘(II) are warranted by existing law or a

5 good faith argument for the extension, modifica6 tion, or reversal of existing law and do not con7 stitute an abuse under paragraph (1) of this sub8 section.

9 ‘‘(5) The court may award a debtor all reasonable costs

10 in contesting a motion filed by a party in interest (not in11 cluding a trustee or the United States trustee) under this

12 subsection (including reasonable attorneys’ fees) if—

13 ‘‘(A) the court does not grant the motion; and

14 ‘‘(B) the court finds that—

15 ‘‘(i) the position of the party that brought

16 the motion was not substantially justified; or

17 ‘‘(ii) the party brought the motion solely for

18 the purpose of coercing a debtor into waiving a

19 right guaranteed to the debtor under this title.

20 ‘‘(6) However, only the court, the United States trustee,

21 or the trustee may file a motion to dismiss or convert a

22 case under this subsection if the current monthly income

23 of the debtor and the debtor’s spouse combined, as of the

24 date of the order for relief, when multiplied by 12, is less

25 than the highest national median family income last re-
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1 ported by the Bureau of the Census for a family of equal

2 or lesser size, or in the case of a household of 1 person, the

3 national median household income for 1 earner. Notwith4 standing the foregoing, the national median family income

5 for a family of more than 4 individuals shall be the na6 tional median family income last reported by the Bureau

7 of the Census for a family of 4 individuals plus $583 for

8 each additional member of the family.

9 ‘‘(7) In making a determination whether to dismiss

10 a case under this section, the court may not take into con11 sideration whether a debtor has made, or continues to make,

12 charitable contributions (that meet the definition of ‘chari13 table contribution’ under section 548(d)(3)) to any qualified

14 religious or charitable entity or organization (as that term

15 is defined in section 548(d)(4)).

16 ‘‘(8) Not later than 3 years after the date of enactment

17 of the Bankruptcy Reform Act of 1999, the Director of the

18 Executive Office for United States Trustees shall submit a

19 report, to the Committee on the Judiciary of the House of

20 Representatives and the Committee on the Judiciary of the

21 Senate, containing its findings regarding the utilization of

22 the Internal Revenue Service standards for determining the

23 current monthly expenses under section 707(b)(1)(A)(ii) of

24 title 11, United States Code, of debtors and the impact that

25 the application of such standards has had on debtors and
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1 on the bankruptcy courts. Such report may include rec2 ommendations for amendments to such title, consistent with

3 the Director’s findings.’’.

4 (b) DEFINITIONS.—Section 101 of title 11, United

5 States Code, is amended—

6 (1) by inserting after paragraph (10) the fol7 lowing:

8 ‘‘(10A) ‘current monthly income’ means the aver9 age monthly income from all sources derived which

10 the debtor, or in a joint case, the debtor and the debt11 or’s spouse, receive without regard to whether it is

12 taxable income, in the 180 days preceding the date of

13 determination, and includes any amount paid by

14 anyone other than the debtor or, in a joint case, the

15 debtor and the debtor’s spouse, on a regular basis to

16 the household expenses of the debtor or the debtor’s de17 pendents and, in a joint case, the debtor’s spouse if

18 not otherwise a dependent, but excludes payments to

19 victims of war crimes or crimes against humanity;’’;

20 and

21 (2) by inserting after paragraph (17) the fol22 lowing:

23 ‘‘(17A) ‘estimated administrative expenses and

24 reasonable attorneys’ fees’ means 10 percent of pro25 jected payments under a chapter 13 plan;’’.
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1 (c) ADMINISTRATIVE PROVISIONS.—Section 704 of

2 title 11, United States Code, is amended—

3 (1) in paragraph (8) by striking ‘‘and’’ at the

4 end;

5 (2) in paragraph (9) by striking the period at

6 the end and inserting ‘‘; and’’; and

7 (3) by adding at the end the following:

8 ‘‘(10)(A) With respect to an individual debtor,

9 the trustee shall review all materials filed by the debt10 or, consider all information presented at the first

11 meeting of creditors, and within 10 days after the

12 first meeting of creditors file with the court a state13 ment as to whether the debtor’s case should be pre14 sumed to be an abuse under section 707(b) of this

15 title. The court shall provide a copy of such statement

16 to all creditors within 5 days after such statement is

17 filed. If, based on the filing of such statement with the

18 court, the trustee determines that the debtor’s case

19 should be presumed to be an abuse under section

20 707(b) of this title and if the current monthly income

21 of the debtor and the debtor’s spouse combined, as of

22 the date of the order for relief, when multiplied by 12,

23 is not less than the highest national median family

24 income reported for a family of equal or lesser size,

25 or in the case of a household of 1 person, the national
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1 median household income for 1 earner, then the trust2 ee shall within 30 days of the filing of such statement,

3 either—

4 ‘‘(i) file a motion to dismiss or convert

5 under section 707(b) of this title; or

6 ‘‘(ii) file a statement setting forth the rea7 sons the trustee or bankruptcy administrator

8 does not believe that such a motion would be ap9 propriate.

10 ‘‘(B) Notwithstanding subparagraph (A), for

11 purposes of this paragraph the national family in12 come for a family of more than 4 individuals shall

13 be the national median family income last reported

14 by the Bureau of the Census for a family of 4 individ15 uals plus $583 for each additional member of the

16 family.’’.

17 (d) CLERICAL AMENDMENT.—The table of sections at

18 the beginning of chapter 7 of title 11, United States Code,

19 is amended by striking the item relating to section 707 and

20 inserting the following:

‘‘707. Dismissal of a case or conversion to a case under chapter 13.’’.

21 SEC. 103. NOTICE OF ALTERNATIVES.

22 Section 342(b) of title 11, United States Code, is

23 amended to read as follows:

24 ‘‘(b) Before the commencement of a case under this title

25 by an individual whose debts are primarily consumer debts,
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1 the clerk shall give to such individual written notice

2 containing—

3 ‘‘(1) a brief description of—

4 ‘‘(A) chapters 7, 11, 12, and 13 and the

5 general purpose, benefits, and costs of proceeding

6 under each of those chapters; and

7 ‘‘(B) the types of services available from

8 credit counseling agencies; and

9 ‘‘(2) statements specifying that—

10 ‘‘(A) a person who knowingly and fraudu11 lently conceals assets or makes a false oath or

12 statement under penalty of perjury in connection

13 with a bankruptcy case shall be subject to fine,

14 imprisonment, or both; and

15 ‘‘(B) all information supplied by a debtor

16 in connection with a bankruptcy case is subject

17 to examination by the Attorney General.’’.

18 SEC. 104. DEBTOR FINANCIAL MANAGEMENT TRAINING

19 TEST PROGRAM.

20 (a) DEVELOPMENT OF FINANCIAL MANAGEMENT AND

21 TRAINING CURRICULUM AND MATERIALS.—The Director of

22 the Executive Office for United States Trustees (in this sec23 tion referred to as the ‘‘Director’’) shall consult with a wide

24 range of individuals who are experts in the field of debtor

25 education, including trustees who are appointed under
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1 chapter 13 of title 11 of the United States Code and who

2 operate financial management education programs for debt3 ors, and shall develop a financial management training

4 curriculum and materials that can be used to educate indi5 vidual debtors on how to better manage their finances.

6 (b) TEST—(1) The Director shall select 6 judicial dis7 tricts of the United States in which to test the effectiveness

8 of the financial management training curriculum and ma9 terials developed under subsection (a).

10 (2) For a 18-month period beginning not later than

11 270 days after the date of the enactment of this Act, such

12 curriculum and materials shall be, for the 6 judicial dis13 tricts selected under paragraph (1), used as the instruc14 tional course concerning personal financial management for

15 purposes of section 111 of this title.

16 (c) EVALUATION.—(1) During the 1-year period re17 ferred to in subsection (b), the Director shall evaluate the

18 effectiveness of—

19 (A) the financial management training cur20 riculum and materials developed under subsection

21 (a); and

22 (B) a sample of existing consumer education

23 programs such as those described in the Report of the

24 National Bankruptcy Review Commission (October

25 20, 1997) that are representative of consumer edu-
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1 cation programs carried out by the credit industry,

2 by trustees serving under chapter 13 of title 11 of the

3 United States Code, and by consumer counselling

4 groups.

5 (2) Not later than 3 months after concluding such eval6 uation, the Director shall submit a report to the Speaker

7 of the House of Representatives and the President pro tem8 pore of the Senate, for referral to the appropriate commit9 tees of the Congress, containing the findings of the Director

10 regarding the effectiveness of such curriculum, such mate11 rials, and such programs and their costs.

12 Subtitle B—Consumer Bankruptcy

13 Protections

14 SEC. 105. DEFINITIONS.

15 (a) DEFINITIONS.—Section 101 of title 11, United

16 States Code, is amended—

17 (1) by inserting after paragraph (2) the fol18 lowing:

19 ‘‘(3) ‘assisted person’ means any person whose

20 debts consist primarily of consumer debts and whose

21 non-exempt assets are less than $150,000;’’;

22 (2) by inserting after paragraph (4) the fol23 lowing:

24 ‘‘(4A) ‘bankruptcy assistance’ means any goods

25 or services sold or otherwise provided to an assisted
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1 person with the express or implied purpose of pro2 viding information, advice, counsel, document prepa3 ration or filing, or attendance at a creditors’ meeting

4 or appearing in a proceeding on behalf of another or

5 providing legal representation with respect to a pro6 ceeding under this title;’’; and

7 (3) by inserting after paragraph (12A) the fol8 lowing:

9 ‘‘(12B) ‘debt relief agency’ means any person

10 who provides any bankruptcy assistance to an as11 sisted person in return for the payment of money or

12 other valuable consideration, or who is a bankruptcy

13 petition preparer pursuant to section 110 of this title,

14 but does not include any person that is any of the fol15 lowing or an officer, director, employee or agent

16 thereof—

17 ‘‘(A) any nonprofit organization which is

18 exempt from taxation under section 501(c)(3) of

19 the Internal Revenue Code of 1986;

20 ‘‘(B) any creditor of the person to the extent

21 the creditor is assisting the person to restructure

22 any debt owed by the person to the creditor; or

23 ‘‘(C) any depository institution (as defined

24 in section 3 of the Federal Deposit Insurance

25 Act) or any Federal credit union or State credit
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1 union (as those terms are defined in section 101

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

3 or subsidiary of such a depository institution or

4 credit union;’’.

5 (b) CONFORMING AMENDMENT.—In section 104(b)(1)

6 by inserting ‘‘101(3),’’ after ‘‘sections’’.

7 SEC. 106. ENFORCEMENT.

8 (a) ENFORCEMENT.—Subchapter II of chapter 5 of

9 title 11, United States Code, is amended by adding at the

10 end the following:

11 ‘‘§ 526. Debt relief agency enforcement

12 ‘‘(a) A debt relief agency shall not—

13 ‘‘(1) fail to perform any service which the debt

14 relief agency has told the assisted person or prospec15 tive assisted person the agency would provide that

16 person in connection with the preparation for or ac17 tivities during a proceeding under this title;

18 ‘‘(2) make any statement, or counsel or advise

19 any assisted person to make any statement in any

20 document filed in a proceeding under this title, which

21 is untrue and misleading or which upon the exercise

22 of reasonable care, should be known by the debt relief

23 agency to be untrue or misleading;

24 ‘‘(3) misrepresent to any assisted person or pro25 spective assisted person, directly or indirectly, affirm-
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1 atively or by material omission, what services the

2 debt relief agency can reasonably expect to provide

3 that person, or the benefits an assisted person may

4 obtain or the difficulties the person may experience if

5 the person seeks relief in a proceeding pursuant to

6 this title; or

7 ‘‘(4) advise an assisted person or prospective as8 sisted person to incur more debt in contemplation of

9 that person filing a proceeding under this title or in

10 order to pay an attorney or bankruptcy petition pre11 parer fee or charge for services performed as part of

12 preparing for or representing a debtor in a pro13 ceeding under this title.’’.

14 ‘‘(b) ASSISTED PERSON WAIVERS INVALID.—Any

15 waiver by any assisted person of any protection or right

16 provided by or under this section shall not be enforceable

17 against the debtor by any Federal or State court or any

18 other person, but may be enforced against a debt relief agen19 cy.

20 ‘‘(c) NONCOMPLIANCE.—

21 ‘‘(1) Any contract between a debt relief agency

22 and an assisted person for bankruptcy assistance

23 which does not comply with the material requirements

24 of this section shall be treated as void and may not
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1 be enforced by any Federal or State court or by any

2 other person.

3 ‘‘(2) Any debt relief agency shall be liable to an

4 assisted person in the amount of any fees or charges

5 in connection with providing bankruptcy assistance

6 to such person which the debt relief agency has re7 ceived, for actual damages, and for reasonable attor8 neys’ fees and costs if the debt relief agency is found,

9 after notice and hearing, to have—

10 ‘‘(A) intentionally or negligently failed to

11 comply with any provision of this section with

12 respect to a bankruptcy case or related pro13 ceeding of the assisted person;

14 ‘‘(B) provided bankruptcy assistance to an

15 assisted person in a case or related proceeding

16 which is dismissed or converted because of the

17 debt relief agency’s intentional or negligent fail18 ure to file bankruptcy papers, including papers

19 specified in section 521 of this title; or

20 ‘‘(C) intentionally or negligently dis21 regarded the material requirements of this title

22 or the Federal Rules of Bankruptcy Procedure

23 applicable to such debt relief agency.

24 ‘‘(3) In addition to such other remedies as are

25 provided under State law, whenever the chief law en-
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1 forcement officer of a State, or an official or agency

2 designated by a State, has reason to believe that any

3 person has violated or is violating this section, the

4 State—

5 ‘‘(A) may bring an action to enjoin such

6 violation;

7 ‘‘(B) may bring an action on behalf of its

8 residents to recover the actual damages of as9 sisted persons arising from such violation, in10 cluding any liability under paragraph (2); and

11 ‘‘(C) in the case of any successful action

12 under subparagraph (A) or (B), shall be award13 ed the costs of the action and reasonable attorney

14 fees as determined by the court.

15 ‘‘(4) The United States District Court for any

16 district located in the State shall have concurrent ju17 risdiction of any action under subparagraph (A) or

18 (B) of paragraph (3).

19 ‘‘(5) Notwithstanding any other provision of

20 Federal law and in addition to any other remedy

21 provided under Federal or State law, if the court, on

22 its own motion or on the motion of the United States

23 trustee or the debtor, finds that a person intentionally

24 violated this section, or engaged in a clear and con-
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1 sistent pattern or practice of violating this section,

2 the court may—

3 ‘‘(A) enjoin the violation of such section; or

4 ‘‘(B) impose an appropriate civil penalty

5 against such person.

6 ‘‘(c) RELATION TO STATE LAW.—This section shall not

7 annul, alter, affect or exempt any person subject to those

8 sections from complying with any law of any State except

9 to the extent that such law is inconsistent with those sec10 tions, and then only to the extent of the inconsistency.’’.

11 (b) CONFORMING AMENDMENT.—The table of sections

12 for chapter 5 of title 11, United States Code, is amended

13 by inserting after the item relating to section 527, the fol14 lowing:

‘‘526. Debt relief agency enforcement.’’.

15 SEC. 107. SENSE OF THE CONGRESS.

16 It is the sense of the Congress that States should de17 velop curricula relating to the subject of personal finance,

18 designed for use in elementary and secondary schools.

19 SEC. 108. DISCOURAGING ABUSIVE REAFFIRMATION PRAC20 TICES.

21 Section 524 of title 11, United States Code, is

22 amended—

23 (1) in subsection (c)—

24 (A) in paragraph (2)—
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1 (i) in subparagraph (A) by striking

2 ‘‘and’’ at the end;

3 (ii) in subparagraph (B) by adding

4 ‘‘and’’ at the end; and

5 (iii) by adding at the end the fol6 lowing:

7 ‘‘(C) if the consideration for such agreement is

8 based on a wholly unsecured consumer debt (except

9 for debts owed to creditors defined in section

10 461(b)(1)(A)(iv) of title 12, United States Code), such

11 agreement contains a clear and conspicuous statement

12 which advises the debtor—

13 ‘‘(i) that the debtor is entitled to a hearing

14 before the court at which the debtor shall appear

15 in person and at which the court will decide

16 whether the agreement is an undue hardship, not

17 in the debtor’s best interest, and not the result of

18 a threat by the creditor to take any action that

19 cannot be legally taken or that is not intended

20 to be taken; and

21 ‘‘(ii) that if the debtor is represented by

22 counsel, the debtor may waive the debtor’s right

23 to such a hearing by signing a statement

24 waiving the hearing, stating that the debtor is
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1 represented by counsel, and identifying such

2 counsel;’’; and

3 (B) in paragraph (6)(A)—

4 (i) by striking ‘‘and’’ at the end of

5 clause (i);

6 (ii) by striking the period at the end of

7 clause (ii) and inserting ‘‘; and’’; and

8 (iii) by adding at the end thereof the

9 following:

10 ‘‘(iii) not entered into by the debtor as the

11 result of a threat by the creditor to take any ac12 tion that cannot be legally taken or that is not

13 intended to be taken.’’; and

14 (2) in the 3d sentence of subsection (d)—

15 (A) by striking ‘‘of this section’’ and insert16 ing a comma; and

17 (B) by inserting after ‘‘such agreement’’ the

18 following:

19 ‘‘or if the consideration for such agreement is based on a

20 wholly unsecured consumer debt (except for debts owed to

21 creditors defined in section 461(b)(1)(A)(iv) of title 12,

22 United States Code) and the debtor has not waived the debt23 or’s right to a hearing on the agreement in accordance with

24 subsection (c)(2)(C) of this section’’.
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1 SEC. 109. PROMOTION OF ALTERNATIVE DISPUTE RESOLU2 TION.

3 (a) REDUCTION OF CLAIM.—Section 502 of title 11,

4 United States Code, is amended by adding at the end the

5 following:

6 ‘‘(k)(1) The court, on the motion of the debtor and after

7 a hearing, may reduce a claim filed under this section based

8 wholly on unsecured consumer debts by not more than 20

9 percent, if the debtor can prove by clear and convincing

10 evidence that the claim was filed by a creditor who unrea11 sonably refused to negotiate a reasonable alternative repay12 ment schedule proposed by an approved credit counseling

13 agency acting on behalf of the debtor, and if—

14 ‘‘(A) such offer was made within the period be15 ginning 60 days before the filing of the petition;

16 ‘‘(B) such offer provided for payment of at least

17 60 percent of the amount of the debt over a period not

18 to exceed the repayment period of the loan, or a rea19 sonable extension thereof; and

20 ‘‘(C) no part of the debt under the alternative re21 payment schedule is nondischargeable, is entitled to

22 priority under section 507 of this title, or would be

23 paid a greater percentage in a chapter 13 proceeding

24 than offered by the debtor.

25 ‘‘(2) The debtor shall have the burden of proving that

26 the proposed alternative repayment schedule was made in
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1 the 60-day period specified in subparagraph (A) and that

2 the creditor unreasonably refused to consider the debtor’s

3 proposal.’’.

4 (b) LIMITATION ON AVOIDABILITY.—Section 547 of

5 title 11, United States Code, is amended by adding at the

6 end the following:

7 ‘‘(h) The trustee may not avoid a transfer if such

8 transfer was made as a part of an alternative repayment

9 plan between the debtor and any creditor of the debtor cre10 ated by an approved credit counseling agency.’’.

11 SEC. 110. ENHANCED DISCLOSURE FOR CREDIT EXTEN12 SIONS SECURED BY A DWELLING.

13 (a) STUDY REQUIRED.—During the period beginning

14 180 days after the date of enactment of this Act and ending

15 18 months after the date of the enactment, the Board of

16 Governors of the Federal Reserve System (in this section

17 referred to as the ‘‘Board’’) shall conduct a study and sub18 mit to Congress a report (including recommendations for

19 any appropriate legislation) regarding—

20 (1) whether a consumer engaging in an open-end

21 credit transaction (as defined pursuant to section 103

22 of the Truth in lending Act) secured by the con23 sumer’s principal dwelling is provided adequate in24 formation under Federal law, including under section
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1 127A of the Truth in Lending Act, regarding the tax

2 deductibility of interest paid on such transaction; and

3 (2) whether a consumer engaging in a closed-end

4 credit transaction (as defined pursuant to section 103

5 of the Truth in Lending Act) secured by the con6 sumer’s principal dwelling is provided adequate in7 formation regarding the tax deductibility of interest

8 paid on such transaction.

9 In conducting such study, the Board shall specifically con10 sider whether additional disclosures are necessary with re11 spect to such open-end or closed-end credit transactions in

12 which the amount of the credit extended exceeds the fair

13 market value of the dwelling.

14 (b) REGULATIONS.—If the Board determines that ad15 ditional disclosures are necessary in connection with trans16 actions described in subsection (a), the Board, pursuant to

17 its authority under the Truth in Lending Act, may promul18 gate regulations that would require such additional disclo19 sures. Any such regulations promulgated by the Board

20 under this section shall not take effect before the end of the

21 36-month period after the date of the enactment of this Act.

22 SEC. 111. DUAL USE DEBIT CARD.

23 (a) STUDY REQUIRED.—The Board of Governors of the

24 Federal Reserve System (in this section referred to as the

25 ‘‘Board’’) shall conduct a study of existing protections pro-
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1 vided to consumers to limit their liability for unauthorized

2 use of a debit card or similar access device.

3 (b) SPECIFIC CONSIDERATIONS.—In conducting the

4 study required by subsection (a), the Board shall specifi5 cally consider the following—

6 (1) the extent to which existing provisions of sec7 tion 909 of the Electronic Fund Transfer Act and the

8 Board’s implementing regulations provide adequate

9 unauthorized use liability protection for consumers;

10 (2) the extent to which any voluntary industry

11 rules have enhanced the level of protection afforded

12 consumers in connection with such unauthorized use

13 liability; and

14 (3) whether amendments to the Electronic Funds

15 Transfer Act or the Board’s implementing regulations

16 thereto are necessary to provide adequate protection

17 for consumers in this area.

18 (c) REPORT AND REGULATIONS.—Not later than 2

19 years after the date of the enactment of this Act, the Board

20 shall make public a report on its findings with respect to

21 the adequacy of existing protections afforded consumers

22 with respect to unauthorized-use liability for debit cards

23 and similar access devices. If the Board determines that

24 such protections are inadequate, the Board, pursuant to its

25 authority under the Electronic Funds Transfer Act, may
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1 issue regulations to address such inadequacy. Any regula2 tions issued by the Board shall not be effective before 36

3 months after the date of the enactment of this Act.

4 SEC. 112. ENHANCED DISCLOSURES UNDER AN OPEN-END

5 CREDIT PLAN.

6 (a) INITIAL AND ANNUAL MINIMUM PAYMENT DISCLO7 SURE.—Section 127(a) of the Truth in Lending Act (15

8 U.S.C. 1637(a)) is amended by adding at the end the fol9 lowing:

10 ‘‘(9) In the case of any credit or charge card ac11 count under an open-end consumer credit plan on

12 which a minimum monthly or periodic payment will

13 be required, other than an account described in para14 graph (8)—

15 ‘‘(A) the following statement: ‘The min16 imum payment amount shown on your billing

17 statement is the smallest payment which you can

18 make in order to keep the account in good stand19 ing. This payment option is offered as a conven20 ience and you may make larger payments at

21 any time. Making only the minimum payment

22 each month will increase the amount of interest

23 you pay and the length of time it takes to repay

24 your outstanding balance.’;
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1 ‘‘(B) if the plan provides that the consumer

2 will be permitted to forgo making a minimum

3 payment during a specified billing cycle, a state4 ment, if applicable, that if the consumer chooses

5 to forgo making the minimum payment, finance

6 charges will continue to accrue; and

7 ‘‘(C) an example, based on an annual per8 centage rate and method for determining min9 imum periodic payments recently in effect for

10 that creditor, and a $500 outstanding balance,

11 showing the estimated minimum periodic pay12 ment, and the estimated period of time it would

13 take to repay the $500 outstanding balance if the

14 consumer paid only the minimum periodic pay15 ment on each monthly or periodic statement and

16 obtained no additional extensions of credit.

17 ‘‘(10) With respect to one billing cycle per cal18 endar year, the creditor shall transmit the informa19 tion required under paragraph (9) to each consumer

20 to whom the creditor is required to transit a state21 ment pursuant to subsection (b) for such billing cycle.

22 The creditor shall also transmit to such consumer for

23 such cycle a worksheet prescribed by the Board to as24 sist the consumer in determining the consumer’s

25 household income and debt obligations.’’.
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1 (b) PERIODIC MINIMUM PAYMENT DISCLOSURES.—

2 Section 127(b) of the Truth in Lending Act (15 U.S.C.

3 1637(b)) is amended by adding at the end the following:

4 ‘‘(11) The following statement: ‘The minimum

5 payment amount shown on your billing statement is

6 the smallest payment which you can make in order

7 to keep the account in good standing. This payment

8 option is offered as a convenience and you may make

9 larger payments at any time. Making only the min10 imum payment each month will increase the amount

11 of interest you pay and the length of time it takes to

12 repay your outstanding balance.’ ’’.

13 (c) ENFORCEMENT.—Section 127 of the Truth in

14 Lending Act (15 U.S.C. 1637) is amended by adding at

15 the end the following:

16 ‘‘(h) In promulgating regulations to implement the

17 disclosure of an example required under subsection

18 (a)(9)(C) and (a)(10), the Board shall set forth a model dis19 closure to accompany the example stating that the credit

20 features shown are only an example which does not obligate

21 the creditor, but is intended to illustrate the approximate

22 length of time it could take to repay using the assumptions

23 set forth in subsection (a)(9)(C) without regard to any other

24 factors that could impact an approximate repayment pe25 riod, including other credit features or the consumer’s pay-
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1 ment or other behavior with respect to the account. Compli2 ance with the disclosures required under subsection

3 (a)(9)(C) and (a)(10) shall be enforced exclusively by the

4 Federal agencies set forth in section 108.’’.

5 (d) REGULATORY IMPLEMENTATION.—The Board of

6 Governors of the Federal Reserve System (in this section

7 referred to as the ‘‘Board’’) shall promulgate regulations

8 implementing the amendments made by subsections (a) and

9 (b). Such regulations shall take effect no earlier than the

10 end of the 36-month period beginning on the date of the

11 enactment of this Act.

12 (e) STUDY REQUIRED.—The Board shall conduct a

13 study to determine whether consumers have adequate infor14 mation about borrowing activities which may result in fi15 nancial problems. In studying this issue, the Board shall

16 consider the extent to which—

17 (1) consumers, in establishing new credit ar18 rangements, are aware of their existing payment obli19 gations, the need to consider those obligations in de20 ciding to take on new credit, and how taking on ex21 cessive credit can result in financial difficulty;

22 (2) minimum periodic payment features offered

23 in connection with open-end credit plans impact con24 sumer default rates;
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1 (3) consumers always make only the minimum

2 payment throughout the life of the plan;

3 (4) consumers are aware that making only min4 imum payments will increase the cost and repayment

5 period of an open-end loan; and

6 (5) the availability of low minimum payment

7 options is a cause of consumers experiencing financial

8 difficulty.

9 (f) REPORT TO CONGRESS.—Before the end of the 2-

10 year period beginning on the date of the enactment of this

11 Act, the Board shall submit to Congress a report containing

12 the findings of the Board in connection with the study re13 quired under subsection (e).

14 (g) REGULATIONS.—The Board shall, by regulation

15 promulgated pursuant to its authority under the Truth in

16 Lending Act, require additional disclosures to consumers re17 garding minimum payment features, including periodic

18 statement disclosures, if the Board determines that such dis19 closures are necessary based on its findings. Any such regu20 lations promulgated by the Board shall not take effect ear21 lier than January 1, 2002.

22 SEC. 113. PROTECTION OF SAVINGS EARMARKED FOR THE

23 POSTSECONDARY EDUCATION OF CHILDREN.

24 Section 522 of title 11, United States Code, is

25 amended—
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1 (1) in subsection (b)(2)—

2 (A) in subparagraph (A) by striking ‘‘and’’

3 at the end;

4 (B) in subparagraph (B) by striking the pe5 riod at the end and inserting ‘‘; and’’; and

6 (C) by adding at the end the following:

7 ‘‘(C) except as provided in paragraph (n), funds

8 placed in an education individual retirement account

9 (as defined in section 530(b)(1) of the Internal Rev10 enue Code of 1986) not less than 365 days before the

11 date of entry of the order of relief but only to the ex12 tent such funds—

13 ‘‘(i) are not pledged or promised to any en14 tity in connection with any extension of credit;

15 and

16 ‘‘(ii) are not excess contributions (as de17 scribed in section 4973(e) of the Internal Rev18 enue Code of 1986).’’; and

19 (2) by adding at the end the following:

20 ‘‘(n) For purposes of subsection (b)(3)(C), funds placed

21 in an education individual retirement account shall not be

22 exempt under this subsection—

23 ‘‘(1) unless the designated beneficiary of such ac24 count was a dependent child of the debtor for the tax-
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1 able year for which the funds were placed in such ac2 count; and

3 ‘‘(2) to the extent such funds exceed—

4 ‘‘(A) $50,000 in the aggregate in all such

5 accounts having the same designated beneficiary;

6 or

7 ‘‘(B) $100,000 in the aggregate in all such

8 accounts attributable to all such dependent chil9 dren of the debtor.’’.

10 SEC. 114. EFFECT OF DISCHARGE.

11 Section 524 of title 11, United States Code, is amended

12 by adding at the end the following:

13 ‘‘(i) The willful failure of a creditor to credit payments

14 received under a plan confirmed under this title (including

15 a plan of reorganization confirmed under chapter 11 of this

16 title) in the manner required by the plan (including cred17 iting the amounts required under the plan) shall constitute

18 a violation of any injunction under subsection (a)(2) which

19 has arisen at the time of the failure.

20 ‘‘(j)(1) An individual who is injured by the willful

21 failure of a creditor to comply with the requirements for

22 a reaffirmation agreement under subsections (c) and (d),

23 or by any willful violation of the injunction under sub24 section (a)(2), shall be entitled to recover—

25 ‘‘(A) the greater of—
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1 ‘‘(i) the amount of actual damages; or

2 ‘‘(ii) $1,000; and

3 ‘‘(B) costs and attorneys’ fees.

4 ‘‘(2) An action to recover for a violation specified in

5 paragraph (1) may not be brought as a class action.’’.

6 SEC. 115. LIMITING TRUSTEE LIABILITY.

7 (a) QUALIFICATION OF TRUSTEE.—Section 322 of title

8 11, United States Code, is amended—

9 (1) in subsection (a) by adding at the end the

10 following:

11 ‘‘The trustee in a case under this title is not liable

12 personally or on such trustee’s bond for acts taken

13 within the scope of the trustee’s duties or authority as

14 delineated by other sections of this title or by order

15 of the court, except to the extent that the trustee acted

16 with gross negligence. Gross negligence shall be de17 fined as reckless indifference or deliberate disregard of

18 the trustee’s fiduciary duty.’’; and

19 (2) in subsection (c) by inserting ‘‘for any acts

20 within the scope of the trustee’s authority defined in

21 subsection (a)’’ before the period at the end.

22 (b) ROLE AND CAPACITY OF TRUSTEE.—Section 323

23 of title 11, United States Code, is amended—

24 (1) in subsection (b) by inserting at the end the

25 following: ‘‘in the trustee’s official capacity as rep-
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1 resentative of the estate’’ before the period at the end;

2 and

3 (2) by adding at the end the following:

4 ‘‘(c) The trustee in a case under this title may not be

5 sued, either personally, in a representative capacity, or

6 against the trustee’s bond in favor of the United States—

7 ‘‘(1) for acts taken in furtherance of the trustee’s

8 duties or authority in a case in which the debtor is

9 subsequently determined to be ineligible for relief

10 under the chapter in which the trustee was appointed;

11 or

12 ‘‘(2) for the dissemination of statistics and other

13 information regarding a case or cases, unless the

14 trustee has actual knowledge that the information is

15 false.

16 ‘‘(d) The trustee in a case under this title may not

17 be sued in a personal capacity without leave of the bank18 ruptcy court in which the case is pending.’’.

19 SEC. 116. REINFORCE THE FRESH START.

20 (a) RESTORATION OF AN EFFECTIVE DISCHARGE.—

21 Section 523(a)(17) of title 11, United States Code, is

22 amended—

23 (1) by striking ‘‘by a court’’ and inserting ‘‘by

24 any court’’,
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1 (2) by striking ‘‘section 1915(b) or (f)’’ and in2 serting ‘‘subsection (b) or (f)(2) of section 1915’’, and

3 (3) by inserting ‘‘(or a similar non-Federal

4 law)’’ after ‘‘title 28’’ each place it appears.

5 SEC. 117. DISCOURAGING BAD FAITH REPEAT FILINGS.

6 Section 362(c) of title 11, United States Code, is

7 amended—

8 (1) in paragraph (1) by striking ‘‘and’’ at the

9 end;

10 (2) in paragraph (2) by striking the period at

11 the end and inserting a semicolon; and

12 (3) by adding at the end the following new para13 graphs:

14 ‘‘(3) If a single or joint case is filed by or

15 against an individual debtor under chapter 7, 11, or

16 13 (other than a case refiled under a chapter other

17 than chapter 7 after dismisssal under section 707(b)

18 of this title), and if a single or joint case of the debtor

19 was pending within the previous 1-year period but

20 was dismissed, the stay under subsection (a) with re21 spect to any action taken with respect to a debt or

22 property securing such debt or with respect to any

23 lease will terminate with respect to the debtor on the

24 30th day after the filing of the later case. Upon mo25 tion by a party in interest for continuation of the
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1 automatic stay and upon notice and a hearing, the

2 court may extend the stay in particular cases as to

3 any or all creditors (subject to such conditions or lim4 itations as the court may then impose) after notice

5 and a hearing completed before the expiration of the

6 30-day period only if the party in interest dem7 onstrates that the filing of the later case is in good

8 faith as to the creditors to be stayed. A case is pre9 sumptively filed not in good faith (but such presump10 tion may be rebutted by clear and convincing evi11 dence to the contrary)—

12 ‘‘(A) as to all creditors if—

13 ‘‘(i) more than 1 previous case under

14 any of chapter 7, 11, or 13 in which the in15 dividual was a debtor was pending within

16 such 1-year period;

17 ‘‘(ii) a previous case under any of

18 chapters 7, 11, or 13 in which the indi19 vidual was a debtor was dismissed within

20 such 1-year period, after the debtor failed to

21 file or amend the petition or other docu22 ments as required by this title or the court

23 without substantial excuse (but mere inad24 vertence or negligence shall not be substan25 tial excuse unless the dismissal was caused
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1 by the negligence of the debtor’s attorney),

2 failed to provide adequate protection as or3 dered by the court, or failed to perform the

4 terms of a plan confirmed by the court; or

5 ‘‘(iii) there has not been a substantial

6 change in the financial or personal affairs

7 of the debtor since the dismissal of the next

8 most previous case under any of chapters 7,

9 11, or 13 of this title, or there is not any

10 other reason to conclude that the later case

11 will be concluded, if a case under chapter 7

12 of this title, with a discharge, and if a

13 chapter 11 or 13 case, a confirmed plan

14 which will be fully performed;

15 ‘‘(B) as to any creditor that commenced an

16 action under subsection (d) in a previous case in

17 which the individual was a debtor if, as of the

18 date of dismissal of such case, that action was

19 still pending or had been resolved by termi20 nating, conditioning, or limiting the stay as to

21 actions of such creditor.

22 ‘‘(4) If a single or joint case is filed by or

23 against an individual debtor under this title (other

24 than a case refiled under a chapter other than chapter

25 7 after a dismissal under section 707(b) of this title),
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1 and if 2 or more single or joint cases of the debtor

2 were pending within the previous year but were dis3 missed, the stay under subsection (a) will not go into

4 effect upon the filing of the later case. On request of

5 a party in interest, the court shall promptly enter an

6 order confirming that no stay is in effect. If a party

7 in interest requests within 30 days of the filing of the

8 later case, the court may order the stay to take effect

9 in the case as to any or all creditors (subject to such

10 conditions or limitations as the court may impose),

11 after notice and hearing, only if the party in interest

12 demonstrates that the filing of the later case is in

13 good faith as to the creditors to be stayed. A stay im14 posed pursuant to the preceding sentence will be effec15 tive on the date of entry of the order allowing the

16 stay to go into effect. A case is presumptively not filed

17 in good faith (but such presumption may be rebutted

18 by clear and convincing evidence to the contrary)—

19 ‘‘(A) as to all creditors if—

20 ‘‘(i) 2 or more previous cases under

21 this title in which the individual was a

22 debtor were pending within the 1-year pe23 riod;

24 ‘‘(ii) a previous case under this title in

25 which the individual was a debtor was dis-
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1 missed within the time period stated in this

2 paragraph after the debtor failed to file or

3 amend the petition or other documents as

4 required by this title or the court without

5 substantial excuse (but mere inadvertence or

6 negligence shall not be substantial excuse

7 unless the dismissal was caused by the neg8 ligence of the debtor’s attorney), failed to

9 provide adequate protection as ordered by

10 the court, or failed to perform the terms of

11 a plan confirmed by the court; or

12 ‘‘(iii) there has not been a substantial

13 change in the financial or personal affairs

14 of the debtor since the dismissal of the next

15 most previous case under this title, or there

16 is not any other reason to conclude that the

17 later case will be concluded, if a case under

18 chapter 7, with a discharge, and if a case

19 under chapter 11 or 13, with a confirmed

20 plan that will be fully performed; or

21 ‘‘(B) as to any creditor that commenced an

22 action under subsection (d) in a previous case in

23 which the individual was a debtor if, as of the

24 date of dismissal of such case, such action was

25 still pending or had been resolved by termi-
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1 nating, conditioning, or limiting the stay as to

2 action of such creditor.’’.

3 SEC. 118. CURBING ABUSIVE FILINGS.

4 (a) IN GENERAL.—Section 362(d) of title 11, United

5 States Code, is amended—

6 (1) in paragraph (2), by striking ‘‘or’’ at the

7 end;

8 (2) in paragraph (3), by striking the period at

9 the end and inserting ‘‘; or’’; and

10 (3) by adding at the end the following:

11 ‘‘(4) with respect to a stay of an act against real

12 property under subsection (a), by a creditor whose

13 claim is secured by an interest in such real estate, if

14 the court finds that the filing of the bankruptcy peti15 tion was part of a scheme to delay, hinder, and de16 fraud creditors that involved either—

17 ‘‘(A) transfer of all or part ownership of, or

18 other interest in, the real property without the

19 consent of the secured creditor or court approval;

20 or

21 ‘‘(B) multiple bankruptcy filings affecting

22 the real property.

23 If recorded in compliance with applicable State laws gov24 erning notices of interests or liens in real property, an order

25 entered pursuant to this subsection shall be binding in any
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1 other case under this title purporting to affect the real prop2 erty filed not later than 2 years after that recording, except

3 that a debtor in a subsequent case may move for relief from

4 such order based upon changed circumstances or for good

5 cause shown, after notice and a hearing. Any Federal,

6 State, or local governmental unit which accepts notices of

7 interests or liens in real property shall accept any certified

8 copy of an order described in this subsection for indexing

9 and recording.’’.

10 (b) AUTOMATIC STAY.—Section 362(b) of title 11,

11 United States Code, is amended—

12 (1) in paragraph (17), by striking ‘‘or’’ at the

13 end;

14 (2) in paragraph (18) by striking the period at

15 the end and inserting a semicolon; and

16 (3) by inserting after paragraph (18) the fol17 lowing:

18 ‘‘(19) under subsection (a), of any act to enforce

19 any lien against or security interest in real property

20 following the entry of an order under section

21 362(d)(4) of this title as to that property in any prior

22 bankruptcy case for a period of 2 years after entry of

23 such an order. The debtor in a subsequent case, how24 ever, may move the court for relief from such order

25 based upon changed circumstances or for other good
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1 cause shown (consistent with the standards for good

2 faith in subsection (c)), after notice and a hearing; or

3 ‘‘(20) under subsection (a), of any act to enforce

4 any lien against or security interest in real

5 property—

6 ‘‘(A) if the debtor is ineligible under section

7 109(g) of this title to be a debtor in a bank8 ruptcy case; or

9 ‘‘(B) if the bankruptcy case was filed in

10 violation of a bankruptcy court order in a prior

11 bankruptcy case prohibiting the debtor from

12 being a debtor in another bankruptcy case.’’.

13 SEC. 119. DEBTOR RETENTION OF PERSONAL PROPERTY

14 SECURITY.

15 Title 11, United States Code, is amended—

16 (1) in section 521—

17 (A) in paragraph (4) by striking ‘‘, and’’ at

18 the end and inserting a semicolon;

19 (B) in paragraph (5) by striking the period

20 at the end and inserting ‘‘; and’’; and

21 (C) by adding at the end the following:

22 ‘‘(6) in an individual case under chapter 7 of

23 this title, not retain possession of personal property

24 as to which a creditor has an allowed claim for the

25 purchase price secured in whole or in part by an in-
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1 terest in that personal property unless, in the case of

2 an individual debtor, the debtor takes 1 of the fol3 lowing actions within 45 days after the first meeting

4 of creditors under section 341(a)—

5 ‘‘(A) enters into an agreement with the

6 creditor pursuant to section 524(c) of this title

7 with respect to the claim secured by such prop8 erty; or

9 ‘‘(B) redeems such property from the secu10 rity interest pursuant to section 722 of this title.

11 ‘‘If the debtor fails to so act within the 45-day period,

12 the stay under section 362(a) of this title is termi13 nated with respect to the personal property of the es14 tate or of the debtor which is affected, such property

15 shall no longer be property of the estate, and the cred16 itor may take whatever action as to such property as

17 is permitted by applicable nonbankruptcy law, unless

18 the court determines on the motion of the trustee

19 brought before the expiration of such 45-day period,

20 and after notice and a hearing, that such property is

21 of consequential value or benefit to the estate, orders

22 appropriate adequate protection of the creditor’s in23 terest, and orders the debtor to deliver any collateral

24 in the debtor’s possession to the trustee.’’; and
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1 (2) in section 722 by inserting ‘‘in full at the

2 time of redemption’’ before the period at the end.

