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[House Report 106-123]
[From the U.S. Government Publishing Office]

106th Congress                                           Rept. 106-123,
  1st Session           HOUSE OF REPRESENTATIVES             Part 1    

=======================================================================

 
                     BANKRUPTCY REFORM ACT OF 1999

                                _______

                 April 29, 1999.--Ordered to be printed

                                _______
                                

Mr. Gekas, from the Committee on the Judiciary, submitted the following

                              R E P O R T

                             together with

                    ADDITIONAL AND DISSENTING VIEWS

                        [To accompany H.R. 833]

    The Committee on the Judiciary, to whom was referred the 
bill (H.R. 833) to amend title 11 of the United States Code, 
and for other purposes, having considered the same, report 
favorably thereon with an amendment and recommend that the bill 
as amended do pass.

                                CONTENTS

                                                                   Page
The Amendment....................................................    86
Purpose and Summary..............................................    86
Background and Need for the Legislation..........................    86
Hearings.........................................................    95
Committee Consideration..........................................    97
Vote of the Committee............................................    98
Committee Oversight Findings.....................................   110
Committee on Government Reform Findings..........................   110
New Budget Authority and Tax Expenditures........................   110
Committee Cost Estimate..........................................   111
Committee Jurisdiction Letters...................................   112
Constitutional Authority Statement...............................   114
Preemption of State Law..........................................   114
Section-by-Section Analysis and Discussion.......................   114
Agency Views.....................................................   198
Changes in Existing Law Made by the Bill, as Reported............   229
Additional Views.................................................   376
Dissenting Views.................................................   381
  The amendment is as follows:
  Strike out all after the enacting clause and insert in lieu 
thereof the following:

SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

  (a) Short Title.--This Act may be cited as the ``Bankruptcy Reform 
Act of 1999''.
  (b) Table of Contents.--The table of contents of this 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.
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.
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.
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.
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.

      TITLE XII--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

Sec. 1201. Effective date; application of amendments.

                TITLE I--CONSUMER BANKRUPTCY PROVISIONS

                   Subtitle A--Needs based bankruptcy

SEC. 101. CONVERSION.

  Section 706(c) of title 11, United States Code, is amended by 
inserting ``or consents to'' after ``requests''.

SEC. 102. DISMISSAL OR CONVERSION.

  (a) In General.--Section 707 of title 11, United States Code, is 
amended--
          (1) by striking the section heading and inserting the 
        following:

``Sec. 707. Dismissal of a case or conversion to a case under chapter 
                    13'';

        and
          (2) in subsection (b)--
                  (A) by inserting ``(1)'' after ``(b)''; and
                  (B) in paragraph (1), as redesignated by subparagraph 
                (A) of this paragraph--
                          (i) in the first sentence--
                                  (I) by striking ``but not at the 
                                request or suggestion of'' and 
                                inserting ``the trustee, or'';
                                  (II) by inserting ``, or, with the 
                                debtor's consent, convert such a case 
                                to a case under chapter 13 of this 
                                title,'' after ``consumer debts''; and
                                  (III) by striking ``substantial 
                                abuse'' and inserting ``abuse''; and
                          (ii) by striking the second and third 
                        sentences and inserting the following:
  ``(2)(A)(i) In considering under paragraph (1) whether the granting 
of relief would be an abuse of the provisions of this chapter, the 
court shall presume abuse exists if the debtor's current monthly income 
less estimated administrative expenses and reasonable attorneys' fees, 
and amounts set forth in clauses (ii) for monthly expenses (which shall 
include, if applicable, the continuation of actual expenses of a 
dependent child under the age of 18 for tuition, books, and required 
fees at a private elementary or secondary school, not exceeding $10,000 
per year, which amount shall be adjusted pursuant to section 104(b)), 
(iii) for monthly payments on account of secured debts, and (iv) for 
monthly unsecured priority debt payments, and multiplied by 60 months 
is not less than $6,000.
  ``(ii) The debtor's monthly expenses shall be the debtor's applicable 
monthly expense amounts specified under the National Standards and 
Local Standards, and the debtor's applicable monthly expenses for the 
categories specifically listed as Other Necessary Expenses issued by 
the Internal Revenue Service for the area in which the debtor resides, 
as in effect on the date of the entry of the order for relief, for the 
debtor, the dependents of the debtor, and the spouse of the debtor in a 
joint case, if the spouse is not otherwise a dependent In addition, if 
it is demonstrated that it is reasonable and necessary, the debtor may 
also subtract an allowance of up to 5% of the food and clothing 
categories as specified by the National Standards issued by the 
Internal Revenue Service Notwithstanding any other provision of this 
clause, the debtor's monthly expenses shall not include any payments 
for debts.
  ``(iii) The debtor's average monthly payments on account of secured 
debts shall be calculated as the total of all amounts scheduled as 
contractually due to securedcreditors in each month of the 60 months 
following the date of the petition, and dividing that total by 60 
months.
  ``(iv) The debtor's monthly unsecured priority debt payments 
(including payments for priority child support and alimony claims) 
shall be calculated as the total amount of unsecured debts entitled to 
priority, and dividing the total by 60 months.
  ``(v) For the purposes of this subsection, a family or household 
shall consist of the debtor, the debtor's spouse, and the debtor's 
dependents, but not a legally separated spouse unless the spouse files 
a joint case with the debtor.
  ``(B) In any proceeding brought under this subsection, the 
presumption of abuse may be rebutted only by demonstrating 
extraordinary circumstances that require additional expenses or 
adjustment of current monthly income In order to establish 
extraordinary circumstances, the debtor must itemize each additional 
expense or adjustment of income and provide documentation for such 
expenses or adjustment of income and a detailed explanation of the 
extraordinary circumstances which make such expenses or adjustment of 
income necessary and reasonable The debtor shall attest under oath to 
the accuracy of any information provided to demonstrate that additional 
expenses or adjustment to income are required The presumption of abuse 
may be rebutted only if such additional expenses or adjustments to 
income cause the debtor's current monthly income less estimated 
administrative expenses and reasonable attorneys' fees, and the amounts 
set forth in clauses (ii), (iii), and (iv) of subparagraph (A) when 
multiplied by 60 to be less than $6,000.
  ``(C) As part of the schedule of current income and expenditures 
required under section 521 of this title, the debtor shall include a 
statement of the debtor's current monthly income, and the calculations 
which determine whether a presumption arises under subparagraph (A)(i), 
showing how each amount is calculated The bankruptcy rules promulgated 
under section 2075 of title 28, United States Code, shall prescribe a 
form for such statement and may provide general rules on its content.
  ``(D) No judge, United States trustee, panel trustee, bankruptcy 
administrator or other party in interest shall bring a motion under 
this paragraph if the debtor and the debtor's spouse combined, as of 
the date of the order for relief, have current monthly total income 
equal to or less than the regional median household monthly income 
calculated on a semiannual basis for a household of equal size However, 
for a household of more than 4 individuals, the median income shall be 
that of a household of 4 individuals plus $583 for each additional 
member of that household.
  ``(3) In considering under paragraph (1) whether the granting of 
relief would be an abuse of the provisions of this chapter in a case in 
which the presumption in paragraph (2)(A)(i) does not apply or has been 
rebutted, the court shall consider--
          ``(A) whether the debtor filed the petition in bad faith; or
          ``(B) the totality of the circumstances (including whether 
        the debtor seeks to reject a personal services contract and the 
        financial need for such rejection as sought by the debtor) of 
        the debtor's financial situation demonstrates abuse.
  ``(4)(A) If a panel trustee appointed under section 586(a)(1) of 
title 28 or bankruptcy administrator brings a motion for dismissal or 
conversion under this subsection and the court grants that motion and 
finds that the action of the counsel for the debtor in filing under 
this chapter violated Rule 9011, the court shall assess damages which 
may include ordering:
          ``(i) the counsel for the debtor to reimburse the trustee for 
        all reasonable costs in prosecuting the motion, including 
        reasonable attorneys' fees.
          ``(ii) the assessment of an appropriate civil penalty against 
        the counsel for the debtor; and
          ``(iii) the payment of the civil penalty to the panel 
        trustee, bankruptcy administrator or the United States trustee.
  ``(B) In the case of a petition filed under sections 301, 302, or 303 
of this title and supporting lists, schedules and documents filed under 
section 521(a)(1) of this title, the signature of an attorney on the 
petition shall constitute a certificate that the attorney has--
          ``(i) performed a reasonable investigation into the 
        circumstances that gave rise to the petition; and
          ``(ii) determined that the petition, lists, schedules, and 
        documents--
                  ``(I) are well grounded in fact; and
                  ``(II) are warranted by existing law or a good faith 
                argument for the extension, modification, or reversal 
                of existing law and do not constitute an abuse under 
                paragraph (1) of this subsection.
  ``(5) The court may award a debtor all reasonable costs in contesting 
a motion filed by a party in interest (not including a trustee or the 
United States trustee) under this subsection (including reasonable 
attorneys' fees) if--
          ``(A) the court does not grant the motion; and
          ``(B) the court finds that--
                  ``(i) the position of the party that brought the 
                motion was not substantially justified; or
                  ``(ii) the party brought the motion solely for the 
                purpose of coercing a debtor into waiving a right 
                guaranteed to the debtor under this title.
  ``(6) However, only the court, the United States trustee, or the 
trustee may file a motion to dismiss or convert a case under this 
subsection if the current monthly income of the debtor and the debtor's 
spouse combined, as of the date of the order for relief, when 
multiplied by 12, is less than the highest national median family 
income last reported by the Bureau of the Census for a family of equal 
or lesser size, or in the case of a household of 1 person, the national 
median household income for 1 earner Notwithstanding the foregoing, the 
national median family income for a family of more than 4 individuals 
shall be the national median family income last reported by the Bureau 
of the Census for a family of 4 individuals plus $583 for each 
additional member of the family.
  ``(7) In making a determination whether to dismiss a case under this 
section, the court may not take into consideration whether a debtor has 
made, or continues to make, charitable contributions (that meet the 
definition of `charitable contribution' under section 548(d)(3)) to any 
qualified religious or charitable entity or organization (as that term 
is defined in section 548(d)(4)).
  ``(8) Not later than 3 years after the date of enactment of the 
Bankruptcy Reform Act of 1999, the Director of the Executive Office for 
United States Trustees shall submit a report, to the Committee on the 
Judiciary of the House of Representatives and the Committee on the 
Judiciary of the Senate, containing its findings regarding the 
utilization of the Internal Revenue Service standards for determining 
the current monthly expenses under section 707(b)(1)(A)(ii) of title 
11, United States Code, of debtors and the impact that the application 
of such standards has had on debtors and on the bankruptcy courts Such 
report may include recommendations for amendments to such title, 
consistent with the Director's findings.''.
  (b) Definitions.--Section 101 of title 11, United States Code, is 
amended--
          (1) by inserting after paragraph (10) the following:
          ``(10A) `current monthly income' means the average monthly 
        income from all sources derived which the debtor, or in a joint 
        case, the debtor and the debtor's spouse, receive without 
        regard to whether it is taxable income, in the 180 days 
        preceding the date of determination, and includes any amount 
        paid by anyone other than the debtor or, in a joint case, the 
        debtor and the debtor's spouse, on a regular basis to the 
        household expenses of the debtor or the debtor's dependents 
        and, in a joint case, the debtor's spouse if not otherwise a 
        dependent, but excludes payments to victims of war crimes or 
        crimes against humanity;''; and
          (2) by inserting after paragraph (17) the following:
          ``(17A) `estimated administrative expenses and reasonable 
        attorneys' fees' means 10 percent of projected payments under a 
        chapter 13 plan;''.
  (c) Administrative Provisions.--Section 704 of title 11, United 
States Code, is amended--
          (1) in paragraph (8) by striking ``and'' at the end;
          (2) in paragraph (9) by striking the period at the end and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(10)(A) With respect to an individual debtor, the trustee 
        shall review all materials filed by the debtor, consider all 
        information presented at the first meeting of creditors, and 
        within 10 days after the first meeting of creditors file with 
        the court a statement as to whether the debtor's case should be 
        presumed to be an abuse under section 707(b) of this title The 
        court shall provide a copy of such statement to all creditors 
        within 5 days after such statement is filed If, based on the 
        filing of such statement with the court, the trustee determines 
        that the debtor's case should be presumed to be an abuse under 
        section 707(b) of this title and if the current monthly income 
        of the debtor and the debtor's spouse combined, as of the date 
        of the order for relief, when multiplied by 12, is not less 
        than the highest national median family income reported for a 
        family of equal or lesser size, or in the case of a household 
        of 1 person, the national median household income for 1 earner, 
        then the trustee shall within 30 days of the filing of such 
        statement, either--
                  ``(i) file a motion to dismiss or convert under 
                section 707(b) of this title; or
                  ``(ii) file a statement setting forth the reasons the 
                trustee or bankruptcy administrator does not believe 
                that such a motion would be appropriate.
          ``(B) Notwithstanding subparagraph (A), for purposes of this 
        paragraph the national family income for a family of more than 
        4 individuals shall be the national median family income last 
        reported by the Bureau of the Census for a family of 4 
        individuals plus $583 for each additional member of the 
        family.''.
  (d) Clerical Amendment.--The table of sections at the beginning of 
chapter 7 of title 11, United States Code, is amended by striking the 
item relating to section 707 and inserting the following:

``707. Dismissal of a case or conversion to a case under chapter 13.''.

SEC. 103. NOTICE OF ALTERNATIVES.