3 SEC. 120. RELIEF FROM THE AUTOMATIC STAY WHEN THE

4 DEBTOR DOES NOT COMPLETE INTENDED

5 SURRENDER OF CONSUMER DEBT COLLAT6 ERAL.

7 Title 11, United States Code, is amended as follows—

8 (1) in section 362—

9 (A) by striking ‘‘(e), and (f)’’ in subsection

10 (c) and inserting in lieu thereof ‘‘(e), (f), and

11 (h)’’; and

12 (B) by redesignating subsection (h) as sub13 section (i) and by inserting after subsection (g)

14 the following:

15 ‘‘(h) In an individual case pursuant to chapter 7, 11,

16 or 13 the stay provided by subsection (a) is terminated with

17 respect to personal property of the estate or of the debtor

18 securing in whole or in part a claim, or subject to an unex19 pired lease, and such personal property shall no longer be

20 property of the estate if the debtor fails within the applica21 ble time set by section 521(a)(2) of this title—

22 ‘‘(1) to file timely any statement of intention re23 quired under section 521(a)(2) of this title with re24 spect to that property or to indicate therein that the

25 debtor will either surrender the property or retain it
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1 and, if retaining it, either redeem the property pursu2 ant to section 722 of this title, reaffirm the debt it se3 cures pursuant to section 524(c) of this title, or as4 sume the unexpired lease pursuant to section 365(p)

5 of this title if the trustee does not do so, as applicable;

6 or

7 ‘‘(2) to take timely the action specified in that

8 statement of intention, as it may be amended before

9 expiration of the period for taking action, unless the

10 statement of intention specifies reaffirmation and the

11 creditor refuses to reaffirm on the original contract

12 terms;

13 unless the court determines on the motion of the trustee filed

14 before the expiration of the applicable time set by section

15 521(a)(2), and after notice and a hearing, that such prop16 erty is of consequential value or benefit to the estate, orders

17 appropriate adequate protection of the creditor’s interest,

18 and orders the debtor to deliver any collateral in the debtor’s

19 possession to the trustee. If the court does not so determine

20 an order, the stay shall terminate upon the conclusion of

21 the proceeding on the motion.’’; and

22 (2) in section 521, as amended by sections 603

23 and 604—

24 (A) in paragraph (2) by striking ‘‘con25 sumer’’;
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1 (B) in paragraph (2)(B)—

2 (i) by striking ‘‘forty-five days after

3 the filing of a notice of intent under this

4 section’’ and inserting ‘‘30 days after the

5 first date set for the meeting of creditors

6 under section 341(a) of this title’’; and

7 (ii) by striking ‘‘forty-five day’’ the

8 second place it appears and inserting ‘‘30-

9 day’’;

10 (C) in paragraph (2)(C) by inserting ‘‘ex11 cept as provided in section 362(h) of this title’’

12 before the semicolon; and

13 (D) by inserting after subsection (b) the fol14 lowing:

15 ‘‘(c) If the debtor fails timely to take the action speci16 fied in subsection (a)(6) of this section, or in paragraphs

17 (1) and (2) of section 362(h) of this title, with respect to

18 property which a lessor or bailor owns and has leased,

19 rented, or bailed to the debtor or as to which a creditor

20 holds a security interest not otherwise voidable under sec21 tion 522(f), 544, 545, 547, 548, or 549 of this title, nothing

22 in this title shall prevent or limit the operation of a provi23 sion in the underlying lease or agreement which has the

24 effect of placing the debtor in default under such lease or

25 agreement by reason of the occurrence, pendency, or exist-
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1 ence of a proceeding under this title or the insolvency of

2 the debtor. Nothing in this subsection shall be deemed to

3 justify limiting such a provision in any other cir4 cumstance.’’.

5 SEC. 121. GIVING SECURED CREDITORS FAIR TREATMENT

6 IN CHAPTER 13.

7 Section 1325(a)(5)(B)(i) of title 11, United States

8 Code, is amended to read as follows:

9 ‘‘(i) the plan provides that the holder of

10 such claim retain the lien securing such claim

11 until the earlier of payment of the underlying

12 debt determined under nonbankruptcy law or

13 discharge under section 1328 of this title, and

14 that if the case under this chapter is dismissed

15 or converted without completion of the plan, such

16 lien shall also be retained by such holder to the

17 extent recognized by applicable nonbankruptcy

18 law; and’’.

19 SEC. 122. RESTRAINING ABUSIVE PURCHASES ON SECURED

20 CREDIT.

21 Section 506 of title 11, United States Code, is amended

22 by adding at the end the following:

23 ‘‘(e) In an individual case under chapter 7, 11, 12,

24 or 13—
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1 ‘‘(1) subsection (a) shall not apply to an allowed

2 claim to the extent attributable in whole or in part

3 to the purchase price of personal property acquired by

4 the debtor within 5 years of the filing of the petition,

5 except for the purpose of applying paragraph (3) of

6 this subsection;

7 ‘‘(2) if such allowed claim attributable to the

8 purchase price is secured only by the personal prop9 erty so acquired, the value of the personal property

10 and the amount of the allowed secured claim shall be

11 the sum of the unpaid principal balance of the pur12 chase price and accrued and unpaid interest and

13 charges at the contract rate;

14 ‘‘(3) if such allowed claim attributable to the

15 purchase price is secured by the personal property so

16 acquired and other property, the value of the security

17 may be determined under subsection (a), but the value

18 of the security and the amount of the allowed secured

19 claim shall be not less than the unpaid principal bal20 ance of the purchase price of the personal property

21 acquired and unpaid interest and charges at the con22 tract rate; and

23 ‘‘(4) in any subsequent case under this title that

24 is filed by or against the debtor in the 2-year period

25 beginning on the date the petition is filed in the
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1 original case, the value of the personal property and

2 the amount of the allowed secured claim shall be

3 deemed to be not less than the amount provided under

4 paragraphs (2) and (3) less any payments actually

5 received.’’.

6 SEC. 123. FAIR VALUATION OF COLLATERAL.

7 Section 506(a) of title 11, United States Code, is

8 amended by adding at the end the following:

9 ‘‘In the case of an individual debtor under chapters 7 and

10 13, such value with respect to personal property securing

11 an allowed claim shall be determined based on the replace12 ment value of such property as of the date of filing the peti13 tion without deduction for costs of sale or marketing. With

14 respect to property acquired for personal, family, or house15 hold purpose, replacement value shall mean the price a re16 tail merchant would charge for property of that kind con17 sidering the age and condition of the property at the time

18 value is determined.’’.

19 SEC. 124. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.

20 Section 522(b)(2)(A) of title 11, United States Code,

21 is amended—

22 (1) by striking ‘‘180’’ and inserting ‘‘730’’; and

23 (2) by striking ‘‘, or for a longer portion of such

24 180-day period than in any other place’’ and insert25 ing ‘‘or if the debtor’s domicile has not been located
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1 at a single State for such 730-day period, the place

2 in which the debtor’s domicile was located for 180

3 days immediately preceding the 730-day period or for

4 a longer portion of such 180-day period than in any

5 other place’’.

6 SEC. 125. RESTRICTIONS ON CERTAIN EXEMPT PROPERTY

7 OBTAINED THROUGH FRAUD.

8 Section 522 of title 11, United States Code, as amend9 ed by section 113, is amended—

10 (1) in subsection (b)(2)(A) by inserting ‘‘subject

11 to subsection (o),’’ before ‘‘any property’’; and

12 (2) by adding at the end the following:

13 ‘‘(o) For purposes of subsection (b)(3)(A) and notwith14 standing subsection (a), the value of an interest in—

15 ‘‘(1) real or personal property that the debtor or

16 a dependent of the debtor uses as a residence;

17 ‘‘(2) a cooperative that owns property that the

18 debtor or a dependent of the debtor uses as a resi19 dence; or

20 ‘‘(3) a burial plot for the debtor or a dependent

21 of the debtor;

22 shall be reduced to the extent such value is attributable to

23 any portion of any property that the debtor disposed of in

24 the 730-day period ending of the date of the filing of the

25 petition, with the intent to hinder, delay, or defraud a cred-
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1 itor and that the debtor could not exempt, or that portion

2 that the debtor could not exempt, under subsection (b) if

3 on such date the debtor had held the property so disposed

4 of.’’.

5 SEC. 126. ROLLING STOCK EQUIPMENT.

6 (a) IN GENERAL.—Section 1168 of title 11, United

7 States Code, is amended to read as follows:

8 ‘‘§ 1168. Rolling stock equipment

9 ‘‘(a)(1) The right of a secured party with a security

10 interest in or of a lessor or conditional vendor of equipment

11 described in paragraph (2) to take possession of such equip12 ment in compliance with an equipment security agreement,

13 lease, or conditional sale contract, and to enforce any of

14 its other rights or remedies under such security agreement,

15 lease, or conditional sale contract, to sell, lease, or otherwise

16 retain or dispose of such equipment, is not limited or other17 wise affected by any other provision of this title or by any

18 power of the court, except that the right to take possession

19 and enforce those other rights and remedies shall be subject

20 to section 362 of this title, if—

21 ‘‘(A) before the date that is 60 days after the

22 date of commencement of a case under this chapter,

23 the trustee, subject to the court’s approval, agrees to

24 perform all obligations of the debtor under such secu-
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1 rity agreement, lease, or conditional sale contract;

2 and

3 ‘‘(B) any default, other than a default of a kind

4 described in section 365(b)(2) of this title, under such

5 security agreement, lease, or conditional sale

6 contract—

7 ‘‘(i) that occurs before the date of com8 mencement of the case and is an event of default

9 therewith is cured before the expiration of such

10 60-day period;

11 ‘‘(ii) that occurs or becomes an event of de12 fault after the date of commencement of the case

13 and before the expiration of such 60-day period

14 is cured before the later of—

15 ‘‘(I) the date that is 30 days after the

16 date of the default or event of the default; or

17 ‘‘(II) the expiration of such 60-day pe18 riod; and

19 ‘‘(iii) that occurs on or after the expiration

20 of such 60-day period is cured in accordance

21 with the terms of such security agreement, lease,

22 or conditional sale contract, if cure is permitted

23 under that agreement, lease, or conditional sale

24 contract.

25 ‘‘(2) The equipment described in this paragraph—
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1 ‘‘(A) is rolling stock equipment or accessories

2 used on rolling stock equipment, including super3 structures or racks, that is subject to a security inter4 est granted by, leased to, or conditionally sold to a

5 debtor; and

6 ‘‘(B) includes all records and documents relating

7 to such equipment that are required, under the terms

8 of the security agreement, lease, or conditional sale

9 contract, that is to be surrendered or returned by the

10 debtor in connection with the surrender or return of

11 such equipment.

12 ‘‘(3) Paragraph (1) applies to a secured party, lessor,

13 or conditional vendor acting in its own behalf or acting

14 as trustee or otherwise in behalf of another party.

15 ‘‘(b) The trustee and the secured party, lessor, or condi16 tional vendor whose right to take possession is protected

17 under subsection (a) may agree, subject to the court’s ap18 proval, to extend the 60-day period specified in subsection

19 (a)(1).

20 ‘‘(c)(1) In any case under this chapter, the trustee shall

21 immediately surrender and return to a secured party, les22 sor, or conditional vendor, described in subsection (a)(1),

23 equipment described in subsection (a)(2), if at any time

24 after the date of commencement of the case under this chap25 ter such secured party, lessor, or conditional vendor is enti-
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1 tled pursuant to subsection (a)(1) to take possession of such

2 equipment and makes a written demand for such possession

3 of the trustee.

4 ‘‘(2) At such time as the trustee is required under

5 paragraph (1) to surrender and return equipment described

6 in subsection (a)(2), any lease of such equipment, and any

7 security agreement or conditional sale contract relating to

8 such equipment, if such security agreement or conditional

9 sale contract is an executory contract, shall be deemed re10 jected.

11 ‘‘(d) With respect to equipment first placed in service

12 on or prior to October 22, 1994, for purposes of this

13 section—

14 ‘‘(1) the term ‘lease’ includes any written agree15 ment with respect to which the lessor and the debtor,

16 as lessee, have expressed in the agreement or in a sub17 stantially contemporaneous writing that the agree18 ment is to be treated as a lease for Federal income

19 tax purposes; and

20 ‘‘(2) the term ‘security interest’ means a pur21 chase-money equipment security interest.

22 ‘‘(e) With respect to equipment first placed in service

23 after October 22, 1994, for purposes of this section, the term

24 ‘rolling stock equipment’ includes rolling stock equipment
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1 that is substantially rebuilt and accessories used on such

2 equipment.’’.

3 (b) AIRCRAFT EQUIPMENT AND VESSELS.—Section

4 1110 of title 11, United States Code, is amended to read

5 as follows:

6 ‘‘§ 1110. Aircraft equipment and vessels

7 ‘‘(a)(1) Except as provided in paragraph (2) and sub8 ject to subsection (b), the right of a secured party with a

9 security interest in equipment described in paragraph (3),

10 or of a lessor or conditional vendor of such equipment, to

11 take possession of such equipment in compliance with a se12 curity agreement, lease, or conditional sale contract, and

13 to enforce any of its other rights or remedies, under such

14 security agreement, lease, or conditional sale contract, to

15 sell, lease, or otherwise retain or dispose of such equipment,

16 is not limited or otherwise affected by any other provision

17 of this title or by any power of the court.

18 ‘‘(2) The right to take possession and to enforce the

19 other rights and remedies described in paragraph (1) shall

20 be subject to section 362 of this title if—

21 ‘‘(A) before the date that is 60 days after the

22 date of the order for relief under this chapter, the

23 trustee, subject to the approval of the court, agrees to

24 perform all obligations of the debtor under such secu-
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1 rity agreement, lease, or conditional sale contract;

2 and

3 ‘‘(B) any default, other than a default of a kind

4 specified in section 365(b)(2) of this title, under such

5 security agreement, lease, or conditional sale

6 contract—

7 ‘‘(i) that occurs before the date of the order

8 is cured before the expiration of such 60-day pe9 riod;

10 ‘‘(ii) that occurs after the date of the order

11 and before the expiration of such 60-day period

12 is cured before the later of—

13 ‘‘(I) the date that is 30 days after the

14 date of the default; or

15 ‘‘(II) the expiration of such 60-day pe16 riod; and

17 ‘‘(iii) that occurs on or after the expiration

18 of such 60-day period is cured in compliance

19 with the terms of such security agreement, lease,

20 or conditional sale contract, if a cure is per21 mitted under that agreement, lease, or contract.

22 ‘‘(3) The equipment described in this paragraph—

23 ‘‘(A) is—

24 ‘‘(i) an aircraft, aircraft engine, propeller,

25 appliance, or spare part (as defined in section
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1 40102 of title 49) that is subject to a security in2 terest granted by, leased to, or conditionally sold

3 to a debtor that, at the time such transaction is

4 entered into, holds an air carrier operating cer5 tificate issued pursuant to chapter 447 of title 49

6 for aircraft capable of carrying 10 or more indi7 viduals or 6,000 pounds or more of cargo; or

8 ‘‘(ii) a documented vessel (as defined in sec9 tion 30101(1) of title 46) that is subject to a se10 curity interest granted by, leased to, or condi11 tionally sold to a debtor that is a water carrier

12 that, at the time such transaction is entered into,

13 holds a certificate of public convenience and ne14 cessity or permit issued by the Department of

15 Transportation; and

16 ‘‘(B) includes all records and documents relating

17 to such equipment that are required, under the terms

18 of the security agreement, lease, or conditional sale

19 contract, to be surrendered or returned by the debtor

20 in connection with the surrender or return of such

21 equipment.

22 ‘‘(4) Paragraph (1) applies to a secured party, lessor,

23 or conditional vendor acting in its own behalf or acting

24 as trustee or otherwise in behalf of another party.
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1 ‘‘(b) The trustee and the secured party, lessor, or condi2 tional vendor whose right to take possession is protected

3 under subsection (a) may agree, subject to the approval of

4 the court, to extend the 60-day period specified in subsection

5 (a)(1).

6 ‘‘(c)(1) In any case under this chapter, the trustee shall

7 immediately surrender and return to a secured party, les8 sor, or conditional vendor, described in subsection (a)(1),

9 equipment described in subsection (a)(3), if at any time

10 after the date of the order for relief under this chapter such

11 secured party, lessor, or conditional vendor is entitled pur12 suant to subsection (a)(1) to take possession of such equip13 ment and makes a written demand for such possession to

14 the trustee.

15 ‘‘(2) At such time as the trustee is required under

16 paragraph (1) to surrender and return equipment described

17 in subsection (a)(3), any lease of such equipment, and any

18 security agreement or conditional sale contract relating to

19 such equipment, if such security agreement or conditional

20 sale contract is an executory contract, shall be deemed re21 jected.

22 ‘‘(d) With respect to equipment first placed in service

23 on or before October 22, 1994, for purposes of this section—

24 ‘‘(1) the term ‘lease’ includes any written agree25 ment with respect to which the lessor and the debtor,
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1 as lessee, have expressed in the agreement or in a sub2 stantially contemporaneous writing that the agree3 ment is to be treated as a lease for Federal income

4 tax purposes; and

5 ‘‘(2) the term ‘security interest’ means a pur6 chase-money equipment security interest.’’.

7 SEC. 127. DISCHARGE UNDER CHAPTER 13.

8 Section 1328(a) of title 11, United States Code, is

9 amended by striking paragraphs (1) through (3) and insert10 ing the following:

11 ‘‘(1) provided for under section 1322(b)(5) of this

12 title;

13 ‘‘(2) of the kind specified in paragraph (2), (4),

14 (3)(B), (5), (8), or (9) of section 523(a) of this title;

15 ‘‘(3) for restitution, or a criminal fine, included

16 in a sentence on the debtor’s conviction of a crime; or

17 ‘‘(4) for restitution, or damages, awarded in a

18 civil action against the debtor as a result of willful

19 or malicious injury by the debtor that caused per20 sonal injury to an individual or the death of an indi21 vidual.’’.

22 SEC. 128. BANKRUPTCY JUDGESHIPS.

23 (a) SHORT TITLE.—This section may be cited as the

24 ‘‘Bankruptcy Judgeship Act of 1999’’.

25 (b) TEMPORARY JUDGESHIPS.—
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1 (1) APPOINTMENTS.—The following judgeship

2 positions shall be filled in the manner prescribed in

3 section 152(a)(1) of title 28, United States Code, for

4 the appointment of bankruptcy judges provided for in

5 section 152(a)(2) of such title:

6 (A) One additional bankruptcy judgeship

7 for the eastern district of California.

8 (B) Four additional bankruptcy judgeships

9 for the central district of California.

10 (C) One additional bankruptcy judgeship

11 for the southern district of Florida.

12 (D) Two additional bankruptcy judgeships

13 for the district of Maryland.

14 (E) One additional bankruptcy judgeship

15 for the eastern district of Michigan.

16 (F) One additional bankruptcy judgeship

17 for the southern district of Mississippi.

18 (G) One additional bankruptcy judgeship

19 for the district of New Jersey.

20 (H) One additional bankruptcy judgeship

21 for the eastern district of New York.

22 (I) One additional bankruptcy judgeship for

23 the northern district of New York.

24 (J) One additional bankruptcy judgeship

25 for the southern district of New York.
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1 (K) One additional bankruptcy judgeship

2 for the eastern district of Pennsylvania.

3 (L) One additional bankruptcy judgeship

4 for the middle district of Pennsylvania.

5 (M) One additional bankruptcy judgeship

6 for the western district of Tennessee.

7 (N) One additional bankruptcy judgeship

8 for the eastern district of Virginia.

9 (2) VACANCIES.—The first vacancy occurring in

10 the office of a bankruptcy judge in each of the judicial

11 districts set forth in paragraph (1) that—

12 (A) results from the death, retirement, res13 ignation, or removal of a bankruptcy judge; and

14 (B) occurs 5 years or more after the ap15 pointment date of a bankruptcy judge appointed

16 under paragraph (1);

17 shall not be filled.

18 (c) EXTENSIONS.—

19 (1) IN GENERAL.—The temporary bankruptcy

20 judgeship positions authorized for the northern dis21 trict of Alabama, the district of Delaware, the district

22 of Puerto Rico, the district of South Carolina, and the

23 eastern district of Tennessee under section 3(a) (1),

24 (3), (7), (8), and (9) of the Bankruptcy Judgeship Act

25 of 1992 (28 U.S.C. 152 note) are extended until the
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1 first vacancy occurring in the office of a bankruptcy

2 judge in the applicable district resulting from the

3 death, retirement, resignation, or removal of a bank4 ruptcy judge and occurring—

5 (A) 8 years or more after November 8, 1993,

6 with respect to the northern district of Alabama;

7 (B) 10 years or more after October 28,

8 1993, with respect to the district of Delaware;

9 (C) 8 years or more after August 29, 1994,

10 with respect to the district of Puerto Rico;

11 (D) 8 years or more after June 27, 1994,

12 with respect to the district of South Carolina;

13 and

14 (E) 8 years or more after November 23,

15 1993, with respect to the eastern district of Ten16 nessee.

17 (2) APPLICABILITY OF OTHER PROVISIONS.—All

18 other provisions of section 3 of the Bankruptcy Judge19 ship Act of 1992 remain applicable to such temporary

20 judgeship position.

21 (d) TECHNICAL AMENDMENT.—The first sentence of

22 section 152(a)(1) of title 28, United States Code, is amend23 ed to read as follows: ‘‘Each bankruptcy judge to be ap24 pointed for a judicial district as provided in paragraph (2)
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1 shall be appointed by the United States court of appeals

2 for the circuit in which such district is located.’’.

3 (e) TRAVEL EXPENSES OF BANKRUPTCY JUDGES.—

4 Section 156 of title 28, United States Code, is amended by

5 adding at the end the following new subsection:

6 ‘‘(g)(1) In this subsection, the term ‘travel expenses’—

7 ‘‘(A) means the expenses incurred by a bank8 ruptcy judge for travel that is not directly related to

9 any case assigned to such bankruptcy judge; and

10 ‘‘(B) shall not include the travel expenses of a

11 bankruptcy judge if—

12 ‘‘(i) the payment for the travel expenses is

13 paid by such bankruptcy judge from the personal

14 funds of such bankruptcy judge; and

15 ‘‘(ii) such bankruptcy judge does not receive

16 funds (including reimbursement) from the

17 United States or any other person or entity for

18 the payment of such travel expenses.

19 ‘‘(2) Each bankruptcy judge shall annually submit the

20 information required under paragraph (3) to the chief

21 bankruptcy judge for the district in which the bankruptcy

22 judge is assigned.

23 ‘‘(3)(A) Each chief bankruptcy judge shall submit an

24 annual report to the Director of the Administrative Office

25 of the United States Courts on the travel expenses of each
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1 bankruptcy judge assigned to the applicable district (in2 cluding the travel expenses of the chief bankruptcy judge

3 of such district).

4 ‘‘(B) The annual report under this paragraph shall

5 include—

6 ‘‘(i) the travel expenses of each bankruptcy judge,

7 with the name of the bankruptcy judge to whom the

8 travel expenses apply;

9 ‘‘(ii) a description of the subject matter and pur10 pose of the travel relating to each travel expense iden11 tified under clause (i), with the name of the bank12 ruptcy judge to whom the travel applies; and

13 ‘‘(iii) the number of days of each travel described

14 under clause (ii), with the name of the bankruptcy

15 judge to whom the travel applies.

16 ‘‘(4)(A) The Director of the Administrative Office of

17 the United States Courts shall—

18 ‘‘(i) consolidate the reports submitted under

19 paragraph (3) into a single report; and

20 ‘‘(ii) annually submit such consolidated report to

21 Congress.

22 ‘‘(B) The consolidated report submitted under this

23 paragraph shall include the specific information required

24 under paragraph (3)(B), including the name of each bank-
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1 ruptcy judge with respect to clauses (i), (ii), and (iii) of

2 paragraph (3)(B).’’.

3 SEC. 129. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED

4 STATES CODE.

5 Section 507(a) of title 11, United States Code, is

6 amended by inserting after paragraph (9) the following:

7 ‘‘(10) Tenth, allowed claims for death or per8 sonal injuries resulting from the operation of a motor

9 vehicle or vessel if such operation was unlawful be10 cause the debtor was intoxicated from using alcohol,

11 a drug or another substance.’’.

12 SEC. 130. AMENDMENT TO SECTION 1325 OF TITLE 11,

13 UNITED STATES CODE.

14 Section 1325(b) of title 11, United States Code, is

15 amended—

16 (1) in paragraph (1), by inserting ‘‘to unsecured

17 creditors’’ after ‘‘to make payments’’;

18 (2) in paragraph (2)—

19 (A) by inserting ‘‘current monthly’’ before

20 ‘‘income’’;

21 (B) by striking ‘‘and which is not’’ and in22 serting ‘‘less amounts’’;

23 (C) by inserting after ‘‘received by the debt24 or’’, ‘‘(other than child support payments, foster

25 care payments, or disability payments for a de-
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1 pendent child made in accordance with applica2 ble nonbankruptcy law and which is reasonably

3 necessary to be expended)’’; and

4 (D) in subparagraph (A) by inserting after

5 ‘‘dependent of the debtor’’ the following: ‘‘, as de6 termined in accordance with section

7 707(b)(2)(A) and if applicable 707(b)(2)(B)’’.

8 SEC. 131. APPLICATION OF THE CODEBTOR STAY ONLY

9 WHEN THE STAY PROTECTS THE DEBTOR.

10 Section 1301(b) of title 11, United States Code, is

11 amended—

12 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and

13 (2) by adding at the end the following:

14 ‘‘(2)(A) Notwithstanding subsection (c) and except as

15 provided in subparagraph (B), in any case in which the

16 debtor did not receive the consideration for the claim held

17 by a creditor, the stay provided by subsection (a) shall

18 apply to that creditor for a period not to exceed 30 days

19 beginning on the date of the order for relief, to the extent

20 the creditor proceeds against—

21 ‘‘(i) the individual that received that consider22 ation; or

23 ‘‘(ii) property not in the possession of the debtor

24 that secures that claim.
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1 ‘‘(B) Notwithstanding subparagraph (A), the stay pro2 vided by subsection (a) shall apply in any case in which

3 the debtor is primarily obligated to pay the creditor in

4 whole or in part with respect to a claim described in sub5 paragraph (A) under a legally binding separation or prop6 erty settlement agreement or divorce or dissolution decree

7 with respect to—

8 ‘‘(i) an individual described in subparagraph

9 (A)(i); or

10 ‘‘(ii) property described in subparagraph (A)(ii).

11 ‘‘(3) Notwithstanding subsection (c), the stay provided

12 by subsection (a) shall terminate as of the date of confirma13 tion of the plan, in any case in which the plan of the debtor

14 provides that the debtor’s interest in personal property sub15 ject to a lease with respect to which the debtor is the lessee

16 will be surrendered or abandoned or no payments will be

17 made under the plan on account of the debtor’s obligations

18 under the lease.’’.

19 SEC. 132. ADEQUATE PROTECTION FOR INVESTORS.

20 (a) DEFINITION.—Section 101 of title 11, United

21 States Code, is amended by inserting after paragraph (48)

22 the following:

23 ‘‘(48A) ‘securities self regulatory organization’

24 means either a securities association registered with

25 the Securities and Exchange Commission pursuant to
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1 section 15A of the Securities Exchange Act of 1934 or

2 a national securities exchange registered with the Se3 curities and Exchange Commission pursuant to sec4 tion 6 of the Securities Exchange Act of 1934;’’.

5 (b) AUTOMATIC STAY.—Section 362(b) of title 11,

6 United States Code, as amended by section 118, is

7 amended—

8 (1) in paragraph (19) by striking ‘‘or’’ at the

9 end;

10 (2) in paragraph (20) by striking the period at

11 the end and a inserting ‘‘; or’’; and

12 (3) by inserting after paragraph (20) the fol13 lowing:

14 ‘‘(21) under subsection (a), of the commencement

15 or continuation of an investigation or action by a se16 curities self regulatory organization to enforce such

17 organization’s regulatory power; of the enforcement of

18 an order or decision, other than for monetary sanc19 tions, obtained in an action by the securities self reg20 ulatory organization to enforce such organization’s

21 regulatory power; or of any act taken by the securities

22 self regulatory organization to delist, delete, or refuse

23 to permit quotation of any stock that does not meet

24 applicable regulatory requirements.’’.
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1 SEC. 133. LIMITATION ON LUXURY GOODS.

2 Section 523(a)(2)(C) of title 11, United States Code,

3 is amended to read as follows:

4 ‘‘(C)(i) for purposes of subparagraph (A),

5 consumer debts owed to a single creditor and ag6 gregating more than $250 for ‘luxury goods or

7 services’ incurred by an individual debtor on or

8 within 90 days before the order for relief under

9 this title, or cash advances aggregating more

10 than $250 that are extensions of consumer credit

11 under an open end credit plan obtained by an

12 individual debtor on or within 90 days before the

13 order for relief under this title, are presumed to

14 be nondischargeable; and

15 ‘‘(ii) for purposes of this subparagraph—

16 ‘‘(I) the term ‘luxury goods or services’

17 does not include goods or services reason18 ably necessary for the support or mainte19 nance of the debtor or a dependent of the

20 debtor; and

21 ‘‘(II) the term ‘an extension of con22 sumer credit under an open end credit plan’

23 has the same meaning such term has for

24 purposes of the Consumer Credit Protection

25 Act;’’.
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1 SEC. 134. GIVING DEBTORS THE ABILITY TO KEEP LEASED

2 PERSONAL PROPERTY BY ASSUMPTION.

3 Section 365 of title 11, United States Code, is amended

4 by adding at the end the following:

5 ‘‘(p)(1) If a lease of personal property is rejected or

6 not timely assumed by the trustee under subsection (d), the

7 leased property is no longer property of the estate and the

8 stay under section 362(a) of this title is automatically ter9 minated.

10 ‘‘(2) In the case of an individual under chapter 7, the

11 debtor may notify the creditor in writing that the debtor

12 desires to assume the lease. Upon being so notified, the cred13 itor may, at its option, notify the debtor that it is willing

14 to have the lease assumed by the debtor and may, at its

15 option, condition such assumption on cure of any out16 standing default on terms set by the contract. If within 30

17 days of the notice from the creditor the debtor notifies the

18 lessor in writing that the lease is assumed, the liability

19 under the lease will be assumed by the debtor and not by

20 the estate. The stay under section 362 of this title and the

21 injunction under section 524(a) of this title shall not be

22 violated by notification of the debtor and negotiation of cure

23 under this subsection. Nothing in this paragraph shall re24 quire a debtor to assume a lease, or a creditor to permit

25 assumption.
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1 ‘‘(3) In a case under chapter 11 of this title in which

2 the debtor is an individual and in a case under chapter

3 13 of this title, if the debtor is the lessee with respect to

4 personal property and the lease is not assumed in the plan

5 confirmed by the court, the lease is deemed rejected as of

6 the conclusion of the hearing on confirmation. If the lease

7 is rejected, the stay under section 362 of this title and any

8 stay under section 1301 is automatically terminated with

9 respect to the property subject to the lease.’’.

10 SEC. 135. ADEQUATE PROTECTION OF LESSORS AND PUR11 CHASE MONEY SECURED CREDITORS.

12 (a) IN GENERAL.—Chapter 13 of title 11, United

13 States Code, is amended by adding after section 1307 the

14 following:

15 ‘‘§ 1307A. Adequate protection in chapter 13 cases

16 ‘‘(a)(1)(A) On or before the date that is 30 days after

17 the filing of a case under this chapter, the debtor shall make

18 cash payments in an amount determined under paragraph

19 (2), to—

20 ‘‘(i) any lessor of personal property; and

21 ‘‘(ii) any creditor holding a claim secured by

22 personal property to the extent that the claim is at23 tributable to the purchase of that property by the

24 debtor.
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1 ‘‘(B) The debtor or the plan shall continue making the

2 adequate protection payments required under subparagraph

3 (A) until the earlier of the date on which—

4 ‘‘(i) the creditor begins to receive actual pay5 ments under the plan; or

6 ‘‘(ii) the debtor relinquishes possession of the

7 property referred to in subparagraph (A) to—

8 ‘‘(I) the lessor or creditor; or

9 ‘‘(II) any third party acting under claim of

10 right, as applicable.

11 ‘‘(2) The payments referred to in paragraph (1)(A)

12 shall be the contract amount and shall reduce any amount

13 payable under section 1326(a) of the title.

14 ‘‘(b)(1) Subject to the limitations under paragraph (2),

15 the court may, after notice and hearing, change the amount

16 and timing of the dates of payment of payments made

17 under subsection (a).

18 ‘‘(2)(A) The payments referred to in paragraph (1)

19 shall be payable not less frequently than monthly.

20 ‘‘(B) The amount of payments referred to in para21 graph (1) shall not be less than the amount of any weekly,

22 biweekly, monthly, or other periodic payment scheduled as

23 payable under the contract between the debtor and creditor.

24 ‘‘(c) Notwithstanding section 1326(b), the payments

25 referred to in subsection (a)(1)(A) shall be continued in ad-
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1 dition to plan payments under a confirmed plan until ac2 tual payments to the creditor begin under that plan, if the

3 confirmed plan provides—

4 ‘‘(1) for payments to a creditor or lessor de5 scribed in subsection (a)(1); and

6 ‘‘(2) for the deferral of payments to such creditor

7 or lessor under the plan until the payment of

8 amounts described in section 1326(b).

9 ‘‘(d) Notwithstanding sections 362, 542, and 543, a les10 sor or creditor described in subsection (a) may retain pos11 session of property described in that subsection that was

12 obtained in accordance with applicable law before the date

13 of filing of the petition until the first payment under sub14 section (a)(1)(A) is received by the lessor or creditor.

15 ‘‘(e) On or before 60 days after the filling of a case

16 under this chapter, a debtor retaining possession of personal

17 property subject to a lease or securing a claim attributable

18 in whole or in part to the purchase price of such property

19 shall provide each creditor or lessor reasonable evidence of

20 the maintenance of any required insurance coverage with

21 respect to the use or ownership of such property and con22 tinue to do so for so long as the debtor retains possession

23 of such property.’’.

24 (b) CLERICAL AMENDMENT.—The table of sections at

25 the beginning of chapter 13 of title 11, United States Code,
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1 is amended by inserting after the item relating to section

2 1307 the following:

‘‘1307A. Adequate protection in chapter 13 cases.’’.

3 SEC. 136. AUTOMATIC STAY.

4 Section 362(b) of title 11, United States Code, as

5 amended by sections 118 and 132, is amended—

6 (1) in paragraph (20), by striking ‘‘or’’ at the

7 end;

8 (2) in paragraph (21), by striking the period at

9 the end and inserting a semicolon; and

10 (3) by inserting after paragraph (21) the fol11 lowing:

12 ‘‘(22) under subsection (a) of any transfer that

13 is not avoidable under section 544 of this title and

14 that is not avoidable under section 549 of this title;

15 ‘‘(23) under subsection (a)(3), of the continu16 ation of any eviction, unlawful detainer action, or

17 similar proceeding by a lessor against a debtor in18 volving residential real property in which the debtor

19 resides as a tenant under a rental agreement and the

20 debtor has not paid rent to the lessor pursuant to the

21 terms of the lease agreement or applicable State law

22 after the commencement and during the course of the

23 case;

24 ‘‘(24) under subsection (a)(3), of the commence25 ment or continuation of any eviction, unlawful de-
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1 tainer action, or similar proceeding by a lessor

2 against a debtor involving residential real property

3 in which the debtor resides as a tenant under a rental

4 agreement that has terminated pursuant to the lease

5 agreement or applicable State law;

6 ‘‘(25) under subsection (a)(3), of any eviction,

7 unlawful detainer action, or similar proceeding, if the

8 debtor has previously filed within the last year and

9 failed to pay post-petition rent during the course of

10 that case; or

11 ‘‘(26) under subsection (a)(3), of eviction actions

12 based on endangerment to property or person or the

13 use of illegal drugs.’’.

14 SEC. 137. EXTEND PERIOD BETWEEN BANKRUPTCY DIS15 CHARGES.

16 Title 11, United States Code, is amended—

17 (1) in section 727(a)(8) by striking ‘‘six’’ and

18 inserting ‘‘8’’; and

19 (2) in section 1328 by adding at the end the fol20 lowing:

21 ‘‘(f) Notwithstanding subsections (a) and (b), the court

22 shall not grant a discharge of all debts provided for by the

23 plan or disallowed under section 502 of this title if the debt24 or has received a discharge in any case filed under this title

25 within 5 years of the order for relief under this chapter.’’.
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1 SEC. 138. DEFINITION OF DOMESTIC SUPPORT OBLIGA2 TION.

3 Section 101 of title 11, United States Code, is

4 amended—

5 (1) by striking paragraph (12A); and

6 (2) by inserting after paragraph (14) the fol7 lowing:

8 ‘‘(14A) ‘domestic support obligation’ means a

9 debt that accrues before or after the entry of an order

10 for relief under this title that is—

11 ‘‘(A) owed to or recoverable by—

12 ‘‘(i) a spouse, former spouse, or child of

13 the debtor or that child’s legal guardian; or

14 ‘‘(ii) a governmental unit;

15 ‘‘(B) in the nature of alimony, mainte16 nance, or support (including assistance provided

17 by a governmental unit) of such spouse, former

18 spouse, or child, without regard to whether such

19 debt is expressly so designated;

20 ‘‘(C) established or subject to establishment

21 before or after entry of an order for relief under

22 this title, by reason of applicable provisions of—

23 ‘‘(i) a separation agreement, divorce

24 decree, or property settlement agreement;

25 ‘‘(ii) an order of a court of record; or
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1 ‘‘(iii) a determination made in accord2 ance with applicable nonbankruptcy law by

3 a governmental unit; and

4 ‘‘(D) not assigned to a nongovernmental en5 tity, unless that obligation is assigned volun6 tarily by the spouse, former spouse, child, or par7 ent solely for the purpose of collecting the debt.’’.

8 SEC. 139. PRIORITIES FOR CLAIMS FOR DOMESTIC SUP9 PORT OBLIGATIONS.

10 Section 507(a) of title 11, United States Code, is

11 amended—

12 (1) by striking paragraph (7);

13 (2) by redesignating paragraphs (1) through (6)

14 as paragraphs (2) through (7), respectively;

15 (3) in paragraph (2), as redesignated, by strik16 ing ‘‘First’’ and inserting ‘‘Second’’;

17 (4) in paragraph (3), as redesignated, by strik18 ing ‘‘Second’’ and inserting ‘‘Third’’;

19 (5) in paragraph (4), as redesignated, by strik20 ing ‘‘Third’’ and inserting ‘‘Fourth’’;

21 (6) in paragraph (5), as redesignated, by strik22 ing ‘‘Fourth’’ and inserting ‘‘Fifth’’;

23 (7) in paragraph (6), as redesignated, by strik24 ing ‘‘Fifth’’ and inserting ‘‘Sixth’’;
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1 (8) in paragraph (7), as redesignated, by strik2 ing ‘‘Sixth’’ and inserting ‘‘Seventh’’; and

3 (9) by inserting before paragraph (2), as redesig4 nated, the following:

5 ‘‘(1) First, allowed claims for domestic support

6 obligations to be paid in the following order on the

7 condition that funds received under this paragraph by

8 a governmental unit in a case under this title be ap9 plied:

10 ‘‘(A) Claims that, as of the date of entry of

11 the order for relief, are owed directly to a spouse,

12 former spouse, or child of the debtor, or the par13 ent of such child, without regard to whether the

14 claim is filed by the spouse, former spouse, child,

15 or parent, or is filed by a governmental unit on

16 behalf of that person.

17 ‘‘(B) Claims that, as of the date of entry of

18 the order for relief, are assigned by a spouse,

19 former spouse, child of the debtor, or the parent

20 of that child to a governmental unit or are owed

21 directly to a governmental unit under applicable

22 nonbankruptcy law.’’.
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1 SEC. 140. REQUIREMENTS TO OBTAIN CONFIRMATION AND

2 DISCHARGE IN CASES INVOLVING DOMESTIC

3 SUPPORT OBLIGATIONS.

4 Title 11, United States Code, is amended—

5 (1) in section 1129(a), by adding at the end the

6 following:

7 ‘‘(14) If the debtor is required by a judicial or

8 administrative order or statute to pay a domestic

9 support obligation, the debtor has paid all amounts

10 payable under such order or statute for such obliga11 tion that become payable after the date on which the

12 petition is filed.’’;

13 (2) in section 1325(a)—

14 (A) in paragraph (5), by striking ‘‘and’’ at

15 the end;

16 (B) in paragraph (6), by striking the period

17 at the end and inserting ‘‘; and’’; and

18 (C) by adding at the end the following:

19 ‘‘(7) if the debtor is required by a judicial or ad20 ministrative order or statute to pay a domestic sup21 port obligation, the debtor has paid all amounts pay22 able under such order for such obligation that become

23 payable after the date on which the petition is filed.’’;

24 and

25 (3) in section 1328(a), as amended by section

26 127, in the matter preceding paragraph (1), by in-
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1 serting ‘‘, and with respect to a debtor who is re2 quired by a judicial or administrative order to pay

3 a domestic support obligation, certifies that all

4 amounts payable under such order or statute that are

5 due on or before the date of the certification (includ6 ing amounts due before or after the petition was filed)

7 have been paid’’ after ‘‘completion by the debtor of all

8 payments under the plan’’.

9 SEC. 141. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC

10 SUPPORT OBLIGATION PROCEEDINGS.

11 Section 362(b) of title 11, United States Code, as

12 amended by sections 118, 132, and 136, is amended—

13 (1) by striking paragraph (2) and inserting the

14 following:

15 ‘‘(2) under subsection (a)—

16 ‘‘(A) of the commencement or continuation

17 of an action or proceeding for—

18 ‘‘(i) the establishment of paternity; or

19 ‘‘(ii) the establishment or modification

20 of an order for domestic support obligations;

21 or

22 ‘‘(B) the collection of a domestic support ob23 ligation from property that is not property of the

24 estate;’’;
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1 (2) in paragraph (25), by striking ‘‘or’’ at the

2 end;

3 (3) in paragraph (26), by striking the period at

4 the end and inserting a semicolon; and

5 (4) by inserting after paragraph (26) the fol6 lowing:

7 ‘‘(27) under subsection (a) with respect to the

8 withholding of income pursuant to an order as speci9 fied in section 466(b) of the Social Security Act (42

10 U.S.C. 666(b)); or

11 ‘‘(28) under subsection (a) with respect to—

12 ‘‘(A) the withholding, suspension, or restric13 tion of drivers’ licenses, professional and occupa14 tional licenses, and recreational licenses pursu15 ant to State law, as specified in section

16 466(a)(16) of the Social Security Act (42 U.S.C.

17 666(a)(16)) or with respect to the reporting of

18 overdue support owed by an absent parent to

19 any consumer reporting agency as specified in

20 section 466(a)(7) of the Social Security Act (42

21 U.S.C. 666(a)(7));

22 ‘‘(B) the interception of tax refunds, as

23 specified in sections 464 and 466(a)(3) of the So24 cial Security Act (42 U.S.C. 664 and 666(a)(3));

25 or
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1 ‘‘(C) the enforcement of medical obligations

2 as specified under title IV of the Social Security

3 Act (42 U.S.C. 601 et seq.).’’.

4 SEC. 142. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR

5 ALIMONY, MAINTENANCE, AND SUPPORT.

6 Section 523 of title 11, United States Code, is

7 amended—

8 (1) in subsection (a), by striking paragraph (5)

9 and inserting the following:

10 ‘‘(5) for a domestic support obligation;’’;

11 (2) in subsection (a)(15)—

12 (A) by inserting ‘‘or’’ after ‘‘court of

13 record,’’;

14 (B) by striking ‘‘unless—’’ and all that fol15 lows through ‘‘debtor’’ the last place it appears;

16 and

17 (3) in subsection (c), by striking ‘‘(6), or (15)’’

18 each place it appears and inserting ‘‘or (6)’’.

19 SEC. 143. CONTINUED LIABILITY OF PROPERTY.

20 Section 522 of title 11, United States Code, is

21 amended—

22 (1) in subsection (c), by striking paragraph (1)

23 and inserting the following:

24 ‘‘(1) a debt of a kind specified in paragraph (1)

25 or (5) of section 523(a) (in which case, notwith-
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1 standing any provision of applicable nonbankruptcy

2 law to the contrary, such property shall be liable for

3 a debt of a kind specified in section 523(a)(5);’’; and

4 (2) in subsection (f)(1)(A), by striking the dash

5 and all that follows through the end of the subpara6 graph and inserting ‘‘of a kind that is specified in

7 section 523(a)(5); or’’.

8 SEC. 144. PROTECTION OF DOMESTIC SUPPORT CLAIMS

9 AGAINST PREFERENTIAL TRANSFER MO10 TIONS.

11 Section 547(c)(7) of title 11, United States Code, is

12 amended to read as follows:

13 ‘‘(7) to the extent such transfer was a bona fide

14 payment of a debt for a domestic support obligation;

15 or’’.

16 SEC. 145. CLARIFICATION OF MEANING OF HOUSEHOLD

17 GOODS.

18 Section 101 of title 11, United States Code, is amended

19 by inserting after paragraph (27) the following:

20 ‘‘(27A) ‘household goods’ includes tangible per21 sonal property normally found in or around a resi22 dence, but does not include motorized vehicles used for

23 transportation purposes;’’.
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1 SEC. 146. NONDISCHARGEABLE DEBTS.

2 Section 523(a) of title 11, United States Code, is

3 amended by inserting after paragraph (14) the following:

4 ‘‘(14A) incurred to pay a debt that is non5 dischargeable by reason of section 727, 1141, 1228(a),

6 1228(b), or 1328(c), or any other provision of this

7 subsection, if the debtor incurred the debt to pay such

8 a nondischargeable debt with the intent to discharge

9 in bankruptcy the newly-created debt, except that all

10 debts incurred to pay nondischargeable debts, without

11 regard to intent, are nondischargeable if incurred

12 within 90 days of the filing of the petition;’’.

13 SEC. 147. MONETARY LIMITATION ON CERTAIN EXEMPT

14 PROPERTY.

15 Section 522 of title 11, United States Code, as amend16 ed by section 125, is amended—

17 (1) in subsection (b)(2)(A) by striking ‘‘sub18 section (o)’’ and inserting ‘‘subsections (o) and (p)’’

19 before ‘‘any property’’; and

20 (2) by adding at the end the following:

21 ‘‘(p)(1) Except as provided in paragraphs (2) and (3),

22 as a result of electing under subsection (b)(3)(A) to exempt

23 property under State or local law, a debtor may not exempt

24 any interest that exceeds $250,000 in value, in the aggre25 gate, in—
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1 ‘‘(A) real or personal property that the debtor or

2 a dependent of the debtor uses as a residence;

3 ‘‘(B) a cooperative that owns property that the

4 debtor or a dependent of the debtor uses as a resi5 dence; or

6 ‘‘(C) a burial plot for the debtor or a dependent

7 of the debtor.

8 ‘‘(2) The limitation under paragraph (1) shall not

9 apply to an exemption claimed under subsection (b)(3)(A)

10 by a family farmer for the principal residence of that farm11 er.

12 ‘‘(3) Paragraph (1) shall not apply to debtors if appli13 cable State law expressly provides by a statute enacted after

14 the effective date of this paragraph that such paragraph

15 shall not apply to debtors.’’.

16 SEC. 148. BANKRUPTCY FEES.

17 Section 1930 of title 28, United States Code, is

18 amended—

19 (1) in subsection (a) by striking ‘‘Notwith20 standing section 1915 of this title, the’’ and inserting

21 ‘‘The’’; and

22 (2) by adding at the end the following:

23 ‘‘(f)(1) Pursuant to procedures prescribed by the Judi24 cial Conference of the United States, the district court or

25 the bankruptcy court may waive the filing fee in a case
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1 under chapter 7 of title 11 for an individual debtor who

2 is unable to pay such fee in installments. For purposes of

3 this paragraph, the term ‘filing fee’ means the filing fee re4 quired by subsection (a), or any other fee prescribed by the

5 Judicial Conference under subsections (b) and (c) that is

6 payable to the clerk upon the commencement of a case under

7 chapter 7 of title 11.

8 ‘‘(2) The district court or the bankruptcy court may

9 also waive for such debtors other fees prescribed pursuant

10 to subsections (b) and (c).

11 ‘‘(3) This subsection does not restrict the district court

12 or the bankruptcy court from waiving, in accordance with

13 Judicial Conference policy, fees prescribed pursuant to such

14 subsections for other debtors and creditors.’’.

15 SEC. 149. COLLECTION OF CHILD SUPPORT.

16 (a) DUTIES OF TRUSTEE UNDER CHAPTER 7.—Sec17 tion 704 of title 11, United States Code, as amended by

18 section 102, is amended—

19 (1) by inserting ‘‘(a)’’ before ‘‘The trustee’’,

20 (2) in paragraph (9) by striking ‘‘and’’ at the

21 end,

22 (3) in paragraph (10) by striking the period and

23 inserting ‘‘; and’’, and

24 (4) by adding at the end the following:
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1 ‘‘(11) if, with respect to an individual debtor,

2 there is a claim for support of a child of the debtor

3 or a custodial parent of such child entitled to receive

4 priority under section 507(a)(1) of this title, provide

5 the applicable notification specified in subsection (b).

6 ‘‘(b)(1) In any case described in subsection (a)(11), the

7 trustee shall—

8 ‘‘(A)(i) notify in writing the holder of the claim

9 of the right of such holder to use the services of a

10 State child support enforcement agency established

11 under sections 464 and 466 of the Social Security Act

12 for the State in which the holder resides; and

13 ‘‘(ii) include in the notice under this paragraph

14 the address and telephone number of the child support

15 enforcement agency; and

16 ‘‘(B)(i) notify in writing the State child support

17 agency of the State in which the holder of the claim

18 resides of the claim;

19 ‘‘(ii) include in the notice under this paragraph

20 the name, address, and telephone number of the holder

21 of the claim; and

22 ‘‘(iii) at such time as the debtor is granted a dis23 charge under section 727 of this title, notify the holder

24 of such claim and the State child support agency of

25 the State in which such holder resides of—
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1 ‘‘(I) the granting of the discharge;

2 ‘‘(II) the last recent known address of the

3 debtor; and

4 ‘‘(III) with respect to the debtor’s case, the

5 name of each creditor that holds a claim that is

6 not discharged under paragraph (2), (4), or

7 (14A) of section 523(a) of this title or that was

8 reaffirmed by the debtor under section 524(c) of

9 this title.

10 ‘‘(2)(A) If, after receiving a notice under paragraph

11 (1)(B)(iii), a holder of a claim or a State child support

12 agency is unable to locate the debtor that is the subject of

13 the notice, such holder or such agency may request from

14 a creditor described in paragraph (1)(B)(iii)(III) the last

15 known address of the debtor.

16 ‘‘(B) Notwithstanding any other provision of law, a

17 creditor that makes a disclosure of a last known address

18 of a debtor in connection with a request made under sub19 paragraph (A) shall not be liable to the debtor or any other

20 person by reason of making such disclosure.’’.

21 (b) DUTIES OF TRUSTEE UNDER CHAPTER 13.—Sec22 tion 1302 of title 11, United States Code, is amended—

23 (1) in subsection (b)—

24 (A) in paragraph (4) by striking ‘‘and’’ at

25 the end,
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1 (B) in paragraph (5) by striking the period

2 and inserting ‘‘; and’’, and

3 (C) by adding at the end the following:

4 ‘‘(6) if, with respect to an individual debtor,

5 there is a claim for support of a child of the debtor

6 or a custodial parent of such child entitled to receive

7 priority under section 507(a)(1) of this title, provide

8 the applicable notification specified in subsection

9 (d).’’, and

10 (2) by adding at the end the following:

11 ‘‘(d)(1) In any case described in subsection (b)(6), the

12 trustee shall—

13 ‘‘(A)(i) notify in writing the holder of the claim

14 of the right of such holder to use the services of a

15 State child support enforcement agency established

16 under sections 464 and 466 of the Social Security Act

17 for the State in which the holder resides; and

18 ‘‘(ii) include in the notice under this paragraph

19 the address and telephone number of the child support

20 enforcement agency; and

21 ‘‘(B)(i) notify in writing the State child support

22 agency of the State in which the holder of the claim

23 resides of the claim; and
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1 ‘‘(ii) include in the notice under this paragraph

2 the name, address, and telephone number of the holder

3 of the claim;

4 ‘‘(iii) at such time as the debtor is granted a dis5 charge under section 1328 of this title, notify the

6 holder of the claim and the State child support agen7 cy of the State in which such holder resides of—

8 ‘‘(I) the granting of the discharge;

9 ‘‘(II) the last recent known address of the

10 debtor; and

11 ‘‘(III) with respect to the debtor’s case, the

12 name of each creditor that holds a claim that is

13 not discharged under paragraph (2), (4), or

14 (14A) of section 523(a) of this title or that was

15 reaffirmed by the debtor under section 524(c) of

16 this title.

17 ‘‘(2)(A) If, after receiving a notice under paragraph

18 (1)(B)(iii), a holder of a claim or a State child support

19 agency is unable to locate the debtor that is the subject of

20 the notice, such holder or such agency may request from

21 a creditor described in paragraph (1)(B)(iii) the last known

22 address of the debtor.

23 ‘‘(B) Notwithstanding any other provision of law, a

24 creditor that makes a disclosure of a last known address

25 of a debtor in connection with a request made under sub-
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1 paragraph (A) shall not be liable to the debtor or any other

2 person by reason of making such disclosure.’’.

3 SEC. 150. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICI4 PANT CONTRIBUTIONS AND OTHER PROP5 ERTY FROM THE ESTATE.

6 (a) IN GENERAL.—Section 541(b) of title 11 of the

7 United States Code is amended—

8 (1) by striking ‘‘or’’ at the end of paragraph

9 (4)(B)(ii);

10 (2) by striking the period at the end of para11 graph (5) and inserting ‘‘; or’’; and

12 (3) by inserting after paragraph (5) the fol13 lowing:

14 ‘‘(7) any amount or interest in property to the

15 extent that an employer has withheld amounts from

16 the wages of employees for contribution to an em17 ployee benefit plan subject to title I of the Employee

18 Retirement Income Security Act of 1974, or to the ex19 tent that the employer has received amounts as a re20 sult of payments by participants or beneficiaries to

21 an employer for contribution to an employee benefit

22 plan subject to title I of the Employee Retirement In23 come Security Act of 1974.’’.

24 (b) APPLICATION OF AMENDMENT.—The amendment

25 made by this section shall not apply to cases commenced
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1 under title 11 of the United States Code before the expira2 tion of the 180-day period beginning on the date of the en3 actment of this Act.

4 SEC. 151. CLARIFICATION OF POSTPETITION WAGES AND

5 BENEFITS.

6 Section 503(b)(1)(A) of title 11, United States Code,

7 is amended to read as follows:

8 ‘‘(A) the actual, necessary costs and expenses of

9 preserving the estate, including wages, salaries, or

10 commissions for services rendered after the commence11 ment of the case, and wages and benefits attributable

12 to any period of time after commencement of the case

13 as a result of the debtor’s violation of Federal law,

14 without regard to when the original unlawful act oc15 curred or to whether any services were rendered;’’.

16 SEC. 152. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC

17 SUPPORT OBLIGATION PROCEEDINGS.

18 Section 362(b)(2) of title 11, United States Code, is

19 amended—

20 (1) in subparagraph (A) by striking ‘‘or’’ at the

21 end;

22 (2) in subparagraph (B) by adding ‘‘or’’ at the

23 end; and

24 (3) by adding at the end the following:

25 ‘‘(C) under subsection (a) of—
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1 ‘‘(i) the withholding of income for pay2 ment of a domestic support obligation pur3 suant to a judicial or administrative order

4 or statute for such obligation that first be5 comes payable after the date on which the

6 petition is filed; or

7 ‘‘(ii) the withholding of income for

8 payment of a domestic support obligation

9 owed directly to the spouse, former spouse

10 or child of the debtor or the parent of such

11 child, pursuant to a judicial or administra12 tive order or statute for such obligation that

13 becomes payable before the date on which

14 the petition is filed unless the court finds,

15 after notice and hearing, that such with16 holding would render the plan infeasible;’’.

17 SEC. 153. AUTOMATIC STAY INAPPLICABLE TO CERTAIN

18 PROCEEDINGS AGAINST THE DEBTOR.

19 Section 362(b)(2) of title 11, United States Code, as

20 amended by section 153, is amended—

21 (1) in subparagraph (B) by striking ‘‘or’’ at the

22 end;

23 (2) by inserting after subparagraph (C) the fol24 lowing:
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1 ‘‘(D) the commencement or continuation of

2 a proceeding concerning a child custody or visi3 tation;

4 ‘‘(E) the commencement or continuation of

5 a proceeding alleging domestic violence; or

6 ‘‘(F) the commencement or continuation of

7 a proceeding seeking a dissolution of marriage,

8 except to the extent the proceeding concerns prop9 erty of the estate;’’.

10 TITLE II—DISCOURAGING

11 BANKRUPTCY ABUSE

12 SEC. 201. REENACTMENT OF CHAPTER 12.

13 (a) REENACTMENT.—Chapter 12 of title 11 of the

14 United States Code, as in effect on March 31, 1999, is here15 by reenacted.

16 (b) EFFECTIVE DATE.—The amendment made by sub17 section (a) shall take effect on March 31, 1999.

18 SEC. 202. MEETINGS OF CREDITORS AND EQUITY SECURITY

19 HOLDERS.

20 Section 341 of title 11, United States Code, is amended

21 by adding at the end the following:

22 ‘‘(e) Notwithstanding subsections (a) and (b), the

23 court, on the request of a party in interest and after notice

24 and a hearing, for cause may order that the United States

25 trustee not convene a meeting of creditors or equity security
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1 holders if the debtor has filed a plan as to which the debtor

2 solicited acceptances prior to the commencement of the

3 case.’’.

4 SEC. 203. PROTECTION OF RETIREMENT SAVINGS IN BANK5 RUPTCY.

6 (a) IN GENERAL.—Section 522 of title 11, United

7 States Code, as amended by sections 113, 125, and 147 is

8 amended—

9 (1) in subsection (b)—

10 (A) in paragraph (2)—

11 (i) by striking ‘‘(2)(A)’’ and inserting:

12 ‘‘(3) Property listed in this paragraph is—

13 ‘‘(A) subject to subsections (o) and (p),’’;

14 (ii) in subparagraph (B), by striking

15 ‘‘and’’ at the end;

16 (iii) in subparagraph (C), by striking

17 the period at the end and inserting ‘‘; and’’;

18 and

19 (iv) by adding at the end the following:

20 ‘‘(D) retirement funds to the extent that those

21 funds are in a fund or account that is exempt from

22 taxation under section 401, 403, 408, 408A, 414, 457,

23 or 501(a) of the Internal Revenue Code of 1986.’’;

24 (B) by striking paragraph (1) and insert25 ing:
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1 ‘‘(2) Property listed in this paragraph is property that

2 is specified under subsection (d), unless the State law that

3 is applicable to the debtor under paragraph (3)(A) specifi4 cally does not so authorize.’’;

5 (C) in the matter preceding paragraph

6 (2)—

7 (i) by striking ‘‘(b)’’ and inserting

8 ‘‘(b)(1)’’;

9 (ii) by striking ‘‘paragraph (2)’’ both

10 places it appears and inserting ‘‘paragraph

11 (3)’’;

12 (iii) by striking ‘‘paragraph (1)’’ each

13 place it appears and inserting ‘‘paragraph

14 (2)’’; and

15 (iv) by striking ‘‘Such property is—’’;

16 and

17 (D) by adding at the end of the subsection

18 the following:

19 ‘‘(4) For purposes of paragraph (3)(D) and subsection

20 (d)(12), the following shall apply:

21 ‘‘(A) If the retirement funds are in a retirement

22 fund that has received a favorable determination pur23 suant to section 7805 of the Internal Revenue Code of

24 1986, and that determination is in effect as of the

25 date of the commencement of the case under section
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1 301, 302, or 303 of this title, those funds shall be pre2 sumed to be exempt from the estate.

3 ‘‘(B) If the retirement funds are in a retirement

4 fund that has not received a favorable determination

5 pursuant to such section 7805, those funds are exempt

6 from the estate if the debtor demonstrates that—

7 ‘‘(i) no prior determination to the contrary

8 has been made by a court or the Internal Rev9 enue Service; and

10 ‘‘(ii) the retirement fund is in substantial

11 compliance with the applicable requirements of

12 the Internal Revenue Code of 1986.

13 ‘‘(C) A direct transfer of retirement funds from

14 1 fund or account that is exempt from taxation under

15 section 401, 403, 408, 408A, 414, 457, or 501(a) of

16 the Internal Revenue Code of 1986, pursuant to sec17 tion 401(a)(31) of the Internal Revenue Code of 1986,

18 or otherwise, shall not cease to qualify for exemption

19 under paragraph (3)(D) or subsection (d)(12) by rea20 son of that direct transfer.

21 ‘‘(D)(i) Any distribution that qualifies as an eli22 gible rollover distribution within the meaning of sec23 tion 402(c) of the Internal Revenue Code of 1986 or

24 that is described in clause (ii) shall not cease to qual-
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1 ify for exemption under paragraph (3)(D) or sub2 section (d)(12) by reason of that distribution.

3 ‘‘(ii) A distribution described in this clause is an

4 amount that—

5 ‘‘(I) has been distributed from a fund or ac6 count that is exempt from taxation under section

7 401, 403, 408, 408A, 414, 457, or 501(a) of the

8 Internal Revenue Code of 1986; and

9 ‘‘(II) to the extent allowed by law, is depos10 ited in such a fund or account not later than

11 60 days after the distribution of that amount.’’;

12 and

13 (2) in subsection (d)—

14 (A) in the matter preceding paragraph (1),

15 by striking ‘‘subsection (b)(1)’’ and inserting

16 ‘‘subsection (b)(2)’’; and

17 (B) by adding at the end the following:

18 ‘‘(12) Retirement funds to the extent that those

19 funds are in a fund or account that is exempt from

20 taxation under section 401, 403, 408, 408A, 414, 457,

21 or 501(a) of the Internal Revenue Code of 1986.’’.

22 (b) AUTOMATIC STAY.—Section 362(b) of title 11,

23 United States Code, as amended by sections 118, 132, 136,

24 and 141 is amended—
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1 (1) in paragraph (27), by striking ‘‘or’’ at the

2 end;

3 (2) in paragraph (28), by striking the period

4 and inserting ‘‘; or’’;

5 (3) by inserting after paragraph (28) the fol6 lowing:

7 ‘‘(29) under subsection (a), of withholding of in8 come from a debtor’s wages and collection of amounts

9 withheld, pursuant to the debtor’s agreement author10 izing that withholding and collection for the benefit of

11 a pension, profit-sharing, stock bonus, or other plan

12 established under section 401, 403, 408, 408A, 414,

13 457, or 501(a) of the Internal Revenue Code of 1986

14 that is sponsored by the employer of the debtor, or an

15 affiliate, successor, or predecessor of such employer—

16 ‘‘(A) to the extent that the amounts withheld

17 and collected are used solely for payments relat18 ing to a loan from a plan that satisfies the re19 quirements of section 408(b)(1) of the Employee

20 Retirement Income Security Act of 1974 or is

21 subject to section 72(p) of the Internal Revenue

22 Code of 1986; or

23 ‘‘(B) in the case of a loan from a thrift sav24 ings plan described in subchapter III of title 5,
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1 that satisfies the requirements of section 8433(g)

2 of such title.’’; and

3 (4) by adding at the end of the flush material

4 following paragraph (29) the following: ‘‘Paragraph

5 (29) does not apply to any amount owed to a plan

6 referred to in that paragraph that is incurred under

7 a loan made during the 1-year period preceding the

8 filing of a petition. Nothing in paragraph (29) may

9 be construed to provide that any loan made under

10 a governmental plan under section 414(d), or a con11 tract or account under section 403(b), of the Internal

12 Revenue Code of 1986 constitutes a claim or a debt

13 under this title.’’.

14 (c) EXCEPTIONS TO DISCHARGE.—Section 523(a) of

15 title 11, United States Code, is amended—

16 (1) by striking ‘‘or’’ at the end of paragraph

17 (17);

18 (2) by striking the period at the end of para19 graph (18) and inserting ‘‘; or’’; and

20 (3) by adding at the end the following:

21 ‘‘(19) owed to a pension, profit-sharing, stock

22 bonus, or other plan established under section 401,

23 403, 408, 408A, 414, 457, or 501(c) of the Internal

24 Revenue Code of 1986, pursuant to—
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1 ‘‘(A) a loan permitted under section

2 408(b)(1) of the Employee Retirement Income

3 Security Act of 1974) or subject to section 72(p)

4 of the Internal Revenue Code of 1986; or

5 ‘‘(B) a loan from the thrift savings plan de6 scribed in subchapter III of title 5, that satisfies

7 the requirements of section 8433(g) of such title.

8 Paragraph (19) does not apply to any amount owed to a

9 plan referred to in that paragraph that is incurred under

10 a loan made during the 1-year period preceding the filing

11 of a petition. Nothing in paragraph (19) may be construed

12 to provide that any loan made under a governmental plan

13 under section 414(d), or a contract or account under section

14 403(b), of the Internal Revenue Code of 1986 constitutes a

15 claim or a debt under this title.’’.

16 (d) PLAN CONTENTS.—Section 1322 of title 11, United

17 States Code, is amended by adding at the end the following:

18 ‘‘(f) A plan may not materially alter the terms of a

19 loan described in section 362(b)(29) of this title.’’.

20 SEC. 204. PROTECTION OF REFINANCE OF SECURITY INTER21 EST.

22 Subparagraphs (A), (B), and (C) of section 547(e)(2)

23 of title 11, United States Code, are amended by striking

24 ‘‘10’’ each place it appears and inserting ‘‘30’’.
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1 SEC. 205. EXECUTORY CONTRACTS AND UNEXPIRED

2 LEASES.

3 Section 365(d)(4) of title 11, United States Code, is

4 amended to read as follows:

5 ‘‘(4)(A) Subject to subparagraph (B), in any case

6 under any chapter in this title, an unexpired lease of non7 residential real property under which the debtor is the lessee

8 shall be deemed rejected, and the trustee shall immediately

9 surrender such property to the lessor, if the trustee does not

10 assume or reject the unexpired lease by the earlier of—

11 ‘‘(i) the date that is 120 days after the date of

12 the order for relief; or

13 ‘‘(ii) the date of the entry of an order confirming

14 a plan.

15 ‘‘(B)(i) The court may extend the period determined

16 under subparagraph (A) for 120 days upon motion of the

17 trustee or the lessor for cause.

18 ‘‘(ii) If the court grants an extension under clause (i),

19 the court may grant a subsequent extension only upon prior

20 written consent of the lessor.’’.

21 SEC. 206. CREDITORS AND EQUITY SECURITY HOLDERS

22 COMMITTEES.

23 Section 1102(a)(2) of title 11, United States Code, is

24 amended by inserting before the first sentence the following:

25 ‘‘On its own motion or on request of a party in interest,

26 and after notice and hearing, the court may order a change
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1 in the membership of a committee appointed under this sub2 section, if the court determines that the change is necessary

3 to ensure adequate representation of creditors or equity se4 curity holders.’’.

5 SEC. 207. AMENDMENT TO SECTION 546 OF TITLE 11,

6 UNITED STATES CODE.

7 Section 546 of title 11, United States Code, is amended

8 by inserting at the end thereof:

9 ‘‘(i) Notwithstanding section 545 (2) and (3) of this

10 title, the trustee may not avoid a warehouseman’s lien for

11 storage, transportation or other costs incidental to the stor12 age and handling of goods, as provided by section 7–209

13 of the Uniform Commercial Code.’’.

14 SEC. 208. LIMITATION.

15 Section 546(c)(1)(B) of title 11, United States Code,

16 is amended by striking ‘‘20’’ and inserting ‘‘45’’.

17 SEC. 209. AMENDMENT TO SECTION 330(a) OF TITLE 11,

18 UNITED STATES CODE.

19 Section 330(a) of title 11, United States Code, is

20 amended—

21 (1) in paragraph (3)—

22 (A) in subparagraph (A) after ‘‘awarded’’,

23 by inserting ‘‘to an examiner, chapter 11 trustee,

24 or professional person’’; and
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1 (B) by redesignating subdivisions (A)

2 through (E) as clauses (i) through (iv), respec3 tively; and

4 (2) by adding at the the following:

5 ‘‘(B) In determining the amount of reasonable

6 compensation to be awarded a trustee, the court shall

7 treat such compensation as a commission based on the

8 results achieved.’’.

9 SEC. 210. POSTPETITION DISCLOSURE AND SOLICITATION.

10 Section 1125 of title 11, United States Code, is amend11 ed by adding at the end the following:

12 ‘‘(g) Notwithstanding subsection (b), an acceptance or

13 rejection of the plan may be solicited from a holder of a

14 claim or interest if such solicitation complies with applica15 ble nonbankruptcy law and if such holder was solicited be16 fore the commencement of the case in a manner complying

17 with applicable nonbankruptcy law.’’.

18 SEC. 211. PREFERENCES.

19 Section 547(c) of title 11, United States Code, is

20 amended—

21 (1) by amending paragraph (2) to read as fol22 lows:

23 ‘‘(2) to the extent that such transfer was in pay24 ment of a debt incurred by the debtor in the ordinary
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1 course of business or financial affairs of the debtor

2 and the transferee, and such transfer was—

3 ‘‘(A) made in the ordinary course of busi4 ness or financial affairs of the debtor and the

5 transferee; or

6 ‘‘(B) made according to ordinary business

7 terms;’’;

8 (2) in paragraph (7) by striking ‘‘or’’ at the end;

9 (3) in paragraph (8) by striking the period at

10 the end and inserting ‘‘; or’’; and

11 (4) by adding at the end the following:

12 ‘‘(9) if, in a case filed by a debtor whose debts

13 are not primarily consumer debts, the aggregate value

14 of all property that constitutes or is affected by such

15 transfer is less than $5,000.’’.

16 SEC. 212. VENUE OF CERTAIN PROCEEDINGS.

17 Section 1409(b) of title 28, United States Code, is

18 amended by inserting ‘‘, or a nonconsumer debt against a

19 noninsider of less than $10,000,’’ after ‘‘$5,000’’.

20 SEC. 213. PERIOD FOR FILING PLAN UNDER CHAPTER 11.

21 Section 1121(d) of title 11, United States Code, is

22 amended—

23 (1) by striking ‘‘On’’ and inserting ‘‘(1) Subject

24 to paragraph (1), on’’; and

25 (2) by adding at the end the following:
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1 ‘‘(2)(A) Such 120-day period may not be extended be2 yond a date that is 18 months after the date of the order

3 for relief under this chapter.

4 ‘‘(B) Such 180-day period may not be extended beyond

5 a date that is 20 months after the date of the order for relief

6 under this chapter.’’.

7 SEC. 214. FEES ARISING FROM CERTAIN OWNERSHIP INTER8 ESTS.

9 Section 523(a)(16) of title 11, United States Code, is

10 amended—

11 (1) by striking ‘‘dwelling’’ the first place it ap12 pears;

13 (2) by striking ‘‘ownership or’’ and inserting

14 ‘‘ownership,’’;

15 (3) by striking ‘‘housing’’ the first place it ap16 pears; and

17 (4) by striking ‘‘but only’’ and all that follows

18 through ‘‘such period,’’, and inserting ‘‘or a lot in a

19 homeowners association, for as long as the debtor or

20 the trustee has a legal, equitable, or possessory owner21 ship interest in such unit, such corporation, or such

22 lot,’’.
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1 SEC. 215. CLAIMS RELATING TO INSURANCE DEPOSITS IN

2 CASES ANCILLARY TO FOREIGN PRO3 CEEDINGS.

4 Section 304 of title 11, United States Code, is amended

5 to read as follows:

6 ‘‘§ 304. Cases ancillary to foreign proceedings

7 ‘‘(a) For purposes of this section—

8 ‘‘(1) the term ‘domestic insurance company’

9 means a domestic insurance company, as such term

10 is used in section 109(b)(2);

11 ‘‘(2) the term ‘foreign insurance company’ means

12 a foreign insurance company, as such term is used in

13 section 109(b)(3);

14 ‘‘(3) the term ‘United States claimant’ means a

15 beneficiary of any deposit referred to in subsection (b)

16 or any multibeneficiary trust referred to in subsection

17 (b);

18 ‘‘(4) the term ‘United States creditor’ means,

19 with respect to a foreign insurance company—

20 ‘‘(A) a United States claimant; or

21 ‘‘(B) any business entity that operates in

22 the United States and that is a creditor; and

23 ‘‘(5) the term ‘United States policyholder’ means

24 a holder of an insurance policy issued in the United

25 States.
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1 ‘‘(b) The court may not grant relief under chapter 15

2 of this title with respect to any deposit, escrow, trust fund,

3 or other security required or permitted under any applica4 ble State insurance law or regulation for the benefit of

5 claim holders in the United States.’’.

6 SEC. 216. DEFAULTS BASED ON NONMONETARY OBLIGA7 TIONS.

8 (a) EXECUTORY CONTRACTS AND UNEXPIRED

9 LEASES.—Section 365 of title 11, United States Code, is

10 amended—

11 (1) in subsection (b)—

12 (A) in paragraph (1)(A) by striking the

13 semicolon at the end and inserting the following:

14 ‘‘other than a default that is a breach of a provision

15 relating to—

16 ‘‘(i) the satisfaction of any provision (other

17 than a penalty rate or penalty provision) relat18 ing to a default arising from any failure to per19 form nonmonetary obligations under an unex20 pired lease of real property (excluding executory

21 contracts that transfer a right or interest under

22 a filed or issued patent, copyright, trademark,

23 trade dress, or trade secret), if it is impossible

24 for the trustee to cure such default by performing
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1 nonmonetary acts at and after the time of as2 sumption; or

3 ‘‘(ii) the satisfaction of any provision (other

4 than a penalty rate or penalty provision) relat5 ing to a default arising from any failure to per6 form nonmonetary obligations under an execu7 tory contract, if it is impossible for the trustee

8 to cure such default by performing nonmonetary

9 acts at and after the time of assumption and if

10 the court determines, based on the equities of the

11 case, that this subparagraph should not apply

12 with respect to such default;’’; and

13 (B) by amending paragraph (2)(D) to read

14 as follows:

15 ‘‘(D) the satisfaction of any penalty rate or pen16 alty provision relating to a default arising from a

17 failure to perform nonmonetary obligations under an

18 executory contract (excluding executory contracts that

19 transfer a right or interest under a filed or issued

20 patent, copyright, trademark, trade dress, or trade se21 cret) or under an unexpired lease of real or personal

22 property.’’;

23 (2) in subsection (c)—

24 (A) in paragraph (2) by adding ‘‘or’’ at the

25 end;
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1 (B) in paragraph (3) by striking ‘‘; or’’ at

2 the end and inserting a period; and

3 (C) by striking paragraph (4);

4 (3) in subsection (d)—

5 (A) by striking paragraphs (5) through (9);

6 and

7 (B) by redesignating paragraph (10) as

8 paragraph (5); and

9 (4) in subsection (f)(1) by striking ‘‘; except

10 that’’ and all that follows through the end of the para11 graph and inserting a period.

12 (b) IMPAIRMENT OF CLAIMS OR INTERESTS.—Section

13 1124(2) of title 11, United States Code, is amended—

14 (1) in subparagraph (A) by inserting ‘‘or of a

15 kind that section 365(b)(1)(A) of this title expressly

16 does not require to be cured’’ before the semicolon at

17 the end;

18 (2) in subparagraph (C) by striking ‘‘and’’ at

19 the end;

20 (3) by redesignating subparagraph (D) as sub21 paragraph (E); and

22 (4) by inserting after subparagraph (C) the fol23 lowing:

24 ‘‘(D) if such claim or such interest arises

25 from any failure to perform a nonmonetary obli-
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1 gation, compensates the holder of such claim or

2 such interest (other than the debtor or an in3 sider) for any actual pecuniary loss incurred by

4 such holder as a result of such failure; and’’.

5 SEC. 217. SHARING OF COMPENSATION.

6 Section 504 of title 11, United States Code, is amended

7 by adding at the end the following:

8 ‘‘(c) This section shall not apply with respect to shar9 ing, or agreeing to share, compensation with a bona fide

10 public service attorney referral program that operates in

11 accordance with non-Federal law regulating attorney refer12 ral services and with rules of professional responsibility ap13 plicable to attorney acceptance of referrals.’’.

14 SEC. 218. PRIORITY FOR ADMINISTRATIVE EXPENSES.

15 Section 503(b) of title 11, United States Code, is

16 amended—

17 (1) by deleting ‘‘and’’ at the end of paragraph

18 (5);

19 (2) by striking the period at the end of para20 graph (6) and inserting ‘‘; and’’;

21 (3) by inserting the following after paragraph

22 (6):

23 ‘‘(7) with respect to a nonresidential real prop24 erty lease previously assumed under section 365, and

25 subsequently rejected, a sum equal to all monetary ob-
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1 ligations due, excluding those arising from or relating

2 to a failure to operate or penalty provisions, for the

3 period of one year following the later of the rejection

4 date or date of actual turnover of the premises, with5 out reduction or setoff for any reason whatsoever ex6 cept for sums actually received or to be received from

7 a nondebtor; and the claim for remaining sums due

8 for the balance of the term of the lease shall be a

9 claim under section 502(b)(6).’’.

10 TITLE III—GENERAL BUSINESS

11 BANKRUPTCY PROVISIONS

12 SEC. 301. DEFINITION OF DISINTERESTED PERSON.

13 Section 101(14) of title 11, United States Code, is

14 amended to read as follows:

15 ‘‘(14) ‘disinterested person’ means a person

16 that—

17 ‘‘(A) is not a creditor, an equity security

18 holder, or an insider;

19 ‘‘(B) is not and was not, within 2 years be20 fore the date of the filing of the petition, a direc21 tor, officer, or employee of the debtor; and

22 ‘‘(C) does not have an interest materially

23 adverse to the interest of the estate or of any

24 class of creditors or equity security holders, by

25 reason of any direct or indirect relationship to,
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1 connection with, or interest in, the debtor, or for

2 any other reason;’’.

3 SEC. 302. MISCELLANEOUS IMPROVEMENTS.

4 (a) WHO MAY BE A DEBTOR.—Section 109 of title 11,

5 United States Code, is amended by adding at the end the

6 following:

7 ‘‘(h)(1) Subject to paragraphs (2) and (3) and not8 withstanding any other provision of this section, an indi9 vidual may not be a debtor under this title unless that indi10 vidual has, during the 90-day period preceding the date of

11 filing of the petition of that individual, received credit

12 counseling, including, at a minimum, participation in an

13 individual or group briefing that outlined the opportunities

14 for available credit counseling and assisted that individual

15 in performing an initial budget analysis, through a credit

16 counseling program (offered through an approved credit

17 counseling service described in section 111(a)).

18 ‘‘(2)(A) Paragraph (1) shall not apply with respect to

19 a debtor who resides in a district for which the United

20 States trustee or bankruptcy administrator of the bank21 ruptcy court of that district determines that the approved

22 credit counseling services for that district are not reason23 ably able to provide adequate services to the additional in24 dividuals who would otherwise seek credit counseling from
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1 those programs by reason of the requirements of paragraph

2 (1).

3 ‘‘(B) Each United States trustee or bankruptcy admin4 istrator that makes a determination described in subpara5 graph (A) shall review that determination not later than

6 one year after the date of that determination, and not less

7 frequently than every year thereafter.

8 ‘‘(3)(A) Subject to subparagraph (B), the requirements

9 of paragraph (1) shall not apply with respect to a debtor

10 who submits to the court a certification that—

11 ‘‘(i) describes exigent circumstances that merit a

12 waiver of the requirements of paragraph (1);

13 ‘‘(ii) states that the debtor requested credit coun14 seling services from an approved credit counseling

15 service, but was unable to obtain the services referred

16 to in paragraph (1) during the 5-day period begin17 ning on the date on which the debtor made that re18 quest or that the exigent circumstances require filing

19 before such 5-day period expires; and

20 ‘‘(iii) is satisfactory to the court.

21 ‘‘(B) With respect to a debtor, an exemption under sub22 paragraph (A) shall cease to apply to that debtor on the

23 date on which the debtor meets the requirements of para24 graph (1), but in no case may the exemption apply to that
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1 debtor after the date that is 30 days after the debtor files

2 a petition.’’.

3 (b) CHAPTER 7 DISCHARGE.—Section 727(a) of title

4 11, United States Code, is amended—

5 (1) in paragraph (9), by striking ‘‘or’’ at the

6 end;

7 (2) in paragraph (10), by striking the period

8 and inserting ‘‘; or’’; and

9 (3) by adding at the end the following:

10 ‘‘(11) after the filing of the petition, the debtor

11 failed to complete an instructional course concerning

12 personal financial management described in section

13 111 unless the debtor resides in a district for which

14 the United States trustee or bankruptcy adminis15 trator of the bankruptcy court of that district deter16 mines that the approved instructional courses are not

17 adequate to provide service to the additional individ18 uals who would be required to compete the instruc19 tional course by reason of the requirements of this sec20 tion. Each United States trustee or bankruptcy ad21 ministrator that makes such a determination shall re22 view that determination not later than 1 year after

23 the date of that determination, and not less frequently

24 than every year thereafter.’’.
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1 (c) CHAPTER 13 DISCHARGE.—Section 1328 of title

2 11, United States Code, as amended by section 137, is

3 amended by adding at the end the following:

4 ‘‘(g) The court shall not grant a discharge under this

5 section to a debtor, unless after filing a petition the debtor

6 has completed an instructional course concerning personal

7 financial management described in section 111.

8 ‘‘(h) Subsection (g) shall not apply with respect to a

9 debtor who resides in a district for which the United States

10 trustee or bankruptcy administrator of the bankruptcy

11 court of that district determines that the approved instruc12 tional courses are not adequate to provide service to the ad13 ditional individuals who would be required to complete the

14 instructional course by reason of the requirements of this

15 section.

16 ‘‘(i) Each United States trustee or bankruptcy admin17 istrator that makes a determination described in subsection

18 (h) shall review that determination not later than 1 year

19 after the date of that determination, and not less frequently

20 than every year thereafter.’’.

21 (d) DEBTOR’S DUTIES.—Section 521 of title 11,

22 United States Code, as amended by sections 604 and 120,

23 is amended by adding at the end the following:

24 ‘‘(d) In addition to the requirements under subsection

25 (a), an individual debtor shall file with the court—
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1 ‘‘(1) a certificate from the credit counseling serv2 ice that provided the debtor services under section

3 109(h); and

4 ‘‘(2) a copy of the debt repayment plan, if any,

5 developed under section 109(h) through the credit

6 counseling service referred to in paragraph (1).’’.

7 (e) GENERAL PROVISIONS.—

8 (1) IN GENERAL.—Chapter 1 of title 11, United

9 States Code, is amended by adding at the end the fol10 lowing:

11 ‘‘§ 111. Credit counseling services; financial manage12 ment instructional courses

13 ‘‘The clerk of each district shall maintain a list of cred14 it counseling services that provide 1 or more programs de15 scribed in section 109(h) and a list of instructional courses

16 concerning personal financial management that have been

17 approved by—

18 ‘‘(1) the United States trustee; or

19 ‘‘(2) the bankruptcy administrator for the dis20 trict.’’.

21 (2) CLERICAL AMENDMENT.—The table of sec22 tions at the beginning of chapter 1 of title 11, United

23 States Code, is amended by adding at the end the fol24 lowing:

‘‘111. Credit counseling services; financial management instructional courses.’’.
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1 (e) DEFINITIONS.—Section 101 of title 11, United

2 States Code, is amended—

3 (1) by inserting after paragraph (13) the fol4 lowing:

5 ‘‘(13A) ‘debtor’s principal residence’ means a

6 residential structure including incidental property

7 when the structure contains 1 to 4 units, whether or

8 not that structure is attached to real property, and

9 includes, without limitation, an individual condo10 minium or cooperative unit or mobile or manufac11 tured home or trailer;’’;

12 (2) by inserting after paragraph (27A), as added

13 by section 318 of this Act, the following:

14 ‘‘(27B) ‘incidental property’ means property in15 cidental to such residence including, without limita16 tion, property commonly conveyed with a principal

17 residence where the real estate is located, window

18 treatments, carpets, appliances and equipment located

19 in the residence, and easements, appurtenances, fix20 tures, rents, royalties, mineral rights, oil and gas

21 rights, escrow funds and insurance proceeds;’’;

22 (3) in section 362(b), as amended by sections

23 117, 118, 132, 136, 141 203, 818, and 1007,—

24 (A) in paragraph (28) by striking ‘‘or’’ at

25 the end thereof;
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1 (B) in paragraph (29) by striking the pe2 riod at the end and inserting ‘‘; or’’; and

3 (C) by inserting after paragraph (29) the

4 following:

5 ‘‘(30) under subsection (a), until a prepetition

6 default is cured fully in a case under chapter 13 of

7 this title by actual payment of all arrears as required

8 by the plan, of the postponement, continuation or

9 other similar delay of a prepetition foreclosure pro10 ceeding or sale in accordance with applicable non11 bankruptcy law, but nothing herein shall imply that

12 such postponement, continuation or other similar

13 delay is a violation of the stay under subsection (a).’’;

14 and

15 (4) by amending section 1322(b)(2) to read as

16 follows:

17 ‘‘(2) modify the rights of holders of secured

18 claims, other than a claim secured primarily by a se19 curity interest in property used as the debtor’s prin20 cipal residence at any time during 180 days prior to

21 the filing of the petition, or of holders of unsecured

22 claims, or leave unaffected the rights of holders of any

23 class of claims;’’.