  Section 342(b) of title 11, United States Code, is amended to read as 
follows:
  ``(b) Before the commencement of a case under this title by an 
individual whose debts are primarily consumer debts, the clerk shall 
give to such individual written notice containing--
          ``(1) a brief description of--
                  ``(A) chapters 7, 11, 12, and 13 and the general 
                purpose, benefits, and costs of proceeding under each 
                of those chapters; and
                  ``(B) the types of services available from credit 
                counseling agencies; and
          ``(2) statements specifying that--
                  ``(A) a person who knowingly and fraudulently 
                conceals assets or makes a false oath or statement 
                under penalty of perjury in connection with a 
                bankruptcy case shall be subject to fine, imprisonment, 
                or both; and
                  ``(B) all information supplied by a debtor in 
                connection with a bankruptcy case is subject to 
                examination by the Attorney General.''.

SEC. 104. DEBTOR FINANCIAL MANAGEMENT TRAINING TEST PROGRAM.

  (a) Development of Financial Management and Training Curriculum and 
Materials.--The Director of the Executive Office for United States 
Trustees (in this section referred to as the ``Director'') shall 
consult with a wide range of individuals who are experts in the field 
of debtor education, including trustees who are appointed under chapter 
13 of title 11 of the United States Code and who operate financial 
management education programs for debtors, and shall develop a 
financial management training curriculum and materials that can be used 
to educate individual debtors on how to better manage their finances.
  (b) Test--(1) The Director shall select 6 judicial districts of the 
United States in which to test the effectiveness of the financial 
management training curriculum and materials developed under subsection 
(a).
  (2) For a 18-month period beginning not later than 270 days after the 
date of the enactment of this Act, such curriculum and materials shall 
be, for the 6 judicial districts selected under paragraph (1), used as 
the instructional course concerning personal financial management for 
purposes of section 111 of this title.
  (c) Evaluation.--(1) During the 1-year period referred to in 
subsection (b), the Director shall evaluate the effectiveness of--
          (A) the financial management training curriculum and 
        materials developed under subsection (a); and
          (B) a sample of existing consumer education programs such as 
        those described in the Report of the National Bankruptcy Review 
        Commission (October 20, 1997) that are representative of 
        consumer education programs carried out by the credit industry, 
        by trustees serving under chapter 13 of title 11 of the United 
        States Code, and by consumer counselling groups.
  (2) Not later than 3 months after concluding such evaluation, the 
Director shall submit a report to the Speaker of the House of 
Representatives and the President pro tempore of the Senate, for 
referral to the appropriate committees of the Congress, containing the 
findings of the Director regarding the effectiveness of such 
curriculum, such materials, and such programs and their costs.

              Subtitle B--Consumer Bankruptcy Protections

SEC. 105. DEFINITIONS.

  (a) Definitions.--Section 101 of title 11, United States Code, is 
amended--
          (1) by inserting after paragraph (2) the following:
          ``(3) `assisted person' means any person whose debts consist 
        primarily of consumer debts and whose non-exempt assets are 
        less than $150,000;'';
          (2) by inserting after paragraph (4) the following:
          ``(4A) `bankruptcy assistance' means any goods or services 
        sold or otherwise provided to an assisted person with the 
        express or implied purpose of providing
information, advice, counsel, document preparation or filing, or 
attendance at a creditors' meeting or appearing in a proceeding on 
behalf of another or providing legal representation with respect to a 
proceeding under this title;''; and
          (3) by inserting after paragraph (12A) the following:
          ``(12B) `debt relief agency' means any person who provides 
        any bankruptcy assistance to an assisted person in return for 
        the payment of money or other valuable consideration, or who is 
        a bankruptcy petition preparer pursuant to section 110 of this 
        title, but does not include any person that is any of the 
        following or an officer, director, employee or agent thereof--
                  ``(A) any nonprofit organization which is exempt from 
                taxation under section 501(c)(3) of the Internal 
                Revenue Code of 1986;
                  ``(B) any creditor of the person to the extent the 
                creditor is assisting the person to restructure any 
                debt owed by the person to the creditor; or
                  ``(C) any depository institution (as defined in 
                section 3 of the Federal Deposit Insurance Act) or any 
                Federal credit union or State credit union (as those 
                terms are defined in section 101 of the Federal Credit 
                Union Act), or any affiliate or subsidiary of such a 
                depository institution or credit union;''.
  (b) Conforming Amendment.--In section 104(b)(1) by inserting 
``101(3),'' after ``sections''.

SEC. 106. ENFORCEMENT.

  (a) Enforcement.--Subchapter II of chapter 5 of title 11, United 
States Code, is amended by adding at the end the following:

``Sec. 526. Debt relief agency enforcement

  ``(a) A debt relief agency shall not--
          ``(1) fail to perform any service which the debt relief 
        agency has told the assisted person or prospective assisted 
        person the agency would provide that person in connection with 
        the preparation for or activities during a proceeding under 
        this title;
          ``(2) make any statement, or counsel or advise any assisted 
        person to make any statement in any document filed in a 
        proceeding under this title, which is untrue and misleading or 
        which upon the exercise of reasonable care, should be known by 
        the debt relief agency to be untrue or misleading;
          ``(3) misrepresent to any assisted person or prospective 
        assisted person, directly or indirectly, affirmatively or by 
        material omission, what services the debt relief agency can 
        reasonably expect to provide that person, or the benefits an 
        assisted person may obtain or the difficulties the person may 
        experience if the person seeks relief in a proceeding pursuant 
        to this title; or
          ``(4) advise an assisted person or prospective assisted 
        person to incur more debt in contemplation of that person 
        filing a proceeding under this title or in order to pay an 
        attorney or bankruptcy petition preparer fee or charge for 
        services performed as part of preparing for or representing a 
        debtor in a proceeding under this title.''.
  ``(b) Assisted Person Waivers Invalid.--Any waiver by any assisted 
person of any protection or right provided by or under this section 
shall not be enforceable against the debtor by any Federal or State 
court or any other person, but may be enforced against a debt relief 
agency.
  ``(c) Noncompliance.--
          ``(1) Any contract between a debt relief agency and an 
        assisted person for bankruptcy assistance which does not comply 
        with the material requirements of this section shall be treated 
        as void and may not be enforced by any Federal or State court 
        or by any other person.
          ``(2) Any debt relief agency shall be liable to an assisted 
        person in the amount of any fees or charges in connection with 
        providing bankruptcy assistance to such person which the debt 
        relief agency has received, for actual damages, and for 
        reasonable attorneys' fees and costs if the debt relief agency 
        is found, after notice and hearing, to have--
                  ``(A) intentionally or negligently failed to comply 
                with any provision of this section with respect to a 
                bankruptcy case or related proceeding of the assisted 
                person;
                  ``(B) provided bankruptcy assistance to an assisted 
                person in a case or related proceeding which is 
                dismissed or converted because of the debt relief 
                agency's intentional or negligent failure to file 
                bankruptcy papers, including papers specified in 
                section 521 of this title; or
                  ``(C) intentionally or negligently disregarded the 
                material requirements of this title or the Federal 
                Rules of Bankruptcy Procedure applicable to such debt 
                relief agency.
          ``(3) In addition to such other remedies as are provided 
        under State law, whenever the chief law enforcement officer of 
        a State, or an official or agency designated by a State, has 
        reason to believe that any person has violated or is violating 
        this section, the State--
                  ``(A) may bring an action to enjoin such violation;
                  ``(B) may bring an action on behalf of its residents 
                to recover the actual damages of assisted persons 
                arising from such violation, including any liability 
                under paragraph (2); and
                  ``(C) in the case of any successful action under 
                subparagraph (A) or (B), shall be awarded the costs of 
                the action and reasonable attorney fees as determined 
                by the court.
          ``(4) The United States District Court for any district 
        located in the State shall have concurrent jurisdiction of any 
        action under subparagraph (A) or (B) of paragraph (3).
          ``(5) Notwithstanding any other provision of Federal law and 
        in addition to any other remedy provided under Federal or State 
        law, if the court, on its own motion or on the motion of the 
        United States trustee or the debtor, finds that a person 
        intentionally violated this section, or engaged in a clear and 
        consistent pattern or practice of violating this section, the 
        court may--
                  ``(A) enjoin the violation of such section; or
                  ``(B) impose an appropriate civil penalty against 
                such person.
  ``(c) Relation to State Law.--This section shall not annul, alter, 
affect or exempt any person subject to those sections from complying 
with any law of any State except to the extent that such law is 
inconsistent with those sections, and then only to the extent of the 
inconsistency.''.
  (b) Conforming Amendment.--The table of sections for chapter 5 of 
title 11, United States Code, is amended by inserting after the item 
relating to section 527, the following:

``526. Debt relief agency enforcement.''.

SEC. 107. SENSE OF THE CONGRESS.

  It is the sense of the Congress that States should develop curricula 
relating to the subject of personal finance, designed for use in 
elementary and secondary schools.

SEC. 108. DISCOURAGING ABUSIVE REAFFIRMATION PRACTICES.

  Section 524 of title 11, United States Code, is amended--
          (1) in subsection (c)--
                  (A) in paragraph (2)--
                          (i) in subparagraph (A) by striking ``and'' 
                        at the end;
                          (ii) in subparagraph (B) by adding ``and'' at 
                        the end; and
                          (iii) by adding at the end the following:
          ``(C) if the consideration for such agreement is based on a 
        wholly unsecured consumer debt (except for debts owed to 
        creditors defined in section 461(b)(1)(A)(iv) of title 12, 
        United States Code), such agreement contains a clear and 
        conspicuous statement which advises the debtor--
                  ``(i) that the debtor is entitled to a hearing before 
                the court at which the debtor shall appear in person 
                and at which the court will decide whether the 
                agreement is an undue hardship, not in the debtor's 
                best interest, and not the result of a threat by the 
                creditor to take any action that cannot be legally 
                taken or that is not intended to be taken; and
                  ``(ii) that if the debtor is represented by counsel, 
                the debtor may waive the debtor's right to such a 
                hearing by signing a statement waiving the hearing, 
                stating that the debtor is represented by counsel, and 
                identifying such counsel;''; and
                  (B) in paragraph (6)(A)--
                          (i) by striking ``and'' at the end of clause 
                        (i);
                          (ii) by striking the period at the end of 
                        clause (ii) and inserting ``; and''; and
                          (iii) by adding at the end thereof the 
                        following:
                  ``(iii) not entered into by the debtor as the result 
                of a threat by the creditor to take any action that 
                cannot be legally taken or that is not intended to be 
                taken.''; and
          (2) in the 3d sentence of subsection (d)--
                  (A) by striking ``of this section'' and inserting a 
                comma; and
                  (B) by inserting after ``such agreement'' the 
                following:
``or if the consideration for such agreement is based on a wholly 
unsecured consumer debt (except for debts owed to creditors defined in 
section 461(b)(1)(A)(iv) of title 12,United States Code) and the debtor 
has not waived the debtor's right to a hearing on the agreement in 
accordance with subsection (c)(2)(C) of this section''.

SEC. 109. PROMOTION OF ALTERNATIVE DISPUTE RESOLUTION.

  (a) Reduction of Claim.--Section 502 of title 11, United States Code, 
is amended by adding at the end the following:
  ``(k)(1) The court, on the motion of the debtor and after a hearing, 
may reduce a claim filed under this section based wholly on unsecured 
consumer debts by not more than 20 percent, if the debtor can prove by 
clear and convincing evidence that the claim was filed by a creditor 
who unreasonably refused to negotiate a reasonable alternative 
repayment schedule proposed by an approved credit counseling agency 
acting on behalf of the debtor, and if--
          ``(A) such offer was made within the period beginning 60 days 
        before the filing of the petition;
          ``(B) such offer provided for payment of at least 60 percent 
        of the amount of the debt over a period not to exceed the 
        repayment period of the loan, or a reasonable extension 
        thereof; and
          ``(C) no part of the debt under the alternative repayment 
        schedule is nondischargeable, is entitled to priority under 
        section 507 of this title, or would be paid a greater 
        percentage in a chapter 13 proceeding than offered by the 
        debtor.
  ``(2) The debtor shall have the burden of proving that the proposed 
alternative repayment schedule was made in the 60-day period specified 
in subparagraph (A) and that the creditor unreasonably refused to 
consider the debtor's proposal.''.
  (b) Limitation on Avoidability.--Section 547 of title 11, United 
States Code, is amended by adding at the end the following:
  ``(h) The trustee may not avoid a transfer if such transfer was made 
as a part of an alternative repayment plan between the debtor and any 
creditor of the debtor created by an approved credit counseling 
agency.''.

SEC. 110. ENHANCED DISCLOSURE FOR CREDIT EXTENSIONS SECURED BY A 
                    DWELLING.