24 (f) LIMITATION.—Section 362 of title 11, United States

25 Code, is amended by adding at the end the following:
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1 ‘‘(j) If one case commenced under chapter 7, 11, or

2 13 of this title is dismissed due to the creation of a debt

3 repayment plan administered by a credit counseling agency

4 approved pursuant to section 111 of this title, then for pur5 poses of section 362(c)(3) of this title the subsequent case

6 commenced under any such chapter shall not be presumed

7 to be filed not in good faith.’’.

8 (g) RETURN OF GOODS SHIPPED.—Section 546(g) of

9 title 11, United States Code, as added by section 222(a)

10 of Public Law 103–394, is amended to read as follows:

11 ‘‘(h) Notwithstanding the rights and powers of a trust12 ee under sections 544(a), 545, 547, 549, and 553 of this

13 title, if the court determines on a motion by the trustee

14 made not later than 120 days after the date of the order

15 for relief in a case under chapter 11 of this title and after

16 notice and hearing, that a return is in the best interests

17 of the estate, the debtor, with the consent of the creditor,

18 and subject to the prior rights, if any, of third parties in

19 such goods, may return goods shipped to the debtor by the

20 creditor before the commencement of the case, and the cred21 itor may offset the purchase price of such goods against any

22 claim of the creditor against the debtor that arose before

23 the commencement of the case.’’.
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1 SEC. 303. EXTENSIONS.

2 Section 302(d)(3) of the Bankruptcy, Judges, United

3 States Trustees, and Family Farmer Bankruptcy Act of

4 1986 (28 U.S.C. 581 note) is amended—

5 (1) in subparagraph (A), in the matter following

6 clause (ii), by striking ‘‘or October 1, 2002, whichever

7 occurs first’’; and

8 (2) in subparagraph (F)—

9 (A) in clause (i)—

10 (i) in subclause (II), by striking ‘‘or

11 October 1, 2002, whichever occurs first’’;

12 and

13 (ii) in the matter following subclause

14 (II), by striking ‘‘October 1, 2003, or’’; and

15 (B) in clause (ii), in the matter following

16 subclause (II)—

17 (i) by striking ‘‘before October 1, 2003,

18 or’’; and

19 (ii) by striking ‘‘, whichever occurs

20 first’’.

21 SEC. 304. LOCAL FILING OF BANKRUPTCY CASES.

22 Section 1408 of title 28, United States Code, is

23 amended—

24 (1) by striking ‘‘Except’’ and inserting ‘‘(a) Ex25 cept’’; and

26 (2) by adding at the end the following:
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1 ‘‘(b) For the purposes of subsection (a), if the debtor

2 is a corporation, the domicile and residence of the debtor

3 are conclusively presumed to be where the debtor’s principal

4 place of business in the United States is located.’’.

5 SEC. 305. PERMITTING ASSUMPTION OF CONTRACTS.

6 (a) Section 365(c) of title 11, United States Code, is

7 amended to read as follows:

8 ‘‘(c)(1) The trustee may not assume or assign an execu9 tory contract or unexpired lease of the debtor, whether or

10 not the contract or lease prohibits or restricts assignment

11 of rights or delegation of duties, if—

12 ‘‘(A)(i) applicable law excuses a party to the

13 contract or lease from accepting performance from or

14 rendering performance to an assignee of the contract

15 or lease, whether or not the contract or lease prohibits

16 or restricts assignment of rights or delegation of du17 ties; and

18 ‘‘(ii) the party does not consent to the assump19 tion or assignment; or

20 ‘‘(B) the contract is a contract to make a loan,

21 or extend other debt financing or financial accom22 modations, to or for the benefit of the debtor, or to

23 issue a security of the debtor.

24 ‘‘(2) Notwithstanding paragraph (1)(A) and applica25 ble nonbankruptcy law, in a case under chapter 11 of this
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1 title, a trustee in a case in which a debtor is a corporation,

2 or a debtor in possession, may assume an executory contract

3 or unexpired lease of the debtor, whether or not the contract

4 or lease prohibits or restricts assignment of rights or delega5 tion of duties.

6 ‘‘(3) The trustee may not assume or assign an unex7 pired lease of the debtor of nonresidential real property,

8 whether or not the contract or lease prohibits or restricts

9 assignment of rights or delegation of duties, if the lease has

10 been terminated under applicable nonbankruptcy law before

11 the order for relief.’’.

12 (b) Section 365(d) of title 11, United States Code, is

13 amended by striking paragraphs (5), (6), (7), (8), and (9),

14 and redesignating paragraph (10) as paragraph (5).

15 (c) Section 365(e) of title 11, United States Code, is

16 amended to read as follows:

17 ‘‘(e)(1) Notwithstanding a provision in an executory

18 contract or unexpired lease, or in applicable law, an execu19 tory contract or unexpired lease of the debtor may not be

20 terminated or modified, and any right or obligation under

21 such contract or lease may not be terminated or modified,

22 at any time after the commencement of the case solely be23 cause of a provision in such contract or lease that is condi24 tioned on—
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1 ‘‘(A) the insolvency or financial condition of the

2 debtor at any time before the closing of the case;

3 ‘‘(B) the commencement of a case under this

4 title; or

5 ‘‘(C) the appointment of or taking possession by

6 a trustee in a case under this title or a custodian be7 fore such commencement.

8 ‘‘(2) Paragraph (1) does not apply to an executory

9 contract or unexpired lease of the debtor if the trustee may

10 not assume or assign, and the debtor in possession may not

11 assume, the contract or lease by reason of the provisions

12 of subsection (c) of this section.’’.

13 (d) Section 365(f)(1) of title 11, United States Code,

14 is amended by striking the semicolon and all that follows

15 through ‘‘event’’.

16 TITLE IV SMALL BUSINESS

17 BANKRUPTCY PROVISIONS

18 SEC. 401. FLEXIBLE RULES FOR DISCLOSURE STATEMENT

19 AND PLAN.

20 (a) Section 1125(a)(1) of title 11, United States Code,

21 is amended by inserting before the semicolon following:

22 ‘‘and in determining whether a disclosure statement pro23 vides adequate information, the court shall consider the

24 complexity of the case, the benefit of additional information
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1 to creditors and other parties in interest, and the cost of

2 providing additional information’’.

3 (b) Section 1125(f) of title 11, United States Code, is

4 amended to read as follows:

5 ‘‘(f) Notwithstanding subsection (b)—

6 ‘‘(1) the court may determine that the plan itself

7 provides adequate information and that a separate

8 disclosure statement is not necessary;

9 ‘‘(2) the court may approve a disclosure state10 ment submitted on standard forms approved by the

11 court or adopted pursuant to section 2075 of title 28;

12 and

13 ‘‘(3)(A) the court may conditionally approve a

14 disclosure statement subject to final approval after

15 notice and a hearing;

16 ‘‘(B) acceptances and rejections of a plan may be

17 solicited based on a conditionally approved disclosure

18 statement if the debtor provides adequate information

19 to each holder of a claim or interest that is solicited,

20 but a conditionally approved disclosure statement

21 shall be mailed not less than 20 days before the date

22 of the hearing on confirmation of the plan; and

23 ‘‘(C) the hearing on the disclosure statement may be

24 combined with the hearing on confirmation of a plan.’’.
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1 SEC. 402. DEFINITIONS.

2 (a) DEFINITIONS. Section 101 of title 11, United States

3 Code, is amended by striking paragraph (51C) and insert4 ing the following:

5 ‘‘(51C) ‘small business case’ means a case filed

6 under chapter 11 of this title in which the debtor is

7 a small business debtor; and

8 ‘‘(51D) ‘small business debtor’ means (A) a per9 son (including affiliates of such person that are also

10 debtors under this title) that has aggregate noncontin11 gent, liquidated secured and unsecured debts as of the

12 date of the petition or the order for relief in an

13 amount not more than $4,000,000 (excluding debts

14 owed to 1 or more affiliates or insiders), except that

15 if a group of affiliated debtors has aggregate non16 contingent liquidated secured and unsecured debts

17 greater than $4,000,000 (excluding debt owed to 1 or

18 more affiliates or insiders), then no member of such

19 group is a small business debtor;’’.

20 (b) CONFORMING AMENDMENT.—Section 1102(a)(3) of

21 title 11, United States Code, is amended by inserting ‘‘debt22 or’’ after ‘‘small business’’ .

23 SEC. 403. STANDARD FORM DISCLOSURE STATEMENT AND

24 PLAN.

25 The Advisory Committee on Bankruptcy Rules of the

26 Judicial Conference of the United States shall, within a rea-
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1 sonable period of time after the date of the enactment of

2 this Act, propose for adoption standard form disclosure

3 statements and plans of reorganization for small business

4 debtors (as defined in section 101 of title 11, United States

5 Code, as amended by this Act), designed to achieve a prac6 tical balance between—

7 (1) the reasonable needs of the courts, the United

8 States trustee, creditors, and other parties in interest

9 for reasonably complete information; and

10 (2) economy and simplicity for debtors.

11 SEC. 404. UNIFORM NATIONAL REPORTING REQUIREMENTS.

12 (a) REPORTING REQUIRED.—

13 (1) Title 11 of the United States Code is amend14 ed by inserting after section 307 the following:

15 ‘‘§ 308. Debtor reporting requirements

16 ‘‘A small business debtor shall file periodic financial

17 and other reports containing information including—

18 ‘‘(1) the debtor’s profitability, that is, approxi19 mately how much money the debtor has been earning

20 or losing during current and recent fiscal periods;

21 ‘‘(2) reasonable approximations of the debtor’s

22 projected cash receipts and cash disbursements over a

23 reasonable period;

24 ‘‘(3) comparisons of actual cash receipts and dis25 bursements with projections in prior reports; and
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1 ‘‘(4) whether the debtor is—

2 ‘‘(A) in compliance in all material respects

3 with postpetition requirements imposed by this

4 title and the Federal Rules of Bankruptcy Proce5 dure; and

6 ‘‘(B) timely filing tax returns and paying

7 taxes and other administrative claims when due,

8 and, if not, what the failures are and how, at

9 what cost, and when the debtor intends to rem10 edy such failures; and

11 ‘‘(5) such other matters as are in the best inter12 ests of the debtor and creditors, and in the public in13 terest in fair and efficient procedures under chapter

14 11 of this title.’’.

15 (2) The table of sections of chapter 3 of title 11,

16 United States Code, is amended by inserting after the

17 item relating to section 307 the following:

‘‘308. Debtor reporting requirements.’’.

18 (b) EFFECTIVE DATE.—The amendments made by sub19 section (a) shall take effect 60 days after the date on which

20 rules are prescribed pursuant to section 2075, title 28,

21 United States Code to establish forms to be used to comply

22 with section 308 of title 11, United States Code, as added

23 by subsection (a).
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1 SEC. 405. UNIFORM REPORTING RULES AND FORMS FOR

2 SMALL BUSINESS CASES.

3 (a) PROPOSAL OF RULES AND FORMS.—The Advisory

4 Committee on Bankruptcy Rules of the Judicial Conference

5 of the United States shall propose for adoption amended

6 Federal Rules of Bankruptcy Procedure and Official Bank7 ruptcy Forms to be used by small business debtors to file

8 periodic financial and other reports containing informa9 tion, including information relating to—

10 (1) the debtor’s profitability;

11 (2) the debtor’s cash receipts and disbursements;

12 and

13 (3) whether the debtor is timely filing tax re14 turns and paying taxes and other administrative

15 claims when due.

16 (b) PURPOSE.—The rules and forms proposed under

17 subsection (a) shall be designed to achieve a practical bal18 ance between—

19 (1) the reasonable needs of the bankruptcy court,

20 the United States trustee, creditors, and other parties

21 in interest for reasonably complete information;

22 (2) the small business debtor’s interest that re23 quired reports be easy and inexpensive to complete;

24 and
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1 (3) the interest of all parties that the required re2 ports help the small business debtor to understand its

3 financial condition and plan its future.

4 SEC. 406. DUTIES IN SMALL BUSINESS CASES.

5 (a) DUTIES IN CHAPTER 11 CASES.—Title 11 of the

6 United States Code is amended by inserting after section

7 1114 the following:

8 ‘‘§ 1115. Duties of trustee or debtor in possession in

9 small business cases

10 ‘‘(a) In a small business case, a trustee or the debtor

11 in possession, in addition to the duties provided in this title

12 and as otherwise required by law, shall—

13 ‘‘(1) append to the voluntary petition or, in an

14 involuntary case, file within 3 days after the date of

15 the order for relief—

16 ‘‘(A) its most recent balance sheet, statement

17 of operations, cash-flow statement, Federal in18 come tax return; or

19 ‘‘(B) a statement made under penalty of

20 perjury that no balance sheet, statement of oper21 ations, or cash-flow statement has been prepared

22 and no Federal tax return has been filed;

23 ‘‘(2) attend, through its responsible individual,

24 meetings scheduled by the court or the United States

25 trustee, including initial debtor interviews and meet-
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1 ings of creditors convened under section 341 of this

2 title;

3 ‘‘(3) timely file all schedules and statements of

4 financial affairs, unless the court, after notice and a

5 hearing, grants an extension, which shall not extend

6 such time period to a date later than 30 days after

7 the date of the order for relief, absent extraordinary

8 and compelling circumstances;

9 ‘‘(4) file all postpetition financial and other re10 ports required by the Federal Rules of Bankruptcy

11 Procedure or by local rule of the district court;

12 ‘‘(5) subject to section 363(c)(2) of this title,

13 maintain insurance customary and appropriate to

14 the industry;

15 ‘‘(6)(A) timely file tax returns;

16 ‘‘(B) subject to section 363(c)(2) of this title,

17 timely pay all administrative expense tax claims, ex18 cept those being contested by appropriate proceedings

19 being diligently prosecuted; and

20 ‘‘(C) subject to section 363(c)(2) of this title, es21 tablish 1 or more separate deposit accounts not later

22 than 10 business days after the date of order for relief

23 (or as soon thereafter as possible if all banks con24 tacted decline the business) and deposit therein, not

25 later than 1 business day after receipt thereof or a re-
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1 sponsible time set by the court, all taxes payable for

2 periods beginning after the date the case is com3 menced that are collected or withheld by the debtor for

4 governmental units unless the court waives this re5 quirement after notice and hearing; and

6 ‘‘(7) allow the United States trustee, or its des7 ignated representative, to inspect the debtor’s business

8 premises, books, and records at reasonable times, after

9 reasonable prior written notice, unless notice is

10 waived by the debtor.’’.

11 (b) TECHNICAL AMENDMENT.—The table of sections of

12 chapter 11, United States Code, is amended by inserting

13 after the item relating to section 1114 the following:

‘‘1115. Duties of trustee or debtor in possession in small business cases.’’.

14 SEC. 407. PLAN FILING AND CONFIRMATION DEADLINES.

15 Section 1121(e) of title 11, United States Code, is

16 amended to read as follows:

17 ‘‘(e) In a small business case—

18 ‘‘(1) only the debtor may file a plan until after

19 90 days after the date of the order for relief, unless

20 a trustee has been appointed under this chapter, or

21 unless the court, on request of a party in interest and

22 after notice and hearing, shortens such time;

23 ‘‘(2) the debtor shall file a plan, and any nec24 essary disclosure statement, not later than 90 days

25 after the date of the order for relief, unless the United
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1 States Trustee has appointed under section

2 1102(a)(1) of this title a committee of unsecured

3 creditors that the court has determined, before the 90

4 days has expired, is sufficiently active and represent5 ative to provide effective oversight of the debtor; and

6 ‘‘(3) the time periods specified in paragraphs (1)

7 and (2) of this subsection and the time fixed in sec8 tion 1129(e) of this title for confirmation of a plan,

9 may be extended only as follows:

10 ‘‘(A) On request of a party in interest made

11 within the respective periods, and after notice

12 and hearing, the court may for cause grant one

13 or more extensions, cumulatively not to exceed 60

14 days, if the movant establishes—

15 ‘‘(i) that no cause exists to dismiss or

16 convert the case or appoint a trustee or ex17 aminer under subparagraphs (A) (I) of sec18 tion 1112(b) of this title; and

19 ‘‘(ii) that there is a reasonable possi20 bility the court will confirm a plan within

21 a reasonable time;

22 ‘‘(B) On request of a party in interest made

23 within the respective periods, and after notice

24 and hearing, the court may for cause grant one

25 or more extensions in excess of those authorized
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1 under subparagraph (A) of this paragraph, if the

2 movant establishes:

3 ‘‘(i) that no cause exists to dismiss or

4 convert the case or appoint a trustee or ex5 aminer under subparagraphs (A) (I) of sec6 tion 1112(b)(3) of this title; and

7 ‘‘(ii) that it is more likely than not

8 that the court will confirm a plan within a

9 reasonable time; and

10 ‘‘(C) a new deadline shall be imposed when11 ever an extension is granted.’’.

12 SEC. 408. PLAN CONFIRMATION DEADLINE.

13 Section 1129 of title 11, United States Code, is amend14 ed by adding at the end the following:

15 ‘‘(e) In a small business case, the debtor shall confirm

16 a plan not later than 150 days after the date of the order

17 for relief unless—

18 ‘‘(1) the United States Trustee has appointed,

19 under section 1102(a)(1) of this title, a committee of

20 unsecured creditors that the court has determined, be21 fore the 150 days has expired, is sufficiently active

22 and representative to provide effective oversight of the

23 debtor; or

24 ‘‘(2) such 150-day period is extended as provided

25 in section 1121(e)(3) of this title.’’.
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1 SEC. 409. PROHIBITION AGAINST EXTENSION OF TIME.

2 Section 105(d) of title 11, United States Code, is

3 amended—

4 (1) in paragraph (2)(B)(vi) by striking the pe5 riod at the end and inserting ‘‘; and’’; and

6 (2) by adding at the end the following:

7 ‘‘(3) in a small business case, not extend the time

8 periods specified in sections 1121(e) and 1129(e) of

9 this title except as provided in section 1121(e)(3) of

10 this title.’’.

11 SEC. 410. DUTIES OF THE UNITED STATES TRUSTEE.

12 (a) DUTIES OF THE UNITED STATES TRUSTEE.—

13 Section 586(a) of title 28, United States Code, is

14 amended—

15 (1) in paragraph (3)—

16 (A) in subparagraph (G) by striking ‘‘and

17 at the end’’;

18 (B) by redesignating subparagraph (H) as

19 subparagraph (I); and

20 (C) by inserting after subparagraph (G) the

21 following:

22 ‘‘(H) in small business cases (as defined in

23 section 101 of title 11), performing the addi24 tional duties specified in title 11 pertaining to

25 such cases’’;
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1 (2) in paragraph (5) by striking ‘‘and at the

2 end’’;

3 (3) in paragraph (6) by striking the period at

4 the end and inserting ‘‘; and’’; and

5 (4) by inserting after paragraph (7) the fol6 lowing:

7 ‘‘(7) in each of such small business cases—

8 ‘‘(A) conduct an initial debtor interview as

9 soon as practicable after the entry of order for

10 relief but before the first meeting scheduled under

11 section 341(a) of title 11 at which time the

12 United States trustee shall begin to investigate

13 the debtor’s viability, inquire about the debtor’s

14 business plan, explain the debtor’s obligations to

15 file monthly operating reports and other required

16 reports, attempt to develop an agreed scheduling

17 order, and inform the debtor of other obligations;

18 ‘‘(B) when determined to be appropriate

19 and advisable, visit the appropriate business

20 premises of the debtor and ascertain the state of

21 the debtor’s books and records and verify that the

22 debtor has filed its tax returns; and

23 ‘‘(C) review and monitor diligently the

24 debtor’s activities, to identify as promptly as
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1 possible whether the debtor will be unable to con2 firm a plan; and

3 ‘‘(8) in cases in which the United States trustee

4 finds material grounds for any relief under section

5 1112 of title 11, the United States trustee shall apply

6 promptly to the court for relief.’’.

7 SEC. 411. SCHEDULING CONFERENCES.

8 Section 105(d) of title 11, United States Code, is

9 amended—

10 (1) in the matter preceding paragraph (1) by

11 striking ‘‘, may’’;

12 (2) by amending paragraph (1) to read as fol13 lows:

14 ‘‘(1) shall hold such status conferences as are

15 necessary to further the expeditious and economical

16 resolution of the case; and’’; and

17 (3) in paragraph (2) by striking ‘‘unless incon18 sistent with another provision of this title or with ap19 plicable Federal Rules of Bankruptcy Procedure’’, and

20 inserting ‘‘may’’.

21 SEC. 412. SERIAL FILER PROVISIONS.

22 Section 362 of title 11, United States Code, as amend23 ed by section 302, is amended—

24 (1) in subsection (i) as so redesignated by section

25 122—
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1 (A) by striking ‘‘An’’ and inserting ‘‘(1)

2 Except as provided in paragraph (2), an’’; and

3 (B) by adding at the end the following:

4 ‘‘(2) If such violation is based on an action taken by

5 an entity in the good-faith belief that subsection (h) applies

6 to the debtor, then recovery under paragraph (1) against

7 such entity shall be limited to actual damages.’’; and

8 (2) by inserting after subsection (j), as added by

9 section 302, the following:

10 ‘‘(k)(1) Except as provided in paragraph (2) of this

11 subsection, the provisions of subsection (a) of thissection

12 shall not apply in a case in which the debtor—

13 ‘‘(A) is a debtor in a case under this title pend14 ing at the time the petition is filed;

15 ‘‘(B) was a debtor in a case under this title

16 which was dismissed for any reason by an order that

17 became final in the 2-year period ending on the date

18 of the order for relief entered with respect to the peti19 tion;

20 ‘‘(C) was a debtor in a case under this title in

21 which a chapter 11, 12, or 13 plan was confirmed in

22 the 2-year period ending on the date of the order for

23 relief entered with respect to the petition; or
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1 ‘‘(D) is an entity that has succeeded to substan2 tially all of the assets or business of a debtor described

3 in subparagraph (A), (B), or (C).

4 ‘‘(2) This subsection shall not apply—

5 ‘‘(A) to a case initiated by an involuntary peti6 tion filed by a creditor that is not an insider or affil7 iate of the debtor; or

8 ‘‘(B) after such time as the debtor, after notice

9 and a hearing, demonstrates by a preponderance of

10 the evidence, that the filing of such petition resulted

11 from circumstances beyond the control of the debtor

12 and not foreseeable at the time the earlier case was

13 filed; and that it is more likely than not that the

14 court will confirm a plan, other than a liquidating

15 plan, within a reasonable time.’’.

16 SEC. 413. EXPANDED GROUNDS FOR DISMISSAL OR CON17 VERSION AND APPOINTMENT OF TRUSTEE OR

18 EXAMINER.

19 (a) EXPANDED GROUNDS FOR DISMISSAL OR CONVER20 SION.—Section 1112(b) of title 11, United States Code, is

21 amended to read as follows:

22 ‘‘(b)(1) Except as provided in paragraphs (2) and (4)

23 of this subsection, and in subsection (c) of this section, on

24 request of a party in interest, and after notice and a hear25 ing, the court shall convert a case under this chapter to
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1 a case under chapter 7 of this title or dismiss a case under

2 this chapter, or appoint a trustee or examiner under section

3 1104(e) of this title, whichever is in the best interest of

4 creditors and the estate, if the movant establishes cause.

5 ‘‘(2) The court may decline to grant the relief specified

6 in paragraph (1) of this subsection if the debtor or another

7 party in interest objects and establishes by a preponderance

8 of the evidence that—

9 ‘‘(A) it is more likely than not that a plan will

10 be confirmed within a time as fixed by this title or

11 by order of the court entered pursuant to section

12 1121(e)(3), or within a reasonable time if no time has

13 been fixed; and

14 ‘‘(B) if the cause is an act or omission of the

15 debtor that—

16 ‘‘(i) there exists a reasonable justification

17 for the act or omission; and

18 ‘‘(ii) the act or omission will be cured with19 in a reasonable time fixed by the court not to ex20 ceed 30 days after the court decides the motion,

21 unless the movant expressly consents to a con22 tinuance for a specific period of time, or compel23 ling circumstances beyond the control of the debt24 or justify an extension.

25 ‘‘(3) For purposes of this subsection, cause includes—
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1 ‘‘(A) substantial or continuing loss to or diminu2 tion of the estate;

3 ‘‘(B) gross mismanagement of the estate;

4 ‘‘(C) failure to maintain insurance that poses a

5 material risk to the estate or the public;

6 ‘‘(D) unauthorized use of cash collateral harmful

7 to 1 or more creditors;

8 ‘‘(E) failure to comply with an order of the

9 court;

10 ‘‘(F) failure timely to satisfy any filing or re11 porting requirement established by this title or by any

12 rule applicable to a case under this chapter;

13 ‘‘(G) failure to attend the meeting of creditors

14 convened under section 341(a) of this title;

15 ‘‘(H) failure timely to provide information or at16 tend meetings reasonably requested by the United

17 States trustee or bankruptcy administrator;

18 ‘‘(I) failure timely to pay taxes due after the

19 date of the order for relief or to file tax returns due

20 after the order for relief;

21 ‘‘(J) failure to file a disclosure statement, or to

22 file or confirm a plan, within the time fixed by this

23 title or by order of the court;

24 ‘‘(K) failure to pay any fees or charges required

25 under chapter 123 of title 28;
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1 ‘‘(L) revocation of an order of confirmation

2 under section 1144 of this title;

3 ‘‘(M) inability to effectuate substantial con4 summation of a confirmed plan;

5 ‘‘(N) material default by the debtor with respect

6 to a confirmed plan; and

7 ‘‘(O) termination of a plan by reason of the oc8 currence of a condition specified in the plan.

9 ‘‘(4) The court may grant relief under this subsection

10 for cause as defined in subparagraphs C, F, G, H, or K

11 of paragraph 3 of this subsection only upon motion of the

12 United States trustee or bankruptcy administrator or upon

13 the court s own motion.

14 ‘‘(5) The court shall commence the hearing on any mo15 tion under this subsection not later than 30 days after filing

16 of the motion, and shall decide the motion within 15 days

17 after commencement of the hearing, unless the movant ex18 pressly consents to a continuance for a specific period of

19 time or compelling circumstances prevent the court from

20 meeting the time limits established by this paragraph.’’.

21 (b) ADDITIONAL GROUNDS FOR APPOINTMENT OF

22 TRUSTEE OR EXAMINER.—Section 1104 of title 11, United

23 States Code, is amended by adding at the end the following:

24 ‘‘(e) If grounds exist to convert or dismiss the case

25 under section 1112 of this title, the court may instead ap-
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1 point a trustee or examiner, if it determines that such ap2 pointment is in the best interests of creditors and the es3 tate.’’.

4 SEC. 414. STUDY OF OPERATION OF TITLE 11 OF THE

5 UNITED STATES CODE WITH RESPECT TO

6 SMALL BUSINESSES.

7 Not later than 2 years after the date of the enactment

8 of this Act, the Administrator of the Small Business Admin9 istration, in consultation with the Attorney General, the

10 Director of the Administrative Office of United States

11 Trustees, and the Director of the Administrative Office of

12 the United States Courts, shall—

13 (1) conduct a study to determine—

14 (A) the internal and external factors that

15 cause small businesses, especially sole proprietor16 ships, to become debtors in cases under title 11

17 of the United States Code and that cause certain

18 small businesses to successfully complete cases

19 under chapter 11 of such title; and

20 (B) how Federal laws relating to bank21 ruptcy may be made more effective and efficient

22 in assisting small businesses to remain viable;

23 and
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1 (2) submit to the President pro tempore of the

2 Senate and the Speaker of the House of Representa3 tives a report summarizing that study.

4 SEC. 415. PAYMENT OF INTEREST.

5 Section 362(d)(3) of title 11, United States Code, is

6 amended—

7 (1) by inserting ‘‘or 30 days after the court de8 termines that the debtor is subject to this paragraph,

9 whichever is later’’ after ‘‘90-day period)’’; and

10 (2) by amending subparagraph (B) to read as

11 follows:

12 ‘‘(B) the debtor has commenced monthly

13 payments (which payments may, in the debtor’s

14 sole discretion, notwithstanding section 363(c)(2)

15 of this title, be made from rents or other income

16 generated before or after the commencement of

17 the case by or from the property) to each creditor

18 whose claim is secured by such real estate (other

19 than a claim secured by a judgment lien or by

20 an unmatured statutory lien), which payments

21 are in an amount equal to interest at the then22 applicable nondefault contract rate of interest on

23 the value of the creditor’s interest in the real es24 tate; or’’.
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1 TITLE V—MUNICIPAL

2 BANKRUPTCY PROVISIONS

3 SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETI4 TION.

5 (a) TECHNICAL AMENDMENT RELATING TO MUNICI6 PALITIES.—Section 921(d) of title 11, United States Code,

7 is amended by inserting ‘‘notwithstanding section 301(b)’’

8 before the period at the end.

9 (b) CONFORMING AMENDMENT.—Section 301 of title

10 11, United States Code, is amended—

11 (1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’; and

12 (2) by amending the last sentence to read as fol13 lows:

14 ‘‘(b) The commencement of a voluntary case under a

15 chapter of this title constitutes an order for relief under such

16 chapter.’’.

17 SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAPTER

18 9.

19 Section 901(a) of title 11, United States Code, is

20 amended—

21 (1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and

22 (2) by inserting ‘‘559, 560, 561, 562’’ after

23 ‘‘557,’’.
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1 TITLE VI—STREAMLINING THE

2 BANKRUPTCY SYSTEM

3 SEC. 601. CREDITOR REPRESENTATION AT FIRST MEETING

4 OF CREDITORS.

5 Section 341(c) of title 11, United States Code, is

6 amended by inserting after the first sentence the following:

7 ‘‘Notwithstanding any local court rule, provision of a State

8 constitution, any other Federal or State law that is not a

9 bankruptcy law, or other requirement that representation

10 at the meeting of creditors under subsection (a) be by an

11 attorney, a creditor holding a consumer debt or any rep12 resentative of the creditor (which may include an entity or

13 an employee of an entity and may be a representative for

14 more than one creditor) shall be permitted to appear at and

15 participate in the meeting of creditors and activities related

16 thereto in a case under chapter 7 or 13, either alone or

17 in conjunction with an attorney for the creditor. Nothing

18 in this subsection shall be construed to require any creditor

19 to be represented by an attorney at any meeting of credi20 tors.’’.

21 SEC. 602. AUDIT PROCEDURES.

22 (a) AMENDMENTS.—Section 586 of title 28, United

23 States Code, is amended—

24 (1) in subsection (a) by amending striking para25 graph (6) to read as follows:
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1 ‘‘(6) make such reports as the Attorney General

2 directs, including the results of audits performed

3 under subsection (f); and’’; and

4 (2) by adding at the end the following:

5 ‘‘(f)(1)(A) The Attorney General shall establish proce6 dures to determine the accuracy, veracity, and completeness

7 of petitions, schedules, and other information which the

8 debtor is required to provide under sections 521 and 1322

9 of title 11, and, if applicable, section 111 of title 11, in

10 individual cases filed under chapter 7 or 13 of such title.

11 Such audits shall be in accordance with generally accepted

12 auditing standards and performed by independent certified

13 public accountants or independent licensed public account14 ants.

15 ‘‘(B) Those procedures shall—

16 ‘‘(i) establish a method of selecting appropriate

17 qualified persons to contract to perform those audits;

18 ‘‘(ii) establish a method of randomly selecting

19 cases to be audited, except that not less than 1 out of

20 every 250 cases in each Federal judicial district shall

21 be selected for audit;

22 ‘‘(iii) require audits for schedules of income and

23 expenses which reflect greater than average variances

24 from the statistical norm of the district in which the

25 schedules were filed; and
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1 ‘‘(iv) establish procedures for providing, not less

2 frequently than annually, public information con3 cerning the aggregate results of such audits including

4 the percentage of cases, by district, in which a mate5 rial misstatement of income or expenditures is re6 ported.

7 ‘‘(2) The United States trustee for each district is au8 thorized to contract with auditors to perform audits in cases

9 designated by the United States trustee according to the

10 procedures established under paragraph (1).

11 ‘‘(3)(A) The report of each audit conducted under this

12 subsection shall be filed with the court and transmitted to

13 the United States trustee. Each report shall clearly and con14 spicuously specify any material misstatement of income or

15 expenditures or of assets identified by the person performing

16 the audit. In any case where a material misstatement of

17 income or expenditures or of assets has been reported, the

18 clerk of the bankruptcy court shall give notice of the

19 misstatement to the creditors in the case.

20 ‘‘(B) If a material misstatement of income or expendi21 tures or of assets is reported, the United States trustee

22 shall—

23 ‘‘(i) report the material misstatement, if appro24 priate, to the United States Attorney pursuant to sec25 tion 3057 of title 18, United States Code; and
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1 ‘‘(ii) if advisable, take appropriate action, in2 cluding but not limited to commencing an adversary

3 proceeding to revoke the debtor’s discharge pursuant

4 to section 727(d) of title 11, United States Code.’’.

5 (b) AMENDMENTS TO SECTION 521 OF TITLE 11,

6 U.S.C.—Section 521(a) of title 11, United States Code, as

7 amended by section 603, is amended in paragraphs (3) and

8 (4) by adding ‘‘or an auditor appointed pursuant to section

9 586 of title 28, United States Code’’ after ‘‘serving in the

10 case’’.

11 (c) AMENDMENTS TO SECTION 727 OF TITLE 11,

12 U.S.C.—Section 727(d) of title 11, United States Code, is

13 amended—

14 (1) by deleting ‘‘or’’ at the end of paragraph (2);

15 (2) by substituting ‘‘; or’’ for the period at the

16 end of paragraph (3); and

17 (3) by adding the following at the end the fol18 lowing:

19 ‘‘(4) the debtor has failed to explain

20 satisfactorily—

21 ‘‘(A) a material misstatement in an audit

22 performed pursuant to section 586(f) of title 28,

23 United States Code; or

24 ‘‘(B) a failure to make available for inspec25 tion all necessary accounts, papers, documents,
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1 financial records, files, and all other papers,

2 things, or property belonging to the debtor that

3 are requested for an audit conducted pursuant

4 to section 586(f) of title 28, United States

5 Code.’’.

6 (d) EFFECTIVE DATE.—The amendments made by this

7 section shall take effect 18 months after the date of enact8 ment of this Act.

9 SEC. 603. GIVING CREDITORS FAIR NOTICE IN CHAPTER 7

10 AND 13 CASES.

11 (a) NOTICE.—Section 342 of title 11, United States

12 Code, is amended—

13 (1) in subsection (c)—

14 (A) by striking ‘‘, but the failure of such no15 tice to contain such information shall not invali16 date the legal effect of such notice’’; and

17 (B) by adding the following at the end:

18 ‘‘If the credit agreement between the debtor and the creditor

19 or the last communication before the filing of the petition

20 in a voluntary case from the creditor to a debtor who is

21 an individual states an account number of the debtor which

22 is the current account number of the debtor with respect

23 to any debt held by the creditor against the debtor, the debt24 or shall include such account number in any notice to the

25 creditor required to be given under this title. If the creditor
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1 has specified to the debtor an address at which the creditor

2 wishes to receive correspondence regarding the debtor’s ac3 count, any notice to the creditor required to be given by

4 the debtor under this title shall be given at such address.

5 For the purposes of this section, ‘notice’ shall include, but

6 shall not be limited to, any correspondence from the debtor

7 to the creditor after the commencement of the case, any

8 statement of the debtor’s intention under section 521(a)(2)

9 of this title, notice of the commencement of any proceeding

10 in the case to which the creditor is a party, and any notice

11 of the hearing under section 1324 of this title.’’;

12 (2) by adding at the end the following:

13 ‘‘(d) At any time, a creditor in a case of an individual

14 debtor under chapter 7 or 13 may file with the court and

15 serve on the debtor a notice of the address to be used to

16 notify the creditor in that case. After 5 days following re17 ceipt of such notice, any notice the court or the debtor is

18 required to give the creditor shall be given at that address.

19 ‘‘(e) An entity may file with the court a notice stating

20 its address for notice in cases under chapters 7 and 13.

21 After 30 days following the filing of such notice, any notice

22 in any case filed under chapter 7 or 13 given by the court

23 shall be to that address unless specific notice is given under

24 subsection (d) with respect to a particular case.
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1 ‘‘(f) Notice given to a creditor other than as provided

2 in this section shall not be effective notice until it has been

3 brought to the attention of the creditor. If the creditor has

4 designated a person or department to be responsible for re5 ceiving notices concerning bankruptcy cases and has estab6 lished reasonable procedures so that bankruptcy notices re7 ceived by the creditor will be delivered to such department

8 or person, notice will not be brought to the attention of the

9 creditor until received by such person or department. No

10 sanction under section 362(h) of this title or any other sanc11 tion which a court may impose on account of violations

12 of the stay under section 362(a) of this title or failure to

13 comply with section 542 or 543 of this title may be imposed

14 on any action of the creditor unless the action takes place

15 after the creditor has received notice of the commencement

16 of the case effective under this section.’’.

17 (b) DEBTOR’S DUTIES.—Section 521 of title 11,

18 United States Code, as amended by sections 604, 120, and

19 302, is amended—

20 (1) by inserting ‘‘(a)’’ before ‘‘The debtor shall—

21 ’’;

22 (2) by striking paragraph (1) and inserting the

23 following:

24 ‘‘(1) file—

25 ‘‘(A) a list of creditors; and
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1 ‘‘(B) unless the court orders otherwise—

2 ‘‘(i) a schedule of assets and liabilities;

3 ‘‘(ii) a schedule of current monthly in4 come and current expenditures prepared in

5 accordance with section 707(b)(2);

6 ‘‘(iii) a statement of the debtor’s finan7 cial affairs and, if applicable, a

8 certificate—

9 ‘‘(I) of an attorney whose name is

10 on the petition as the attorney for the

11 debtor or any bankruptcy petition pre12 parer signing the petition pursuant to

13 section 110(b)(1) of this title indi14 cating that such attorney or bank15 ruptcy petition preparer delivered to

16 the debtor any notice required by sec17 tion 342(b) of this title; or

18 ‘‘(II) if no attorney for the debtor

19 is indicated and no bankruptcy peti20 tion preparer signed the petition, of the

21 debtor that such notice was obtained

22 and read by the debtor;

23 ‘‘(iv) copies of any Federal tax returns,

24 including any schedules or attachments,
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1 filed by the debtor for the 3-year period pre2 ceding the order for relief;

3 ‘‘(v) copies of all payment advices or

4 other evidence of payment, if any, received

5 by the debtor from any employer of the

6 debtor in the period 60 days prior to the fil7 ing of the petition; and

8 ‘‘(vi) a statement disclosing any rea9 sonably anticipated increase in income or

10 expenditures over the 12-month period fol11 lowing the date of filing;’’;

12 (3) by adding at the end the following:

13 ‘‘(e)(1) At any time, a creditor, in the case of an indi14 vidual under chapter 7 or 13, may file with the court notice

15 that the creditor requests the petition, schedules, and a

16 statement of affairs filed by the debtor in the case and the

17 court shall make those documents available to the creditor

18 who requests those documents at a reasonable cost within

19 5 business days after such request.

20 ‘‘(2) At any time, a creditor in a case under chapter

21 13 may file with the court notice that the creditor requests

22 the plan filed by the debtor in the case, and the court shall

23 make such plan available to the creditor who requests such

24 plan at a reasonable cost and not later than 5 days after

25 such request.
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1 ‘‘(f) An individual debtor in a case under chapter 7

2 or 13 shall file with the court—

3 ‘‘(1) at the time filed with the taxing authority,

4 all tax returns, including any schedules or attach5 ments, with respect to the period from the commence6 ment of the case until such time as the case is closed;

7 ‘‘(2) at the time filed with the taxing authority,

8 all tax returns, including any schedules or attach9 ments, that were not filed with the taxing authority

10 when the schedules under subsection (a)(1) were filed

11 with respect to the period that is 3 years before the

12 order for relief;

13 ‘‘(3) any amendments to any of the tax returns,

14 including schedules or attachments, described in para15 graph (1) or (2); and

16 ‘‘(4) in a case under chapter 13, a statement

17 subject to the penalties of perjury by the debtor of the

18 debtor’s current monthly income and expenditures in

19 the preceding tax year and current monthly income

20 less expenditures for the month preceding the state21 ment prepared in accordance with section 707(b)(2)

22 that shows how the amounts are calculated—

23 ‘‘(A) beginning on the date that is the later

24 of 90 days after the close of the debtor’s tax year
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1 or 1 year after the order for relief, unless a plan

2 has been confirmed; and

3 ‘‘(B) thereafter, on or before the date that is

4 45 days before each anniversary of the confirma5 tion of the plan until the case is closed.

6 ‘‘(g)(1) A statement referred to in subsection (f)(4)

7 shall disclose—

8 ‘‘(A) the amount and sources of income of the

9 debtor;

10 ‘‘(B) the identity of any persons responsible with

11 the debtor for the support of any dependents of the

12 debtor; and

13 ‘‘(C) the identity of any persons who contributed,

14 and the amount contributed, to the household in

15 which the debtor resides.

16 ‘‘(2) The tax returns, amendments, and statement of

17 income and expenditures described in paragraph (1) shall

18 be available to the United States trustee, any bankruptcy

19 administrator, any trustee, and any party in interest for

20 inspection and copying, subject to the requirements of sub21 section (h).