  (a) Study Required.--During the period beginning 180 days after the 
date of enactment of this Act and ending 18 months after the date of 
the enactment, the Board of Governors of the Federal Reserve System (in 
this section referred to as the ``Board'') shall conduct a study and 
submit to Congress a report (including recommendations for any 
appropriate legislation) regarding--
          (1) whether a consumer engaging in an open-end credit 
        transaction (as defined pursuant to section 103 of the Truth in 
        lending Act) secured by the consumer's principal dwelling is 
        provided adequate information under Federal law, including 
        under section 127A of the Truth in Lending Act, regarding the 
        tax deductibility of interest paid on such transaction; and
          (2) whether a consumer engaging in a closed-end credit 
        transaction (as defined pursuant to section 103 of the Truth in 
        Lending Act) secured by the consumer's principal dwelling is 
        provided adequate information regarding the tax deductibility 
        of interest paid on such transaction.
In conducting such study, the Board shall specifically consider whether 
additional disclosures are necessary with respect to such open-end or 
closed-end credit transactions in which the amount of the credit 
extended exceeds the fair market value of the dwelling.
  (b) Regulations.--If the Board determines that additional disclosures 
are necessary in connection with transactions described in subsection 
(a), the Board, pursuant to its authority under the Truth in Lending 
Act, may promulgate regulations that would require such additional 
disclosures Any such regulations promulgated by the Board under this 
section shall not take effect before the end of the 36-month period 
after the date of the enactment of this Act.

SEC. 111. DUAL USE DEBIT CARD.

  (a) Study Required.--The Board of Governors of the Federal Reserve 
System (in this section referred to as the ``Board'') shall conduct a 
study of existing protections provided to consumers to limit their 
liability for unauthorized use of a debit card or similar access 
device.
  (b) Specific Considerations.--In conducting the study required by 
subsection (a), the Board shall specifically consider the following--
          (1) the extent to which existing provisions of section 909 of 
        the Electronic Fund Transfer Act and the Board's implementing 
        regulations provide adequate unauthorized use liability 
        protection for consumers;
          (2) the extent to which any voluntary industry rules have 
        enhanced the level of protection afforded consumers in 
        connection with such unauthorized use liability; and
          (3) whether amendments to the Electronic Funds Transfer Act 
        or the Board's implementing regulations thereto are necessary 
        to provide adequate protection for consumers in this area.
  (c) Report and Regulations.--Not later than 2 years after the date of 
the enactment of this Act, the Board shall make public a report on its 
findings with respect to the adequacy of existing protections afforded 
consumers with respect to unauthorized-use liability for debit cards 
and similar access devices If the Board determines that such 
protections are inadequate, the Board, pursuant to its authority under 
the Electronic Funds Transfer Act, may issue regulations to address 
such inadequacy Any regulations issued by the Board shall not be 
effective before 36 months after the date of the enactment of this Act.

SEC. 112. ENHANCED DISCLOSURES UNDER AN OPEN-END CREDIT PLAN.

  (a) Initial and Annual Minimum Payment Disclosure.--Section 127(a) of 
the Truth in Lending Act (15 U.S.C 1637(a)) is amended by adding at the 
end the following:
          ``(9) In the case of any credit or charge card account under 
        an open-end consumer credit plan on which a minimum monthly or 
        periodic payment will be required, other than an account 
        described in paragraph (8)--
                  ``(A) the following statement: `The minimum payment 
                amount shown on your billing statement is the smallest 
                payment which you can make in order to keep the account 
                in good standing This payment option is offered as a 
                convenience and you may make larger payments at any 
                time Making only the minimum payment each month will 
                increase the amount of interest you pay and the length 
                of time it takes to repay your outstanding balance.';
                  ``(B) if the plan provides that the consumer will be 
                permitted to forgo making a minimum payment during a 
                specified billing cycle, a statement, if applicable, 
                that if the consumer chooses to forgo making the 
                minimum payment, finance charges will continue to 
                accrue; and
                  ``(C) an example, based on an annual percentage rate 
                and method for determining minimum periodic payments 
                recently in effect for that creditor, and a $500 
                outstanding balance, showing the estimated minimum 
                periodic payment, and the estimated period of time it 
                would take to repay the $500 outstanding balance if the 
                consumer paid only the minimum periodic payment on each 
                monthly or periodic statement and obtained no 
                additional extensions of credit.
          ``(10) With respect to one billing cycle per calendar year, 
        the creditor shall transmit the information required under 
        paragraph (9) to each consumer to whom the creditor is required 
        to transit a statement pursuant to subsection (b) for such 
        billing cycle The creditor shall also transmit to such consumer 
        for such cycle a worksheet prescribed by the Board to assist 
        the consumer in determining the consumer's household income and 
        debt obligations.''.
  (b) Periodic Minimum Payment Disclosures.--Section 127(b) of the 
Truth in Lending Act (15 U.S.C 1637(b)) is amended by adding at the end 
the following:
          ``(11) The following statement: `The minimum payment amount 
        shown on your billing statement is the smallest payment which 
        you can make in order to keep the account in good standing This 
        payment option is offered as a convenience and you may make 
        larger payments at any time Making only the minimum payment 
        each month will increase the amount of interest you pay and the 
        length of time it takes to repay your outstanding balance.' ''.
  (c) Enforcement.--Section 127 of the Truth in Lending Act (15 U.S.C 
1637) is amended by adding at the end the following:
  ``(h) In promulgating regulations to implement the disclosure of an 
example required under subsection (a)(9)(C) and (a)(10), the Board 
shall set forth a model disclosure to accompany the example stating 
that the credit features shown are only an example which does not 
obligate the creditor, but is intended to illustrate the approximate 
length of time it could take to repay using the assumptions set forth 
in subsection (a)(9)(C) without regard to any other factors that could 
impact an approximate repayment period, including other credit features 
or the consumer's payment or other behavior with respect to the account 
Compliance with the disclosures required under subsection (a)(9)(C) and 
(a)(10) shall be enforced exclusively by the Federal agencies set forth 
in section 108.''.
  (d) Regulatory Implementation.--The Board of Governors of the Federal 
Reserve System (in this section referred to as the ``Board'') shall 
promulgate regulations implementing the amendments made by subsections 
(a) and (b) Such regulations shall take effect no earlier than the end 
of the 36-month period beginning on the date of the enactment of this 
Act.
  (e) Study Required.--The Board shall conduct a study to determine 
whether consumers have adequate information about borrowing activities 
which may result in financial problems In studying this issue, the 
Board shall consider the extent to which--
          (1) consumers, in establishing new credit arrangements, are 
        aware of their existing payment obligations, the need to 
        consider those obligations in deciding to take on new credit, 
        and how taking on excessive credit can result in financial 
        difficulty;
          (2) minimum periodic payment features offered in connection 
        with open-end credit plans impact consumer default rates;
          (3) consumers always make only the minimum payment throughout 
        the life of the plan;
          (4) consumers are aware that making only minimum payments 
        will increase the cost and repayment period of an open-end 
        loan; and
          (5) the availability of low minimum payment options is a 
        cause of consumers experiencing financial difficulty.
  (f) Report to Congress.--Before the end of the 2-year period 
beginning on the date of the enactment of this Act, the Board shall 
submit to Congress a report containing the findings of the Board in 
connection with the study required under subsection (e).
  (g) Regulations.--The Board shall, by regulation promulgated pursuant 
to its authority under the Truth in Lending Act, require additional 
disclosures to consumers regarding minimum payment features, including 
periodic statement disclosures, if the Board determines that such 
disclosures are necessary based on its findings Any such regulations 
promulgated by the Board shall not take effect earlier than January 1, 
2002.

SEC. 113. PROTECTION OF SAVINGS EARMARKED FOR THE POSTSECONDARY 
                    EDUCATION OF CHILDREN.

  Section 522 of title 11, United States Code, is amended--
          (1) in subsection (b)(2)--
                  (A) in subparagraph (A) by striking ``and'' at the 
                end;
                  (B) in subparagraph (B) by striking the period at the 
                end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(C) except as provided in paragraph (n), funds placed in an 
        education individual retirement account (as defined in section 
        530(b)(1) of the Internal Revenue Code of 1986) not less than 
        365 days before the date of entry of the order of relief but 
        only to the extent such funds--
                  ``(i) are not pledged or promised to any entity in 
                connection with any extension of credit; and
                  ``(ii) are not excess contributions (as described in 
                section 4973(e) of the Internal Revenue Code of 
                1986).''; and
          (2) by adding at the end the following:
  ``(n) For purposes of subsection (b)(3)(C), funds placed in an 
education individual retirement account shall not be exempt under this 
subsection--
          ``(1) unless the designated beneficiary of such account was a 
        dependent child of the debtor for the taxable year for which 
        the funds were placed in such account; and
          ``(2) to the extent such funds exceed--
                  ``(A) $50,000 in the aggregate in all such accounts 
                having the same designated beneficiary; or
                  ``(B) $100,000 in the aggregate in all such accounts 
                attributable to all such dependent children of the 
                debtor.''.

SEC. 114. EFFECT OF DISCHARGE.

  Section 524 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(i) The willful failure of a creditor to credit payments received 
under a plan confirmed under this title (including a plan of 
reorganization confirmed under chapter 11 of this title) in the manner 
required by the plan (including crediting the amounts required under 
the plan) shall constitute a violation of any injunction under 
subsection (a)(2) which has arisen at the time of the failure.
  ``(j)(1) An individual who is injured by the willful failure of a 
creditor to comply with the requirements for a reaffirmation agreement 
under subsections (c) and (d), or by any willful violation of the 
injunction under subsection (a)(2), shall be entitled to recover--
          ``(A) the greater of--
                  ``(i) the amount of actual damages; or
                  ``(ii) $1,000; and
          ``(B) costs and attorneys' fees.
  ``(2) An action to recover for a violation specified in paragraph (1) 
may not be brought as a class action.''.

SEC. 115. LIMITING TRUSTEE LIABILITY.

  (a) Qualification of Trustee.--Section 322 of title 11, United States 
Code, is amended--
          (1) in subsection (a) by adding at the end the following:
        ``The trustee in a case under this title is not liable 
        personally or on such trustee's bond for acts taken within the 
        scope of the trustee's duties or authority as delineated by 
        other sections of this title or by order of the court, except 
        to the extent that the trustee acted with gross negligence 
        Gross negligence shall be defined as reckless indifference or 
        deliberate disregard of the trustee's fiduciary duty.''; and
          (2) in subsection (c) by inserting ``for any acts within the 
        scope of the trustee's authority defined in subsection (a)'' 
        before the period at the end.
  (b) Role and Capacity of Trustee.--Section 323 of title 11, United 
States Code, is amended--
          (1) in subsection (b) by inserting at the end the following: 
        ``in the trustee's official capacity as representative of the 
        estate'' before the period at the end; and
          (2) by adding at the end the following:
  ``(c) The trustee in a case under this title may not be sued, either 
personally, in a representative capacity, or against the trustee's bond 
in favor of the United States--
          ``(1) for acts taken in furtherance of the trustee's duties 
        or authority in a case in which the debtor is subsequently 
        determined to be ineligible for relief under the chapter in 
        which the trustee was appointed; or
          ``(2) for the dissemination of statistics and other 
        information regarding a case or cases, unless the trustee has 
        actual knowledge that the information is false.
  ``(d) The trustee in a case under this title may not be sued in a 
personal capacity without leave of the bankruptcy court in which the 
case is pending.''.

SEC. 116. REINFORCE THE FRESH START.

  (a) Restoration of an Effective Discharge.--Section 523(a)(17) of 
title 11, United States Code, is amended--
          (1) by striking ``by a court'' and inserting ``by any 
        court'',
          (2) by striking ``section 1915(b) or (f)'' and inserting 
        ``subsection (b) or (f)(2) of section 1915'', and
          (3) by inserting ``(or a similar non-Federal law)'' after 
        ``title 28'' each place it appears.

SEC. 117. DISCOURAGING BAD FAITH REPEAT FILINGS.