22 ‘‘(h)(1) Not later than 30 days after the date of enact23 ment of the Consumer Bankruptcy Reform Act of 1999, the

24 Director of the Administrative Office of the United States

25 Courts shall establish procedures for safeguarding the con-
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1 fidentiality of any tax information required to be provided

2 under this section.

3 ‘‘(2) The procedures under paragraph (1) shall include

4 reasonable restrictions on creditor access to tax information

5 that is required to be provided under this section to verify

6 creditor identity and to restrict use of the information ex7 cept with respect to the case.

8 ‘‘(3) Not later than 1 year after the date of enactment

9 of the Consumer Bankruptcy Reform Act of 1999, the Direc10 tor of the Administrative Office of the United States Courts

11 shall prepare, and submit to Congress a report that—

12 ‘‘(A) assesses the effectiveness of the procedures

13 under paragraph (1) to provide timely and sufficient

14 information to creditors concerning the case; and

15 ‘‘(B) if appropriate, includes proposed

16 legislation—

17 ‘‘(i) to further protect the confidentiality of

18 tax information or to make it better available to

19 creditors; and

20 ‘‘(ii) to provide penalties for the improper

21 use by any person of the tax information re22 quired to be provided under this section.

23 ‘‘(i) If requested by the United States trustee or a

24 trustee serving in the case, the debtor provide a document

25 that establishes the identity of the debtor, including a driv-
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1 er’s license, passport, or other document that contains a

2 photograph of the debtor and such other personal identi3 fying information relating to the debtor that establishes the

4 identity of the debtor.’’.

5 (c) Section 1324 of title 11, United States Code, is

6 amended—

7 (1) by inserting ‘‘(a)’’ before ‘‘After’’; and

8 (2) by inserting at the end thereof—

9 ‘‘(c) Whenever a party in interest is given notice of

10 a hearing on the confirmation or modification of a plan

11 under this chapter, such notice shall include the informa12 tion provided by the debtor on the most recent statement

13 filed with the court pursuant to section 521(a)(1)(B)(ii) or

14 (f)(4) of this title.’’.

15 SEC. 604. DISMISSAL FOR FAILURE TO TIMELY FILE SCHED16 ULES OR PROVIDE REQUIRED INFORMATION.

17 Section 521 of title 11, United States Code, as amend18 ed by section 603 is amended by inserting after subsection

19 (a) the following:

20 ‘‘(b)(1) Notwithstanding section 707(a) of this title,

21 and subject to paragraph (2), if an individual debtor in

22 a voluntary case under chapter 7 or 13 fails to file all of

23 the information required under subsection (a)(1) within 45

24 days after the filing of the petition commencing the case,
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1 the case shall be automatically dismissed effective on the

2 46th day after the filing of the petition.

3 ‘‘(2) With respect to a case described in paragraph (1),

4 any party in interest may request the court to enter an

5 order dismissing the case. The court shall, if so requested,

6 enter an order of dismissal not later than 5 days after such

7 request.

8 ‘‘(3) Upon request of the debtor made within 45 days

9 after the filing of the petition commencing a case described

10 in paragraph (1), the court may allow the debtor an addi11 tional period not to exceed 45 days to file the information

12 required under subsection (a)(1) if the court finds justifica13 tion for extending the period for the filing.’’.

14 SEC. 605. ADEQUATE TIME TO PREPARE FOR HEARING ON

15 CONFIRMATION OF THE PLAN.

16 (a) HEARING.—Section 1324 of title 11, United States

17 Code, is amended—

18 (1) by striking ‘‘After’’ and inserting the fol19 lowing:

20 ‘‘(a) Except as provided in subsection (b) and after’’;

21 and

22 (2) by adding at the end the following:

23 ‘‘(b) The hearing on confirmation of the plan may be

24 held not earlier than 20 days, and not later than 45 days,
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1 after the meeting of creditors under section 341(a) of this

2 title.’’.

3 SEC. 606. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION

4 IN CERTAIN CASES.

5 Title 11, United States Code, is amended—

6 (1) by amending section 1322(d) to read as fol7 lows:

8 ‘‘(d) If the current monthly income of the debtor and

9 the debtor’s spouse combined, when multiplied by 12, is not

10 less than the highest national median family income last

11 reported by the Bureau of the Census for a family of equal

12 or lesser size or, in the case of a household of 1 person, not

13 less than the national median household income for 1 earn14 er, the plan may not provide for payments over a period

15 that is longer than 5 years. If the current monthly income

16 of the debtor and the debtor’s spouse combined, when multi17 plied by 12, is less than the highest national median family

18 income for a family of equal or lesser size, or in the case

19 of a household of 1 person, the national median household

20 income for 1 earner, the plan may not provide for payments

21 over a period that is longer than 3 years, unless the court,

22 for cause, approves a longer period, but the court may not

23 approve a period that is longer than 5 years. Notwith24 standing the foregoing, the national median family income

25 for a family of more than 4 individuals shall be the na-
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1 tional median family income last reported by the Bureau

2 of the Census for a family of 4 individuals plus $583 for

3 each additional member of the family.’’;

4 (2) in section 1325(b)(1)(B) as amended by sec5 tion 130—

6 (A) by striking ‘‘three year period’’ and in7 serting ‘‘applicable commitment period’’; and

8 (B) by inserting at the end of subparagraph

9 (B) the following: ‘‘The ‘applicable commitment

10 period’ shall be not less than 5 years if the cur11 rent monthly income of the debtor and the debt12 or’s spouse combined, when multiplied by 12, is

13 not less than the highest national median family

14 income last reported by the Bureau of the Census

15 for a family of equal or lesser size, or in the case

16 of a household of 1 person, the national median

17 household income for 1 earner. Notwithstanding

18 the foregoing, the national median family in19 come for a family of more than 4 individuals

20 shall be the national median family income last

21 reported by the Bureau of the Census for a fam22 ily of 4 individuals plus $583 for each addi23 tional member of the family.’’; and

24 (3) in section 1329—
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1 (A) by striking in subsection (c) ‘‘three

2 years’’ and inserting ‘‘the applicable commit3 ment period under section 1325(b)(1)(B)’’; and

4 (B) by inserting at the end of subsection (c)

5 the following:

6 ‘‘The duration period shall be 5 years if the current monthly

7 income of the debtor and the debtor’s spouse combined, when

8 multiplied by 12, is not less than the highest national me9 dian family income last reported by the Bureau of the Cen10 sus for a family of equal or lesser size or, in the case of

11 a household of 1 person, the national median household in12 come for 1 earner, as of the date of the modification and

13 shall be 3 years if the current monthly total income of the

14 debtor and the debtor’s spouse combined, when multiplied

15 by 12, is less than the highest national median family in16 come last reported by the Bureau of the Census for a family

17 of equal or lesser size or, in the case of a household of 1

18 person, less than the national median household income for

19 1 earner as of the date of the modification. Notwithstanding

20 the foregoing, the national median family income for a fam21 ily of more than 4 individuals shall be the national median

22 family income last reported by the Bureau of the Census

23 for a family of 4 individuals plus $583 for each additional

24 member of the family.’’.
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1 SEC. 607. SENSE OF THE CONGRESS REGARDING EXPAN2 SION OF RULE 9011 OF THE FEDERAL RULES

3 OF BANKRUPTCY PROCEDURE.

4 It is the sense of the Congress that rule 9011 of the

5 Federal Rules of Bankruptcy Procedure (11 U.S.C. App)

6 should be modified to include a requirement that all docu7 ments (including schedules), signed and unsigned, sub8 mitted to the court or to a trustee by debtors who represent

9 themselves and debtors who are represented by an attorney

10 be submitted only after the debtor or the debtor’s attorney

11 has made reasonable inquiry to verify that the information

12 contained in such documents is well grounded in fact, and

13 is warranted by existing law or a good-faith argument for

14 the extension, modification, or reversal of existing law.

15 SEC. 608. ELIMINATION OF CERTAIN FEES PAYABLE IN

16 CHAPTER 11 BANKRUPTCY CASES.

17 (a) AMENDMENTS.—Section 1930(a)(6) of title 28,

18 United States Code, is amended—

19 (1) in the 1st sentence by striking ‘‘until the case

20 is converted or dismissed, whichever occurs first’’; and

21 (2) in the 2d sentence—

22 (A) by striking ‘‘The’’ and inserting ‘‘Until

23 the plan is confirmed or the case is converted

24 (whichever occurs first) the’’; and

25 (B) by striking ‘‘less than $300,000;’’ and

26 inserting ‘‘less than $300,000. Until the case is
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1 converted, dismissed, or closed (whichever occurs

2 first and without regard to confirmation of the

3 plan) the fee shall be’’.

4 (b) DELAYED EFFECTIVE DATE.—The amendments

5 made by subsection (a) shall take effect on October 1, 1999.

6 SEC. 609. STUDY OF BANKRUPTCY IMPACT OF CREDIT EX7 TENDED TO DEPENDENT STUDENTS.

8 Not later than 1 year after the date of the enactment

9 of this Act, the Comptroller General of the United States

10 shall—

11 (1) conduct a study regarding the impact that

12 the extension of credit to individuals who are—

13 (A) claimed as dependents for purposes of

14 the Internal Revenue Code of 1986; and

15 (B) enrolled in post-secondary educational

16 institutions,

17 has on the rate of cases filed under title 11 of the

18 United States Code; and

19 (2) submit to the Speaker of the House of Rep20 resentatives and the President pro tempore of the Sen21 ate a report summarizing such study.

22 SEC. 610. PROMPT RELIEF FROM STAY IN INDIVIDUAL

23 CASES.

24 Section 362(e) of title 11, United States Code, is

25 amended—
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1 (1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and

2 (2) by adding at the end the following:

3 ‘‘(2) Notwithstanding paragraph (1), in the case of an

4 individual filing under chapter 7, 11, or 13, the stay under

5 subsection (a) shall terminate on the date that is 60 days

6 after a request is made by a party in interest under sub7 section (d), unless—

8 ‘‘(A) a final decision is rendered by the court

9 during the 60-day period beginning on the date of the

10 request; or

11 ‘‘(B) that 60-day period is extended—

12 ‘‘(i) by agreement of all parties in interest;

13 or

14 ‘‘(ii) by the court for such specific period of

15 time as the court finds is required by for good

16 cause as described in findings made by the

17 court.’’.

18 SEC. 611. STOPPING ABUSIVE CONVERSIONS FROM CHAP19 TER 13.

20 Section 348(f)(1) of title 11, United States Code, is

21 amended—

22 (1) in subparagraph (A), by striking ‘‘and’’ at

23 the end;

24 (2) in subparagraph (B)—
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1 (A) by striking ‘‘in the converted case, with

2 allowed secured claims’’ and inserting ‘‘only in

3 a case converted to chapter 11 or 12 but not in

4 a case converted to chapter 7, with allowed se5 cured claims in cases under chapters 11 and

6 12’’; and

7 (B) by striking the period and inserting ‘‘;

8 and’’; and

9 (3) by adding at the end the following:

10 ‘‘(C) with respect to cases converted from chapter

11 13—

12 ‘‘(i) the claim of any creditor holding secu13 rity as of the date of the petition shall continue

14 to be secured by that security unless the full

15 amount of such claim determined under applica16 ble nonbankruptcy law has been paid in full as

17 of the date of conversion, notwithstanding any

18 valuation or determination of the amount of an

19 allowed secured claim made for the purposes of

20 the chapter 13 proceeding; and

21 ‘‘(ii) unless a prebankruptcy default has

22 been fully cured pursuant to the plan at the time

23 of conversion, in any proceeding under this title

24 or otherwise, the default shall have the effect

25 given under applicable nonbankruptcy law.’’.
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1 SEC. 612. BANKRUPTCY APPEALS.

2 Title 28 of the United States Code is amended by in3 serting after section 1292 the following:

4 ‘‘§ 1293. Bankruptcy appeals

5 ‘‘(a) The courts of appeals (other than the United

6 States Court of Appeals for the Federal Circuit) shall have

7 jurisdiction of appeals from the following:

8 ‘‘(1) Final orders and judgments entered by

9 bankruptcy courts and district courts in cases under

10 title 11, in proceedings arising under title 11, and in

11 proceedings arising in or related to a case under title

12 11, including final orders in proceedings regarding

13 the automatic stay of section 362 of title 11.

14 ‘‘(2) Interlocutory orders entered by bankruptcy

15 courts and district courts granting, continuing, modi16 fying, refusing or dissolving injunctions, or refusing

17 to dissolve or modify injunctions in cases under title

18 11, in proceedings arising under title 11, and in pro19 ceedings arising in or related to a case under title 11,

20 other than interlocutory orders in proceedings regard21 ing the automatic stay of section 362 of title 11.

22 ‘‘(3) Interlocutory orders of bankruptcy courts

23 and district courts entered under section 1104(a) or

24 1121(d) of title 11, or the refusal to enter an order

25 under such section.
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1 ‘‘(4) An interlocutory order of a bankruptcy

2 court or district court entered in a case under title

3 11, in a proceeding arising under title 11, or in a

4 proceeding arising in or related to a case under title

5 11, if the court of appeals that would have jurisdic6 tion of an appeal of a final order entered in such case

7 or such proceeding permits, in its discretion, appeal

8 to be taken from such interlocutory order.

9 ‘‘(b) Final decisions, judgments, orders, and decrees

10 entered by a bankruptcy appellate panel under subsection

11 (b) of this section.

12 ‘‘(c)(1) The judicial council of a circuit may establish

13 a bankruptcy appellate panel composed of bankruptcy

14 judges in the circuit who are appointed by the judicial

15 council, which panel shall exercise the jurisdiction to review

16 orders and judgments of bankruptcy courts described in

17 paragraphs (1)–(4) of subsection (a) of this section unless—

18 ‘‘(A) the appellant elects at the time of filing the

19 appeal; or

20 ‘‘(B) any other party elects, not later than 10

21 days after service of the notice of the appeal;

22 to have such jurisdiction exercised by the court of appeals.

23 ‘‘(2) An appeal to be heard by a bankruptcy appellate

24 panel under this subsection (b) shall be heard by 3 members

25 of the bankruptcy appellate panel, provided that a member
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1 of such panel may not hear an appeal originating in the

2 district for which such member is appointed or designated

3 under section 152 of this title.

4 ‘‘(3) If authorized by the Judicial Conference of the

5 United States, the judicial councils of 2 or more circuits

6 may establish a joint bankruptcy appellate panel.’’.

7 SEC. 613. GAO STUDY.

8 (a) STUDY.—Not later than 270 days after the date

9 of the enactment of this Act, the Comptroller General of the

10 United States shall conduct a study of the feasibility, effec11 tiveness, and cost of requiring trustees appointed under title

12 11 of the United States Code, or the bankruptcy courts, to

13 provide to the Office of Child Support Enforcement prompt14 ly after the commencement of cases by individual debtors

15 under such title, the names and social security numbers of

16 such debtors for the purposes of allowing such Office to de17 termine whether such debtors have outstanding obligations

18 for child support (as determined on the basis of information

19 in the Federal Case Registry or other national database).

20 (b) REPORT.—Not later than 300 days after the date

21 of the enactment of this Act, the Comptroller General shall

22 submit to the Speaker of the House of Representatives and

23 the President pro tempore of the Senate, a report containing

24 the results of the study required by subsection (a).
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1 TITLE VII—BANKRUPTCY DATA

2 SEC. 701. IMPROVED BANKRUPTCY STATISTICS.

3 (a) AMENDMENT.—Chapter 6 of part I of title 28,

4 United States Code, is amended by adding at the end the

5 following:

6 ‘‘§ 159. Bankruptcy statistics

7 ‘‘(a) The clerk of each district shall compile statistics

8 regarding individual debtors with primarily consumer

9 debts seeking relief under chapters 7, 11, and 13 of title

10 11. Those statistics shall be in a form prescribed by the Di11 rector of the Administrative Office of the United States

12 Courts (referred to in this section as the ‘Office’).

13 ‘‘(b) The Director shall—

14 ‘‘(1) compile the statistics referred to in sub15 section (a);

16 ‘‘(2) make the statistics available to the public;

17 and

18 ‘‘(3) not later than October 31, 2000, and annu19 ally thereafter, prepare, and submit to Congress a re20 port concerning the information collected under sub21 section (a) that contains an analysis of the informa22 tion.

23 ‘‘(c) The compilation required under subsection (b)

24 shall—
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1 ‘‘(1) be itemized, by chapter, with respect to title

2 11;

3 ‘‘(2) be presented in the aggregate and for each

4 district; and

5 ‘‘(3) include information concerning—

6 ‘‘(A) the total assets and total liabilities of

7 the debtors described in subsection (a), and in

8 each category of assets and liabilities, as re9 ported in the schedules prescribed pursuant to

10 section 2075 of this title and filed by those debt11 ors;

12 ‘‘(B) the current monthly income, and aver13 age income and average expenses of those debtors

14 as reported on the schedules and statements that

15 each such debtor files under sections 521 and

16 1322 of title 11;

17 ‘‘(C) the aggregate amount of debt dis18 charged in the reporting period, determined as

19 the difference between the total amount of debt

20 and obligations of a debtor reported on the sched21 ules and the amount of such debt reported in cat22 egories which are predominantly nondischarge23 able;

24 ‘‘(D) the average period of time between the

25 filing of the petition and the closing of the case;
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1 ‘‘(E) for the reporting period—

2 ‘‘(i) the number of cases in which a re3 affirmation was filed; and

4 ‘‘(ii)(I) the total number of reaffirma5 tions filed;

6 ‘‘(II) of those cases in which a reaffir7 mation was filed, the number in which the

8 debtor was not represented by an attorney;

9 and

10 ‘‘(III) of those cases, the number of

11 cases in which the reaffirmation was ap12 proved by the court;

13 ‘‘(F) with respect to cases filed under chap14 ter 13 of title 11, for the reporting period—

15 ‘‘(i)(I) the number of cases in which a

16 final order was entered determining the

17 value of property securing a claim in an

18 amount less than the amount of the claim;

19 and

20 ‘‘(II) the number of final orders deter21 mining the value of property securing a

22 claim issued;

23 ‘‘(ii) the number of cases dismissed, the

24 number of cases dismissed for failure to

25 make payments under the plan, the number
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1 of cases refiled after dismissal, and the

2 number of cases in which the plan was com3 pleted, separately itemized with respect to

4 the number of modifications made before

5 completion of the plan, if any; and

6 ‘‘(iii) the number of cases in which the

7 debtor filed another case within the 6 years

8 previous to the filing;

9 ‘‘(G) the number of cases in which creditors

10 were fined for misconduct and any amount of

11 punitive damages awarded by the court for cred12 itor misconduct; and

13 ‘‘(H) the number of cases in which sanc14 tions under rule 9011 of the Federal Rules of

15 Bankruptcy Procedure were imposed against

16 debtor’s counsel and damages awarded under

17 such Rule.’’.

18 (b) CLERICAL AMENDMENT.—The table of sections at

19 the beginning of chapter 6 of title 28, United States Code,

20 is amended by adding at the end the following:

‘‘159. Bankruptcy statistics.’’.

21 (c) EFFECTIVE DATE.—The amendments made by this

22 section shall take effect 18 months after the date of enact23 ment of this Act.
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1 SEC. 702. UNIFORM RULES FOR THE COLLECTION OF BANK2 RUPTCY DATA.

3 (a) AMENDMENT.—Title 28 of the United States Code

4 is amended by inserting after section 589a the following:

5 ‘‘§ 589b. Bankruptcy data

6 ‘‘(a) RULES.—The Attorney General shall, within a

7 reasonable time after the effective date of this section, issue

8 rules requiring uniform forms for (and from time to time

9 thereafter to appropriately modify and approve)—

10 ‘‘(1) final reports by trustees in cases under

11 chapters 7, 12, and 13 of title 11; and

12 ‘‘(2) periodic reports by debtors in possession or

13 trustees, as the case may be, in cases under chapter

14 11 of title 11.

15 ‘‘(b) REPORTS.—All reports referred to in subsection

16 (a) shall be designed (and the requirements as to place and

17 manner of filing shall be established) so as to facilitate com18 pilation of data and maximum possible access of the public,

19 both by physical inspection at 1 or more central filing loca20 tions, and by electronic access through the Internet or other

21 appropriate media.

22 ‘‘(c) REQUIRED INFORMATION.—The information re23 quired to be filed in the reports referred to in subsection

24 (b) shall be that which is in the best interests of debtors

25 and creditors, and in the public interest in reasonable and

26 adequate information to evaluate the efficiency and practi-
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1 cality of the Federal bankruptcy system. In issuing rules

2 proposing the forms referred to in subsection (a), the Attor3 ney General shall strike the best achievable practical bal4 ance between—

5 ‘‘(1) the reasonable needs of the public for infor6 mation about the operational results of the Federal

7 bankruptcy system; and

8 ‘‘(2) economy, simplicity, and lack of undue bur9 den on persons with a duty to file reports.

10 ‘‘(d) FINAL REPORTS.—Final reports proposed for

11 adoption by trustees under chapters 7, 12, and 13 of title

12 11 shall, in addition to such other matters as are required

13 by law or as the Attorney General in the discretion of the

14 Attorney General, shall propose, include with respect to a

15 case under such title—

16 ‘‘(1) information about the length of time the

17 case was pending;

18 ‘‘(2) assets abandoned;

19 ‘‘(3) assets exempted;

20 ‘‘(4) receipts and disbursements of the estate;

21 ‘‘(5) expenses of administration;

22 ‘‘(6) claims asserted;

23 ‘‘(7) claims allowed; and

24 ‘‘(8) distributions to claimants and claims dis25 charged without payment,
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1 in each case by appropriate category and, in cases under

2 chapters 12 and 13 of title 11, date of confirmation of the

3 plan, each modification thereto, and defaults by the debtor

4 in performance under the plan.

5 ‘‘(e) PERIODIC REPORTS.—Periodic reports proposed

6 for adoption by trustees or debtors in possession under

7 chapter 11 of title 11 shall, in addition to such other mat8 ters as are required by law or as the Attorney General, in

9 the discretion of the Attorney General, shall propose,

10 include—

11 ‘‘(1) information about the standard industry

12 classification, published by the Department of Com13 merce, for the businesses conducted by the debtor;

14 ‘‘(2) length of time the case has been pending;

15 ‘‘(3) number of full-time employees as at the date

16 of the order for relief and at end of each reporting pe17 riod since the case was filed;

18 ‘‘(4) cash receipts, cash disbursements and prof19 itability of the debtor for the most recent period and

20 cumulatively since the date of the order for relief;

21 ‘‘(5) compliance with title 11, whether or not tax

22 returns and tax payments since the date of the order

23 for relief have been timely filed and made;

24 ‘‘(6) all professional fees approved by the court

25 in the case for the most recent period and cumula-
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1 tively since the date of the order for relief (separately

2 reported, in for the professional fees incurred by or on

3 behalf of the debtor, between those that would have

4 been incurred absent a bankruptcy case and those

5 not); and

6 ‘‘(7) plans of reorganization filed and confirmed

7 and, with respect thereto, by class, the recoveries of

8 the holders, expressed in aggregate dollar values and,

9 in the case of claims, as a percentage of total claims

10 of the class allowed.’’.

11 (b) TECHNICAL AMENDMENT.—The table of sections of

12 chapter 39 of title 28, United States Code, is amended by

13 adding at the end the following:

‘‘589b. Bankruptcy data.’’.

14 SEC. 703. SENSE OF THE CONGRESS REGARDING AVAIL15 ABILITY OF BANKRUPTCY DATA.

16 It is the sense of the Congress that—

17 (1) the national policy of the United States

18 should be that all data held by bankruptcy clerks in

19 electronic form, to the extent such data reflects only

20 public records (as defined in section 107 of title 11

21 of the United States Code), should be released in a us22 able electronic form in bulk to the public subject to

23 such appropriate privacy concerns and safeguards as

24 the Judicial Conference of the United States may de25 termine; and
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1 (2) there should be established a bankruptcy data

2 system in which—

3 (A) a single set of data definitions and

4 forms are used to collect data nationwide; and

5 (B) data for any particular bankruptcy

6 case are aggregated in the same electronic record.

7 TITLE VIII—BANKRUPTCY TAX

8 PROVISIONS

9 SEC. 801. TREATMENT OF CERTAIN LIENS.

10 (a) TREATMENT OF CERTAIN LIENS.—Section 724 of

11 title 11, United States Code, is amended—

12 (1) in subsection (b), in the matter preceding

13 paragraph (1), by inserting ‘‘(other than to the extent

14 that there is a properly perfected unavoidable tax lien

15 arising in connection with an ad valorem tax on real

16 or personal property of the estate)’’ after ‘‘under this

17 title’’;

18 (2) in subsection (b)(2), after ‘‘507(a)(1)’’, insert

19 ‘‘(except that such expenses, other than claims for

20 wages, salaries, or commissions which arise after the

21 filing of a petition, shall be limited to expenses in22 curred under chapter 7 of this title and shall not in23 clude expenses incurred under chapter 11 of this

24 title)’’; and

25 (3) by adding at the end the following:
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1 ‘‘(e) Before subordinating a tax lien on real or per2 sonal property of the estate, the trustee shall—

3 ‘‘(1) exhaust the unencumbered assets of the es4 tate; and

5 ‘‘(2) in a manner consistent with section 506(c)

6 of this title, recover from property securing an al7 lowed secured claim the reasonable, necessary costs

8 and expenses of preserving or disposing of that prop9 erty.

10 ‘‘(f) Notwithstanding the exclusion of ad valorem tax

11 liens set forth in this section and subject to the requirements

12 of subsection (e)—

13 ‘‘(1) claims for wages, salaries, and commissions

14 that are entitled to priority under section 507(a)(3)

15 of this title; or

16 ‘‘(2) claims for contributions to an employee ben17 efit plan entitled to priority under section 507(a)(4)

18 of this title,

19 may be paid from property of the estate which secures a

20 tax lien, or the proceeds of such property.’’.

21 (b) DETERMINATION OF TAX LIABILITY.—Section

22 505(a)(2) of title 11, United States Code, is amended—

23 (1) in subparagraph (A), by striking ‘‘or’’ at the

24 end;
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1 (2) in subparagraph (B), by striking the period

2 at the end and inserting ‘‘; or’’; and

3 (3) by adding at the end the following:

4 ‘‘(C) the amount or legality of any amount aris5 ing in connection with an ad valorem tax on real or

6 personal property of the estate, if the applicable pe7 riod for contesting or redetermining that amount

8 under any law (other than a bankruptcy law) has

9 expired.’’.

10 SEC. 802. EFFECTIVE NOTICE TO GOVERNMENT.

11 (a) EFFECTIVE NOTICE TO GOVERNMENTAL UNITS.—

12 Section 342 of title 11, United States Code, as amended

13 by section 603, is amended by adding at the end the fol14 lowing:

15 ‘‘(g) If a debtor lists a governmental unit as a creditor

16 in a list or schedule, any notice required to be given by

17 the debtor under this title, any rule, any applicable law,

18 or any order of the court, shall identify the department,

19 agency, or instrumentality through which the debtor is in20 debted. The debtor shall identify (with information such as

21 a taxpayer identification number, loan, account or contract

22 number, or real estate parcel number, where applicable),

23 and describe the underlying basis for the governmental

24 unit’s claim. If the debtor’s liability to a governmental unit

25 arises from a debt or obligation owed or incurred by another
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1 individual, entity, or organization, or under a different

2 name, the debtor shall identify such individual, entity, or3 ganization, or name.

4 ‘‘(h) The clerk shall keep and update quarterly, in the

5 form and manner as the Director of the Administrative Of6 fice of the United States Courts prescribes, and make avail7 able to debtors, a register in which a governmental unit

8 may designate a safe harbor mailing address for service of

9 notice in cases pending in the district. A governmental unit

10 may file a statement with the clerk designating a safe har11 bor address to which notices are to be sent, unless such gov12 ernmental unit files a notice of change of address.’’.

13 (b) ADOPTION OF RULES PROVIDING NOTICE.—The

14 Advisory Committee on Bankruptcy Rules of the Judicial

15 Conference shall, within a reasonable period of time after

16 the date of the enactment of this Act, propose for adoption

17 enhanced rules for providing notice to State, Federal, and

18 local government units that have regulatory authority over

19 the debtor or which may be creditors in the debtor’s case.

20 Such rules shall be reasonably calculated to ensure that no21 tice will reach the representatives of the governmental unit,

22 or subdivision thereof, who will be the proper persons au23 thorized to act upon the notice. At a minimum, the rules

24 should require that the debtor—
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1 (1) identify in the schedules and the notice, the

2 subdivision, agency, or entity in respect of which such

3 notice should be received;

4 (2) provide sufficient information (such as case

5 captions, permit numbers, taxpayer identification

6 numbers, or similar identifying information) to per7 mit the governmental unit or subdivision thereof, en8 titled to receive such notice, to identify the debtor or

9 the person or entity on behalf of which the debtor is

10 providing notice where the debtor may be a successor

11 in interest or may not be the same as the person or

12 entity which incurred the debt or obligation; and

13 (3) identify, in appropriate schedules, served to14 gether with the notice, the property in respect of

15 which the claim or regulatory obligation may have

16 arisen, if any, the nature of such claim or regulatory

17 obligation and the purpose for which notice is being

18 given.

19 (c) EFFECT OF FAILURE OF NOTICE.—Section 342 of

20 title 11, United States Code, as amended by section 603

21 and subsection (a), is amended by adding at the end the

22 following:

23 ‘‘(i) A notice that does not comply with subsections (d)

24 and (e) shall not be effective unless the debtor demonstrates,

25 by clear and convincing evidence, that timely notice was
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1 given in a manner reasonably calculated to satisfy the re2 quirements of this section was given, and that—

3 ‘‘(1) either the notice was timely sent to the safe

4 harbor address provided in the register maintained by

5 the clerk of the district in which the case was pending

6 for such purposes; or

7 ‘‘(2) no safe harbor address was provided in such

8 list for the governmental unit and that an officer of

9 the governmental unit who is responsible for the mat10 ter or claim had actual knowledge of the case in suffi11 cient time to act.’’.

12 SEC. 803. NOTICE OF REQUEST FOR A DETERMINATION OF

13 TAXES.

14 Section 505(b) of title 11, United States Code, is

15 amended by striking ‘‘Unless’’ at the beginning of the second

16 sentence thereof and inserting ‘‘If the request is made sub17 stantially in the manner designated by the governmental

18 unit and unless’’.

19 SEC. 804. RATE OF INTEREST ON TAX CLAIMS.

20 (a) AMENDMENT.—Chapter 5 of title 11, United States

21 Code, is amended by adding at the end the following:

22 ‘‘§ 511. Rate of interest on tax claims

23 ‘‘If any provision of this title requires the payment

24 of interest on a tax claim or requires the payment of inter25 est to enable a creditor to receive the present value of the
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1 allowed amount of a tax claim, the rate of interest shall

2 be as follows:

3 ‘‘(1) In the case of ad valorem tax claims, wheth4 er secured or unsecured, other unsecured tax claims

5 where interest is required to be paid under section

6 726(a)(5) of this title, secured tax claims, and admin7 istrative tax claims paid under section 503(b)(1) of

8 this title, the rate shall be determined under applica9 ble nonbankruptcy law.

10 ‘‘(2) In the case of all other tax claims, the min11 imum rate of interest shall be the Federal short-term

12 rate rounded to the nearest full percent, determined

13 under section 1274(d) of the Internal Revenue Code of

14 1986, plus 3 percentage points.

15 ‘‘(A) In the case of claims for Federal in16 come taxes, such rate shall be subject to any ad17 justment that may be required under section

18 6621(d) of the Internal Revenue Code of 1986.

19 ‘‘(B) In the case of taxes paid under a con20 firmed plan or reorganization, such rate shall be

21 determined as of the calendar month in which

22 the plan is confirmed.’’.

23 (b) CONFORMING AMENDMENT.—The table of sections

24 of chapter 5 of title 11, United States Code, is amended
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1 by inserting after the item relating to section 510 the fol2 lowing:

‘‘511. Rate of interest on tax claims.’’.

3 SEC. 805. TOLLING OF PRIORITY OF TAX CLAIM TIME PERI4 ODS.

5 Section 507(a)(8)(A) of title 11, United States Code,

6 as so redesignated, is amended—

7 (1) in clause (i) by inserting after ‘‘petition’’

8 and before the semicolon ‘‘, plus any time, plus 6

9 months, during which the stay of proceedings was in

10 effect in a prior case under this title’’; and

11 (2) amend clause (ii) to read as follows:

12 ‘‘(ii) assessed within 240 days before

13 the date of the filing of the petition, exclu14 sive of—

15 ‘‘(I) any time plus 30 days dur16 ing which an offer in compromise with

17 respect of such tax, was pending or in

18 effect during such 240-day period;

19 ‘‘(II) any time plus 30 days dur20 ing which an installment agreement

21 with respect of such tax was pending

22 or in effect during such 240-day pe23 riod, up to 1 year; and
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1 ‘‘(III) any time plus 6 months

2 during which a stay of proceedings

3 against collections was in effect in a

4 prior case under this title during such

5 240-day period.’’.

6 SEC. 806. PRIORITY PROPERTY TAXES INCURRED.

7 Section 507(a)(8)(B) of title 11, United States Code,

8 is amended by striking ‘‘assessed’’ and inserting ‘‘in9 curred’’.

10 SEC. 807. CHAPTER 13 DISCHARGE OF FRAUDULENT AND

11 OTHER TAXES.

12 Section 1328(a)(2) of title 11, United States Code, is

13 amended by inserting ‘‘(1),’’ after ‘‘paragraph’’.

14 SEC. 808. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.

15 Section 1141(d) of title 11, United States Code, is

16 amended by adding at the end the following:

17 ‘‘(6) Notwithstanding the provisions of paragraph (1),

18 the confirmation of a plan does not discharge a debtor

19 which is a corporation from any debt for a tax or customs

20 duty with respect to which the debtor made a fraudulent

21 return or willfully attempted in any manner to evade or

22 defeat such tax.’’.

23 SEC. 809. STAY OF TAX PROCEEDINGS.

24 (a) SECTION 362 STAY LIMITED TO PREPETITION

25 TAXES.—Section 362(a)(8) of title 11, United States Code,
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1 is amended by striking the period at the end and inserting

2 ‘‘, in respect of a tax liability for a taxable period ending

3 before the order for relief.’’.

4 (b) APPEAL OF TAX COURT DECISIONS PERMITTED.—

5 Section 362(b)(9) of title 11, United States Code, is

6 amended—

7 (1) in subparagraph (C) by striking ‘‘or’’ at the

8 end;

9 (2) in subparagraph (D) by striking the period

10 at the end and inserting ‘‘; or’’; and

11 (3) by adding at the end the following:

12 ‘‘(E) the appeal of a decision by a court or

13 administrative tribunal which determines a tax

14 liability of the debtor without regard to whether

15 such determination was made prepetition or

16 postpetition.’’.

17 SEC. 810. PERIODIC PAYMENT OF TAXES IN CHAPTER 11

18 CASES.

19 Section 1129(a)(9) of title 11, United States Code, is

20 amended—

21 (1) in subparagraph (B) by striking ‘‘and’’ at

22 the end; and

23 (2) in subparagraph (C)—

24 (A) by striking ‘‘deferred cash payments,

25 over a period not exceeding six years after the
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1 date of assessment of such claim,’’ and inserting

2 ‘‘regular installment payments in cash, but in

3 no case with a balloon provision, and no more

4 than three months apart, beginning no later

5 than the effective date of the plan and ending on

6 the earlier of five years after the petition date or

7 the last date payments are to be made under the

8 plan to unsecured creditors,’’;

9 (B) by striking the period at the end and

10 inserting ‘‘; and’’; and

11 (3) by adding at the end the following:

12 ‘‘(D) with respect to a secured claim which

13 would be described in section 507(a)(8) of this

14 title but for its secured status, the holder of such

15 claim will receive on account of such claim cash

16 payments of not less than is required in sub17 paragraph (C) and over a period no greater than

18 is required in such subparagraph.’’.

19 SEC. 811. AVOIDANCE OF STATUTORY TAX LIENS PROHIB20 ITED.

21 Section 545(2) of title 11, United States Code, is

22 amended by striking the semicolon at the end and inserting

23 ‘‘, except where such purchaser is a purchaser described in

24 section 6323 of the Internal Revenue Code of 1986 or simi25 lar provision of State or local law;’’.
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1 SEC. 812. PAYMENT OF TAXES IN THE CONDUCT OF BUSI2 NESS.

3 (a) PAYMENT OF TAXES REQUIRED.—Section 960 of

4 title 28, United States Code, is amended—

5 (1) by inserting ‘‘(a)’’ before ‘‘Any’’; and

6 (2) by adding at the end the following:

7 ‘‘(b) Such taxes shall be paid when due in the conduct

8 of such business unless—

9 ‘‘(1) the tax is a property tax secured by a lien

10 against property that is abandoned within a reason11 able time after the lien attaches, by the trustee of a

12 bankruptcy estate, pursuant to section 554 of title 11;

13 or

14 ‘‘(2) payment of the tax is excused under a spe15 cific provision of title 11.

16 ‘‘(c) In a case pending under chapter 7 of title 11,

17 payment of a tax may be deferred until final distribution

18 is made under section 726 of title 11 if—

19 ‘‘(1) the tax was not incurred by a trustee duly

20 appointed under chapter 7 of title 11; or

21 ‘‘(2) before the due date of the tax, the court has

22 made a finding of probable insufficiency of funds of

23 the estate to pay in full the administrative expenses

24 allowed under section 503(b) of title 11 that have the

25 same priority in distribution under section 726(b) of

26 title 11 as such tax.’’.
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1 (b) PAYMENT OF AD VALOREM TAXES REQUIRED.—

2 Section 503(b)(1)(B) of title 11, United States Code, is

3 amended in clause (i) by inserting after ‘‘estate,’’ and before

4 ‘‘except’’ the following: ‘‘whether secured or unsecured, in5 cluding property taxes for which liability is in rem only,

6 in personam or both,’’.

7 (c) REQUEST FOR PAYMENT OF ADMINISTRATIVE EX8 PENSE TAXES ELIMINATED.—Section 503(b)(1) of title 11,

9 United States Code, is amended by adding at the end the

10 following:

11 ‘‘(D) notwithstanding the requirements of sub12 section (a) of this section, a governmental unit shall

13 not be required to file a request for the payment of

14 a claim described in subparagraph (B) or (C);’’.

15 (d) PAYMENT OF TAXES AND FEES AS SECURED

16 CLAIMS.—Section 506 of title 11, United States Code, is

17 amended—

18 (1) in subsection (b) by inserting ‘‘or State stat19 ute’’ after ‘‘agreement’’; and

20 (2) in subsection (c) by inserting ‘‘, including

21 the payment of all ad valorem property taxes in re22 spect of the property’’ before the period at the end.

23 SEC. 813. TARDILY FILED PRIORITY TAX CLAIMS.

24 Section 726(a)(1) of title 11, United States Code, is

25 amended by striking ‘‘before the date on which the trustee
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1 commences distribution under this section’’ and inserting

2 ‘‘on or before the earlier of 10 days after the mailing to

3 creditors of the summary of the trustee’s final report or the

4 date on which the trustee commences final distribution

5 under this section’’.

6 SEC. 814. INCOME TAX RETURNS PREPARED BY TAX AU7 THORITIES.

8 Section 523(a)(1)(B) of title 11, United States Code,

9 is amended—

10 (1) by inserting ‘‘or equivalent report or notice,’’

11 after ‘‘a return,’’;

12 (2) in clause (i)—

13 (A) by inserting ‘‘or given’’ after ‘‘filed’’;

14 and

15 (B) by striking ‘‘or’’ at the end;

16 (3) in clause (ii)—

17 (A) by inserting ‘‘or given’’ after ‘‘filed’’;

18 and

19 (B) by inserting ‘‘, report, or notice’’ after

20 ‘‘return’’; and

21 (4) by adding at the end the following:

22 ‘‘(iii) for purposes of this subsection, a

23 return—

24 ‘‘(I) must satisfy the requirements

25 of applicable nonbankruptcy law, and
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1 includes a return prepared pursuant to

2 section 6020(a) of the Internal Revenue

3 Code of 1986, or similar State or local

4 law, or a written stipulation to a judg5 ment entered by a nonbankruptcy tri6 bunal, but does not include a return

7 made pursuant to section 6020(b) of

8 the Internal Revenue Code of 1986, or

9 similar State or local law; and

10 ‘‘(II) must have been filed in a

11 manner permitted by applicable non12 bankruptcy law; or’’.

13 SEC. 815. DISCHARGE OF THE ESTATE’S LIABILITY FOR UN14 PAID TAXES.

15 Section 505(b) of title 11, United States Code, is

16 amended in the second sentence by inserting ‘‘the estate,’’

17 after ‘‘misrepresentation,’’.

18 SEC. 816. REQUIREMENT TO FILE TAX RETURNS TO CON19 FIRM CHAPTER 13 PLANS.

20 (a) FILING OF PREPETITION TAX RETURNS REQUIRED

21 FOR PLAN CONFIRMATION.—Section 1325(a) of title 11,

22 United States Code, as amended by section 140, is

23 amended—

24 (1) in paragraph (6) by striking ‘‘and’’ at the

25 end;
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1 (2) in paragraph (7) by striking the period at

2 the end and inserting ‘‘; and’’; and

3 (3) by adding at the end the following:

4 ‘‘(8) if the debtor has filed all Federal, State,

5 and local tax returns as required by section 1308 of

6 this title.’’.

7 (b) ADDITIONAL TIME PERMITTED FOR FILING TAX

8 RETURNS.—(1) Chapter 13 of title 11, United States Code,

9 as amended by section 135, is amended by adding at the

10 end the following:

11 ‘‘§ 1308. Filing of prepetition tax returns

12 ‘‘(a) On or before the day prior to the day on which

13 the first meeting of the creditors is convened under section

14 341(a) of this title, the debtor shall have filed with appro15 priate tax authorities all tax returns for all taxable periods

16 ending in the 3-year period ending on the date of filing

17 of the petition.