  Section 362(c) of title 11, United States Code, is amended--
          (1) in paragraph (1) by striking ``and'' at the end;
          (2) in paragraph (2) by striking the period at the end and 
        inserting a semicolon; and
          (3) by adding at the end the following new paragraphs:
          ``(3) If a single or joint case is filed by or against an 
        individual debtor under chapter 7, 11, or 13 (other than a case 
        refiled under a chapter other than chapter 7 after dismisssal 
        under section 707(b) of this title), and if a single or joint 
        case of the debtor was pending within the previous 1-year 
        period but was dismissed, the stay under subsection (a) with 
        respect to any action taken with respect to a debt or property 
        securing such debt or with respect to any lease will terminate 
        with respect to the debtor on the 30th day after the filing of 
        the later case Upon motion by a party in interest for 
        continuation of the automatic stay and upon notice and a 
        hearing, the court may extend the stay in particular cases as 
        to any or all creditors (subject to such conditions or 
        limitations as the court may then impose) after notice and a 
        hearing completed before the expiration of the 30-day period 
        only if the party in interest demonstrates that the filing of 
        the later case is in good faith as to the creditors to be 
        stayed A case is presumptively filed not in good faith (but 
        such presumption may be rebutted by clear and convincing 
        evidence to the contrary)--
                  ``(A) as to all creditors if--
                          ``(i) more than 1 previous case under any of 
                        chapter 7, 11, or 13 in which the individual 
                        was a debtor was pending within such 1-year 
                        period;
                          ``(ii) a previous case under any of chapters 
                        7, 11, or 13 in which the individual was a 
                        debtor was dismissed within such 1-year period, 
                        after the debtor failed to file or amend the 
                        petition or other documents as required by this 
                        title or the court without substantial excuse 
                        (but mere inadvertence or negligence shall not 
                        be substantial excuse unless the dismissal was 
                        caused by the negligence of the debtor's 
                        attorney), failed to provide adequate 
                        protection as ordered by the court, or failed 
                        to perform the terms of a plan confirmed by the 
                        court; or
                          ``(iii) there has not been a substantial 
                        change in the financial or personal affairs of 
                        the debtor since the dismissal of the next most 
                        previous case under any of chapters 7, 11, or 
                        13 of this title, or there is not any other 
                        reason to conclude that the later case will be 
                        concluded, if a case under chapter 7 of this 
                        title, with a discharge, and if a chapter 11 or 
                        13 case, a confirmed plan which will be fully 
                        performed;
                  ``(B) as to any creditor that commenced an action 
                under subsection (d) in a previous case in which the 
                individual was a debtor if, as of the date of dismissal 
                of such case, that action was still pending or had been 
                resolved by terminating, conditioning, or limiting the 
                stay as to actions of such creditor.
          ``(4) If a single or joint case is filed by or against an 
        individual debtor under this title (other than a case refiled 
        under a chapter other than chapter 7 after a dismissal under 
        section 707(b) of this title), and if 2 or more single or joint 
        cases of the debtor were pending within the previous year but 
        were dismissed, the stay under subsection (a) will not go into 
        effect upon the filing of the later case On request of a party 
        in interest, the court shall promptly enter an order confirming 
        that no stay is in effect If a party in interest requests 
        within 30 days of the filing of the later case, the court may 
        order the stay to take effect in the case as to any or all 
        creditors (subject to such conditions or limitations as the 
        court may impose), after notice and hearing, only ifthe party 
in interest demonstrates that the filing of the later case is in good 
faith as to the creditors to be stayed A stay imposed pursuant to the 
preceding sentence will be effective on the date of entry of the order 
allowing the stay to go into effect A case is presumptively not filed 
in good faith (but such presumption may be rebutted by clear and 
convincing evidence to the contrary)--
                  ``(A) as to all creditors if--
                          ``(i) 2 or more previous cases under this 
                        title in which the individual was a debtor were 
                        pending within the 1-year period;
                          ``(ii) a previous case under this title in 
                        which the individual was a debtor was dismissed 
                        within the time period stated in this paragraph 
                        after the debtor failed to file or amend the 
                        petition or other documents as required by this 
                        title or the court without substantial excuse 
                        (but mere inadvertence or negligence shall not 
                        be substantial excuse unless the dismissal was 
                        caused by the negligence of the debtor's 
                        attorney), failed to provide adequate 
                        protection as ordered by the court, or failed 
                        to perform the terms of a plan confirmed by the 
                        court; or
                          ``(iii) there has not been a substantial 
                        change in the financial or personal affairs of 
                        the debtor since the dismissal of the next most 
                        previous case under this title, or there is not 
                        any other reason to conclude that the later 
                        case will be concluded, if a case under chapter 
                        7, with a discharge, and if a case under 
                        chapter 11 or 13, with a confirmed plan that 
                        will be fully performed; or
                  ``(B) as to any creditor that commenced an action 
                under subsection (d) in a previous case in which the 
                individual was a debtor if, as of the date of dismissal 
                of such case, such action was still pending or had been 
                resolved by terminating, conditioning, or limiting the 
                stay as to action of such creditor.''.

SEC. 118. CURBING ABUSIVE FILINGS.

  (a) In General.--Section 362(d) of title 11, United States Code, is 
amended--
          (1) in paragraph (2), by striking ``or'' at the end;
          (2) in paragraph (3), by striking the period at the end and 
        inserting ``; or''; and
          (3) by adding at the end the following:
          ``(4) with respect to a stay of an act against real property 
        under subsection (a), by a creditor whose claim is secured by 
        an interest in such real estate, if the court finds that the 
        filing of the bankruptcy petition was part of a scheme to 
        delay, hinder, and defraud creditors that involved either--
                  ``(A) transfer of all or part ownership of, or other 
                interest in, the real property without the consent of 
                the secured creditor or court approval; or
                  ``(B) multiple bankruptcy filings affecting the real 
                property.
If recorded in compliance with applicable State laws governing notices 
of interests or liens in real property, an order entered pursuant to 
this subsection shall be binding in any other case under this title 
purporting to affect the real property filed not later than 2 years 
after that recording, except that a debtor in a subsequent case may 
move for relief from such order based upon changed circumstances or for 
good cause shown, after notice and a hearing Any Federal, State, or 
local governmental unit which accepts notices of interests or liens in 
real property shall accept any certified copy of an order described in 
this subsection for indexing and recording.''.
  (b) Automatic Stay.--Section 362(b) of title 11, United States Code, 
is amended--
          (1) in paragraph (17), by striking ``or'' at the end;
          (2) in paragraph (18) by striking the period at the end and 
        inserting a semicolon; and
          (3) by inserting after paragraph (18) the following:
          ``(19) under subsection (a), of any act to enforce any lien 
        against or security interest in real property following the 
        entry of an order under section 362(d)(4) of this title as to 
        that property in any prior bankruptcy case for a period of 2 
        years after entry of such an order The debtor in a subsequent 
        case, however, may move the court for relief from such order 
        based upon changed circumstances or for other good cause shown 
        (consistent with the standards for good faith in subsection 
        (c)), after notice and a hearing; or
          ``(20) under subsection (a), of any act to enforce any lien 
        against or security interest in real property--
                  ``(A) if the debtor is ineligible under section 
                109(g) of this title to be a debtor in a bankruptcy 
                case; or
                  ``(B) if the bankruptcy case was filed in violation 
                of a bankruptcy court order in a prior bankruptcy case 
                prohibiting the debtor from being a debtor in another 
                bankruptcy case.''.

SEC. 119. DEBTOR RETENTION OF PERSONAL PROPERTY SECURITY.

  Title 11, United States Code, is amended--
          (1) in section 521--
                  (A) in paragraph (4) by striking ``, and'' at the end 
                and inserting a semicolon;
                  (B) in paragraph (5) by striking the period at the 
                end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(6) in an individual case under chapter 7 of this title, 
        not retain possession of personal property as to which a 
        creditor has an allowed claim for the purchase price secured in 
        whole or in part by an interest in that personal property 
        unless, in the case of an individual debtor, the debtor takes 1 
        of the following actions within 45 days after the first meeting 
        of creditors under section 341(a)--
                  ``(A) enters into an agreement with the creditor 
                pursuant to section 524(c) of this title with respect 
                to the claim secured by such property; or
                  ``(B) redeems such property from the security 
                interest pursuant to section 722 of this title.
        ``If the debtor fails to so act within the 45-day period, the 
        stay under section 362(a) of this title is terminated with 
        respect to the personal property of the estate or of the debtor 
        which is affected, such property shall no longer be property of 
        the estate, and the creditor may take whatever action as to 
        such property as is permitted by applicable nonbankruptcy law, 
        unless the court determines on the motion of the trustee 
        brought before the expiration of such 45-day period, and after 
        notice and a hearing, that such property is of consequential 
        value or benefit to the estate, orders appropriate adequate 
        protection of the creditor's interest, and orders the debtor to 
        deliver any collateral in the debtor's possession to the 
        trustee.''; and
          (2) in section 722 by inserting ``in full at the time of 
        redemption'' before the period at the end.

SEC. 120. RELIEF FROM THE AUTOMATIC STAY WHEN THE DEBTOR DOES NOT 
                    COMPLETE INTENDED SURRENDER OF CONSUMER DEBT 
                    COLLATERAL.

  Title 11, United States Code, is amended as follows--
          (1) in section 362--
                  (A) by striking ``(e), and (f)'' in subsection (c) 
                and inserting in lieu thereof ``(e), (f), and (h)''; 
                and
                  (B) by redesignating subsection (h) as subsection (i) 
                and by inserting after subsection (g) the following:
  ``(h) In an individual case pursuant to chapter 7, 11, or 13 the stay 
provided by subsection (a) is terminated with respect to personal 
property of the estate or of the debtor securing in whole or in part a 
claim, or subject to an unexpired lease, and such personal property 
shall no longer be property of the estate if the debtor fails within 
the applicable time set by section 521(a)(2) of this title--
          ``(1) to file timely any statement of intention required 
        under section 521(a)(2) of this title with respect to that 
        property or to indicate therein that the debtor will either 
        surrender the property or retain it and, if retaining it, 
        either redeem the property pursuant to section 722 of this 
        title, reaffirm the debt it secures pursuant to section 524(c) 
        of this title, or assume the unexpired lease pursuant to 
        section 365(p) of this title if the trustee does not do so, as 
        applicable; or
          ``(2) to take timely the action specified in that statement 
        of intention, as it may be amended before expiration of the 
        period for taking action, unless the statement of intention 
        specifies reaffirmation and the creditor refuses to reaffirm on 
        the original contract terms;
unless the court determines on the motion of the trustee filed before 
the expiration of the applicable time set by section 521(a)(2), and 
after notice and a hearing, that such property is of consequential 
value or benefit to the estate, orders appropriate adequate protection 
of the creditor's interest, and orders the debtor to deliver any 
collateral in the debtor's possession to the trustee If the court does 
not so determine an order, the stay shall terminate upon the conclusion 
of the proceeding on the motion.''; and
          (2) in section 521, as amended by sections 603 and 604--
                  (A) in paragraph (2) by striking ``consumer'';
                  (B) in paragraph (2)(B)--
                          (i) by striking ``forty-five days after the 
                        filing of a notice of intent under this 
                        section'' and inserting ``30 days after the 
                        first date set for the meeting of creditors 
                        under section 341(a) of this title''; and
                          (ii) by striking ``forty-five day'' the 
                        second place it appears and inserting ``30-
                        day'';
                  (C) in paragraph (2)(C) by inserting ``except as 
                provided in section 362(h) of this title'' before the 
                semicolon; and
                  (D) by inserting after subsection (b) the following:
  ``(c) If the debtor fails timely to take the action specified in 
subsection (a)(6) of this section, or in paragraphs (1) and (2) of 
section 362(h) of this title, with respect to property which a lessor 
or bailor owns and has leased, rented, or bailed to the debtor or as to 
which a creditor holds a security interest not otherwise voidable under 
section 522(f), 544, 545, 547, 548, or 549 of this title, nothing in 
this title shall prevent or limit the operation of a provision in the 
underlying lease or agreement which has the effect of placing the 
debtor in default under such lease or agreement by reason of the 
occurrence, pendency, or existence of a proceeding under this title or 
the insolvency of the debtor Nothing in this subsection shall be deemed 
to justify limiting such a provision in any other circumstance.''.

SEC. 121. GIVING SECURED CREDITORS FAIR TREATMENT IN CHAPTER 13.

  Section 1325(a)(5)(B)(i) of title 11, United States Code, is amended 
to read as follows:
                  ``(i) the plan provides that the holder of such claim 
                retain the lien securing such claim until the earlier 
                of payment of the underlying debt determined under 
                nonbankruptcy law or discharge under section 1328 of 
                this title, and that if the case under this chapter is 
                dismissed or converted without completion of the plan, 
                such lien shall also be retained by such holder to the 
                extent recognized by applicable nonbankruptcy law; 
                and''.

SEC. 122. RESTRAINING ABUSIVE PURCHASES ON SECURED CREDIT.

  Section 506 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(e) In an individual case under chapter 7, 11, 12, or 13--
          ``(1) subsection (a) shall not apply to an allowed claim to 
        the extent attributable in whole or in part to the purchase 
        price of personal property acquired by the debtor within 5 
        years of the filing of the petition, except for the purpose of 
        applying paragraph (3) of this subsection;
          ``(2) if such allowed claim attributable to the purchase 
        price is secured only by the personal property so acquired, the 
        value of the personal property and the amount of the allowed 
        secured claim shall be the sum of the unpaid principalbalance 
of the purchase price and accrued and unpaid interest and charges at 
the contract rate;
          ``(3) if such allowed claim attributable to the purchase 
        price is secured by the personal property so acquired and other 
        property, the value of the security may be determined under 
        subsection (a), but the value of the security and the amount of 
        the allowed secured claim shall be not less than the unpaid 
        principal balance of the purchase price of the personal 
        property acquired and unpaid interest and charges at the 
        contract rate; and
          ``(4) in any subsequent case under this title that is filed 
        by or against the debtor in the 2-year period beginning on the 
        date the petition is filed in the original case, the value of 
        the personal property and the amount of the allowed secured 
        claim shall be deemed to be not less than the amount provided 
        under paragraphs (2) and (3) less any payments actually 
        received.''.

SEC. 123. FAIR VALUATION OF COLLATERAL.

  Section 506(a) of title 11, United States Code, is amended by adding 
at the end the following:
``In the case of an individual debtor under chapters 7 and 13, such 
value with respect to personal property securing an allowed claim shall 
be determined based on the replacement value of such property as of the 
date of filing the petition without deduction for costs of sale or 
marketing With respect to property acquired for personal, family, or 
household purpose, replacement value shall mean the price a retail 
merchant would charge for property of that kind considering the age and 
condition of the property at the time value is determined.''.

SEC. 124. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS.

  Section 522(b)(2)(A) of title 11, United States Code, is amended--
          (1) by striking ``180'' and inserting ``730''; and
          (2) by striking ``, or for a longer portion of such 180-day 
        period than in any other place'' and inserting ``or if the 
        debtor's domicile has not been located at a single State for 
        such 730-day period, the place in which the debtor's domicile 
        was located for 180 days immediately preceding the 730-day 
        period or for a longer portion of such 180-day period than in 
        any other place''.

SEC. 125. RESTRICTIONS ON CERTAIN EXEMPT PROPERTY OBTAINED THROUGH 
                    FRAUD.

  Section 522 of title 11, United States Code, as amended by section 
113, is amended--
          (1) in subsection (b)(2)(A) by inserting ``subject to 
        subsection (o),'' before ``any property''; and
          (2) by adding at the end the following:
  ``(o) For purposes of subsection (b)(3)(A) and notwithstanding 
subsection (a), the value of an interest in--
          ``(1) real or personal property that the debtor or a 
        dependent of the debtor uses as a residence;
          ``(2) a cooperative that owns property that the debtor or a 
        dependent of the debtor uses as a residence; or
          ``(3) a burial plot for the debtor or a dependent of the 
        debtor;
shall be reduced to the extent such value is attributable to any 
portion of any property that the debtor disposed of in the 730-day 
period ending of the date of the filing of the petition, with the 
intent to hinder, delay, or defraud a creditor and that the debtor 
could not exempt, or that portion that the debtor could not exempt, 
under subsection (b) if on such date the debtor had held the property 
so disposed of.''.

SEC. 126. ROLLING STOCK EQUIPMENT.

  (a) In General.--Section 1168 of title 11, United States Code, is 
amended to read as follows:

``Sec. 1168. Rolling stock equipment

  ``(a)(1) The right of a secured party with a security interest in or 
of a lessor or conditional vendor of equipment described in paragraph 
(2) to take possession of such equipment in compliance with an 
equipment security agreement, lease, or conditional sale contract, and 
to enforce any of its other rights or remedies under such security 
agreement, lease, or conditional sale contract, to sell, lease, or 
otherwise retain or dispose of such equipment, is not limited or 
otherwise affected by any other provision of this title or by any power 
of the court, except that the right to take possession and enforce 
those other rights and remedies shall be subject to section 362 of this 
title, if--
          ``(A) before the date that is 60 days after the date of 
        commencement of a case under this chapter, the trustee, subject 
        to the court's approval, agrees toperform all obligations of 
the debtor under such security agreement, lease, or conditional sale 
contract; and
          ``(B) any default, other than a default of a kind described 
        in section 365(b)(2) of this title, under such security 
        agreement, lease, or conditional sale contract--
                  ``(i) that occurs before the date of commencement of 
                the case and is an event of default therewith is cured 
                before the expiration of such 60-day period;
                  ``(ii) that occurs or becomes an event of default 
                after the date of commencement of the case and before 
                the expiration of such 60-day period is cured before 
                the later of--
                          ``(I) the date that is 30 days after the date 
                        of the default or event of the default; or
                          ``(II) the expiration of such 60-day period; 
                        and
                  ``(iii) that occurs on or after the expiration of 
                such 60-day period is cured in accordance with the 
                terms of such security agreement, lease, or conditional 
                sale contract, if cure is permitted under that 
                agreement, lease, or conditional sale contract.
  ``(2) The equipment described in this paragraph--
          ``(A) is rolling stock equipment or accessories used on 
        rolling stock equipment, including superstructures or racks, 
        that is subject to a security interest granted by, leased to, 
        or conditionally sold to a debtor; and
          ``(B) includes all records and documents relating to such 
        equipment that are required, under the terms of the security 
        agreement, lease, or conditional sale contract, that is to be 
        surrendered or returned by the debtor in connection with the 
        surrender or return of such equipment.
  ``(3) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as trustee or 
otherwise in behalf of another party.
  ``(b) The trustee and the secured party, lessor, or conditional 
vendor whose right to take possession is protected under subsection (a) 
may agree, subject to the court's approval, to extend the 60-day period 
specified in subsection (a)(1).
  ``(c)(1) In any case under this chapter, the trustee shall 
immediately surrender and return to a secured party, lessor, or 
conditional vendor, described in subsection (a)(1), equipment described 
in subsection (a)(2), if at any time after the date of commencement of 
the case under this chapter such secured party, lessor, or conditional 
vendor is entitled pursuant to subsection (a)(1) to take possession of 
such equipment and makes a written demand for such possession of the 
trustee.
  ``(2) At such time as the trustee is required under paragraph (1) to 
surrender and return equipment described in subsection (a)(2), any 
lease of such equipment, and any security agreement or conditional sale 
contract relating to such equipment, if such security agreement or 
conditional sale contract is an executory contract, shall be deemed 
rejected.
  ``(d) With respect to equipment first placed in service on or prior 
to October 22, 1994, for purposes of this section--
          ``(1) the term `lease' includes any written agreement with 
        respect to which the lessor and the debtor, as lessee, have 
        expressed in the agreement or in a substantially 
        contemporaneous writing that the agreement is to be treated as 
        a lease for Federal income tax purposes; and
          ``(2) the term `security interest' means a purchase-money 
        equipment security interest.
  ``(e) With respect to equipment first placed in service after October 
22, 1994, for purposes of this section, the term `rolling stock 
equipment' includes rolling stock equipment that is substantially 
rebuilt and accessories used on such equipment.''.
  (b) Aircraft Equipment and Vessels.--Section 1110 of title 11, United 
States Code, is amended to read as follows:

``Sec. 1110. Aircraft equipment and vessels

  ``(a)(1) Except as provided in paragraph (2) and subject to 
subsection (b), the right of a secured party with a security interest 
in equipment described in paragraph (3), or of a lessor or conditional 
vendor of such equipment, to take possession of such equipment in 
compliance with a security agreement, lease, or conditional sale 
contract, and to enforce any of its other rights or remedies, under 
such security agreement, lease, or conditional sale contract, to sell, 
lease, or otherwise retain or dispose of such equipment, is not limited 
or otherwise affected by any other provision of this title or by any 
power of the court.
  ``(2) The right to take possession and to enforce the other rights 
and remedies described in paragraph (1) shall be subject to section 362 
of this title if--
          ``(A) before the date that is 60 days after the date of the 
        order for relief under this chapter, the trustee, subject to 
        the approval of the court, agrees to perform all obligations of 
        the debtor under such security agreement, lease, or conditional 
        sale contract; and
          ``(B) any default, other than a default of a kind specified 
        in section 365(b)(2) of this title, under such security 
        agreement, lease, or conditional sale contract--
                  ``(i) that occurs before the date of the order is 
                cured before the expiration of such 60-day period;
                  ``(ii) that occurs after the date of the order and 
                before the expiration of such 60-day period is cured 
                before the later of--
                          ``(I) the date that is 30 days after the date 
                        of the default; or
                          ``(II) the expiration of such 60-day period; 
                        and
                  ``(iii) that occurs on or after the expiration of 
                such 60-day period is cured in compliance with the 
                terms of such security agreement, lease, or conditional 
                sale contract, if a cure is permitted under that 
                agreement, lease, or contract.
  ``(3) The equipment described in this paragraph--
          ``(A) is--
                  ``(i) an aircraft, aircraft engine, propeller, 
                appliance, or spare part (as defined in section 40102 
                of title 49) that is subject to a security interest 
                granted by, leased to, or conditionally sold to a 
                debtor that, at the time such transaction is entered 
                into, holds an air carrier operating certificate issued 
                pursuant to chapter 447 of title 49 for aircraft 
                capable of carrying 10 or more individuals or 6,000 
                pounds or more of cargo; or
                  ``(ii) a documented vessel (as defined in section 
                30101(1) of title 46) that is subject to a security 
                interest granted by, leased to, or conditionally sold 
                to a debtor that is a water carrier that, at the time 
                such transaction is entered into, holds a certificate 
                of public convenience and necessity or permit issued by 
                the Department of Transportation; and
          ``(B) includes all records and documents relating to such 
        equipment that are required, under the terms of the security 
        agreement, lease, or conditional sale contract, to be 
        surrendered or returned by the debtor in connection with the 
        surrender or return of such equipment.
  ``(4) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as trustee or 
otherwise in behalf of another party.
  ``(b) The trustee and the secured party, lessor, or conditional 
vendor whose right to take possession is protected under subsection (a) 
may agree, subject to the approval of the court, to extend the 60-day 
period specified in subsection (a)(1).
  ``(c)(1) In any case under this chapter, the trustee shall 
immediately surrender and return to a secured party, lessor, or 
conditional vendor, described in subsection (a)(1), equipment described 
in subsection (a)(3), if at any time after the date of the order for 
relief under this chapter such secured party, lessor, or conditional 
vendor is entitled pursuant to subsection (a)(1) to take possession of 
such equipment and makes a written demand for such possession to the 
trustee.
  ``(2) At such time as the trustee is required under paragraph (1) to 
surrender and return equipment described in subsection (a)(3), any 
lease of such equipment, and any security agreement or conditional sale 
contract relating to such equipment, if such security agreement or 
conditional sale contract is an executory contract, shall be deemed 
rejected.
  ``(d) With respect to equipment first placed in service on or before 
October 22, 1994, for purposes of this section--
          ``(1) the term `lease' includes any written agreement with 
        respect to which the lessor and the debtor, as lessee, have 
        expressed in the agreement or in a substantially 
        contemporaneous writing that the agreement is to be treated as 
        a lease for Federal income tax purposes; and
          ``(2) the term `security interest' means a purchase-money 
        equipment security interest.''.

SEC. 127. DISCHARGE UNDER CHAPTER 13.

  Section 1328(a) of title 11, United States Code, is amended by 
striking paragraphs (1) through (3) and inserting the following:
          ``(1) provided for under section 1322(b)(5) of this title;
          ``(2) of the kind specified in paragraph (2), (4), (3)(B), 
        (5), (8), or (9) of section 523(a) of this title;
          ``(3) for restitution, or a criminal fine, included in a 
        sentence on the debtor's conviction of a crime; or
          ``(4) for restitution, or damages, awarded in a civil action 
        against the debtor as a result of willful or malicious injury 
        by the debtor that caused personal injury to an individual or 
        the death of an individual.''.

SEC. 128. BANKRUPTCY JUDGESHIPS.

  (a) Short Title.--This section may be cited as the ``Bankruptcy 
Judgeship Act of 1999''.
  (b) Temporary Judgeships.--
          (1) Appointments.--The following judgeship positions shall be 
        filled in the manner prescribed in section 152(a)(1) of title 
        28, United States Code, for the appointment of bankruptcy 
        judges provided for in section 152(a)(2) of such title:
                  (A) One additional bankruptcy judgeship for the 
                eastern district of California.
                  (B) Four additional bankruptcy judgeships for the 
                central district of California.
                  (C) One additional bankruptcy judgeship for the 
                southern district of Florida.
                  (D) Two additional bankruptcy judgeships for the 
                district of Maryland.
                  (E) One additional bankruptcy judgeship for the 
                eastern district of Michigan.
                  (F) One additional bankruptcy judgeship for the 
                southern district of Mississippi.
                  (G) One additional bankruptcy judgeship for the 
                district of New Jersey.
                  (H) One additional bankruptcy judgeship for the 
                eastern district of New York.
                  (I) One additional bankruptcy judgeship for the 
                northern district of New York.
                  (J) One additional bankruptcy judgeship for the 
                southern district of New York.
                  (K) One additional bankruptcy judgeship for the 
                eastern district of Pennsylvania.
                  (L) One additional bankruptcy judgeship for the 
                middle district of Pennsylvania.
                  (M) One additional bankruptcy judgeship for the 
                western district of Tennessee.
                  (N) One additional bankruptcy judgeship for the 
                eastern district of Virginia.
          (2) Vacancies.--The first vacancy occurring in the office of 
        a bankruptcy judge in each of the judicial districts set forth 
        in paragraph (1) that--
                  (A) results from the death, retirement, resignation, 
                or removal of a bankruptcy judge; and
                  (B) occurs 5 years or more after the appointment date 
                of a bankruptcy judge appointed under paragraph (1);
        shall not be filled.
  (c) Extensions.--
          (1) In general.--The temporary bankruptcy judgeship positions 
        authorized for the northern district of Alabama, the district 
        of Delaware, the district of Puerto Rico, the district of South 
        Carolina, and the eastern district of Tennessee under section 
        3(a) (1), (3), (7), (8), and (9) of the Bankruptcy Judgeship 
        Act of 1992 (28 U.S.C 152 note) are extended until the first 
        vacancy occurring in the office of a bankruptcy judge in the 
        applicable district resulting from the death, retirement, 
        resignation, or removal of a bankruptcy judge and occurring--
                  (A) 8 years or more after November 8, 1993, with 
                respect to the northern district of Alabama;
                  (B) 10 years or more after October 28, 1993, with 
                respect to the district of Delaware;
                  (C) 8 years or more after August 29, 1994, with 
                respect to the district of Puerto Rico;
                  (D) 8 years or more after June 27, 1994, with respect 
                to the district of South Carolina; and
                  (E) 8 years or more after November 23, 1993, with 
                respect to the eastern district of Tennessee.
          (2) Applicability of other provisions.--All other provisions 
        of section 3 of the Bankruptcy Judgeship Act of 1992 remain 
        applicable to such temporary judgeship position
  (d) Technical Amendment.--The first sentence of section 152(a)(1) of 
title 28, United States Code, is amended to read as follows: ``Each 
bankruptcy judge to beappointed for a judicial district as provided in 
paragraph (2) shall be appointed by the United States court of appeals 
for the circuit in which such district is located.''.
  (e) Travel Expenses of Bankruptcy Judges.--Section 156 of title 28, 
United States Code, is amended by adding at the end the following new 
subsection:
  ``(g)(1) In this subsection, the term `travel expenses'--
          ``(A) means the expenses incurred by a bankruptcy judge for 
        travel that is not directly related to any case assigned to 
        such bankruptcy judge; and
          ``(B) shall not include the travel expenses of a bankruptcy 
        judge if--
                  ``(i) the payment for the travel expenses is paid by 
                such bankruptcy judge from the personal funds of such 
                bankruptcy judge; and
                  ``(ii) such bankruptcy judge does not receive funds 
                (including reimbursement) from the United States or any 
                other person or entity for the payment of such travel 
                expenses.
  ``(2) Each bankruptcy judge shall annually submit the information 
required under paragraph (3) to the chief bankruptcy judge for the 
district in which the bankruptcy judge is assigned.
  ``(3)(A) Each chief bankruptcy judge shall submit an annual report to 
the Director of the Administrative Office of the United States Courts 
on the travel expenses of each bankruptcy judge assigned to the 
applicable district (including the travel expenses of the chief 
bankruptcy judge of such district).
  ``(B) The annual report under this paragraph shall include--
          ``(i) the travel expenses of each bankruptcy judge, with the 
        name of the bankruptcy judge to whom the travel expenses apply;
          ``(ii) a description of the subject matter and purpose of the 
        travel relating to each travel expense identified under clause 
        (i), with the name of the bankruptcy judge to whom the travel 
        applies; and
          ``(iii) the number of days of each travel described under 
        clause (ii), with the name of the bankruptcy judge to whom the 
        travel applies.
  ``(4)(A) The Director of the Administrative Office of the United 
States Courts shall--
          ``(i) consolidate the reports submitted under paragraph (3) 
        into a single report; and
          ``(ii) annually submit such consolidated report to Congress.
  ``(B) The consolidated report submitted under this paragraph shall 
include the specific information required under paragraph (3)(B), 
including the name of each bankruptcy judge with respect to clauses 
(i), (ii), and (iii) of paragraph (3)(B).''.