18 ‘‘(b) If the tax returns required by subsection (a) have

19 not been filed by the date on which the first meeting of

20 creditors is convened under section 341(a) of this title, the

21 trustee may continue such meeting for a reasonable period

22 of time, to allow the debtor additional time to file any

23 unfiled returns, but such additional time shall be no more

24 than—
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1 ‘‘(1) for returns that are past due as of the date

2 of the filing of the petition, 120 days from such date;

3 ‘‘(2) for returns which are not past due as of the

4 date of the filing of the petition, the later of 120 days

5 from such date or the due date for such returns under

6 the last automatic extension of time for filing such re7 turns to which the debtor is entitled, and for which

8 request has been timely made, according to applicable

9 nonbankruptcy law; and

10 ‘‘(3) upon notice and hearing, and order entered

11 before the lapse of any deadline fixed according to

12 this subsection, where the debtor demonstrates, by

13 clear and convincing evidence, that the failure to file

14 the returns as required is because of circumstances be15 yond the control of the debtor, the court may extend

16 the deadlines set by the trustee as provided in this

17 subsection for—

18 ‘‘(A) a period of no more than 30 days for

19 returns described in paragraph (1) of this sub20 section; and

21 ‘‘(B) for no more than the period of time

22 ending on the applicable extended due date for

23 the returns described in paragraph (2).

24 ‘‘(c) For purposes of this section only, a return in25 cludes a return prepared pursuant to section 6020 (a) or
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1 (b) of the Internal Revenue Code of 1986 or similar State

2 or local law, or a written stipulation to a judgment entered

3 by a nonbankruptcy tribunal.’’.

4 (2) The table of sections of chapter 13 of title 11,

5 United States Code, is amended by inserting after the item

6 relating to section 1307 the following:

‘‘1308. Filing of prepetition tax returns.’’.

7 (c) DISMISSAL OR CONVERSION ON FAILURE TO COM8 PLY.—Section 1307 of title 11, United States Code, is

9 amended—

10 (1) by redesignating subsections (e) and (f) as

11 subsections (f) and (g), respectively; and

12 (2) by inserting after subsection (d) the fol13 lowing:

14 ‘‘(e) Upon the failure of the debtor to file tax returns

15 under section 1308 of this title, on request of a party in

16 interest or the United States trustee and after notice and

17 a hearing, the court shall dismiss a case or convert a case

18 under this chapter to a case under chapter 7 of this title,

19 whichever is in the best interests of creditors and the es20 tate.’’.

21 (d) TIMELY FILED CLAIMS.—Section 502(b)(9) of title

22 11, United States Code, is amended by striking the period

23 at the end and inserting ‘‘, and except that in a case under

24 chapter 13 of this title, a claim of a governmental unit for

25 a tax in respect of a return filed under section 1308 of this
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1 title shall be timely if it is filed on or before 60 days after

2 such return or returns were filed as required.’’.

3 (e) RULES FOR OBJECTIONS TO CLAIMS AND TO CON4 FIRMATION.—It is the sense of the Congress that the Advi5 sory Committee on Bankruptcy Rules of the Judicial Con6 ference should, within a reasonable period of time after the

7 date of the enactment of this Act, propose for adoption

8 amended Federal Rules of Bankruptcy Procedure which

9 provide that—

10 (1) notwithstanding the provisions of Rule

11 3015(f), in cases under chapter 13 of title 11, United

12 States Code, a governmental unit may object to the

13 confirmation of a plan on or before 60 days after the

14 debtor files all tax returns required under sections

15 1308 and 1325(a)(7) of title 11, United States Code;

16 and

17 (2) in addition to the provisions of Rule 3007,

18 in a case under chapter 13 of title 11, United States

19 Code, no objection to a tax in respect of a return re20 quired to be filed under such section 1308 shall be

21 filed until such return has been filed as required.

22 SEC. 817. STANDARDS FOR TAX DISCLOSURE.

23 Section 1125(a) of title 11, United States Code, is

24 amended in paragraph (1)—
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1 (1) by inserting after ‘‘records,’’ the following:

2 ‘‘including a full discussion of the potential material

3 Federal, State, and local tax consequences of the plan

4 to the debtor, any successor to the debtor, and a hypo5 thetical investor domiciled in the State in which the

6 debtor resides or has its principal place of business

7 typical of the holders of claims or interests in the

8 case,’’;

9 (2) by inserting ‘‘such’’ after ‘‘enable’’; and

10 (3) by striking ‘‘reasonable’’ where it appears

11 after ‘‘hypothetical’’ and by striking ‘‘typical of hold12 ers of claims or interests’’ after ‘‘investor’’.

13 SEC. 818. SETOFF OF TAX REFUNDS.

14 Section 362(b) of title 11, United States Code, as

15 amended by sections 118, 132, 136, and 203, is amended—

16 (1) in paragraph (29) by striking ‘‘or’’;

17 (2) in paragraph (30) by striking the period at

18 the end and inserting ‘‘; or’’; and

19 (3) by inserting after paragraph (30) the fol20 lowing:

21 ‘‘(31) under subsection (a) of the setoff of an in22 come tax refund, by a governmental unit, in respect

23 of a taxable period which ended before the order for

24 relief against an income tax liability for a taxable pe-
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1 riod which also ended before the order for relief,

2 unless—

3 ‘‘(A) prior to such setoff, an action to deter4 mine the amount or legality of such tax liability

5 under section 505(a) was commenced; or

6 ‘‘(B) where the setoff of an income tax re7 fund is not permitted because of a pending ac8 tion to determine the amount or legality of a tax

9 liability, the governmental unit may hold the re10 fund pending the resolution of the action.’’.

11 TITLE IX—ANCILLARY AND

12 OTHER CROSS-BORDER CASES

13 SEC. 901. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11,

14 UNITED STATES CODE.

15 (a) IN GENERAL.—Title 11, United States Code, is

16 amended by inserting after chapter 13 the following:

17 ‘‘CHAPTER 15—ANCILLARY AND OTHER

18 CROSS-BORDER CASES

‘‘Sec.

‘‘1501. Purpose and scope of application.

‘‘SUBCHAPTER I—GENERAL PROVISIONS

‘‘1502. Definitions.

‘‘1503. International obligations of the United States.

‘‘1504. Commencement of ancillary case.

‘‘1505. Authorization to act in a foreign country.

‘‘1506. Public policy exception.

‘‘1507. Additional assistance.

‘‘1508. Interpretation.

‘‘SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES AND

CREDITORS TO THE COURT

‘‘1509. Right of direct access.
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‘‘1510. Limited jurisdiction.

‘‘1511. Commencement of case under section 301 or 303.

‘‘1512. Participation of a foreign representative in a case under this title.

‘‘1513. Access of foreign creditors to a case under this title.

‘‘1514. Notification to foreign creditors concerning a case under this title.

‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING AND

RELIEF

‘‘1515. Application for recognition of a foreign proceeding.

‘‘1516. Presumptions concerning recognition.

‘‘1517. Order recognizing a foreign proceeding.

‘‘1518. Subsequent information.

‘‘1519. Relief that may be granted upon petition for recognition of a foreign proceeding.

‘‘1520. Effects of recognition of a foreign main proceeding.

‘‘1521. Relief that may be granted upon recognition of a foreign proceeding.

‘‘1522. Protection of creditors and other interested persons.

‘‘1523. Actions to avoid acts detrimental to creditors.

‘‘1524. Intervention by a foreign representative.

‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND

FOREIGN REPRESENTATIVES

‘‘1525. Cooperation and direct communication between the court and foreign

courts or foreign representatives.

‘‘1526. Cooperation and direct communication between the trustee and foreign

courts or foreign representatives.

‘‘1527. Forms of cooperation.

‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

‘‘1528. Commencement of a case under this title after recognition of a foreign

main proceeding.

‘‘1529. Coordination of a case under this title and a foreign proceeding.

‘‘1530. Coordination of more than 1 foreign proceeding.

‘‘1531. Presumption of insolvency based on recognition of a foreign main proceeding.

‘‘1532. Rule of payment in concurrent proceedings.

1 ‘‘§ 1501. Purpose and scope of application

2 ‘‘(a) The purpose of this chapter is to incorporate the

3 Model Law on Cross-Border Insolvency so as to provide ef4 fective mechanisms for dealing with cases of cross-border in5 solvency with the objectives of—

6 ‘‘(1) cooperation between—
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1 ‘‘(A) United States courts, United States

2 trustees, trustees, examiners, debtors, and debtors

3 in possession; and

4 ‘‘(B) the courts and other competent au5 thorities of foreign countries involved in cross6 border insolvency cases;

7 ‘‘(2) greater legal certainty for trade and invest8 ment;

9 ‘‘(3) fair and efficient administration of cross10 border insolvencies that protects the interests of all

11 creditors, and other interested entities, including the

12 debtor;

13 ‘‘(4) protection and maximization of the value of

14 the debtor’s assets; and

15 ‘‘(5) facilitation of the rescue of financially trou16 bled businesses, thereby protecting investment and

17 preserving employment.

18 ‘‘(b) This chapter applies where—

19 ‘‘(1) assistance is sought in the United States by

20 a foreign court or a foreign representative in connec21 tion with a foreign proceeding;

22 ‘‘(2) assistance is sought in a foreign country in

23 connection with a case under this title;
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1 ‘‘(3) a foreign proceeding and a case under this

2 title with respect to the same debtor are taking place

3 concurrently; or

4 ‘‘(4) creditors or other interested persons in a

5 foreign country have an interest in requesting the

6 commencement of, or participating in, a case or pro7 ceeding under this title.

8 ‘‘(c) This chapter does not apply to—

9 ‘‘(1) a proceeding concerning an entity identified

10 by exclusion in subsection 109(b);

11 ‘‘(2) an individual, or to an individual and such

12 individual’s spouse, who have debts within the limits

13 specified in section 109(e) and who are citizens of the

14 United States or aliens lawfully admitted for perma15 nent residence in the United States; or

16 ‘‘(3) an entity subject to a proceeding under the

17 Securities Investor Protection Act, a stockbroker sub18 ject to subchapter III of chapter 7 of this title, or a

19 commodity broker subject to subchapter IV of chapter

20 7 of this title.

21 ‘‘SUBCHAPTER I—GENERAL PROVISIONS

22 ‘‘§ 1502. Definitions

23 ‘‘For the purposes of this chapter, the term—

24 ‘‘(1) ‘debtor’ means an entity that is the subject

25 of a foreign proceeding;
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1 ‘‘(2) ‘establishment’ means any place of oper2 ations where the debtor carries out a nontransitory

3 economic activity;

4 ‘‘(3) ‘foreign court’ means a judicial or other au5 thority competent to control or supervise a foreign

6 proceeding;

7 ‘‘(4) ‘foreign main proceeding’ means a foreign

8 proceeding taking place in the country where the debt9 or has the center of its main interests;

10 ‘‘(5) ‘foreign nonmain proceeding’ means a for11 eign proceeding, other than a foreign main pro12 ceeding, taking place in a country where the debtor

13 has an establishment;

14 ‘‘(6) ‘trustee’ includes a trustee, a debtor in pos15 session in a case under any chapter of this title, or

16 a debtor under chapter 9 of this title; and

17 ‘‘(7) ‘within the territorial jurisdiction of the

18 United States’ when used with reference to property

19 of a debtor refers to tangible property located within

20 the territory of the United States and intangible

21 property deemed under applicable nonbankruptcy law

22 to be located within that territory, including any

23 property subject to attachment or garnishment that

24 may properly be seized or garnished by an action in

25 a Federal or State court in the United States.
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1 ‘‘§ 1503. International obligations of the United States

2 ‘‘To the extent that this chapter conflicts with an obli3 gation of the United States arising out of any treaty or

4 other form of agreement to which it is a party with 1 or

5 more other countries, the requirements of the treaty or

6 agreement prevail.

7 ‘‘§ 1504. Commencement of ancillary case

8 ‘‘A case under this chapter is commenced by the filing

9 of a petition for recognition of a foreign proceeding under

10 section 1515.

11 ‘‘§ 1505. Authorization to act in a foreign country

12 ‘‘A trustee or another entity (including an examiner)

13 may be authorized by the court to act in a foreign country

14 on behalf of an estate created under section 541. An entity

15 authorized to act under this section may act in any way

16 permitted by the applicable foreign law.

17 ‘‘§ 1506. Public policy exception

18 ‘‘Nothing in this chapter prevents the court from refus19 ing to take an action governed by this chapter if the action

20 would be manifestly contrary to the public policy of the

21 United States.

22 ‘‘§ 1507. Additional assistance

23 ‘‘(a) Subject to the specific limitations stated elsewhere

24 in this chapter the court, upon recognition of a foreign pro25 ceeding, the court may provide additional assistance to a
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1 foreign representative under this title or under other laws

2 of the United States.

3 ‘‘(b) In determining whether to provide additional as4 sistance under this title or under other laws of the United

5 States, the court shall consider whether such additional as6 sistance, consistent with the principles of comity, will rea7 sonably assure—

8 ‘‘(1) just treatment of all holders of claims

9 against or interests in the debtor’s property;

10 ‘‘(2) protection of claim holders in the United

11 States against prejudice and inconvenience in the

12 processing of claims in such foreign proceeding;

13 ‘‘(3) prevention of preferential or fraudulent dis14 positions of property of the debtor;

15 ‘‘(4) distribution of proceeds of the debtor’s prop16 erty substantially in accordance with the order pre17 scribed by this title; and

18 ‘‘(5) if appropriate, the provision of an oppor19 tunity for a fresh start for the individual that such

20 foreign proceeding concerns.

21 ‘‘§ 1508. Interpretation

22 ‘‘In interpreting this chapter, the court shall consider

23 its international origin, and the need to promote an appli24 cation of this chapter that is consistent with the application

25 of similar statutes adopted by foreign jurisdictions.
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1 ‘‘SUBCHAPTER II—ACCESS OF FOREIGN REP2 RESENTATIVES AND CREDITORS TO THE

3 COURT

4 ‘‘§ 1509. Right of direct access

5 ‘‘(a) A foreign representative may commence a case

6 under section 1504 of this title by filing with the court a

7 petition for recognition of a foreign proceeding under sec8 tion 1515 of this title.

9 ‘‘(b) If the court grants recognition under section 1515

10 of this title, and subject to any limitations that the court

11 may impose consistent with the policy of this chapter—

12 ‘‘(1) the foreign representative has the capacity

13 to sue and be sued in a court in the United States;

14 ‘‘(2) the foreign representative may apply di15 rectly to a court in the United States for appropriate

16 relief in that court; and

17 ‘‘(3) a court in the United States shall grant

18 comity or cooperation to the foreign representative.

19 ‘‘(c) A request for comity or cooperation by a foreign

20 representative in a court in the United States shall be ac21 companied by a certified copy of an order granting recogni22 tion under section 1517 of this title.

23 ‘‘(d) If the court denies recognition under this chapter,

24 the court may issue any appropriate order necessary to pre-
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1 vent the foreign representative from obtaining comity or co2 operation from courts in the United States.

3 ‘‘(e) Whether or not the court grants recognition, and

4 subject to sections 306 and 1510 of this title, a foreign rep5 resentative is subject to applicable nonbankruptcy law.

6 ‘‘(f) Notwithstanding any other provision of this sec7 tion, the failure of a foreign representative to commence a

8 case or to obtain recognition under this chapter does not

9 affect any right the foreign representative may have to sue

10 in a court in the United State to collect or recover a claim

11 which is the property of the debtor.’’.

12 ‘‘§ 1510. Limited jurisdiction

13 ‘‘The sole fact that a foreign representative files a peti14 tion under section 1515 does not subject the foreign rep15 resentative to the jurisdiction of any court in the United

16 States for any other purpose.

17 ‘‘§ 1511. Commencement of case under section 301 or

18 303

19 ‘‘(a) Upon recognition, a foreign representative may

20 commence—

21 ‘‘(1) an involuntary case under section 303; or

22 ‘‘(2) a voluntary case under section 301 or 302,

23 if the foreign proceeding is a foreign main proceeding.

24 ‘‘(b) The petition commencing a case under subsection

25 (a) must be accompanied by certified copy of an order
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1 granting recognition. The court where the petition for rec2 ognition has been filed must be advised of the foreign rep3 resentative’s intent to commence a case under subsection (a)

4 prior to such commencement.

5 ‘‘§ 1512. Participation of a foreign representative in a

6 case under this title

7 ‘‘Upon recognition of a foreign proceeding, the foreign

8 representative in that proceeding is entitled to participate

9 as a party in interest in a case regarding the debtor under

10 this title.

11 ‘‘§ 1513. Access of foreign creditors to a case under

12 this title

13 ‘‘(a) Foreign creditors have the same rights regarding

14 the commencement of, and participation in, a case under

15 this title as domestic creditors.

16 ‘‘(b)(1) Subsection (a) does not change or codify

17 present law as to the priority of claims under section 507

18 or 726 of this title, except that the claim of a foreign cred19 itor under those sections shall not be given a lower priority

20 than that of general unsecured claims without priority sole21 ly because the holder of such claim is a foreign creditor.

22 ‘‘(2)(A) Subsection (a) and paragraph (1) do not

23 change or codify present law as to the allowability of foreign

24 revenue claims or other foreign public law claims in a pro25 ceeding under this title.
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1 ‘‘(B) Allowance and priority as to a foreign tax claim

2 or other foreign public law claim shall be governed by any

3 applicable tax treaty of the United States, under the condi4 tions and circumstances specified therein.

5 ‘‘§ 1514. Notification to foreign creditors concerning a

6 case under this title

7 ‘‘(a) Whenever in a case under this title notice is to

8 be given to creditors generally or to any class or category

9 of creditors, such notice shall also be given to the known

10 creditors generally, or to creditors in the notified class or

11 category, that do not have addresses in the United States.

12 The court may order that appropriate steps be taken with

13 a view to notifying any creditor whose address is not yet

14 known.

15 ‘‘(b) Such notification to creditors with foreign ad16 dresses described in subsection (a) shall be given individ17 ually, unless the court considers that, under the cir18 cumstances, some other form of notification would be more

19 appropriate. No letters rogatory or other similar formality

20 is required.

21 ‘‘(c) When a notification of commencement of a case

22 is to be given to foreign creditors, the notification shall—

23 ‘‘(1) indicate the time period for filing proofs of

24 claim and specify the place for their filing;
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1 ‘‘(2) indicate whether secured creditors need to

2 file their proofs of claim; and

3 ‘‘(3) contain any other information required to

4 be included in such a notification to creditors under

5 this title and the orders of the court.

6 ‘‘(d) Any rule of procedure or order of the court as

7 to notice or the filing of a claim shall provide such addi8 tional time to creditors with foreign addresses as is reason9 able under the circumstances.

10 ‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN

11 PROCEEDING AND RELIEF

12 ‘‘§ 1515. Application for recognition of a foreign pro13 ceeding

14 ‘‘(a) A foreign representative applies to the court for

15 recognition of the foreign proceeding in which the foreign

16 representative has been appointed by filing a petition for

17 recognition.

18 ‘‘(b) A petition for recognition shall be accompanied

19 by—

20 ‘‘(1) a certified copy of the decision commencing

21 the foreign proceeding and appointing the foreign

22 representative;

23 ‘‘(2) a certificate from the foreign court affirm24 ing the existence of the foreign proceeding and of the

25 appointment of the foreign representative; or
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1 ‘‘(3) in the absence of evidence referred to in

2 paragraphs (1) and (2), any other evidence acceptable

3 to the court of the existence of the foreign proceeding

4 and of the appointment of the foreign representative.

5 ‘‘(c) A petition for recognition shall also be accom6 panied by a statement identifying all foreign proceedings

7 with respect to the debtor that are known to the foreign rep8 resentative.

9 ‘‘(d) The documents referred to in paragraphs (1) and

10 (2) of subsection (b) must be translated into English. The

11 court may require a translation into English of additional

12 documents.

13 ‘‘§ 1516. Presumptions concerning recognition

14 ‘‘(a) If the decision or certificate referred to in section

15 1515(b) indicates that the foreign proceeding is a foreign

16 proceeding as defined in section 101 and that the person

17 or body is a foreign representative as defined in section 101,

18 the court is entitled to so presume.

19 ‘‘(b) The court is entitled to presume that documents

20 submitted in support of the petition for recognition are au21 thentic, whether or not they have been legalized.

22 ‘‘(c) In the absence of evidence to the contrary, the

23 debtor’s registered office, or habitual residence in the case

24 of an individual, is presumed to be the center of the debtor’s

25 main interests.
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1 ‘‘§ 1517. Order recognizing a foreign proceeding

2 ‘‘(a) Subject to section 1506, after notice and a hearing

3 an order recognizing a foreign proceeding shall be entered

4 if—

5 ‘‘(1) the foreign proceeding is a foreign main

6 proceeding or foreign nonmain proceeding within the

7 meaning of section 1502;

8 ‘‘(2) the foreign representative applying for rec9 ognition is a person or body as defined in section

10 101; and

11 ‘‘(3) the petition meets the requirements of sec12 tion 1515.

13 ‘‘(b) The foreign proceeding shall be recognized—

14 ‘‘(1) as a foreign main proceeding if it is taking

15 place in the country where the debtor has the center

16 of its main interests; or

17 ‘‘(2) as a foreign nonmain proceeding if the debt18 or has an establishment within the meaning of section

19 1502 in the foreign country where the proceeding is

20 pending.

21 ‘‘(c) A petition for recognition of a foreign proceeding

22 shall be decided upon at the earliest possible time. Entry

23 of an order recognizing a foreign proceeding constitutes rec24 ognition under this chapter.

25 ‘‘(d) The provisions of this subchapter do not prevent

26 modification or termination of recognition if it is shown
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1 that the grounds for granting it were fully or partially lack2 ing or have ceased to exist, but in considering such action

3 the court shall give due weight to possible prejudice to par4 ties that have relied upon the granting of recognition. The

5 case under this chapter may be closed in the manner pre6 scribed under section 350.

7 ‘‘§ 1518. Subsequent information

8 ‘‘From the time of filing the petition for recognition

9 of the foreign proceeding, the foreign representative shall file

10 with the court promptly a notice of change of status

11 concerning—

12 ‘‘(1) any substantial change in the status of the

13 foreign proceeding or the status of the foreign rep14 resentative’s appointment; and

15 ‘‘(2) any other foreign proceeding regarding the

16 debtor that becomes known to the foreign representa17 tive.

18 ‘‘§ 1519. Relief that may be granted upon petition for

19 recognition of a foreign proceeding

20 ‘‘(a) From the time of filing a petition for recognition

21 until the court rules on the petition, the court may, at the

22 request of the foreign representative, where relief is urgently

23 needed to protect the assets of the debtor or the interests

24 of the creditors, grant relief of a provisional nature,

25 including—
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1 ‘‘(1) staying execution against the debtor’s assets;

2 ‘‘(2) entrusting the administration or realization

3 of all or part of the debtor’s assets located in the

4 United States to the foreign representative or another

5 person authorized by the court, including an exam6 iner, in order to protect and preserve the value of as7 sets that, by their nature or because of other cir8 cumstances, are perishable, susceptible to devaluation

9 or otherwise in jeopardy; and

10 ‘‘(3) any relief referred to in paragraph (3), (4),

11 or (7) of section 1521(a).

12 ‘‘(b) Unless extended under section 1521(a)(6), the re13 lief granted under this section terminates when the petition

14 for recognition is decided upon.

15 ‘‘(c) It is a ground for denial of relief under this sec16 tion that such relief would interfere with the administration

17 of a foreign main proceeding.

18 ‘‘(d) The court may not enjoin a police or regulatory

19 act of a governmental unit, including a criminal action or

20 proceeding, under this section.

21 ‘‘(e) The standards, procedures, and limitations appli22 cable to an injunction shall apply to relief under this sec23 tion.
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1 ‘‘§ 1520. Effects of recognition of a foreign main pro2 ceeding

3 ‘‘(a) Upon recognition of a foreign proceeding that is

4 a foreign main proceeding—

5 ‘‘(1) sections 361 and 362 with respect to the

6 debtor and that property of the debtor that is within

7 the territorial jurisdiction of the United States;

8 ‘‘(2) sections 363, 549, and 552 of this title

9 apply to a transfer of an interest of the debtor in

10 property that is within the territorial jurisdiction of

11 the United States to the same extent that the sections

12 would apply to property of an estate;

13 ‘‘(3) unless the court orders otherwise, the foreign

14 representative may operate the debtor’s business and

15 may exercise the rights and powers of a trustee under

16 and to the extent provided by sections 363 and 552;

17 and

18 ‘‘(4) section 552 applies to property of the debtor

19 that is within the territorial jurisdiction of the

20 United States.’’.

21 ‘‘(b) Subsection (a) does not affect the right to com22 mence an individual action or proceeding in a foreign

23 country to the extent necessary to preserve a claim against

24 the debtor.

25 ‘‘(c) Subsection (a) does not affect the right of a foreign

26 representative or an entity to file a petition commencing
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1 a case under this title or the right of any party to file

2 claims or take other proper actions in such a case.

3 ‘‘§ 1521. Relief that may be granted upon recognition

4 of a foreign proceeding

5 ‘‘(a) Upon recognition of a foreign proceeding, whether

6 main or nonmain, where necessary to effectuate the purpose

7 of this chapter and to protect the assets of the debtor or

8 the interests of the creditors, the court may, at the request

9 of the foreign representative, grant any appropriate relief,

10 including—

11 ‘‘(1) staying the commencement or continuation

12 of an individual action or proceeding concerning the

13 debtor’s assets, rights, obligations or liabilities to the

14 extent they have not been stayed under section

15 1520(a);

16 ‘‘(2) staying execution against the debtor’s assets

17 to the extent it has not been stayed under section

18 1520(a);

19 ‘‘(3) suspending the right to transfer, encumber

20 or otherwise dispose of any assets of the debtor to the

21 extent this right has not been suspended under section

22 1520(a);

23 ‘‘(4) providing for the examination of witnesses,

24 the taking of evidence or the delivery of information
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1 concerning the debtor’s assets, affairs, rights, obliga2 tions or liabilities;

3 ‘‘(5) entrusting the administration or realization

4 of all or part of the debtor’s assets within the terri5 torial jurisdiction of the United States to the foreign

6 representative or another person, including an exam7 iner, authorized by the court;

8 ‘‘(6) extending relief granted under section

9 1519(a); and

10 ‘‘(7) granting any additional relief that may be

11 available to a trustee, except for relief available under

12 sections 522, 544, 545, 547, 548, 550, and 724(a).

13 ‘‘(b) Upon recognition of a foreign proceeding, whether

14 main or nonmain, the court may, at the request of the for15 eign representative, entrust the distribution of all or part

16 of the debtor’s assets located in the United States to the for17 eign representative or another person, including an exam18 iner, authorized by the court, provided that the court is sat19 isfied that the interests of creditors in the United States

20 are sufficiently protected.

21 ‘‘(c) In granting relief under this section to a rep22 resentative of a foreign nonmain proceeding, the court must

23 be satisfied that the relief relates to assets that, under the

24 law of the United States, should be administered in the for-
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1 eign nonmain proceeding or concerns information required

2 in that proceeding.

3 ‘‘(d) The court may not enjoin a police or regulatory

4 act of a governmental unit, including a criminal action or

5 proceeding, under this section.

6 ‘‘(e) The standards, procedures, and limitations appli7 cable to an injunction shall apply to relief under para8 graphs (1), (2), (3), and (6) of subsection (a).

9 ‘‘§ 1522. Protection of creditors and other interested

10 persons

11 ‘‘(a) The court may grant relief under section 1519

12 or 1521, or may modify or terminate relief under subsection

13 (c), only if the interests of the creditors and other interested

14 entities, including the debtor, are sufficiently protected.

15 ‘‘(b) The court may subject relief granted under section

16 1519 or 1521, or the operation of the debtor’s business under

17 section 1520(a)(3) of this title, to conditions it considers

18 appropriate, including the giving of security or the filing

19 of a bond.

20 ‘‘(c) The court may, at the request of the foreign rep21 resentative or an entity affected by relief granted under sec22 tion 1519 or 1521, or at its own motion, modify or termi23 nate such relief.

24 ‘‘(d) Section 1104(d) shall apply to the appointment

25 of an examiner under this chapter. Any examiner shall
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1 comply with the qualification requirements imposed on a

2 trustee by section 322.

3 ‘‘§ 1523. Actions to avoid acts detrimental to creditors

4 ‘‘(a) Upon recognition of a foreign proceeding, the for5 eign representative has standing in a case concerning the

6 debtor pending under another chapter of this title to initiate

7 actions under sections 522, 544, 545, 547, 548, 550, and

8 724(a).

9 ‘‘(b) When the foreign proceeding is a foreign nonmain

10 proceeding, the court must be satisfied that an action under

11 subsection (a) relates to assets that, under United States

12 law, should be administered in the foreign nonmain pro13 ceeding.

14 ‘‘§ 1524. Intervention by a foreign representative

15 ‘‘Upon recognition of a foreign proceeding, the foreign

16 representative may intervene in any proceedings in a State

17 or Federal court in the United States in which the debtor

18 is a party.
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1 ‘‘SUBCHAPTER IV—COOPERATION WITH FOR2 EIGN COURTS AND FOREIGN REPRESENTA3 TIVES

4 ‘‘§ 1525. Cooperation and direct communication be5 tween the court and foreign courts or for6 eign representatives

7 ‘‘(a) Consistent with section 1501, the court shall co8 operate to the maximum extent possible with foreign courts

9 or foreign representatives, either directly or through the

10 trustee.

11 ‘‘(b) The court is entitled to communicate directly

12 with, or to request information or assistance directly from,

13 foreign courts or foreign representatives, subject to the rights

14 of parties in interest to notice and participation.

15 ‘‘§ 1526. Cooperation and direct communication be16 tween the trustee and foreign courts or

17 foreign representatives

18 ‘‘(a) Consistent with section 1501, the trustee or other

19 person, including an examiner, authorized by the court,

20 shall, subject to the supervision of the court, cooperate to

21 the maximum extent possible with foreign courts or foreign

22 representatives.

23 ‘‘(b) The trustee or other person, including an exam24 iner, authorized by the court is entitled, subject to the super-
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1 vision of the court, to communicate directly with foreign

2 courts or foreign representatives.

3 ‘‘§ 1527. Forms of cooperation

4 ‘‘Cooperation referred to in sections 1525 and 1526

5 may be implemented by any appropriate means,

6 including—

7 ‘‘(1) appointment of a person or body, including

8 an examiner, to act at the direction of the court;

9 ‘‘(2) communication of information by any

10 means considered appropriate by the court;

11 ‘‘(3) coordination of the administration and su12 pervision of the debtor’s assets and affairs;

13 ‘‘(4) approval or implementation of agreements

14 concerning the coordination of proceedings; and

15 ‘‘(5) coordination of concurrent proceedings re16 garding the same debtor.

17 ‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

18 ‘‘§ 1528. Commencement of a case under this title after

19 recognition of a foreign main proceeding

20 ‘‘After recognition of a foreign main proceeding, a case

21 under another chapter of this title may be commenced only

22 if the debtor has assets in the United States. The effects of

23 such case shall be restricted to the assets of the debtor that

24 are within the territorial jurisdiction of the United States

25 and, to the extent necessary to implement cooperation and
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1 coordination under sections 1525, 1526, and 1527, to other

2 assets of the debtor that are within the jurisdiction of the

3 court under sections 541(a) of this title, and 1334(e) of title

4 28, to the extent that such other assets are not subject to

5 the jurisdiction and control of a foreign proceeding that has

6 been recognized under this chapter.

7 ‘‘§ 1529. Coordination of a case under this title and a

8 foreign proceeding

9 ‘‘Where a foreign proceeding and a case under another

10 chapter of this title are taking place concurrently regarding

11 the same debtor, the court shall seek cooperation and coordi12 nation under sections 1525, 1526, and 1527, and the fol13 lowing shall apply:

14 ‘‘(1) When the case in the United States is tak15 ing place at the time the petition for recognition of

16 the foreign proceeding is filed—

17 ‘‘(A) any relief granted under sections 1519

18 or 1521 must be consistent with the relief grant19 ed in the case in the United States; and

20 ‘‘(B) even if the foreign proceeding is recog21 nized as a foreign main proceeding, section 1520

22 does not apply.

23 ‘‘(2) When a case in the United States under this

24 title commences after recognition, or after the filing of
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1 the petition for recognition, of the foreign

2 proceeding—

3 ‘‘(A) any relief in effect under sections 1519

4 or 1521 shall be reviewed by the court and shall

5 be modified or terminated if inconsistent with

6 the case in the United States; and

7 ‘‘(B) if the foreign proceeding is a foreign

8 main proceeding, the stay and suspension re9 ferred to in section 1520(a) shall be modified or

10 terminated if inconsistent with the relief granted

11 in the case in the United States.

12 ‘‘(3) In granting, extending, or modifying relief

13 granted to a representative of a foreign nonmain pro14 ceeding, the court must be satisfied that the relief re15 lates to assets that, under the law of the United

16 States, should be administered in the foreign nonmain

17 proceeding or concerns information required in that

18 proceeding.

19 ‘‘(4) In achieving cooperation and coordination

20 under sections 1528 and 1529, the court may grant

21 any of the relief authorized under section 305.

22 ‘‘§ 1530. Coordination of more than 1 foreign pro23 ceeding

24 ‘‘In matters referred to in section 1501, with respect

25 to more than 1 foreign proceeding regarding the debtor, the
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1 court shall seek cooperation and coordination under sections

2 1525, 1526, and 1527, and the following shall apply:

3 ‘‘(1) Any relief granted under section 1519 or

4 1521 to a representative of a foreign nonmain pro5 ceeding after recognition of a foreign main proceeding

6 must be consistent with the foreign main proceeding.

7 ‘‘(2) If a foreign main proceeding is recognized

8 after recognition, or after the filing of a petition for

9 recognition, of a foreign nonmain proceeding, any re10 lief in effect under section 1519 or 1521 shall be re11 viewed by the court and shall be modified or termi12 nated if inconsistent with the foreign main pro13 ceeding.

14 ‘‘(3) If, after recognition of a foreign nonmain

15 proceeding, another foreign nonmain proceeding is

16 recognized, the court shall grant, modify, or terminate

17 relief for the purpose of facilitating coordination of

18 the proceedings.

19 ‘‘§ 1531. Presumption of insolvency based on recogni20 tion of a foreign main proceeding

21 ‘‘In the absence of evidence to the contrary, recognition

22 of a foreign main proceeding is for the purpose of com23 mencing a proceeding under section 303, proof that the

24 debtor is generally not paying its debts as such debts become

25 due.
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1 ‘‘§ 1532. Rule of payment in concurrent proceedings

2 ‘‘Without prejudice to secured claims or rights in rem,

3 a creditor who has received payment with respect to its

4 claim in a foreign proceeding pursuant to a law relating

5 to insolvency may not receive a payment for the same claim

6 in a case under any other chapter of this title regarding

7 the debtor, so long as the payment to other creditors of the

8 same class is proportionately less than the payment the

9 creditor has already received.’’.

10 (b) CLERICAL AMENDMENT.—The table of chapters for

11 title 11, United States Code, is amended by inserting after

12 the item relating to chapter 13 the following:

‘‘15. Ancillary and Other Cross-Border Cases ........................... 1501’’.

13 SEC. 902. AMENDMENTS TO OTHER CHAPTERS IN TITLE 11,

14 UNITED STATES CODE.

15 (a) APPLICABILITY OF CHAPTERS.—Section 103 of

16 title 11, United States Code, is amended—

17 (1) in subsection (a), by inserting before the pe18 riod the following: ‘‘, and this chapter, sections 307,

19 304, 555 through 557, 559, and 560 apply in a case

20 under chapter 15’’; and

21 (2) by adding at the end the following:

22 ‘‘(j) Chapter 15 applies only in a case under such

23 chapter, except that—

24 ‘‘(1) sections 1505, 1513, and 1514 apply in all

25 cases under this title; and
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1 ‘‘(2) section 1509 applies whether or not a case

2 under this title is pending.’’.

3 (b) DEFINITIONS.—Paragraphs (23) and (24) of title

4 11, United States Code, are amended to read as follows:

5 ‘‘(23) ‘foreign proceeding’ means a collective ju6 dicial or administrative proceeding in a foreign coun7 try, including an interim proceeding, under a law re8 lating to insolvency or adjustment of debt in which

9 proceeding the assets and affairs of the debtor are sub10 ject to control or supervision by a foreign court, for

11 the purpose of reorganization or liquidation;

12 ‘‘(24) ‘foreign representative’ means a person or

13 body, including a person or body appointed on an in14 terim basis, authorized in a foreign proceeding to ad15 minister the reorganization or the liquidation of the

16 debtor’s assets or affairs or to act as a representative

17 of the foreign proceeding;’’.

18 (c) AMENDMENTS TO TITLE 28, UNITED STATES

19 CODE.—

20 (1) PROCEDURES.—Section 157(b)(2) of title 28,

21 United States Code, is amended—

22 (A) in subparagraph (N), by striking ‘‘and’’

23 at the end;

24 (B) in subparagraph (O), by striking the

25 period at the end and inserting ‘‘; and’’; and
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1 (C) by adding at the end the following:

2 ‘‘(P) recognition of foreign proceedings and other

3 matters under chapter 15 of title 11.’’.

4 (2) BANKRUPTCY CASES AND PROCEEDINGS.—

5 Section 1334(c) of title 28, United States Code, is

6 amended by striking ‘‘Nothing in’’ and inserting ‘‘Ex7 cept with respect to a case under chapter 15 of title

8 11, nothing in’’.

9 (3) DUTIES OF TRUSTEES.—Section 586(a)(3) of

10 title 28, United States Code, is amended by striking

11 ‘‘or 13’’ and inserting ‘‘13, or 15,’’ after ‘‘chapter’’.

12 (4) Section 305(a)(2) of title 11, United States

13 Code, is amended to read:

14 ‘‘(2)(A) a petition under section 1515 of this title

15 for recognition of a foreign proceeding has been grant16 ed; and

17 ‘‘(B) the purposes of chapter 15 of this title

18 would be best served by such dismissal or suspen19 sion.’’.

20 (5) Section 508 of title 11, United States Code,

21 is amended by striking subsection (a) and by striking

22 out the letter ‘‘(b)’’ at the beginning of the second

23 paragraph.
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1 TITLE X—FINANCIAL CONTRACT

2 PROVISIONS

3 SEC. 1001. TREATMENT OF CERTAIN AGREEMENTS BY CON4 SERVATORS OR ––RECEIVERS OF INSURED

5 DEPOSITORY INSTITUTIONS.

6 (a) DEFINITION OF QUALIFIED FINANCIAL CON7 TRACT.—Section 11(e)(8)(D)(i) of the Federal Deposit In8 surance Act (12 U.S.C. 1821(e)(8)(D)(i)) is amended by in9 serting ‘‘, resolution or order’’ after ‘‘any similar agreement

10 that the Corporation determines by regulation’’.

11 (b) DEFINITION OF SECURITIES CONTRACT.—Section

12 11(e)(8)(D)(ii) of the Federal Deposit Insurance Act (12

13 U.S.C. 1821(e)(8)(D)(ii)) is amended to read as follows:

14 ‘‘(ii) SECURITIES CONTRACT.—The

15 term ‘securities contract’—

16 ‘‘(I) means a contract for the pur17 chase, sale, or loan of a security, a cer18 tificate of deposit, a mortgage loan, or

19 any interest in a mortgage loan, a

20 group or index of securities, certificates

21 of deposit, or mortgage loans or inter22 ests therein (including any interest

23 therein or based on the value thereof)

24 or any option on any of the foregoing,

25 including any option to purchase or
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1 sell any such security, certificate of de2 posit, loan, interest, group or index, or

3 option;

4 ‘‘(II) does not include any pur5 chase, sale, or repurchase obligation

6 under a participation in a commercial

7 mortgage loan unless the Corporation

8 determines by regulation, resolution, or

9 order to include any such agreement

10 within the meaning of such term;

11 ‘‘(III) means any option entered

12 into on a national securities exchange

13 relating to foreign currencies;

14 ‘‘(IV) means the guarantee by or

15 to any securities clearing agency of

16 any settlement of cash, securities, cer17 tificates of deposit, mortgage loans or

18 interests therein, group or index of se19 curities, certificates of deposit, or mort20 gage loans or interests therein (includ21 ing any interest therein or based on

22 the value thereof) or option on any of

23 the foregoing, including any option to

24 purchase or sell any such security, cer-
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1 tificate of deposit, loan, interest, group

2 or index or option;

3 ‘‘(V) means any margin loan;

4 ‘‘(VI) means any other agreement

5 or transaction that is similar to any

6 agreement or transaction referred to in

7 this clause;

8 ‘‘(VII) means any combination of

9 the agreements or transactions referred

10 to in this clause;

11 ‘‘(VIII) means any option to enter

12 into any agreement or transaction re13 ferred to in this clause;

14 ‘‘(IX) means a master agreement

15 that provides for an agreement or

16 transaction referred to in subclause (I),

17 (III), (IV), (V), (VI), (VII), or (VIII),

18 together with all supplements to any

19 such master agreement, without regard

20 to whether the master agreement pro21 vides for an agreement or transaction

22 that is not a securities contract under

23 this clause, except that the master

24 agreement shall be considered to be a

25 securities contract under this clause
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1 only with respect to each agreement or

2 transaction under the master agree3 ment that is referred to in subclause

4 (I), (III), (IV), (V), (VI), (VII), or

5 (VIII); and

6 ‘‘(X) means any security agree7 ment or arrangement or other credit

8 enhancement related to any agreement

9 or transaction referred to in this

10 clause.’’.