SEC. 129. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED STATES CODE.

  Section 507(a) of title 11, United States Code, is amended by 
inserting after paragraph (9) the following:
          ``(10) Tenth, allowed claims for death or personal injuries 
        resulting from the operation of a motor vehicle or vessel if 
        such operation was unlawful because the debtor was intoxicated 
        from using alcohol, a drug or another substance.''.

SEC 130 AMENDMENT TO SECTION 1325 OF TITLE 11, UNITED STATES CODE.

  Section 1325(b) of title 11, United States Code, is amended--
          (1) in paragraph (1), by inserting ``to unsecured creditors'' 
        after ``to make payments'';
          (2) in paragraph (2)--
                  (A) by inserting ``current monthly'' before 
                ``income'';
                  (B) by striking ``and which is not'' and inserting 
                ``less amounts'';
                  (C) by inserting after ``received by the debtor'', 
                ``(other than child support payments, foster care 
                payments, or disability payments for a dependent child 
                made in accordance with applicable nonbankruptcy law 
                and which is reasonably necessary to be expended)''; 
                and
                  (D) in subparagraph (A) by inserting after 
                ``dependent of the debtor'' the following: ``, as 
                determined in accordance with section 707(b)(2)(A) and 
                if applicable 707(b)(2)(B)''.

SEC. 131. APPLICATION OF THE CODEBTOR STAY ONLY WHEN THE STAY PROTECTS 
                    THE DEBTOR.

  Section 1301(b) of title 11, United States Code, is amended--
          (1) by inserting ``(1)'' after ``(b)''; and
          (2) by adding at the end the following:
  ``(2)(A) Notwithstanding subsection (c) and except as provided in 
subparagraph (B), in any case in which the debtor did not receive the 
consideration for the claim held by a creditor, the stay provided by 
subsection (a) shall apply to that creditor for a period not to exceed 
30 days beginning on the date of the order for relief, to the extent 
the creditor proceeds against--
          ``(i) the individual that received that consideration; or
          ``(ii) property not in the possession of the debtor that 
        secures that claim.
  ``(B) Notwithstanding subparagraph (A), the stay provided by 
subsection (a) shall apply in any case in which the debtor is primarily 
obligated to pay the creditor in whole or in part with respect to a 
claim described in subparagraph (A) under a legally binding separation 
or property settlement agreement or divorce or dissolution decree with 
respect to--
          ``(i) an individual described in subparagraph (A)(i); or
          ``(ii) property described in subparagraph (A)(ii).
  ``(3) Notwithstanding subsection (c), the stay provided by subsection 
(a) shall terminate as of the date of confirmation of the plan, in any 
case in which the plan of the debtor provides that the debtor's 
interest in personal property subject to a lease with respect to which 
the debtor is the lessee will be surrendered or abandoned or no 
payments will be made under the plan on account of the debtor's 
obligations under the lease.''.

SEC. 132. ADEQUATE PROTECTION FOR INVESTORS.

  (a) Definition.--Section 101 of title 11, United States Code, is 
amended by inserting after paragraph (48) the following:
          ``(48A) `securities self regulatory organization' means 
        either a securities association registered with the Securities 
        and Exchange Commission pursuant to section 15A of the 
        Securities Exchange Act of 1934 or a national securities 
        exchange registered with the Securities and Exchange Commission 
        pursuant to section 6 of the Securities Exchange Act of 
        1934;''.
  (b) Automatic Stay.--Section 362(b) of title 11, United States Code, 
as amended by section 118, is amended--
          (1) in paragraph (19) by striking ``or'' at the end;
          (2) in paragraph (20) by striking the period at the end and a 
        inserting ``; or''; and
          (3) by inserting after paragraph (20) the following:
          ``(21) under subsection (a), of the commencement or 
        continuation of an investigation or action by a securities self 
        regulatory organization to enforce such organization's 
        regulatory power; of the enforcement of an order or decision, 
        other than for monetary sanctions, obtained in an action by the 
        securities self regulatory organization to enforce such 
        organization's regulatory power; or of any act taken by the 
        securities self regulatory organization to delist, delete, or 
        refuse to permit quotation of any stock that does not meet 
        applicable regulatory requirements.''.

SEC. 133. LIMITATION ON LUXURY GOODS.

  Section 523(a)(2)(C) of title 11, United States Code, is amended to 
read as follows:
                  ``(C)(i) for purposes of subparagraph (A), consumer 
                debts owed to a single creditor and aggregating more 
                than $250 for `luxury goods or services' incurred by an 
                individual debtor on or within 90 days before the order 
                for relief under this title, or cash advances 
                aggregating more than $250 that are extensions of 
                consumer credit under an open end credit plan obtained 
                by an individual debtor on or within 90 days before the 
                order for relief under this title, are presumed to be 
                nondischargeable; and
                  ``(ii) for purposes of this subparagraph--
                          ``(I) the term `luxury goods or services' 
                        does not include goods or services reasonably 
                        necessary for the support or maintenance of the 
                        debtor or a dependent of the debtor; and
                          ``(II) the term `an extension of consumer 
                        credit under an open end credit plan' has the 
                        same meaning such term has for purposes of the 
                        Consumer Credit Protection Act;''.

SEC. 134. GIVING DEBTORS THE ABILITY TO KEEP LEASED PERSONAL PROPERTY 
                    BY ASSUMPTION.

  Section 365 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(p)(1) If a lease of personal property is rejected or not timely 
assumed by the trustee under subsection (d), the leased property is no 
longer property of the estate and the stay under section 362(a) of this 
title is automatically terminated.
  ``(2) In the case of an individual under chapter 7, the debtor may 
notify the creditor in writing that the debtor desires to assume the 
lease Upon being so notified, the creditor may, at its option, notify 
the debtor that it is willing to have the lease assumed by the debtor 
and may, at its option, condition such assumption on cure of any 
outstanding default on terms set by the contract If within 30 days 
ofthe notice from the creditor the debtor notifies the lessor in 
writing that the lease is assumed, the liability under the lease will 
be assumed by the debtor and not by the estate The stay under section 
362 of this title and the injunction under section 524(a) of this title 
shall not be violated by notification of the debtor and negotiation of 
cure under this subsection Nothing in this paragraph shall require a 
debtor to assume a lease, or a creditor to permit assumption.
  ``(3) In a case under chapter 11 of this title in which the debtor is 
an individual and in a case under chapter 13 of this title, if the 
debtor is the lessee with respect to personal property and the lease is 
not assumed in the plan confirmed by the court, the lease is deemed 
rejected as of the conclusion of the hearing on confirmation If the 
lease is rejected, the stay under section 362 of this title and any 
stay under section 1301 is automatically terminated with respect to the 
property subject to the lease.''.

SEC. 135. ADEQUATE PROTECTION OF LESSORS AND PURCHASE MONEY SECURED 
                    CREDITORS.

  (a) In General.--Chapter 13 of title 11, United States Code, is 
amended by adding after section 1307 the following:

``Sec. 1307A. Adequate protection in chapter 13 cases

  ``(a)(1)(A) On or before the date that is 30 days after the filing of 
a case under this chapter, the debtor shall make cash payments in an 
amount determined under paragraph (2), to--
          ``(i) any lessor of personal property; and
          ``(ii) any creditor holding a claim secured by personal 
        property to the extent that the claim is attributable to the 
        purchase of that property by the debtor
  ``(B) The debtor or the plan shall continue making the adequate 
protection payments required under subparagraph (A) until the earlier 
of the date on which--
          ``(i) the creditor begins to receive actual payments under 
        the plan; or
          ``(ii) the debtor relinquishes possession of the property 
        referred to in subparagraph (A) to--
                  ``(I) the lessor or creditor; or
                  ``(II) any third party acting under claim of right, 
                as applicable.
  ``(2) The payments referred to in paragraph (1)(A) shall be the 
contract amount and shall reduce any amount payable under section 
1326(a) of the title.
  ``(b)(1) Subject to the limitations under paragraph (2), the court 
may, after notice and hearing, change the amount and timing of the 
dates of payment of payments made under subsection (a)
  ``(2)(A) The payments referred to in paragraph (1) shall be payable 
not less frequently than monthly.
  ``(B) The amount of payments referred to in paragraph (1) shall not 
be less than the amount of any weekly, biweekly, monthly, or other 
periodic payment scheduled as payable under the contract between the 
debtor and creditor.
  ``(c) Notwithstanding section 1326(b), the payments referred to in 
subsection (a)(1)(A) shall be continued in addition to plan payments 
under a confirmed plan until actual payments to the creditor begin 
under that plan, if the confirmed plan provides--
          ``(1) for payments to a creditor or lessor described in 
        subsection (a)(1); and
          ``(2) for the deferral of payments to such creditor or lessor 
        under the plan until the payment of amounts described in 
        section 1326(b)
  ``(d) Notwithstanding sections 362, 542, and 543, a lessor or 
creditor described in subsection (a) may retain possession of property 
described in that subsection that was obtained in accordance with 
applicable law before the date of filing of the petition until the 
first payment under subsection (a)(1)(A) is received by the lessor or 
creditor.
  ``(e) On or before 60 days after the filling of a case under this 
chapter, a debtor retaining possession of personal property subject to 
a lease or securing a claim attributable in whole or in part to the 
purchase price of such property shall provide each creditor or lessor 
reasonable evidence of the maintenance of any required insurance 
coverage with respect to the use or ownership of such property and 
continue to do so for so long as the debtor retains possession of such 
property.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 13 of title 11, United States Code, is amended by inserting 
after the item relating to section 1307 the following:

``1307A. Adequate protection in chapter 13 cases.''.

SEC. 136. AUTOMATIC STAY.

  Section 362(b) of title 11, United States Code, as amended by 
sections 118 and 132, is amended--
          (1) in paragraph (20), by striking ``or'' at the end;
          (2) in paragraph (21), by striking the period at the end and 
        inserting a semicolon; and
          (3) by inserting after paragraph (21) the following:
          ``(22) under subsection (a) of any transfer that is not 
        avoidable under section 544 of this title and that is not 
        avoidable under section 549 of this title;
          ``(23) under subsection (a)(3), of the continuation of any 
        eviction, unlawful detainer action, or similar proceeding by a 
        lessor against a debtor involving residential real property in 
        which the debtor resides as a tenant under a rental agreement 
        and the debtor has not paid rent to the lessor pursuant to the 
        terms of the lease agreement or applicable State law after the 
        commencement and during the course of the case;
          ``(24) under subsection (a)(3), of the commencement or 
        continuation of any eviction, unlawful detainer action, or 
        similar proceeding by a lessor against a debtor involving 
        residential real property in which the debtor resides as a 
        tenant under a rental agreement that has terminated pursuant to 
        the lease agreement or applicable State law;
          ``(25) under subsection (a)(3), of any eviction, unlawful 
        detainer action, or similar proceeding, if the debtor has 
        previously filed within the last year and failed to pay post-
        petition rent during the course of that case; or
          ``(26) under subsection (a)(3), of eviction actions based on 
        endangerment to property or person or the use of illegal 
        drugs.''.

SEC. 137. EXTEND PERIOD BETWEEN BANKRUPTCY DISCHARGES.

  Title 11, United States Code, is amended--
          (1) in section 727(a)(8) by striking ``six'' and inserting 
        ``8''; and
          (2) in section 1328 by adding at the end the following:
  ``(f) Notwithstanding subsections (a) and (b), the court shall not 
grant a discharge of all debts provided for by the plan or disallowed 
under section 502 of this title if the debtor has received a discharge 
in any case filed under this title within 5 years of the order for 
relief under this chapter.''.

SEC. 138. DEFINITION OF DOMESTIC SUPPORT OBLIGATION.

  Section 101 of title 11, United States Code, is amended--
          (1) by striking paragraph (12A); and
          (2) by inserting after paragraph (14) the following:
          ``(14A) `domestic support obligation' means a debt that 
        accrues before or after the entry of an order for relief under 
        this title that is--
                  ``(A) owed to or recoverable by--
                          ``(i) a spouse, former spouse, or child of 
                        the debtor or that child's legal guardian; or
                          ``(ii) a governmental unit;
                  ``(B) in the nature of alimony, maintenance, or 
                support (including assistance provided by a 
                governmental unit) of such spouse, former spouse, or 
                child, without regard to whether such debt is expressly 
                so designated;
                  ``(C) established or subject to establishment before 
                or after entry of an order for relief under this title, 
                by reason of applicable provisions of--
                          ``(i) a separation agreement, divorce decree, 
                        or property settlement agreement;
                          ``(ii) an order of a court of record; or
                          ``(iii) a determination made in accordance 
                        with applicable nonbankruptcy law by a 
                        governmental unit; and
                  ``(D) not assigned to a nongovernmental entity, 
                unless that obligation is assigned voluntarily by the 
                spouse, former spouse, child, or parent solely for the 
                purpose of collecting the debt.''.

SEC. 139. PRIORITIES FOR CLAIMS FOR DOMESTIC SUPPORT OBLIGATIONS.

  Section 507(a) of title 11, United States Code, is amended--
          (1) by striking paragraph (7);
          (2) by redesignating paragraphs (1) through (6) as paragraphs 
        (2) through (7), respectively;
          (3) in paragraph (2), as redesignated, by striking ``First'' 
        and inserting ``Second'';
          (4) in paragraph (3), as redesignated, by striking ``Second'' 
        and inserting ``Third'';
          (5) in paragraph (4), as redesignated, by striking ``Third'' 
        and inserting ``Fourth'';
          (6) in paragraph (5), as redesignated, by striking ``Fourth'' 
        and inserting ``Fifth'';
          (7) in paragraph (6), as redesignated, by striking ``Fifth'' 
        and inserting ``Sixth'';
          (8) in paragraph (7), as redesignated, by striking ``Sixth'' 
        and inserting ``Seventh''; and
          (9) by inserting before paragraph (2), as redesignated, the 
        following:
          ``(1) First, allowed claims for domestic support obligations 
        to be paid in the following order on the condition that funds 
        received under this paragraph by a governmental unit in a case 
        under this title be applied:
                  ``(A) Claims that, as of the date of entry of the 
                order for relief, are owed directly to a spouse, former 
                spouse, or child of the debtor, or the parent of such 
                child, without regard to whether the claim is filed by 
                the spouse, former spouse, child, or parent, or is 
                filed by a governmental unit on behalf of that person.
                  ``(B) Claims that, as of the date of entry of the 
                order for relief, are assigned by a spouse, former 
                spouse, child of the debtor, or the parent of that 
                child to a governmental unit or are owed directly to a 
                governmental unit under applicable nonbankruptcy 
                law.''.

SEC. 140. REQUIREMENTS TO OBTAIN CONFIRMATION AND DISCHARGE IN CASES 
                    INVOLVING DOMESTIC SUPPORT OBLIGATIONS.

  Title 11, United States Code, is amended--
          (1) in section 1129(a), by adding at the end the following:
          ``(14) If the debtor is required by a judicial or 
        administrative order or statute to pay a domestic support 
        obligation, the debtor has paid all amounts payable under such 
        order or statute for such obligation that become payable after 
        the date on which the petition is filed.'';
          (2) in section 1325(a)--
                  (A) in paragraph (5), by striking ``and'' at the end;
                  (B) in paragraph (6), by striking the period at the 
                end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(7) if the debtor is required by a judicial or 
        administrative order or statute to pay a domestic support 
        obligation, the debtor has paid all amounts payable under such 
        order for such obligation that become payable after the date on 
        which the petition is filed.''; and
          (3) in section 1328(a), as amended by section 127, in the 
        matter preceding paragraph (1), by inserting ``, and with 
        respect to a debtor who is required by a judicial or 
        administrative order to pay a domestic support obligation, 
        certifies that all amounts payable under such order or statute 
        that are due on or before the date of the certification 
        (including amounts due before or after the petition was filed) 
        have been paid'' after ``completion by the debtor of all 
        payments under the plan''.

SEC. 141. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT OBLIGATION 
                    PROCEEDINGS.

  Section 362(b) of title 11, United States Code, as amended by 
sections 118, 132, and 136, is amended--
          (1) by striking paragraph (2) and inserting the following:
          ``(2) under subsection (a)--
                  ``(A) of the commencement or continuation of an 
                action or proceeding for--
                          ``(i) the establishment of paternity; or
                          ``(ii) the establishment or modification of 
                        an order for domestic support obligations; or
                  ``(B) the collection of a domestic support obligation 
                from property that is not property of the estate;'';
          (2) in paragraph (25), by striking ``or'' at the end;
          (3) in paragraph (26), by striking the period at the end and 
        inserting a semicolon; and
          (4) by inserting after paragraph (26) the following:
          ``(27) under subsection (a) with respect to the withholding 
        of income pursuant to an order as specified in section 466(b) 
        of the Social Security Act (42 U.S.C 666(b)); or
          ``(28) under subsection (a) with respect to--
                  ``(A) the withholding, suspension, or restriction of 
                drivers' licenses, professional and occupational 
                licenses, and recreational licenses pursuant to State 
                law, as specified in section 466(a)(16) of the Social 
                Security Act (42 U.S.C 666(a)(16)) or with respect to 
                the reporting of overdue support owedby an absent 
parent to any consumer reporting agency as specified in section 
466(a)(7) of the Social Security Act (42 U.S.C 666(a)(7));
                  ``(B) the interception of tax refunds, as specified 
                in sections 464 and 466(a)(3) of the Social Security 
                Act (42 U.S.C 664 and 666(a)(3)); or
                  ``(C) the enforcement of medical obligations as 
                specified under title IV of the Social Security Act (42 
                U.S.C 601 et seq.).''.

SEC. 142. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR ALIMONY, 
                    MAINTENANCE, AND SUPPORT.

  Section 523 of title 11, United States Code, is amended--
          (1) in subsection (a), by striking paragraph (5) and 
        inserting the following:
          ``(5) for a domestic support obligation;'';
          (2) in subsection (a)(15)--
                  (A) by inserting ``or'' after ``court of record,'';
                  (B) by striking ``unless--'' and all that follows 
                through ``debtor'' the last place it appears; and
          (3) in subsection (c), by striking ``(6), or (15)'' each 
        place it appears and inserting ``or (6)''.

SEC. 143. CONTINUED LIABILITY OF PROPERTY.

  Section 522 of title 11, United States Code, is amended--
          (1) in subsection (c), by striking paragraph (1) and 
        inserting the following:
          ``(1) a debt of a kind specified in paragraph (1) or (5) of 
        section 523(a) (in which case, notwithstanding any provision of 
        applicable nonbankruptcy law to the contrary, such property 
        shall be liable for a debt of a kind specified in section 
        523(a)(5);''; and
          (2) in subsection (f)(1)(A), by striking the dash and all 
        that follows through the end of the subparagraph and inserting 
        ``of a kind that is specified in section 523(a)(5); or''.

SEC. 144. PROTECTION OF DOMESTIC SUPPORT CLAIMS AGAINST PREFERENTIAL 
                    TRANSFER MOTIONS.

  Section 547(c)(7) of title 11, United States Code, is amended to read 
as follows:
          ``(7) to the extent such transfer was a bona fide payment of 
        a debt for a domestic support obligation; or''.

SEC. 145. CLARIFICATION OF MEANING OF HOUSEHOLD GOODS.

  Section 101 of title 11, United States Code, is amended by inserting 
after paragraph (27) the following:
          ``(27A) `household goods' includes tangible personal property 
        normally found in or around a residence, but does not include 
        motorized vehicles used for transportation purposes;''.

SEC. 146. NONDISCHARGEABLE DEBTS.

  Section 523(a) of title 11, United States Code, is amended by 
inserting after paragraph (14) the following:
          ``(14A) incurred to pay a debt that is nondischargeable by 
        reason of section 727, 1141, 1228(a), 1228(b), or 1328(c), or 
        any other provision of this subsection, if the debtor incurred 
        the debt to pay such a nondischargeable debt with the intent to 
        discharge in bankruptcy the newly-created debt, except that all 
        debts incurred to pay nondischargeable debts, without regard to 
        intent, are nondischargeable if incurred within 90 days of the 
        filing of the petition;''.

SEC. 147. MONETARY LIMITATION ON CERTAIN EXEMPT PROPERTY.

  Section 522 of title 11, United States Code, as amended by section 
125, is amended--
          (1) in subsection (b)(2)(A) by striking ``subsection (o)'' 
        and inserting ``subsections (o) and (p)'' before ``any 
        property''; and
          (2) by adding at the end the following:
  ``(p)(1) Except as provided in paragraphs (2) and (3), as a result of 
electing under subsection (b)(3)(A) to exempt property under State or 
local law, a debtor may not exempt any interest that exceeds $250,000 
in value, in the aggregate, in--
          ``(A) real or personal property that the debtor or a 
        dependent of the debtor uses as a residence;
          ``(B) a cooperative that owns property that the debtor or a 
        dependent of the debtor uses as a residence; or
          ``(C) a burial plot for the debtor or a dependent of the 
        debtor.
  ``(2) The limitation under paragraph (1) shall not apply to an 
exemption claimed under subsection (b)(3)(A) by a family farmer for the 
principal residence of that farmer.
  ``(3) Paragraph (1) shall not apply to debtors if applicable State 
law expressly provides by a statute enacted after the effective date of 
this paragraph that such paragraph shall not apply to debtors.''.

SEC. 148. BANKRUPTCY FEES.

  Section 1930 of title 28, United States Code, is amended--
          (1) in subsection (a) by striking ``Notwithstanding section 
        1915 of this title, the'' and inserting ``The''; and
          (2) by adding at the end the following:
  ``(f)(1) Pursuant to procedures prescribed by the Judicial Conference 
of the United States, the district court or the bankruptcy court may 
waive the filing fee in a case under chapter 7 of title 11 for an 
individual debtor who is unable to pay such fee in installments For 
purposes of this paragraph, the term `filing fee' means the filing fee 
required by subsection (a), or any other fee prescribed by the Judicial 
Conference under subsections (b) and (c) that is payable to the clerk 
upon the commencement of a case under chapter 7 of title 11.
  ``(2) The district court or the bankruptcy court may also waive for 
such debtors other fees prescribed pursuant to subsections (b) and (c).
  ``(3) This subsection does not restrict the district court or the 
bankruptcy court from waiving, in accordance with Judicial Conference 
policy, fees prescribed pursuant to such subsections for other debtors 
and creditors.''.

SEC. 149. COLLECTION OF CHILD SUPPORT.

  (a) Duties of Trustee Under Chapter 7.--Section 704 of title 11, 
United States Code, as amended by section 102, is amended--
          (1) by inserting ``(a)'' before ``The trustee'',
          (2) in paragraph (9) by striking ``and'' at the end,
          (3) in paragraph (10) by striking the period and inserting 
        ``; and'', and
          (4) by adding at the end the following:
          ``(11) if, with respect to an individual debtor, there is a 
        claim for support of a child of the debtor or a custodial 
        parent of such child entitled to receive priority under section 
        507(a)(1) of this title, provide the applicable notification 
        specified in subsection (b).
  ``(b)(1) In any case described in subsection (a)(11), the trustee 
shall--
          ``(A)(i) notify in writing the holder of the claim of the 
        right of such holder to use the services of a State child 
        support enforcement agency established under sections 464 and 
        466 of the Social Security Act for the State in which the 
        holder resides; and
          ``(ii) include in the notice under this paragraph the address 
        and telephone number of the child support enforcement agency; 
        and
          ``(B)(i) notify in writing the State child support agency of 
        the State in which the holder of the claim resides of the 
        claim;
          ``(ii) include in the notice under this paragraph the name, 
        address, and telephone number of the holder of the claim; and
          ``(iii) at such time as the debtor is granted a discharge 
        under section 727 of this title, notify the holder of such 
        claim and the State child support agency of the State in which 
        such holder resides of--
                  ``(I) the granting of the discharge;
                  ``(II) the last recent known address of the debtor; 
                and
                  ``(III) with respect to the debtor's case, the name 
                of each creditor that holds a claim that is not 
                discharged under paragraph (2), (4), or (14A) of 
                section 523(a) of this title or that was reaffirmed by 
                the debtor under section 524(c) of this title.
  ``(2)(A) If, after receiving a notice under paragraph (1)(B)(iii), a 
holder of a claim or a State child support agency is unable to locate 
the debtor that is the subject of the notice, such holder or such 
agency may request from a creditor described in paragraph 
(1)(B)(iii)(III) the last known address of the debtor.
  ``(B) Notwithstanding any other provision of law, a creditor that 
makes a disclosure of a last known address of a debtor in connection 
with a request made under subparagraph (A) shall not be liable to the 
debtor or any other person by reason of making such disclosure.''.
  (b) Duties of Trustee Under Chapter 13.--Section 1302 of title 11, 
United States Code, is amended--
          (1) in subsection (b)--
                  (A) in paragraph (4) by striking ``and'' at the end,
                  (B) in paragraph (5) by striking the period and 
                inserting ``; and'', and
                  (C) by adding at the end the following:
          ``(6) if, with respect to an individual debtor, there is a 
        claim for support of a child of the debtor or a custodial 
        parent of such child entitled to receivepriority under section 
507(a)(1) of this title, provide the applicable notification specified 
in subsection (d).'', and
          (2) by adding at the end the following:
  ``(d)(1) In any case described in subsection (b)(6), the trustee 
shall--
          ``(A)(i) notify in writing the holder of the claim of the 
        right of such holder to use the services of a State child 
        support enforcement agency established under sections 464 and 
        466 of the Social Security Act for the State in which the 
        holder resides; and
          ``(ii) include in the notice under this paragraph the address 
        and telephone number of the child support enforcement agency; 
        and
          ``(B)(i) notify in writing the State child support agency of 
        the State in which the holder of the claim resides of the 
        claim; and
          ``(ii) include in the notice under this paragraph the name, 
        address, and telephone number of the holder of the claim;
          ``(iii) at such time as the debtor is granted a discharge 
        under section 1328 of this title, notify the holder of the 
        claim and the State child support agency of the State in which 
        such holder resides of--
                  ``(I) the granting of the discharge;
                  ``(II) the last recent known address of the debtor; 
                and
                  ``(III) with respect to the debtor's case, the name 
                of each creditor that holds a claim that is not 
                discharged under paragraph (2), (4), or (14A) of 
                section 523(a) of this title or that was reaffirmed by 
                the debtor under section 524(c) of this title.
  ``(2)(A) If, after receiving a notice under paragraph (1)(B)(iii), a 
holder of a claim or a State child support agency is unable to locate 
the debtor that is the subject of the notice, such holder or such 
agency may request from a creditor described in paragraph (1)(B)(iii) 
the last known address of the debtor.
  ``(B) Notwithstanding any other provision of law, a creditor that 
makes a disclosure of a last known address of a debtor in connection 
with a request made under subparagraph (A) shall not be liable to the 
debtor or any other person by reason of making such disclosure.''.