11 (c) DEFINITION OF COMMODITY CONTRACT.—Section

12 11(e)(8)(D)(iii) of the Federal Deposit Insurance Act (12

13 U.S.C. 1821(e)(8)(D)(iii)) is amended to read as follows:

14 ‘‘(iii) COMMODITY CONTRACT.—The

15 term ‘commodity contract’ means—

16 ‘‘(I) with respect to a futures com17 mission merchant, a contract for the

18 purchase or sale of a commodity for fu19 ture delivery on, or subject to the rules

20 of, a contract market or board of trade;

21 ‘‘(II) with respect to a foreign fu22 tures commission merchant, a foreign

23 future;
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1 ‘‘(III) with respect to a leverage

2 transaction merchant, a leverage trans3 action;

4 ‘‘(IV) with respect to a clearing

5 organization, a contract for the pur6 chase or sale of a commodity for future

7 delivery on, or subject to the rules of,

8 a contract market or board of trade

9 that is cleared by such clearing organi10 zation, or commodity option traded on,

11 or subject to the rules of, a contract

12 market or board of trade that is

13 cleared by such clearing organization;

14 ‘‘(V) with respect to a commodity

15 options dealer, a commodity option;

16 ‘‘(VI) any other agreement or

17 transaction that is similar to any

18 agreement or transaction referred to in

19 this clause;

20 ‘‘(VII) any combination of the

21 agreements or transactions referred to

22 in this clause;

23 ‘‘(VIII) any option to enter into

24 any agreement or transaction referred

25 to in this clause;
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1 ‘‘(IX) a master agreement that

2 provides for an agreement or trans3 action referred to in subclause (I), (II),

4 (III), (IV), (V), (VI), (VII), or (VIII),

5 together with all supplements to any

6 such master agreement, without regard

7 to whether the master agreement pro8 vides for an agreement or transaction

9 that is not a commodity contract

10 under this clause, except that the mas11 ter agreement shall be considered to be

12 a commodity contract under this clause

13 only with respect to each agreement or

14 transaction under the master agree15 ment that is referred to in subclause

16 (I), (II), (III), (IV), (V), (VI), (VII), or

17 (VIII); or

18 ‘‘(X) a security agreement or ar19 rangement or other credit enhancement

20 related to any agreement or trans21 action referred to in this clause.’’.

22 (d) DEFINITION OF FORWARD CONTRACT.—Section

23 11(e)(8)(D)(iv) of the Federal Deposit Insurance Act (12

24 U.S.C. 1821(e)(8)(D)(iv)) is amended to read as follows:
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1 ‘‘(iv) FORWARD CONTRACT.—The term

2 ‘forward contract’ means—

3 ‘‘(I) a contract (other than a com4 modity contract) for the purchase, sale,

5 or transfer of a commodity or any

6 similar good, article, service, right, or

7 interest which is presently or in the fu8 ture becomes the subject of dealing in

9 the forward contract trade, or product

10 or byproduct thereof, with a maturity

11 date more than 2 days after the date

12 the contract is entered into, including,

13 but not limited to, a repurchase agree14 ment, reverse repurchase agreement,

15 consignment, lease, swap, hedge trans16 action, deposit, loan, option, allocated

17 transaction, unallocated transaction,

18 or any other similar agreement;

19 ‘‘(II) any combination of agree20 ments or transactions referred to in

21 subclauses (I) and (III);

22 ‘‘(III) any option to enter into

23 any agreement or transaction referred

24 to in subclause (I) or (II);
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1 ‘‘(IV) a master agreement that

2 provides for an agreement or trans3 action referred to in subclauses (I),

4 (II), or (III), together with all supple5 ments to any such master agreement,

6 without regard to whether the master

7 agreement provides for an agreement

8 or transaction that is not a forward

9 contract under this clause, except that

10 the master agreement shall be consid11 ered to be a forward contract under

12 this clause only with respect to each

13 agreement or transaction under the

14 master agreement that is referred to in

15 subclause (I), (II), or (III); or

16 ‘‘(V) a security agreement or ar17 rangement or other credit enhancement

18 related to any agreement or trans19 action referred to in subclause (I), (II),

20 (III), or (IV).’’.

21 (e) DEFINITION OF REPURCHASE AGREEMENT.—Sec22 tion 11(e)(8)(D)(v) of the Federal Deposit Insurance Act

23 (12 U.S.C. 1821(e)(8)(D)(v)) is amended to read as follows:

24 ‘‘(v) REPURCHASE AGREEMENT.—The

25 term ‘repurchase agreement’ (which defini-
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1 tion also applies to a reverse repurchase

2 agreement)—

3 ‘‘(I) mean an agreement, includ4 ing related terms, which provides for

5 the transfer of 1 or more certificates of

6 deposit, mortgage-related securities (as

7 such term is defined in the Securities

8 Exchange Act of 1934), mortgage loans,

9 interests in mortgage-related securities

10 or mortgage loans, eligible bankers’ ac11 ceptances, qualified foreign government

12 securities or securities that are direct

13 obligations of, or that are fully guaran14 teed by, the United States or any agen15 cy of the United States against the

16 transfer of funds by the transferee of

17 such certificates of deposit, eligible

18 bankers’ acceptances, securities, loans,

19 or interests with a simultaneous agree20 ment by such transferee to transfer to

21 the transferor thereof certificates of de22 posit, eligible bankers’ acceptances, se23 curities, loans, or interests as described

24 above, at a date certain not later than

25 1 year after such transfers or on de-
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1 mand, against the transfer of funds, or

2 any other similar agreement;

3 ‘‘(II) does not include any repur4 chase obligation under a participation

5 in a commercial mortgage loan unless

6 the Corporation determines by regula7 tion, resolution, or order to include

8 any such participation within the

9 meaning of such term;

10 ‘‘(III) means any combination of

11 agreements or transactions referred to

12 in subclauses (I) and (IV);

13 ‘‘(IV) means any option to enter

14 into any agreement or transaction re15 ferred to in subclause (I) or (III);

16 ‘‘(V) means a master agreement

17 that provides for an agreement or

18 transaction referred to in subclause (I),

19 (III), or (IV), together with all supple20 ments to any such master agreement,

21 without regard to whether the master

22 agreement provides for an agreement

23 or transaction that is not a repurchase

24 agreement under this clause, except

25 that the master agreement shall be con-
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1 sidered to be a repurchase agreement

2 under this subclause only with respect

3 to each agreement or transaction under

4 the master agreement that is referred to

5 in subclause (I), (III), or (IV); and

6 ‘‘(VI) means a security agreement

7 or arrangement or other credit en8 hancement related to any agreement or

9 transaction referred to in subclause (I),

10 (III), (IV), or (V).

11 For purposes of this clause, the term ‘quali12 fied foreign government security’ means a

13 security that is a direct obligation of, or

14 that is fully guaranteed by, the central gov15 ernment of a member of the Organization

16 for Economic Cooperation and Development

17 (as determined by regulation or order

18 adopted by the appropriate Federal banking

19 authority).’’.

20 (f) DEFINITION OF SWAP AGREEMENT.—Section

21 11(e)(8)(D)(iv) of the Federal Deposit Insurance Act (12

22 U.S.C. 1821(e)(8)(D)(vi)) is amended to read as follows:

23 ‘‘(vi) SWAP AGREEMENT.—The term

24 ‘swap agreement’ means—
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1 ‘‘(I) any agreement, including the

2 terms and conditions incorporated by

3 reference in any such agreement, which

4 is an interest rate swap, option, future,

5 or forward agreement, including a rate

6 floor, rate cap, rate collar, cross-cur7 rency rate swap, and basis swap; a

8 spot, same day-tomorrow, tomorrow9 next, forward, or other foreign ex10 change or precious metals agreement; a

11 currency swap, option, future, or for12 ward agreement; an equity index or eq13 uity swap, option, future, or forward

14 agreement; a debt index or debt swap,

15 option, future, or forward agreement; a

16 credit spread or credit swap, option,

17 future, or forward agreement; a com18 modity index or commodity swap, op19 tion, future, or forward agreement;

20 ‘‘(II) any agreement or trans21 action similar to any other agreement

22 or transaction referred to in this clause

23 that is presently, or in the future be24 comes, regularly entered into in the

25 swap market (including terms and
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1 conditions incorporated by reference in

2 such agreement) and that is a forward,

3 swap, future, or option on 1 or more

4 rates, currencies, commodities, equity

5 securities or other equity instruments,

6 debt securities or other debt instru7 ments, or economic indices or measures

8 of economic risk or value;

9 ‘‘(III) any combination of agree10 ments or transactions referred to in

11 this clause;

12 ‘‘(IV) any option to enter into

13 any agreement or transaction referred

14 to in this clause;

15 ‘‘(V) a master agreement that pro16 vides for an agreement or transaction

17 referred to in subclause (I), (II), (III),

18 or (IV), together with all supplements

19 to any such master agreement, without

20 regard to whether the master agreement

21 contains an agreement or transaction

22 that is not a swap agreement under

23 this clause, except that the master

24 agreement shall be considered to be a

25 swap agreement under this clause only
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1 with respect to each agreement or

2 transaction under the master agree3 ment that is referred to in subclause

4 (I), (II), (III), or (IV); and

5 ‘‘(VI) any security agreement or

6 arrangement or other credit enhance7 ment related to any agreements or

8 transactions referred to in subpara9 graph (I), (II), (III), or (IV).

10 Such term is applicable for purposes of this

11 title only and shall not be construed or ap12 plied so as to challenge or affect the charac13 terization, definition, or treatment of any

14 swap agreement under any other statute,

15 regulation, or rule, including the Securities

16 Act of 1933, the Securities Exchange Act of

17 1934, the Public Utility Holding Company

18 Act of 1935, the Trust Indenture Act of

19 1939, the Investment Company Act of 1940,

20 the Investment Advisers Act of 1940, the Se21 curities Investor Protection Act of 1970, the

22 Commodity Exchange Act, and the regula23 tions promulgated by the Securities and Ex24 change Commission or the Commodity Fu25 tures Trading Commission.’’.
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1 (g) DEFINITION OF TRANSFER.—Section

2 11(e)(8)(D)(viii) of the Federal Deposit Insurance Act (12

3 U.S.C. 1821(e)(8)(D)(viii)) is amended to read as follows:

4 ‘‘(viii) TRANSFER.—The term ‘trans5 fer’ means every mode, direct or indirect,

6 absolute or conditional, voluntary or invol7 untary, of disposing of or parting with

8 property or with an interest in property,

9 including retention of title as a security in10 terest and foreclosure of the depository

11 institutions’s equity of redemption.’’.

12 (h) TREATMENT OF QUALIFIED FINANCIAL CON13 TRACTS.—Section 11(e)(8) of the Federal Deposit Insurance

14 Act (12 U.S.C. 1821(e)(8)) is amended—

15 (1) in subparagraph (A), by striking ‘‘paragraph

16 (10)’’ and inserting ‘‘paragraphs (9) and (10)’’;

17 (2) in subparagraph (A)(i), by striking ‘‘to cause

18 the termination or liquidation’’ and inserting ‘‘such

19 person has to cause the termination, liquidation, or

20 acceleration’’;

21 (3) by amending subparagraph (A)(ii) to read as

22 follows:

23 ‘‘(ii) any right under any security

24 agreement or arrangement or other credit

25 enhancement related to 1 or more qualified
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1 financial contracts described in clause (i);’’;

2 and

3 (4) by amending subparagraph (E)(ii) to read

4 as follows:

5 ‘‘(ii) any right under any security

6 agreement or arrangement or other credit

7 enhancement related to 1 or more qualified

8 financial contracts described in clause (i);’’.

9 (i) AVOIDANCE OF TRANSFERS.—Section

10 11(e)(8)(C)(i) of the Federal Deposit Insurance Act (12

11 U.S.C. 1821(e)(8)(C)(i)) is amended by inserting ‘‘section

12 5242 of the Revised Statutes of the United States (12 U.S.C.

13 91) or any other Federal or State law relating to the avoid14 ance of preferential or fraudulent transfers,’’ before ‘‘the

15 Corporation’’.

16 SEC. 1002. AUTHORITY OF THE CORPORATION WITH RE17 SPECT TO FAILED AND FAILING INSTITU18 TIONS.

19 (a) IN GENERAL.—Section 11(e)(8) of the Federal De20 posit Insurance Act (12 U.S.C. 1821(e)(8)) is amended—

21 (1) in subparagraph (E), by striking ‘‘other than

22 paragraph (12) of this subsection, subsection (d)(9)’’

23 and inserting ‘‘other than subsections (d)(9) and

24 (e)(10)’’; and
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1 (2) by adding at the end the following new sub2 paragraphs:

3 ‘‘(F) CLARIFICATION.—No provision of law

4 shall be construed as limiting the right or power

5 of the Corporation, or authorizing any court or

6 agency to limit or delay, in any manner, the

7 right or power of the Corporation to transfer any

8 qualified financial contract in accordance with

9 paragraphs (9) and (10) of this subsection or to

10 disaffirm or repudiate any such contract in ac11 cordance with subsection (e)(1) of this section.

12 ‘‘(G) WALKAWAY CLAUSES NOT EFFEC13 TIVE.—

14 ‘‘(i) IN GENERAL.—Notwithstanding

15 the provisions of subparagraphs (A) and

16 (E), and sections 403 and 404 of the Fed17 eral Deposit Insurance Corporation Im18 provement Act of 1991, no walkaway clause

19 shall be enforceable in a qualified financial

20 contract of an insured depository institu21 tion in default.

22 ‘‘(ii) WALKAWAY CLAUSE DEFINED.—

23 For purposes of this subparagraph, the term

24 ‘walkaway clause’ means a provision in a

25 qualified financial contract that, after cal-
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1 culation of a value of a party’s position or

2 an amount due to or from 1 of the parties

3 in accordance with its terms upon termi4 nation, liquidation, or acceleration of the

5 qualified financial contract, either does not

6 create a payment obligation of a party or

7 extinguishes a payment obligation of a

8 party in whole or in part solely because of

9 such party’s status as a nondefaulting

10 party.’’.

11 (b) TECHNICAL AND CONFORMING AMENDMENT.—Sec12 tion 11(e)(12)(A) of the Federal Deposit Insurance Act (12

13 U.S.C. 1821(e)(12)(A)) is amended by inserting ‘‘or the ex14 ercise of rights or powers’’ after ‘‘the appointment’’.

15 SEC. 1003. AMENDMENTS RELATING TO TRANSFERS OF

16 QUALIFIED FINANCIAL CONTRACTS.

17 (a) TRANSFERS OF QUALIFIED FINANCIAL CONTRACTS

18 TO FINANCIAL INSTITUTIONS.—Section 11(e)(9) of the Fed19 eral Deposit Insurance Act (12 U.S.C. 1821(e)(9)) is

20 amended to read as follows:

21 ‘‘(9) TRANSFER OF QUALIFIED FINANCIAL CON22 TRACTS.—

23 ‘‘(A) IN GENERAL.—In making any transfer

24 of assets or liabilities of a depository institution

25 in default which includes any qualified financial
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1 contract, the conservator or receiver for such de2 pository institution shall either—

3 ‘‘(i) transfer to 1 financial institution,

4 other than a financial institution for which

5 a conservator, receiver, trustee in bank6 ruptcy, or other legal custodian has been

7 appointed or which is otherwise the subject

8 of a bankruptcy or insolvency proceeding—

9 ‘‘(I) all qualified financial con10 tracts between any person or any affil11 iate of such person and the depository

12 institution in default;

13 ‘‘(II) all claims of such person or

14 any affiliate of such person against

15 such depository institution under any

16 such contract (other than any claim

17 which, under the terms of any such

18 contract, is subordinated to the claims

19 of general unsecured creditors of such

20 institution);

21 ‘‘(III) all claims of such deposi22 tory institution against such person or

23 any affiliate of such person under any

24 such contract; and
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1 ‘‘(IV) all property securing or any

2 other credit enhancement for any con3 tract described in subclause (I) or any

4 claim described in subclause (II) or

5 (III) under any such contract; or

6 ‘‘(ii) transfer none of the qualified fi7 nancial contracts, claims, property or other

8 credit enhancement referred to in clause (i)

9 (with respect to such person and any affil10 iate of such person).

11 ‘‘(B) TRANSFER TO FOREIGN BANK, FOR12 EIGN FINANCIAL INSTITUTION, OR BRANCH OR

13 AGENCY OF A FOREIGN BANK OR FINANCIAL IN14 STITUTION.—In transferring any qualified fi15 nancial contracts and related claims and prop16 erty pursuant to subparagraph (A)(i), the con17 servator or receiver for such depository institu18 tion shall not make such transfer to a foreign

19 bank, financial institution organized under the

20 laws of a foreign country, or a branch or agency

21 of a foreign bank or financial institution unless,

22 under the law applicable to such bank, financial

23 institution, branch or agency, to the qualified fi24 nancial contracts, and to any netting contract,

25 any security agreement or arrangement or other
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1 credit enhancement related to 1 or more qualified

2 financial contracts, the contractual rights of the

3 parties to such qualified financial contracts, net4 ting contracts, security agreements or arrange5 ments, or other credit enhancements are enforce6 able substantially to the same extent as per7 mitted under this section.

8 ‘‘(C) TRANSFER OF CONTRACTS SUBJECT TO

9 THE RULES OF A CLEARING ORGANIZATION.—In

10 the event that a conservator or receiver transfers

11 any qualified financial contract and related

12 claims, property and credit enhancements pursu13 ant to subparagraph (A)(i) and such contract is

14 subject to the rules of a clearing organization,

15 the clearing organization shall not be required to

16 accept the transferee as a member by virtue of

17 the transfer.

18 ‘‘(D) DEFINITION.—For purposes of this

19 section, the term ‘financial institution’ means a

20 broker or dealer, a depository institution, a fu21 tures commission merchant, or any other institu22 tion as determined by the Corporation by regula23 tion to be a financial institution.’’.

24 (b) NOTICE TO QUALIFIED FINANCIAL CONTRACT

25 COUNTERPARTIES.—Section 11(e)(10)(A) of the Federal
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1 Deposit Insurance Act (12 U.S.C. 1821(e)(10)(A)) is

2 amended by amending the flush material following clause

3 (ii) to read as follows: ‘‘the conservator or receiver shall no4 tify any person who is a party to any such contract of such

5 transfer by 5:00 p.m. (eastern time) on the business day

6 following the date of the appointment of the receiver, in the

7 case of a receivership, or the business day following such

8 transfer, in the case of a conservatorship.’’.

9 (c) RIGHTS AGAINST RECEIVER AND TREATMENT OF

10 BRIDGE BANKS.—Section 11(e)(10) of the Federal Deposit

11 Insurance Act (12 U.S.C. 1821(e)(10)) is further

12 amended—

13 (1) by redesignating subparagraph (B) as sub14 paragraph (D); and

15 (2) by inserting after subparagraph (A) the fol16 lowing new subparagraphs:

17 ‘‘(B) CERTAIN RIGHTS NOT ENFORCE18 ABLE.—

19 ‘‘(i) RECEIVERSHIP.—A person who is

20 a party to a qualified financial contract

21 with an insured depository institution may

22 not exercise any right such person has to

23 terminate, liquidate, or net such contract

24 under paragraph (8)(A) or section 403 or

25 404 of the Federal Deposit Insurance Cor-
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1 poration Improvement Act of 1991 solely by

2 reason of or incidental to the appointment

3 of a receiver for the depository institution

4 (or the insolvency or financial condition of

5 the depository institution for which the re6 ceiver has been appointed)—

7 ‘‘(I) until 5:00 p.m. (eastern time)

8 on the business day following the date

9 of the appointment of the receiver; or

10 ‘‘(II) after the person has received

11 notice that the contract has been trans12 ferred pursuant to paragraph (9)(A).

13 ‘‘(ii) CONSERVATORSHIP.—A person

14 who is a party to a qualified financial con15 tract with an insured depository institution

16 may not exercise any right such person has

17 to terminate, liquidate, or net such contract

18 under paragraph (8)(E) or sections 403 or

19 404 of the Federal Deposit Insurance Cor20 poration Improvement Act of 1991, solely

21 by reason of or incidental to the appoint22 ment of a conservator for the depository in23 stitution (or the insolvency or financial

24 condition of the depository institution for

25 which the conservator has been appointed).
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1 ‘‘(iii) NOTICE.—For purposes of this

2 subsection, the Corporation as receiver or

3 conservator of an insured depository insti4 tution shall be deemed to have notified a

5 person who is a party to a qualified finan6 cial contract with such depository institu7 tion if the Corporation has taken steps rea8 sonably calculated to provide notice to such

9 person by the time specified in subpara10 graph (A) of this subsection.

11 ‘‘(C) TREATMENT OF BRIDGE BANKS.—The

12 following institutions shall not be considered a

13 financial institution for which a conservator, re14 ceiver, trustee in bankruptcy, or other legal cus15 todian has been appointed or which is otherwise

16 the subject of a bankruptcy or insolvency pro17 ceeding for purposes of subsection (e)(9)—

18 ‘‘(i) a bridge bank; or

19 ‘‘(ii) a depository institution organized

20 by the Corporation, for which a conservator

21 is appointed either—

22 ‘‘(I) immediately upon the organi23 zation of the institution; or

24 ‘‘(II) at the time of a purchase

25 and assumption transaction between
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1 such institution and the Corporation

2 as receiver for a depository institution

3 in default.’’.

4 SEC. 1004. AMENDMENTS RELATING TO DISAFFIRMANCE OR

5 REPUDIATION OF QUALIFIED FINANCIAL

6 CONTRACTS.

7 Section 11(e) of the Federal Deposit Insurance Act (12

8 U.S.C. 1821(e)) is further amended—

9 (1) by redesignating paragraphs (11) through

10 (15) as paragraphs (12) through (16), respectively;

11 and

12 (2) by inserting after paragraph (10) the fol13 lowing new paragraph:

14 ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF

15 QUALIFIED FINANCIAL CONTRACTS.—In exercising the

16 rights of disaffirmance or repudiation of a conser17 vator or receiver with respect to any qualified finan18 cial contract to which an insured depository institu19 tion is a party, the conservator or receiver for such

20 institution shall either—

21 ‘‘(A) disaffirm or repudiate all qualified fi22 nancial contracts between—

23 ‘‘(i) any person or any affiliate of such

24 person; and
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1 ‘‘(ii) the depository institution in de2 fault; or

3 ‘‘(B) disaffirm or repudiate none of the

4 qualified financial contracts referred to in sub5 paragraph (A) (with respect to such person or

6 any affiliate of such person).’’.

7 SEC. 1005. CLARIFYING AMENDMENT RELATING TO MASTER

8 AGREEMENTS.

9 Section 11(e)(8)(D)(vii) of the Federal Deposit Insur10 ance Act (12 U.S.C. 1821(e)(8)(D)(vii)) is amended to read

11 as follows:

12 ‘‘(vii) TREATMENT OF MASTER AGREE13 MENT AS 1 AGREEMENT.—Any master

14 agreement for any contract or agreement de15 scribed in any preceding clause of this sub16 paragraph (or any master agreement for

17 such master agreement or agreements), to18 gether with all supplements to such master

19 agreement, shall be treated as a single

20 agreement and a single qualified financial

21 contract. If a master agreement contains

22 provisions relating to agreements or trans23 actions that are not themselves qualified fi24 nancial contracts, the master agreement

25 shall be deemed to be a qualified financial
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1 contract only with respect to those trans2 actions that are themselves qualified finan3 cial contracts.’’.

4 SEC. 1006. FEDERAL DEPOSIT INSURANCE CORPORATION

5 IMPROVEMENT ACT OF 1991.

6 (a) DEFINITIONS.—Section 402 of the Federal Deposit

7 Insurance Corporation Improvement Act of 1991 (12 U.S.C.

8 4402) is amended—

9 (1) in paragraph (6)—

10 (A) by redesignating subparagraphs (B)

11 through (D) as subparagraphs (C) through (E),

12 respectively;

13 (B) by inserting after subparagraph (A) the

14 following new subparagraph:

15 ‘‘(B) an uninsured national bank or an un16 insured State bank that is a member of the Fed17 eral Reserve System if the national bank or

18 State member bank is not eligible to make appli19 cation to become an insured bank under section

20 5 of the Federal Deposit Insurance Act;’’; and

21 (C) by amending subparagraph (C) (as re22 designated) to read as follows:

23 ‘‘(C) a branch or agency of a foreign bank,

24 a foreign bank and any branch or agency of the

25 foreign bank, or the foreign bank that established
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1 the branch or agency, as those terms are defined

2 in section 1(b) of the International Banking Act

3 of 1978;’’;

4 (2) in paragraph (11), by adding before the pe5 riod ‘‘and any other clearing organization with which

6 such clearing organization has a netting contract’’;

7 (3) by amending paragraph (14)(A)(i) to read as

8 follows:

9 ‘‘(i) means a contract or agreement be10 tween 2 or more financial institutions,

11 clearing organizations, or members that

12 provides for netting present or future pay13 ment obligations or payment entitlements

14 (including liquidation or closeout values re15 lating to such obligations or entitlements)

16 among the parties to the agreement; and’’;

17 and

18 (4) by adding at the end the following new para19 graph:

20 ‘‘(15) PAYMENT.—The term ‘payment’ means a

21 payment of United States dollars, another currency,

22 or a composite currency, and a noncash delivery, in23 cluding a payment or delivery to liquidate an

24 unmatured obligation.’’.
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1 (b) ENFORCEABILITY OF BILATERAL NETTING CON2 TRACTS.—Section 403 of the Federal Deposit Insurance

3 Corporation Improvement Act of 1991 (12 U.S.C. 4403) is

4 amended—

5 (1) by amending subsection (a) to read as fol6 lows:

7 ‘‘(a) GENERAL RULE.—Notwithstanding any other

8 provision of State or Federal law (other than paragraphs

9 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal

10 Deposit Insurance Act or any order authorized under sec11 tion 5(b)(2) of the Securities Investor Protection Act of

12 1970, the covered contractual payment obligations and the

13 covered contractual payment entitlements between any 2 fi14 nancial institutions shall be netted in accordance with, and

15 subject to the conditions of, the terms of any applicable net16 ting contract (except as provided in section 561(b)(2) of

17 title 11).’’; and

18 (2) by adding at the end the following new sub19 section:

20 ‘‘(f) ENFORCEABILITY OF SECURITY AGREEMENTS.—

21 The provisions of any security agreement or arrangement

22 or other credit enhancement related to 1 or more netting

23 contracts between any 2 financial institutions shall be en24 forceable in accordance with their terms (except as provided

25 in section 561(b)(2) of title 11) and shall not be stayed,
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1 avoided, or otherwise limited by any State or Federal law

2 (other than paragraphs (8)(E), (8)(F), and (10)(B) of sec3 tion 11(e) of the Federal Deposit Insurance Act and section

4 5(b)(2) of the Securities Investor Protection Act of 1970).’’.

5 (c) ENFORCEABILITY OF CLEARING ORGANIZATION

6 NETTING CONTRACTS.—Section 404 of the Federal Deposit

7 Insurance Corporation Improvement Act of 1991 (12 U.S.C.

8 4404) is amended—

9 (1) by amending subsection (a) to read as fol10 lows:

11 ‘‘(a) GENERAL RULE.—Notwithstanding any other

12 provision of State or Federal law (other than paragraphs

13 (8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal

14 Deposit Insurance Act and any order authorized under sec15 tion 5(b)(2) of the Securities Investor Protection Act of

16 1970, the covered contractual payment obligations and the

17 covered contractual payment entitlements of a member of

18 a clearing organization to and from all other members of

19 a clearing organization shall be netted in accordance with

20 and subject to the conditions of any applicable netting con21 tract (except as provided in section 561(b)(2) of title 11,

22 United States Code).’’; and

23 (2) by adding at the end the following new sub24 section:
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1 ‘‘(h) ENFORCEABILITY OF SECURITY AGREEMENTS.—

2 The provisions of any security agreement or arrangement

3 or other credit enhancement related to 1 or more netting

4 contracts between any 2 members of a clearing organization

5 shall be enforceable in accordance with their terms (except

6 as provided in section 561(b)(2) of title 11, United States

7 Code) and shall not be stayed, avoided, or otherwise limited

8 by any State or Federal law other than paragraphs (8)(E),

9 (8)(F), and (10)(B) of section 11(e) of the Federal Deposit

10 Insurance Act and section 5(b)(2) of the Securities Investor

11 Protection Act of 1970.’’.

12 (d) ENFORCEABILITY OF CONTRACTS WITH UNIN13 SURED NATIONAL BANKS AND UNINSURED FEDERAL

14 BRANCHES AND AGENCIES.—The Federal Deposit Insur15 ance Corporation Improvement Act of 1991 (12 U.S.C. 4401

16 et seq.) is amended—

17 (1) by redesignating section 407 as section 408;

18 and

19 (2) by adding after section 406 the following new

20 section:

21 ‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED

22 NATIONAL BANKS AND UNINSURED FEDERAL

23 BRANCHES AND AGENCIES.

24 ‘‘(a) IN GENERAL.—Notwithstanding any other provi25 sion of law, paragraphs (8), (9), (10), and (11) of section
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1 11(e) of the Federal Deposit Insurance Act shall apply to

2 an uninsured national bank or uninsured Federal branch

3 or Federal agency except—

4 ‘‘(1) any reference to the ‘Corporation as re5 ceiver’ or ‘the receiver or the Corporation’ shall refer

6 to the receiver of an uninsured national bank or un7 insured Federal branch or Federal agency appointed

8 by the Comptroller of the Currency;

9 ‘‘(2) any reference to the ‘Corporation’ (other

10 than in section 11(e)(8)(D) of such Act), the ‘Corpora11 tion, whether acting as such or as conservator or re12 ceiver’, a ‘receiver’, or a ‘conservator’ shall refer to the

13 receiver or conservator of an uninsured national bank

14 or uninsured Federal branch or Federal agency ap15 pointed by the Comptroller of the Currency; and

16 ‘‘(3) any reference to an ‘insured depository in17 stitution’ or ‘depository institution’ shall refer to an

18 uninsured national bank or an uninsured Federal

19 branch or Federal agency.

20 ‘‘(b) LIABILITY.—The liability of a receiver or conser21 vator of an uninsured national bank or uninsured Federal

22 branch or agency shall be determined in the same manner

23 and subject to the same limitations that apply to receivers

24 and conservators of insured depository institutions under

25 section 11(e) of the Federal Deposit Insurance Act.
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1 ‘‘(c) REGULATORY AUTHORITY.—

2 ‘‘(1) IN GENERAL.—The Comptroller of the Cur3 rency, in consultation with the Federal Deposit In4 surance Corporation, may promulgate regulations to

5 implement this section.

6 ‘‘(2) SPECIFIC REQUIREMENT.—In promulgating

7 regulations to implement this section, the Comptroller

8 of the Currency shall ensure that the regulations gen9 erally are consistent with the regulations and policies

10 of the Federal Deposit Insurance Corporation adopted

11 pursuant to the Federal Deposit Insurance Act.

12 ‘‘(d) DEFINITIONS.—For purposes of this section, the

13 terms ‘Federal branch’, ‘Federal agency’, and ‘foreign bank’

14 have the same meaning as in section 1(b) of the Inter15 national Banking Act.’’.

16 SEC. 1007. BANKRUPTCY CODE AMENDMENTS.

17 (a) DEFINITIONS OF FORWARD CONTRACT, REPUR18 CHASE AGREEMENT, SECURITIES CLEARING AGENCY, SWAP

19 AGREEMENT, COMMODITY CONTRACT, AND SECURITIES

20 CONTRACT.—Title 11, United States Code, is amended—

21 (1) in section 101—

22 (A) in paragraph (25)—

23 (i) by striking ‘‘means a contract’’ and

24 inserting ‘‘means—

25 ‘‘(A) a contract’’;
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1 (ii) by striking ‘‘, or any combination

2 thereof or option thereon;’’ and inserting ‘‘,

3 or any other similar agreement;’’; and

4 (iii) by adding at the end the fol5 lowing:

6 ‘‘(B) any combination of agreements or

7 transactions referred to in subparagraphs (A)

8 and (C);

9 ‘‘(C) any option to enter into an agreement

10 or transaction referred to in subparagraph (A)

11 or (B);

12 ‘‘(D) a master agreement that provides for

13 an agreement or transaction referred to in sub14 paragraph (A), (B), or (C), together with all

15 supplements to any such master agreement, with16 out regard to whether such master agreement

17 provides for an agreement or transaction that is

18 not a forward contract under this paragraph, ex19 cept that such master agreement shall be consid20 ered to be a forward contract under this para21 graph only with respect to each agreement or

22 transaction under such master agreement that is

23 referred to in subparagraph (A), (B) or (C); or

24 ‘‘(E) a security agreement or arrangement,

25 or other credit enhancement related to any agree-
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1 ment or transaction referred to in subparagraph

2 (A), (B), (C), or (D), but not to exceed the actual

3 value of such contract, option, agreement, or

4 transaction on the date of the filing of the peti5 tion;’’;

6 (B) in paragraph (46), by striking ‘‘on any

7 day during the period beginning 90 days before

8 the date of’’ and replacing it with ‘‘at any time

9 before’’;

10 (C) by amending paragraph (47) to read as

11 follows:

12 ‘‘(47) ‘repurchase agreement’ (which definition

13 also applies to a reverse repurchase agreement)

14 means—

15 ‘‘(i) an agreement, including related

16 terms, which provides for the transfer of 1

17 or more certificates of deposit, mortgage-re18 lated securities (as defined in the Securities

19 Exchange Act of 1934), mortgage loans, in20 terests in mortgage-related securities or

21 mortgage loans, eligible bankers’ accept22 ances, qualified foreign government securi23 ties; or securities that are direct obligations

24 of, or that are fully guaranteed by, the

25 United States or any agency of the United
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1 States against the transfer of funds by the

2 transferee of such certificates of deposit, eli3 gible bankers’ acceptances, securities, loans,

4 or interests; with a simultaneous agreement

5 by such transferee to transfer to the trans6 feror thereof certificates of deposit, eligible

7 bankers’ acceptance, securities, loans, or in8 terests of the kind described above, at a date

9 certain not later than 1 year after such

10 transfer or on demand, against the transfer

11 of funds;

12 ‘‘(ii) any combination of agreements or

13 transactions referred to in clauses (i) and

14 (iii);

15 ‘‘(iii) an option to enter into an agree16 ment or transaction referred to in clause (i)

17 or (ii);

18 ‘‘(iv) a master agreement that provides

19 for an agreement or transaction referred to

20 in clause (i), (ii), or (iii), together with all

21 supplements to any such master agreement,

22 without regard to whether such master

23 agreement provides for an agreement or

24 transaction that is not a repurchase agree25 ment under this paragraph, except that
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1 such master agreement shall be considered

2 to be a repurchase agreement under this

3 paragraph only with respect to each agree4 ment or transaction under the master agree5 ment that is referred to in clause (i), (ii),

6 or (iii); or

7 ‘‘(v) a security agreement or arrange8 ment or other credit enhancement related to

9 any agreement or transaction referred to in

10 clause (i), (ii), (iii), or (iv), but not to ex11 ceed the actual value of such contract on the

12 date of the filing of the petition; and

13 ‘‘(B) does not include a repurchase obliga14 tion under a participation in a commercial

15 mortgage loan;

16 and, for purposes of this paragraph, the term ‘quali17 fied foreign government security’ means a security

18 that is a direct obligation of, or that is fully guaran19 teed by, the central government of a member of the

20 Organization for Economic Cooperation and Develop21 ment;’’;

22 (D) in paragraph (48) by inserting ‘‘or ex23 empt from such registration under such section

24 pursuant to an order of the Securities and Ex25 change Commission’’ after ‘‘1934’’; and
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1 (E) by amending paragraph (53B) to read

2 as follows:

3 ‘‘(53B) ‘swap agreement’

4 ‘‘(A) means—

5 ‘‘(i) any agreement, including the

6 terms and conditions incorporated by ref7 erence in such agreement, which is an inter8 est rate swap, option, future, or forward

9 agreement, including a rate floor, rate cap,

10 rate collar, cross-currency rate swap, and

11 basis swap; a spot, same day-tomorrow, to12 morrow-next, forward, or other foreign ex13 change or precious metals agreement; a cur14 rency swap, option, future, or forward

15 agreement; an equity index or an equity

16 swap, option, future, or forward agreement;

17 a debt index or a debt swap, option, future,

18 or forward agreement; a credit spread or a

19 credit swap, option, future, or forward

20 agreement; or a commodity index or a com21 modity swap, option, future, or forward

22 agreement;

23 ‘‘(ii) any agreement or transaction

24 similar to any other agreement or trans25 action referred to in this paragraph that—
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1 ‘‘(I) is presently, or in the future

2 becomes, regularly entered into in the

3 swap market (including terms and

4 conditions incorporated by reference

5 therein); and

6 ‘‘(II) is a forward, swap, future,

7 or option on 1 or more rates, cur8 rencies commodities, equity securities,

9 or other equity instruments, debt secu10 rities or other debt instruments, or on

11 an economic index or measure of eco12 nomic risk or value;

13 ‘‘(iii) any combination of agreements

14 or transactions referred to in this para15 graph;

16 ‘‘(iv) any option to enter into an

17 agreement or transaction referred to in this

18 paragraph;

19 ‘‘(v) a master agreement that provides

20 for an agreement or transaction referred to

21 in clause (i), (ii), (iii), or (iv), together

22 with all supplements to any such master

23 agreement, and without regard to whether

24 the master agreement contains an agree25 ment or transaction that is not a swap
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1 agreement under this paragraph, except

2 that the master agreement shall be consid3 ered to be a swap agreement under this

4 paragraph only with respect to each agree5 ment or transaction under the master agree6 ment that is referred to in clause (i), (ii),

7 (iii), or (iv); or

8 ‘‘(B) any security agreement or arrange9 ment or other credit enhancement related to any

10 agreements or transactions referred to in sub11 paragraph (A); and

12 ‘‘(C) is applicable for purposes of this title

13 only and shall not be construed or applied so as

14 to challenge or affect the characterization, defini15 tion, or treatment of any swap agreement under

16 any other statute, regulation, or rule, including

17 the Securities Act of 1933, the Securities Ex18 change Act of 1934, the Public Utility Holding

19 Company Act of 1935, the Trust Indenture Act

20 of 1939, the Investment Company Act of 1940,

21 the Investment Advisers Act of 1940, the Securi22 ties Investor Protection Act of 1970, the Com23 modity Exchange Act, and the regulations pre24 scribed by the Securities and Exchange Commis-
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1 sion or the Commodity Futures Trading Com2 mission.’’;

3 (2) by amending section 741(7) to read as fol4 lows:

5 ‘‘(7) ‘securities contract’—

6 ‘‘(A) means—

7 ‘‘(i) a contract for the purchase, sale,

8 or loan of a security, a certificate of deposit,

9 a mortgage loan or any interest in a mort10 gage loan, a group or index of securities,

11 certificates of deposit or mortgage loans or

12 interests therein (including an interest

13 therein or based on the value thereof), or op14 tion on any of the foregoing, including an

15 option to purchase or sell any such security

16 certificate of deposit, loan, interest, group or

17 index or option;

18 ‘‘(ii) any option entered into on a na19 tional securities exchange relating to foreign

20 currencies;

21 ‘‘(iii) the guarantee by or to any secu22 rities clearing agency of a settlement of

23 cash, securities, certificates of deposit mort24 gage loans or interests therein, group or

25 index of securities, or mortgage loans or in-
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1 terests therein (including any interest there2 in or based on the value thereof), or option

3 on any of the foregoing, including an option

4 to purchase or sell any such security certifi5 cate of deposit, loan, interest, group or

6 index or option;

7 ‘‘(iv) any margin loan;

8 ‘‘(v) any other agreement or trans9 action that is similar to an agreement or

10 transaction referred to in this paragraph;

11 ‘‘(vi) any combination of the agree12 ments or transactions referred to in this

13 paragraph;

14 ‘‘(vii) any option to enter into any

15 agreement or transaction referred to in this

16 paragraph;

17 ‘‘(viii) a master agreement that pro18 vides for an agreement or transaction re19 ferred to in clause (i), (ii), (iii), (iv), (v),

20 (vi), or (vii), together with all supplements

21 to any such master agreement, without re22 gard to whether the master agreement pro23 vides for an agreement or transaction that

24 is not a securities contract under this para25 graph, except that such master agreement
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1 shall be considered to be a securities con2 tract under this paragraph only with re3 spect to each agreement or transaction

4 under such master agreement that is re5 ferred to in clause (i), (ii), (iii), (iv), (v),

6 (vi), or (vii); or

7 ‘‘(ix) any security agreement or ar8 rangement, or other credit enhancement, re9 lated to any agreement or transaction re10 ferred to in this paragraph, but not to ex11 ceed the actual value of such contract on the

12 date of the filing of the petition; and

13 ‘‘(B) does not include any purchase, sale, or

14 repurchase obligation under a participation in a

15 commercial mortgage loan.’’; and

16 (3) in section 761(4)—

17 (A) by striking ‘‘or’’ at the end of subpara18 graph (D); and

19 (B) by adding at the end the following:

20 ‘‘(F) any other agreement or transaction

21 that is similar to an agreement or transaction

22 referred to in this paragraph;

23 ‘‘(G) any combination of the agreements or

24 transactions referred to in this paragraph;
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1 ‘‘(H) any option to enter into an agreement

2 or transaction referred to in this paragraph;

3 ‘‘(I) a master agreement that provides for

4 an agreement or transaction referred to in sub5 paragraph (A), (B), (C), (D), (E), (F), (G), or

6 (H), together with all supplements to such mas7 ter netting agreement, without regard to whether

8 the master netting agreement provides for an

9 agreement or transaction that is not a com10 modity contract under this paragraph, except

11 that the master agreement shall be considered to

12 be a commodity contract under this paragraph

13 only with respect to each agreement or trans14 action under the master agreement that is re15 ferred to in subparagraph (A), (B), (C), (D),

16 (E), (F), (G), or (H); or

17 ‘‘(J) a security agreement or arrangement,

18 or other credit enhancement related to any agree19 ment or transaction referred to in this para20 graph, but not to exceed the actual value of such

21 contract on the date of the filing of the peti22 tion;’’.

23 (b) DEFINITIONS OF FINANCIAL INSTITUTION, FINAN24 CIAL PARTICIPANT, AND FORWARD CONTRACT MER-
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1 CHANT.—Section 101 of title 11, United States Code, is

2 amended—

3 (1) by amending paragraph (22) to read as fol4 lows:

5 ‘‘(22) ‘financial institution’ means—

6 ‘‘(A) a Federal reserve bank, or an entity

7 (domestic or foreign) that is a commercial or

8 savings bank, industrial savings bank, savings

9 and loan association, trust company, or receiver

10 or conservator for such entity and, when any

11 such Federal reserve bank, receiver, conservator

12 or entity is acting as agent or custodian for a

13 customer in connection with a securities con14 tract, as defined in section 741 of this title, such

15 customer; or

16 ‘‘(B) in connection with a securities con17 tract, as defined in section 741 of this title, an

18 investment company registered under the Invest19 ment Company Act of 1940;’’;

20 (2) by inserting after paragraph (22) the fol21 lowing:

22 ‘‘(22A) ‘financial participant’ means an entity

23 that, at the time it enters into a securities contract,

24 commodity contract or forward contract, or at the

25 time of the filing of the petition, has 1 or more agree-
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1 ments or transactions that is described in section

2 561(a)(2) with the debtor or any other entity (other

3 than an affiliate) of a total gross dollar value of at

4 least $1,000,000,000 in notional or actual principal

5 amount outstanding on any day during the previous

6 15-month period, or has gross mark-to-market posi7 tions of at least $100,000,000 (aggregated across

8 counterparties) in 1 or more such agreement or trans9 action with the debtor or any other entity (other than

10 an affiliate) on any day during the previous 15-

11 month period;’’; and

12 (3) by amending paragraph (26) to read as fol13 lows:

14 ‘‘(26) ‘forward contract merchant’ means a Fed15 eral reserve bank, or an entity whose business consists

16 in whole or in part of entering into forward contracts

17 as or with merchants or in a commodity, as defined

18 or in section 761 of this title, or any similar good,

19 article, service, right, or interest which is presently or

20 in the future becomes the subject of dealing or in the

21 forward contract trade;’’.

22 (c) DEFINITION OF MASTER NETTING AGREEMENT

23 AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec24 tion 101 of title 11, United States Code, is amended by in25 serting after paragraph (38) the following new paragraphs:
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1 ‘‘(38A) ‘master netting agreement’ means an

2 agreement providing for the exercise of rights, includ3 ing rights of netting, setoff, liquidation, termination,

4 acceleration, or closeout, under or in connection with

5 1 or more contracts that are described in any 1 or

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

7 or any security agreement or arrangement or other

8 credit enhancement related to 1 or more of the fore9 going. If a master netting agreement contains provi10 sions relating to agreements or transactions that are

11 not contracts described in paragraphs (1) through (5)

12 of section 561(a), the master netting agreement shall

13 be deemed to be a master netting agreement only with

14 respect to those agreements or transactions that are

15 described in any 1 or more of the paragraphs (1)

16 through (5) of section 561(a);

17 ‘‘(38B) ‘master netting agreement participant’

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

19 the petition, is a party to an outstanding master net20 ting agreement with the debtor;’’.

21 (d) SWAP AGREEMENTS, SECURITIES CONTRACTS,

22 COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR23 CHASE AGREEMENTS, AND MASTER NETTING AGREEMENTS

24 UNDER THE AUTOMATIC-STAY.—
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1 (1) IN GENERAL.—Section 362(b) of title 11,

2 United States Code, as amended by sections 118, 132,

3 136, 142, 203 and 818, is amended—

4 (A) in paragraph (6), by inserting ‘‘,

5 pledged to, and under the control of,’’ after ‘‘held

6 by’’;

7 (B) in paragraph (7), by inserting ‘‘,

8 pledged to, and under the control of,’’ after ‘‘held

9 by’’;

10 (C) by amending paragraph (17) to read as

11 follows:

12 ‘‘(17) under subsection (a), of the setoff by a

13 swap participant of a mutual debt and claim under

14 or in connection with 1 or more swap agreements that

15 constitutes the setoff of a claim against the debtor for

16 any payment or other transfer of property due from

17 the debtor under or in connection with any swap

18 agreement against any payment due to the debtor

19 from the swap participant under or in connection

20 with any swap agreement or against cash, securities,

21 or other property held by, pledged to, and under the

22 control of, or due from such swap participant to mar23 gin guarantee, secure, or settle a swap agreement;’’;

24 (D) in paragraph (30) by striking ‘‘or’’ at

25 the end;
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1 (E) in paragraph (31) by striking the pe2 riod at the end and inserting ‘‘; or’’; and

3 (F) by inserting after paragraph (31) the

4 following new paragraph:

5 ‘‘(32) under subsection (a), of the setoff by a

6 master netting agreement participant of a mutual

7 debt and claim under or in connection with 1 or more

8 master netting agreements or any contract or agree9 ment subject to such agreements that constitutes the

10 setoff of a claim against the debtor for any payment

11 or other transfer of property due from the debtor

12 under or in connection with such agreements or any

13 contract or agreement subject to such agreements

14 against any payment due to the debtor from such

15 master netting agreement participant under or in

16 connection with such agreements or any contract or

17 agreement subject to such agreements or against cash,

18 securities, or other property held by, pledged or and

19 under the control of, or due from such master netting

20 agreement participant to margin, guarantee, secure,

21 or settle such agreements or any contract or agree22 ment subject to such agreements, to the extent such

23 participant is eligible to exercise such offset rights

24 under paragraph (6), (7), or (17) for each individual
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1 contract covered by the master netting agreement in

2 issue.’’.

3 (2) LIMITATION.—Section 362 of title 11, United

4 States Code, as amended by sections 120, 302, and

5 412, is amended by adding at the end the following:

6 ‘‘(l) LIMITATION.—The exercise of rights not subject to

7 the stay arising under subsection (a) pursuant to para8 graph (6), (7), or (17), or (31) of subsection (b) shall not

9 be stayed by any order of a court or administrative agency

10 in any proceeding under this title.’’.

11 (e) LIMITATION OF AVOIDANCE POWERS UNDER MAS12 TER NETTING AGREEMENT.—Section 546 of title 11, United

13 States Code, as amended by sections 207 and 302, is

14 amended—

15 (1) in subsection (g) (as added by section 103 of

16 Public Law 101–311)—

17 (A) by striking ‘‘under a swap agreement’’;

18 (B) by striking ‘‘in connection with a swap

19 agreement’’ and inserting ‘‘under or in connec20 tion with any swap agreement’’; and

21 (2) by adding at the end the following:

22 ‘‘(j) Notwithstanding sections 544, 545, 547,

23 548(a)(2)(B), and 548(b) of this title, the trustee may not

24 avoid a transfer made by or to a master netting agreement

25 participant under or in connection with any master netting
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1 agreement or any individual contract covered thereby that

2 is made before the commencement of the case, except under

3 section 548(a)(1)(A) of this title, and except to the extent

4 the trustee could otherwise avoid such a transfer made

5 under an individual contract covered by such master net6 ting agreement.’’.

7 (f) FRAUDULENT TRANSFERS OF MASTER NETTING

8 AGREEMENTS.—Section 548(d)(2) of title 11, United States

9 Code, is amended—

10 (1) in subparagraph (C), by striking ‘‘and’’;

11 (2) in subparagraph (D), by striking the period

12 and inserting ‘‘; and’’; and

13 (3) by adding at the end the following new sub14 paragraph:

15 ‘‘(E) a master netting agreement participant

16 that receives a transfer in connection with a master

17 netting agreement or any individual contract covered

18 thereby takes for value to the extent of such transfer,

19 except, with respect to a transfer under any indi20 vidual contract covered thereby, to the extent such

21 master netting agreement participant otherwise did

22 not take (or is otherwise not deemed to have taken)

23 such transfer for value.’’.
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1 (g) TERMINATION OR ACCELERATION OF SECURITIES

2 CONTRACTS.—Section 555 of title 11, United States Code,

3 is amended—

4 (1) by amending the section heading to read as

5 follows:

6 ‘‘§ 555. Contractual right to liquidate, terminate, or

7 accelerate a securities contract’’; and

8 (2) in the first sentence, by striking ‘‘liquida9 tion’’ and inserting ‘‘liquidation, termination, or ac10 celeration’’.

11 (h) TERMINATION OR ACCELERATION OF COMMOD12 ITIES OR FORWARD CONTRACTS.—Section 556 of title 11,

13 United States Code, is amended—

14 (1) by amending the section heading to read as

15 follows:

16 ‘‘§ 556. Contractual right to liquidate, terminate, or

17 accelerate a commodities contract or for18 ward contract’’; and

19 (2) in the first sentence, by striking ‘‘liquida20 tion’’ and inserting ‘‘liquidation, termination, or ac21 celeration’’.

22 (i) TERMINATION OR ACCELERATION OF REPURCHASE

23 AGREEMENTS.—Section 559 of title 11, United States Code,

24 is amended—
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1 (1) by amending the section heading to read as

2 follows:

3 ‘‘§ 559. Contractual right to liquidate, terminate, or

4 accelerate a repurchase agreement’’; and

5 (2) in the first sentence, by striking ‘‘liquida6 tion’’ and inserting ‘‘liquidation, termination, or ac7 celeration’’.

8 (j) LIQUIDATION, TERMINATION, OR ACCELERATION OF

9 SWAP AGREEMENTS.—Section 560 of title 11, United States

10 Code, is amended—

11 (1) by amending the section heading to read as

12 follows:

13 ‘‘§ 560. Contractual right to liquidate, terminate, or

14 accelerate a swap agreement’’; and

15 (2) in the first sentence, by striking ‘‘termi16 nation of a swap agreement’’ and inserting ‘‘liquida17 tion, termination, or acceleration of 1 or more swap

18 agreements’’; and

19 (3) by striking ‘‘in connection with any swap

20 agreement’’ and inserting ‘‘in connection with the ter21 mination, liquidation, or acceleration of 1 or more

22 swap agreements’’.

23 (k) LIQUIDATION, TERMINATION, ACCELERATION, OR

24 OFFSET UNDER A MASTER NETTING AGREEMENT AND
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1 ACROSS CONTRACTS.—(1) Title 11, United States Code, is

2 amended by inserting after section 560 the following:

3 ‘‘§ 561. Contractual right to terminate, liquidate, ac4 celerate, or offset under a master netting

5 agreement and across contracts

6 ‘‘(a) IN GENERAL.—Subject to subsection (b), the exer7 cise of any contractual right, because of a condition of the

8 kind specified in section 365(e)(1), to cause the termination,

9 liquidation, or acceleration of or to offset or net termination

10 values, payment amounts or other transfer obligations aris11 ing under or in connection with 1 or more (or the termi12 nation, liquidation, or acceleration of 1 or more)—

13 ‘‘(1) securities contracts, as defined in section

14 741(7);

15 ‘‘(2) commodity contracts, as defined in section

16 761(4);

17 ‘‘(3) forward contracts;

18 ‘‘(4) repurchase agreements;

19 ‘‘(5) swap agreements; or

20 ‘‘(6) master netting agreements,

21 shall not be stayed, avoided, or otherwise limited by oper22 ation of any provision of this title or by any order of a

23 court or administrative agency in any proceeding under

24 this title.

25 ‘‘(b) EXCEPTION.—
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1 ‘‘(1) A party may exercise a contractual right

2 described in subsection (a) to terminate, liquidate, or

3 accelerate only to the extent that such party could ex4 ercise such a right under section 555, 556, 559, or

5 560 for each individual contract covered by the mas6 ter netting agreement in issue.

7 ‘‘(2) If a debtor is a commodity broker subject to

8 subchapter IV of chapter 7 of this title—

9 ‘‘(A) a party may not net or offset an obli10 gation to the debtor arising under, or in connec11 tion with, a commodity contract against any

12 claim arising under, or in connection with, other

13 instruments, contracts, or agreements listed in

14 subsection (a) except to the extent the party has

15 positive net equity in the commodity accounts at

16 the debtor, as calculated under subchapter IV;

17 and

18 ‘‘(B) another commodity broker may not net

19 or offset an obligation to the debtor arising

20 under, or in connection with, a commodity con21 tract entered into or held on behalf of a customer

22 of the debtor against any claim arising under, or

23 in connection with, other instruments, contracts,

24 or agreements listed in subsection (a).
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1 ‘‘(c) DEFINITION.—As used in this section, the term

2 ‘contractual right’ includes a right set forth in a rule or

3 bylaw of a national securities exchange, a national securi4 ties association, or a securities clearing agency, a right set

5 forth in a bylaw of a clearing organization or contract mar6 ket or in a resolution of the governing board thereof, and

7 a right, whether or not evidenced in writing, arising under

8 common law, under law merchant, or by reason of normal

9 business practice.’’.

10 (2) CONFORMING AMENDMENT.—The table of sections

11 of chapter 9 of title 11, United States Code, is amended

12 by inserting after the item relating to section 560 the fol13 lowing:

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a master netting agreement and across contracts.

14 (l) ANCILLARY PROCEEDINGS.—Section 304 of title 11,

15 United States Code, as amended by section 215, is amended

16 by adding at the end the following:

17 ‘‘(c) Any provisions of this title relating to securities

18 contracts, commodity contracts, forward contracts, repur19 chase agreements, swap agreements, or master netting

20 agreements shall apply in a case ancillary to a foreign pro21 ceeding under this section or any other section of this title,

22 so that enforcement of contractual provisions of such con23 tracts and agreements in accordance with their terms will

24 not be stayed or otherwise limited by operation of any pro-
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1 vision of this title or by order of a court in any case under

2 this title, and to limit avoidance powers to the same extent

3 as in a proceeding under chapter 7 or 11 of this title (such

4 enforcement not to be limited based on the presence or ab5 sence of assets of the debtor in the United States).’’.

6 (m) COMMODITY BROKER LIQUIDATIONS.—Title 11,

7 United States Code, is amended by inserting after section

8 766 the following:

9 ‘‘§ 767. Commodity broker liquidation and forward

10 contract merchants, commodity brokers,

11 stockbrokers, financial institutions, secu12 rities clearing agencies, swap partici13 pants, repo participants, and master net14 ting agreement participants

15 ‘‘Notwithstanding any other provision of this title, the

16 exercise of rights by a forward contract merchant, com17 modity broker, stockbroker, financial institution, securities

18 clearing agency, swap participant, repo participant, or

19 master netting agreement participant under this title shall

20 not affect the priority of any unsecured claim it may have

21 after the exercise of such rights.’’.

22 (n) STOCKBROKER LIQUIDATIONS.—Title 11, United

23 States Code, is amended by inserting after section 752 the

24 following:
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1 ‘‘§ 753. Stockbroker liquidation and forward contract

2 merchants, commodity brokers, stock3 brokers, financial institutions, securities

4 clearing agencies, swap participants, repo

5 participants, and master netting agree6 ment participants

7 ‘‘Notwithstanding any other provision of this title, the

8 exercise of rights by a forward contract merchant, com9 modity broker, stockbroker, financial institution, securities

10 clearing agency, swap participant, repo participant, finan11 cial participant, or master netting agreement participant

12 under this title shall not affect the priority of any unsecured

13 claim it may have after the exercise of such rights.’’.

14 (o) SETOFF.—Section 553 of title 11, United States

15 Code, is amended—

16 (1) in subsection (a)(3)(C), by inserting ‘‘(except

17 for a setoff of a kind described in section 362(b)(6),

18 362(b)(7), 362(b)(17), 362(b)(19), 555, 556, 559, 560

19 or 561 of this title)’’ before the period; and

20 (2) in subsection (b)(1), by striking

21 ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17), 362(b)(19),

22 555, 556, 559, 560, 561’’.

23 (p) SECURITIES CONTRACTS, COMMODITY CONTRACTS,

24 AND FORWARD CONTRACTS.—Title 11, United States Code,

25 is amended—
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1 (1) in section 362(b)(6), by striking ‘‘financial

2 institutions,’’ each place such term appears and in3 serting ‘‘financial institution, financial participant’’;

4 (2) in section 546(e), by inserting ‘‘financial

5 participant,’’ after ‘‘financial institution,’’;

6 (3) in section 548(d)(2)(B), by inserting ‘‘finan7 cial participant,’’ after ‘‘financial institution,’’;

8 (4) in section 555—

9 (A) by inserting ‘‘financial participant,’’

10 after ‘‘financial institution,’’; and

11 (B) by inserting before the period at the end

12 ‘‘, a right set forth in a bylaw of a clearing orga13 nization or contract market or in a resolution of

14 the governing board thereof, and a right, whether

15 or not in writing, arising under common law,

16 under law merchant, or by reason of normal

17 business practice’’; and

18 (5) in section 556, by inserting ‘‘, financial par19 ticipant’’ after ‘‘commodity broker’’.

20 (q) CONFORMING AMENDMENTS.—Title 11 of the

21 United States Code is amended—

22 (1) in the table of sections of chapter 5—

23 (A) by amending the items relating to sec24 tions 555 and 556 to read as follows:

‘‘555. Contractual right to liquidate, terminate, or accelerate a securities contract.

‘‘556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract.’’; and
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1 (B) by amending the items relating to sec2 tions 559 and 560 to read as follows:

‘‘559. Contractual right to liquidate, terminate, or accelerate a repurchase agreement.

‘‘560. Contractual right to liquidate, terminate, or accelerate a swap agreement.’’;

and

3 (2) in the table of sections of chapter 7—

4 (A) by inserting after the item relating to

5 section 766 the following:

‘‘767. Commodity broker liquidation and forward contract merchants, commodity

brokers, stockbrokers, financial institutions, securities clearing

agencies, swap participants, repo participants, and master netting agreement participants.’’; and

6 (B) by inserting after the item relating to

7 section 752 the following:

‘‘753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, securities clearing agencies, swap participants, repo participants, and master netting

agreement participants.’’.

8 SEC. 1008. RECORDKEEPING REQUIREMENTS.

9 Section 11(e)(8) of the Federal Deposit Insurance Act

10 (12 U.S.C. 1821(e)(8)) is amended by adding at the end

11 the following new subparagraph:

12 ‘‘(H) RECORDKEEPING REQUIREMENTS.—

13 The Corporation, in consultation with the appro14 priate Federal banking agencies, may prescribe

15 regulations requiring more detailed record16 keeping with respect to qualified financial con17 tracts (including market valuations) by insured

18 depository institutions.’’.
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1 SEC. 1009. EXEMPTIONS FROM CONTEMPORANEOUS EXECU2 TION –––REQUIREMENT.

3 Section 13(e)(2) of the Federal Deposit Insurance Act

4 (12 U.S.C. 1823(e)(2)) is amended to read as follows:

5 ‘‘(2) EXEMPTIONS FROM CONTEMPORANEOUS

6 EXECUTION REQUIREMENT.—An agreement to provide

7 for the lawful collateralization of—

8 ‘‘(A) deposits of, or other credit extension

9 by, a Federal, State, or local governmental enti10 ty, or of any depositor referred to in section

11 11(a)(2), including an agreement to provide col12 lateral in lieu of a surety bond;

13 ‘‘(B) bankruptcy estate funds pursuant to

14 section 345(b)(2) of title 11, United States Code;

15 ‘‘(C) extensions of credit, including any

16 overdraft, from a Federal reserve bank or Federal

17 home loan bank; or

18 ‘‘(D) 1 or more qualified financial con19 tracts, as defined in section 11(e)(8)(D),

20 shall not be deemed invalid pursuant to paragraph

21 (1)(B) solely because such agreement was not executed

22 contemporaneously with the acquisition of the collat23 eral or because of pledges, delivery, or substitution of

24 the collateral made in accordance with such agree25 ment.’’.
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1 SEC. 1010. DAMAGE MEASURE.

2 (a) Title 11, United States Code, as amended by sec3 tion 1007, is amended—

4 (1) by inserting after section 561 the following:

5 ‘‘§ 562. Damage measure in connection with swap

6 agreements, securities contracts, forward

7 contracts, commodity contracts, repur8 chase agreements, or master netting

9 agreements

10 ‘‘If the trustee rejects a swap agreement, securities con11 tract as defined in section 741 of this title, forward con12 tract, commodity contract (as defined in section 761 of this

13 title) repurchase agreement, or master netting agreement

14 pursuant to section 365(a) of this title, or if a forward con15 tract merchant, stockbroker, financial institution, securities

16 clearing agency, repo participant, financial participant,

17 master netting agreement participant, or swap participant

18 liquidates, terminates, or accelerates such contract or agree19 ment, damages shall be measured as of the earlier of—

20 ‘‘(1) the date of such rejection; or

21 ‘‘(2) the date of such liquidation, termination, or

22 acceleration.’’; and

23 (2) in the table of sections of chapter 5 by insert24 ing after the item relating to section 561 the fol25 lowing:
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‘‘562. Damage measure in connection with swap agreements, securities contracts,

forward contracts, commodity contracts, repurchase agreements,

or master netting agreements.’’.

1 (b) CLAIMS ARISING FROM REJECTION.—Section

2 502(g) of title 11, United States Code, is amended—

3 (1) by designating the existing text as paragraph

4 (1); and

5 (2) by adding at the end the following:

6 ‘‘(2) A claim for damages calculated in accordance

7 with section 561 of this title shall be allowed under sub8 section (a), (b), or (c), or disallowed under subsection (d)

9 or (e), as if such claim had arisen before the date of the

10 filing of the petition.’’.

11 SEC. 1011. SIPC STAY.

12 Section 5(b)(2) of the Securities Investor Protection

13 Act of 1970 (15 U.S.C. 78eee(b)(2)) is amended by adding

14 after subparagraph (B) the following new subparagraph:

15 ‘‘(C) EXCEPTION FROM STAY.—

16 ‘‘(i) Notwithstanding section 362 of

17 title 11, United States Code, neither the fil18 ing of an application under subsection

19 (a)(3) nor any order or decree obtained by

20 Securities Investor Protection Corporation

21 from the court shall operate as a stay of

22 any contractual rights of a creditor to liq23 uidate, terminate, or accelerate a securities

24 contract, commodity contract, forward con-
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1 tract, repurchase agreement, swap agree2 ment, or master netting agreement, each as

3 defined in title 11, to offset or net termi4 nation values, payment amounts, or other

5 transfer obligations arising under or in con6 nection with 1 or more of such contracts or

7 agreements, or to foreclose on any cash col8 lateral pledged by the debtor whether or not

9 with respect to 1 or more of such contracts

10 or agreements.

11 ‘‘(ii) Notwithstanding clause (i), such

12 application, order, or decree may operate as

13 a stay of the foreclosure on securities collat14 eral pledged by the debtor, whether or not

15 with respect to 1 or more of such contracts

16 or agreements, securities sold by the debtor

17 under a repurchase agreement or securities

18 lent under a securities lending agreement.

19 ‘‘(iii) As used in this section, the term

20 ‘contractual right’ includes a right set forth

21 in a rule or bylaw of a national securities

22 exchange, a national securities association,

23 or a securities clearing agency, a right set

24 forth in a bylaw of a clearing organization

25 or contract market or in a resolution of the
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1 governing board thereof, and a right, wheth2 er or not in writing, arising under common

3 law, under law merchant, or by reason of

4 normal business practice.’’.

5 SEC. 1012. ASSET-BACKED SECURITIZATIONS.

6 Section 541 of title 11, United States Code, as amend7 ed by section 150, is amended—

8 (1) by redesignating paragraph (5) of subsection

9 (b) as paragraph (6);

10 (2) by inserting after paragraph (4) of sub11 section (b) the following new paragraph:

12 ‘‘(5) any eligible asset (or proceeds thereof), to

13 the extent that such eligible asset was transferred by

14 the debtor, before the date of commencement of the

15 case, to an eligible entity in connection with an asset16 backed securitization, except to the extent such asset

17 (or proceeds or value thereof) may be recovered by the

18 trustee under section 550 by virtue of avoidance

19 under section 548(a);’’; and

20 (3) by adding at the end the following new sub21 section:

22 ‘‘(e) For purposes of this section, the following defini23 tions shall apply:

24 ‘‘(1) the term ‘asset-backed securitization’ means

25 a transaction in which eligible assets transferred to
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1 an eligible entity are used as the source of payment

2 on securities, the most senior of which are rated in3 vestment grade by 1 or more nationally recognized se4 curities rating organizations, issued by an issuer;

5 ‘‘(2) the term ‘eligible asset’ means—

6 ‘‘(A) financial assets (including interests

7 therein and proceeds thereof), either fixed or re8 volving, including residential and commercial

9 mortgage loans, consumer receivables, trade re10 ceivables, and lease receivables, that, by their

11 terms, convert into cash within a finite time pe12 riod, plus any residual interest in property sub13 ject to receivables included in such financial as14 sets plus any rights or other assets designed to

15 assure the servicing or timely distribution of

16 proceeds to security holders;

17 ‘‘(B) cash; and

18 ‘‘(C) securities.

19 ‘‘(3) the term ‘eligible entity’ means—

20 ‘‘(A) an issuer; or

21 ‘‘(B) a trust, corporation, partnership, or

22 other entity engaged exclusively in the business

23 of acquiring and transferring eligible assets di24 rectly or indirectly to an issuer and taking ac25 tions ancillary thereto;
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1 ‘‘(4) the term ‘issuer’ means a trust, corporation,

2 partnership, or other entity engaged exclusively in the

3 business of acquiring and holding eligible assets,

4 issuing securities backed by eligible assets, and taking

5 actions ancillary thereto; and

6 ‘‘(5) the term ‘transferred’ means the debtor, pur7 suant to a written agreement, represented and war8 ranted that eligible assets were sold, contributed, or

9 otherwise conveyed with the intention of removing

10 them from the estate of the debtor pursuant to sub11 section (b)(5), irrespective, without limitation of—

12 ‘‘(A) whether the debtor directly or indi13 rectly obtained or held an interest in the issuer

14 or in any securities issued by the issuer;

15 ‘‘(B) whether the debtor had an obligation

16 to repurchase or to service or supervise the serv17 icing of all or any portion of such eligible assets;

18 or

19 ‘‘(C) the characterization of such sale, con20 tribution, or other conveyance for tax, account21 ing, regulatory reporting, or other purposes.’’.

22 SEC. 1013. FEDERAL RESERVE COLLATERAL REQUIRE23 MENTS.

24 The 3d sentence of the 3d undesignated paragraph of

25 section 16 of the Federal Reserve Act (12 U.S.C. 412) is
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1 amended by striking ‘‘acceptances acquired under the provi2 sions of section 13 of this Act’’ and inserting ‘‘acceptances

3 acquired under section 10A, 10B, 13, or 13A of this Act’’.

4 SEC. 1014. EFFECTIVE DATE; APPLICATION OF –––AMEND5 MENTS.

6 (a) EFFECTIVE DATE.—This title shall take effect on

7 the date of the enactment of this Act.

8 (b) APPLICATION OF AMENDMENTS.—The amendments

9 made by this title shall apply with respect to cases com10 menced or appointments made under any Federal or State

11 law after the date of enactment of this Act, but shall not

12 apply with respect to cases commenced or appointments

13 made under any Federal or State law before the date of

14 enactment of this Act.

15 TITLE XI—TECHNICAL

16 CORRECTIONS

17 SEC. 1101. DEFINITIONS.

18 Section 101 of title 11, United States Code, as amend19 ed by sections 102, 105, 132, 138, 301, 302, 402, 902, and

20 1007, is amended—

21 (1) by striking ‘‘In this title—’’ and inserting

22 ‘‘In this title:’’;

23 (2) in each paragraph, by inserting ‘‘The term’’

24 after the paragraph designation;
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1 (3) in paragraph (35)(B), by striking ‘‘para2 graphs (21B) and (33)(A)’’ and inserting ‘‘para3 graphs (23) and (35)’’;

4 (4) in each of paragraphs (35A) and (38), by

5 striking ‘‘; and’’ at the end and inserting a period;

6 (5) in paragraph (51B)—

7 (A) by inserting ‘‘who is not a family farm8 er’’ after ‘‘debtor’’ the first place it appears; and

9 (B) by striking ‘‘thereto having aggregate’’

10 and all that follows through the end of the para11 graph;

12 (6) by amending paragraph (54) to read as fol13 lows:

14 ‘‘(54) The term ‘transfer’ means—

15 ‘‘(A) the creation of a lien;

16 ‘‘(B) the retention of title as a security in17 terest;

18 ‘‘(C) the foreclosure of a debtor’s equity of

19 redemption; or

20 ‘‘(D) each mode, direct or indirect, absolute

21 or conditional, voluntary or involuntary, of dis22 posing of or parting with—

23 ‘‘(i) property; or

24 ‘‘(ii) an interest in property;’’;
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1 (7) in each of paragraphs (1) through (35), in

2 each of paragraphs (36) and (37), and in each of

3 paragraphs (40) through (55) (including paragraph

4 (54), as amended by paragraph (6) of this section),

5 by striking the semicolon at the end and inserting a

6 period; and

7 (8) by redesignating paragraphs (4) through

8 (55), including paragraph (54), as amended by para9 graph (6) of this section, in entirely numerical se10 quence.

11 SEC. 1102. ADJUSTMENT OF DOLLAR AMOUNTS.

12 Section 104 of title 11, United States Code, is amended

13 by inserting ‘‘522(f)(3), 707(b)(5),’’ after ‘‘522(d),’’ each

14 place it appears.

15 SEC. 1103. EXTENSION OF TIME.

16 Section 108(c)(2) of title 11, United States Code, is

17 amended by striking ‘‘922’’ and all that follows through

18 ‘‘or’’, and inserting ‘‘922, 1201, or’’.

19 SEC. 1104. TECHNICAL AMENDMENTS.

20 Title 11 of the United States Code is amended—

21 (1) in section 109(b)(2) by striking ‘‘subsection

22 (c) or (d) of’’; and

23 (2) in section 552(b)(1) by striking ‘‘product’’

24 each place it appears and inserting ‘‘products’’.
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1 SEC. 1105. PENALTY FOR PERSONS WHO NEGLIGENTLY OR

2 FRAUDULENTLY PREPARE BANKRUPTCY PE3 TITIONS.

4 Section 110(j)(3) of title 11, United States Code, is

5 amended by striking ‘‘attorney’s’’ and inserting

6 ‘‘attorneys’ ’’.

7 SEC. 1106. LIMITATION ON COMPENSATION OF PROFES8 SIONAL PERSONS.

9 Section 328(a) of title 11, United States Code, is

10 amended by inserting ‘‘on a fixed or percentage fee basis,’’

11 after ‘‘hourly basis,’’.

12 SEC. 1107. SPECIAL TAX PROVISIONS.

13 Section 346(g)(1)(C) of title 11, United States Code,

14 is amended by striking ‘‘, except’’ and all that follows

15 through ‘‘1986’’.

16 SEC. 1108. EFFECT OF CONVERSION.

17 Section 348(f)(2) of title 11, United States Code, is

18 amended by inserting ‘‘of the estate’’ after ‘‘property’’ the

19 first place it appears.

20 SEC. 1109. ALLOWANCE OF ADMINISTRATIVE EXPENSES.

21 Section 503(b)(4) of title 11, United States Code, is

22 amended by inserting ‘‘subparagraph (A), (B), (C), (D), or

23 (E) of’’ before ‘‘paragraph (3)’’.

24 SEC. 1110. PRIORITIES.

25 Section 507(a) of title 11, United States Code, as

26 amended by section 323, is amended in paragraph (4), as
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1 so redesignated by section 142, by striking the semicolon

2 at the end and inserting a period.

3 SEC. 1111. EXEMPTIONS.

4 Section 522(g)(2) of title 11, United States Code, is

5 amended by striking ‘‘subsection (f)(2)’’ and inserting ‘‘sub6 section (f)(1)(B)’’.

7 SEC. 1112. EXCEPTIONS TO DISCHARGE.

8 Section 523 of title 11, United States Code, as amend9 ed by section 146, is amended—

10 (1) in subsection (a)(3), by striking ‘‘or (6)’’

11 each place it appears and inserting ‘‘(6), or (15)’’;

12 (2) as amended by section 304(e) of Public Law

13 103–394 (108 Stat. 4133), in paragraph (15), by

14 transferring such paragraph so as to insert it after

15 paragraph (14A) of subsection (a);

16 (3) in subsection (a)(9), by inserting

17 ‘‘, watercraft, or aircraft’’ after ‘‘motor vehicle’’;

18 (4) in subsection (a)(15), as so redesignated by

19 paragraph (2) of this subsection, by inserting ‘‘to a

20 spouse, former spouse, or child of the debtor and’’

21 after ‘‘(15)’’; and

22 (5) in subsection (e), by striking ‘‘a insured’’

23 and inserting ‘‘an insured’’.
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1 SEC. 1113. EFFECT OF DISCHARGE.

2 Section 524(a)(3) of title 11, United States Code, is

3 amended by striking ‘‘section 523’’ and all that follows

4 through ‘‘or that’’ and inserting ‘‘section 523, 1228(a)(1),

5 or 1328(a)(1) of this title, or that’’.

6 SEC. 1114. PROTECTION AGAINST DISCRIMINATORY TREAT7 MENT.

8 Section 525(c) of title 11, United States Code, is

9 amended—

10 (1) in paragraph (1), by inserting ‘‘student’’ be11 fore ‘‘grant’’ the second place it appears; and

12 (2) in paragraph (2), by striking ‘‘the program

13 operated under part B, D, or E of’’ and inserting

14 ‘‘any program operated under’’.

15 SEC. 1115. PROPERTY OF THE ESTATE.

16 Section 541(b)(4)(B)(ii) of title 11, United States

17 Code, is amended by inserting ‘‘365 or’’ before ‘‘542’’.

18 SEC. 1116. PREFERENCES.

19 (a) IN GENERAL.—Section 547 of title 11, United

20 States Code, is amended—

21 (1) in subsection (b), by striking ‘‘subsection (c)’’

22 and inserting ‘‘subsections (c) and (i)’’; and

23 (2) by adding at the end the following:

24 ‘‘(i) If the trustee avoids under subsection (b) a trans25 fer made between 90 days and 1 year before the date of

26 the filing of the petition, by the debtor to an entity that
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1 is not an insider for the benefit of a creditor that is an

2 insider, such transfer may be avoided under this section

3 only with respect to the creditor that is an insider.’’.

4 (b) APPLICABILITY.—The amendments made by this

5 section shall apply to any case that is pending or com6 menced on or after the date of enactment of this Act.

7 SEC. 1117. POSTPETITION TRANSACTIONS.

8 Section 549(c) of title 11, United States Code, is

9 amended—

10 (1) by inserting ‘‘an interest in’’ after ‘‘transfer

11 of’’;

12 (2) by striking ‘‘such property’’ and inserting

13 ‘‘such real property’’; and

14 (3) by striking ‘‘the interest’’ and inserting

15 ‘‘such interest’’.

16 SEC. 1118. DISPOSITION OF PROPERTY OF THE ESTATE.

17 Section 726(b) of title 11, United States Code, is

18 amended by striking ‘‘1009,’’.

19 SEC. 1119. GENERAL PROVISIONS.

20 Section 901(a) of title 11, United States Code, is

21 amended by inserting ‘‘1123(d),’’ after ‘‘1123(b),’’.

22 SEC. 1120. APPOINTMENT OF ELECTED TRUSTEE.

23 Section 1104(b) of title 11, United States Code, is

24 amended—

25 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and
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1 (2) by adding at the end the following:

2 ‘‘(2)(A) If an eligible, disinterested trustee is elected

3 at a meeting of creditors under paragraph (1), the United

4 States trustee shall file a report certifying that election.

5 Upon the filing of a report under the preceding sentence—

6 ‘‘(i) the trustee elected under paragraph (1) shall

7 be considered to have been selected and appointed for

8 purposes of this section; and

9 ‘‘(ii) the service of any trustee appointed under

10 subsection (d) shall terminate.

11 ‘‘(B) In the case of any dispute arising out of an elec12 tion under subparagraph (A), the court shall resolve the dis13 pute.’’.

14 SEC. 1121. ABANDONMENT OF RAILROAD LINE.

15 Section 1170(e)(1) of title 11, United States Code, is

16 amended by striking ‘‘section 11347’’ and inserting ‘‘section

17 11326(a)’’.

18 SEC. 1122. CONTENTS OF PLAN.

19 Section 1172(c)(1) of title 11, United States Code, is

20 amended by striking ‘‘section 11347’’ and inserting ‘‘section

21 11326(a)’’.

22 SEC. 1123. DISCHARGE UNDER CHAPTER 12.

23 Subsections (a) and (c) of section 1228 of title 11,

24 United States Code, are amended by striking ‘‘1222(b)(10)’’

25 each place it appears and inserting ‘‘1222(b)(9)’’.
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1 SEC. 1124. BANKRUPTCY CASES AND PROCEEDINGS.

2 Section 1334(d) of title 28, United States Code, is

3 amended—

4 (1) by striking ‘‘made under this subsection’’ and

5 inserting ‘‘made under subsection (c)’’; and

6 (2) by striking ‘‘This subsection’’ and inserting

7 ‘‘Subsection (c) and this subsection’’.

8 SEC. 1125. KNOWING DISREGARD OF BANKRUPTCY LAW OR

9 RULE.

10 Section 156(a) of title 18, United States Code, is

11 amended—

12 (1) in the first undesignated paragraph—

13 (A) by inserting ‘‘(1) the term’’ before

14 ‘‘ ‘bankruptcy’’; and

15 (B) by striking the period at the end and

16 inserting ‘‘; and’’; and

17 (2) in the second undesignated paragraph—

18 (A) by inserting ‘‘(2) the term’’ before ‘‘ ‘doc19 ument’’; and

20 (B) by striking ‘‘this title’’ and inserting

21 ‘‘title 11’’.

22 SEC. 1126. TRANSFERS MADE BY NONPROFIT CHARITABLE

23 CORPORATIONS.

24 (a) SALE OF PROPERTY OF ESTATE.—Section 363(d)

25 of title 11, United States Code, is amended—
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1 (1) by striking ‘‘only’’ and all that follows

2 through the end of the subsection and inserting

3 ‘‘only—

4 ‘‘(1) in accordance with applicable nonbank5 ruptcy law that governs the transfer of property by

6 a corporation or trust that is not a moneyed, busi7 ness, or commercial corporation or trust; and

8 ‘‘(2) to the extent not inconsistent with any relief

9 granted under subsection (c), (d), (e), or (f) of section

10 362 of this title.’’.

11 (b) CONFIRMATION OF PLAN FOR REORGANIZATION.—

12 Section 1129(a) of title 11, United States Code, as amended

13 by section 140, is amended by adding at the end the fol14 lowing:

15 ‘‘(15) All transfers of property of the plan shall

16 be made in accordance with any applicable provisions

17 of nonbankruptcy law that govern the transfer of

18 property by a corporation or trust that is not a

19 moneyed, business, or commercial corporation or

20 trust.’’.

21 (c) TRANSFER OF PROPERTY.—Section 541 of title 11,

22 United States Code, as amended by section 1102, is amend23 ed by adding at the end the following:

24 ‘‘(f) Notwithstanding any other provision of this title,

25 property that is held by a debtor that is a corporation de-
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1 scribed in section 501(c)(3) of the Internal Revenue Code

2 of 1986 and exempt from tax under section 501(a) of such

3 Code may be transferred to an entity that is not such a

4 corporation, but only under the same conditions as would

5 apply if the debtor had not filed a case under this title.’’.

6 (d) APPLICABILITY.—The amendments made by this

7 section shall apply to a case pending under title 11, United

8 States Code, on the date of enactment of this Act, except

9 that the court shall not confirm a plan under chapter 11

10 of this title without considering whether this section would

11 substantially affect the rights of a party in interest who

12 first acquired rights with respect to the debtor after the date

13 of the petition. The parties who may appear and be heard

14 in a proceeding under this section include the attorney gen15 eral of the State in which the debtor is incorporated, was

16 formed, or does business.

17 (e) RULE OF CONSTRUCTION.—Nothing in this section

18 shall be deemed to require the court in which a case under

19 chapter 11 is pending to remand or refer any proceeding,

20 issue, or controversy to any other court or to require the

21 approval of any other court for the transfer of property.

22 SEC. 1127. PROHIBITION ON CERTAIN ACTIONS FOR FAIL23 URE TO INCUR FINANCE CHARGES.

24 Section 127 of the Truth in Lending Act (15 U.S.C.

25 1637) is amended by adding at the end the following:
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1 ‘‘(i) PROHIBITION ON CERTAIN ACTIONS FOR FAILURE

2 TO INCUR FINANCE CHARGES.—A creditor of an account

3 under an open end consumer credit plan may not terminate

4 an account prior to its expiration date solely because the

5 consumer has not incurred finance charges on the account.

6 Nothing in this subsection shall prohibit a creditor from

7 terminating an account for inactivity in 3 or more consecu8 tive months.’’.

9 SEC. 1128. PROTECTION OF VALID PURCHASE MONEY SECU10 RITY INTERESTS.

11 Section 547(c)(3)(B) of title 11, United States Code,

12 is amended by striking ‘‘20’’ and inserting ‘‘30’’.

13 SEC. 1129. TRUSTEES.

14 (a) SUSPENSION AND TERMINATION OF PANEL TRUST15 EES AND STANDING TRUSTEES.—Section 586(d) of title 28,

16 United States Code, is amended—

17 (1) by inserting ‘‘(1)’’ after ‘‘(d)’’; and

18 (2) by adding at the end the following:

19 ‘‘(2) A trustee whose appointment under subsection

20 (a)(1) or under subsection (b) is terminated or who ceases

21 to be assigned to cases filed under title 11 of the United

22 States Code may obtain judicial review of the final agency

23 decision by commencing an action in the United States dis24 trict court for the district for which the panel to which the

25 trustee is appointed under subsection (a)(1), or in the
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1 United States district court for the district in which the

2 trustee is appointed under subsection (b) resides, after first

3 exhausting all available administrative remedies, which if

4 the trustee so elects, shall also include an administrative

5 hearing on the record. Unless the trustee elects to have an

6 administrative hearing on the record, the trustee shall be

7 deemed to have exhausted all administrative remedies for

8 purposes of this paragraph if the agency fails to make a

9 final agency decision within 90 days after the trustee re10 quests administrative remedies. The Attorney General shall

11 prescribe procedures to implement this paragraph. The de12 cision of the agency shall be affirmed by the district court

13 unless it is unreasonable and without cause based on the

14 administrative record before the agency.’’.

15 (b) EXPENSES OF STANDING TRUSTEES.—Section

16 586(e) of title 28, United States Code, is amended by add17 ing at the end the following:

18 ‘‘(3) After first exhausting all available administrative

19 remedies, an individual appointed under subsection (b)

20 may obtain judicial review of final agency action to deny

21 a claim of actual, necessary expenses under this subsection

22 by commencing an action in the United States district

23 court in the district where the individual resides. The deci24 sion of the agency shall be affirmed by the district court
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1 unless it is unreasonable and without cause based upon the

2 administrative record before the agency.

3 ‘‘(4) The Attorney General shall prescribe procedures

4 to implement this subsection.’’.

5 TITLE XII—GENERAL EFFECTIVE

6 DATE; APPLICATION OF

7 AMENDMENTS

8 SEC. 1201. EFFECTIVE DATE; APPLICATION OF AMEND9 MENTS.

10 (a) EFFECTIVE DATE.—Except as provided otherwise

11 in this Act, this Act and the amendments made by this Act

12 shall take effect 180 days after the date of the enactment

13 of this Act.

14 (b) APPLICATION OF AMENDMENTS.—Except as other15 wise provided in this Act, the amendments made by this

16 Act shall not apply with respect to cases commenced under

17 title 11 of the United States Code before the effective date

18 of this Act.