SEC. 150. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICIPANT CONTRIBUTIONS AND 
                    OTHER PROPERTY FROM THE ESTATE.

  (a) In General.--Section 541(b) of title 11 of the United States Code 
is amended--
          (1) by striking ``or'' at the end of paragraph (4)(B)(ii);
          (2) by striking the period at the end of paragraph (5) and 
        inserting ``; or''; and
          (3) by inserting after paragraph (5) the following:
          ``(7) any amount or interest in property to the extent that 
        an employer has withheld amounts from the wages of employees 
        for contribution to an employee benefit plan subject to title I 
        of the Employee Retirement Income Security Act of 1974, or to 
        the extent that the employer has received amounts as a result 
        of payments by participants or beneficiaries to an employer for 
        contribution to an employee benefit plan subject to title I of 
        the Employee Retirement Income Security Act of 1974.''.
  (b) Application of Amendment.--The amendment made by this section 
shall not apply to cases commenced under title 11 of the United States 
Code before the expiration of the 180-day period beginning on the date 
of the enactment of this Act.

SEC. 151. CLARIFICATION OF POSTPETITION WAGES AND BENEFITS.

  Section 503(b)(1)(A) of title 11, United States Code, is amended to 
read as follows:
          ``(A) the actual, necessary costs and expenses of preserving 
        the estate, including wages, salaries, or commissions for 
        services rendered after the commencement of the case, and wages 
        and benefits attributable to any period of time after 
        commencement of the case as a result of the debtor's violation 
        of Federal law, without regard to when the original unlawful 
        act occurred or to whether any services were rendered;''.

SEC. 152. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT OBLIGATION 
                    PROCEEDINGS.

  Section 362(b)(2) of title 11, United States Code, is amended--
          (1) in subparagraph (A) by striking ``or'' at the end;
          (2) in subparagraph (B) by adding ``or'' at the end; and
          (3) by adding at the end the following:
                  ``(C) under subsection (a) of--
                          ``(i) the withholding of income for payment 
                        of a domestic support obligation pursuant to a 
                        judicial or administrative order or statute for 
                        such obligation that first becomes payable 
                        after the date on which the petition is filed; 
                        or
                          ``(ii) the withholding of income for payment 
                        of a domestic support obligation owed directly 
                        to the spouse, former spouse or child of the 
                        debtor or the parent of such child, pursuant to 
                        a judicial or administrative order or statute 
                        for such obligation that becomes payable before 
                        the date on which the petition is filed unless 
                        the court finds, after notice and hearing, that 
                        such withholding would render the plan 
                        infeasible;''.

SEC. 153. AUTOMATIC STAY INAPPLICABLE TO CERTAIN PROCEEDINGS AGAINST 
                    THE DEBTOR.

  Section 362(b)(2) of title 11, United States Code, as amended by 
section 153, is amended--
          (1) in subparagraph (B) by striking ``or'' at the end;
          (2) by inserting after subparagraph (C) the following:
                  ``(D) the commencement or continuation of a 
                proceeding concerning a child custody or visitation;
                  ``(E) the commencement or continuation of a 
                proceeding alleging domestic violence; or
                  ``(F) the commencement or continuation of a 
                proceeding seeking a dissolution of marriage, except to 
                the extent the proceeding concerns property of the 
                estate;''.

                TITLE II--DISCOURAGING BANKRUPTCY ABUSE

SEC. 201. REENACTMENT OF CHAPTER 12.

  (a) Reenactment.--Chapter 12 of title 11 of the United States Code, 
as in effect on March 31, 1999, is hereby reenacted.
  (b) Effective Date.--The amendment made by subsection (a) shall take 
effect on March 31, 1999.

SEC. 202. MEETINGS OF CREDITORS AND EQUITY SECURITY HOLDERS.

  Section 341 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(e) Notwithstanding subsections (a) and (b), the court, on the 
request of a party in interest and after notice and a hearing, for 
cause may order that the United States trustee not convene a meeting of 
creditors or equity security holders if the debtor has filed a plan as 
to which the debtor solicited acceptances prior to the commencement of 
the case.''.

SEC. 203. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY.

  (a) In General.--Section 522 of title 11, United States Code, as 
amended by sections 113, 125, and 147 is amended--
          (1) in subsection (b)--
                  (A) in paragraph (2)--
                          (i) by striking ``(2)(A)'' and inserting:
  ``(3) Property listed in this paragraph is--
          ``(A) subject to subsections (o) and (p),'';
                          (ii) in subparagraph (B), by striking ``and'' 
                        at the end;
                          (iii) in subparagraph (C), by striking the 
                        period at the end and inserting ``; and''; and
                          (iv) by adding at the end the following:
          ``(D) retirement funds to the extent that those funds are in 
        a fund or account that is exempt from taxation under section 
        401, 403, 408, 408A, 414, 457, or 501(a) of the Internal 
        Revenue Code of 1986.'';
                  (B) by striking paragraph (1) and inserting:
  ``(2) Property listed in this paragraph is property that is specified 
under subsection (d), unless the State law that is applicable to the 
debtor under paragraph (3)(A) specifically does not so authorize.'';
                  (C) in the matter preceding paragraph (2)--
                          (i) by striking ``(b)'' and inserting 
                        ``(b)(1)'';
                          (ii) by striking ``paragraph (2)'' both 
                        places it appears and inserting ``paragraph 
                        (3)'';
                          (iii) by striking ``paragraph (1)'' each 
                        place it appears and inserting ``paragraph 
                        (2)''; and
                          (iv) by striking ``Such property is--''; and
                  (D) by adding at the end of the subsection the 
                following:
  ``(4) For purposes of paragraph (3)(D) and subsection (d)(12), the 
following shall apply:
          ``(A) If the retirement funds are in a retirement fund that 
        has received a favorable determination pursuant to section 7805 
        of the Internal Revenue Code of 1986, and that determination is 
        in effect as of the date of the commencement of the case under 
        section 301, 302, or 303 of this title, those funds shall be 
        presumed to be exempt from the estate
          ``(B) If the retirement funds are in a retirement fund that 
        has not received a favorable determination pursuant to such 
        section 7805, those funds are exempt from the estate if the 
        debtor demonstrates that--
                  ``(i) no prior determination to the contrary has been 
                made by a court or the Internal Revenue Service; and
                  ``(ii) the retirement fund is in substantial 
                compliance with the applicable requirements of the 
                Internal Revenue Code of 1986.
          ``(C) A direct transfer of retirement funds from 1 fund or 
        account that is exempt from taxation under section 401, 403, 
        408, 408A, 414, 457, or 501(a) of the Internal Revenue Code of 
        1986, pursuant to section 401(a)(31) of the Internal Revenue 
        Code of 1986, or otherwise, shall not cease to qualify for 
        exemption under paragraph (3)(D) or subsection (d)(12) by 
        reason of that direct transfer.
          ``(D)(i) Any distribution that qualifies as an eligible 
        rollover distribution within the meaning of section 402(c) of 
        the Internal Revenue Code of 1986 or that is described in 
        clause (ii) shall not cease to qualify for exemption under 
        paragraph (3)(D) or subsection (d)(12) by reason of that 
        distribution.
          ``(ii) A distribution described in this clause is an amount 
        that--
                  ``(I) has been distributed from a fund or account 
                that is exempt from taxation under section 401, 403, 
                408, 408A, 414, 457, or 501(a) of the Internal Revenue 
                Code of 1986; and
                  ``(II) to the extent allowed by law, is deposited in 
                such a fund or account not later than60 days after the 
distribution of that amount.''; and
          (2) in subsection (d)--
                  (A) in the matter preceding paragraph (1), by 
                striking ``subsection (b)(1)'' and inserting 
                ``subsection (b)(2)''; and
                  (B) by adding at the end the following:
          ``(12) Retirement funds to the extent that those funds are in 
        a fund or account that is exempt from taxation under section 
        401, 403, 408, 408A, 414, 457, or 501(a) of the Internal 
        Revenue Code of 1986.''.
  (b) Automatic Stay.--Section 362(b) of title 11, United States Code, 
as amended by sections 118, 132, 136, and 141 is amended--
          (1) in paragraph (27), by striking ``or'' at the end;
          (2) in paragraph (28), by striking the period and inserting 
        ``; or'';
          (3) by inserting after paragraph (28) the following:
          ``(29) under subsection (a), of withholding of income from a 
        debtor's wages and collection of amounts withheld, pursuant to 
        the debtor's agreement authorizing that withholding and 
        collection for the benefit of a pension, profit-sharing, stock 
        bonus, or other plan established under section 401, 403, 408, 
        408A, 414, 457, or 501(a) of the Internal Revenue Code of 1986 
        that is sponsored by the employer of the debtor, or an 
        affiliate, successor, or predecessor of such employer--
                  ``(A) to the extent that the amounts withheld and 
                collected are used solely for payments relating to a 
                loan from a plan that satisfies the requirements of 
                section 408(b)(1) of the Employee Retirement Income 
                Security Act of 1974 or is subject to section 72(p) of 
                the Internal Revenue Code of 1986; or
                  ``(B) in the case of a loan from a thrift savings 
                plan described in subchapter III of title 5, that 
                satisfies the requirements of section 8433(g) of such 
                title.''; and
          (4) by adding at the end of the flush material following 
        paragraph (29) the following: ``Paragraph (29) does not apply 
        to any amount owed to a plan referred to in that paragraph that 
        is incurred under a loan made during the 1-year period 
        preceding the filing of a petition Nothing in paragraph (29) 
        may be construed to provide that any loan made under a 
        governmental plan under section 414(d), or a contract or 
        account under section 403(b), of the Internal Revenue Code of 
        1986 constitutes a claim or a debt under this title.''.
  (c) Exceptions to Discharge.--Section 523(a) of title 11, United 
States Code, is amended--
          (1) by striking ``or'' at the end of paragraph (17);
          (2) by striking the period at the end of paragraph (18) and 
        inserting ``; or''; and
          (3) by adding at the end the following:
          ``(19) owed to a pension, profit-sharing, stock bonus, or 
        other plan established under section 401, 403, 408, 408A, 414, 
        457, or 501(c) of the Internal Revenue Code of 1986, pursuant 
        to--
                  ``(A) a loan permitted under section 408(b)(1) of the 
                Employee Retirement Income Security Act of 1974) or 
                subject to section 72(p) of the Internal Revenue Code 
                of 1986; or
                  ``(B) a loan from the thrift savings plan described 
                in subchapter III of title 5, that satisfies the 
                requirements of section 8433(g) of such title.
Paragraph (19) does not apply to any amount owed to a plan referred to 
in that paragraph that is incurred under a loan made during the 1-year 
period preceding the filing of a petition Nothing in paragraph (19) may 
be construed to provide that any loan made under a governmental plan 
under section 414(d), or a contract or account under section 403(b), of 
the Internal Revenue Code of 1986 constitutes a claim or a debt under 
this title.''.
  (d) Plan Contents.--Section 1322 of title 11, United States Code, is 
amended by adding at the end the following:
  ``(f) A plan may not materially alter the terms of a loan described 
in section 362(b)(29) of this title.''.

SEC. 204. PROTECTION OF REFINANCE OF SECURITY INTEREST.

  Subparagraphs (A), (B), and (C) of section 547(e)(2) of title 11, 
United States Code, are amended by striking ``10'' each place it 
appears and inserting ``30''.

SEC. 205. EXECUTORY CONTRACTS AND UNEXPIRED LEASES.

  Section 365(d)(4) of title 11, United States Code, is amended to read 
as follows:
  ``(4)(A) Subject to subparagraph (B), in any case under any chapter 
in this title, an unexpired lease of nonresidential real property under 
which the debtor is the lessee shall be deemed rejected, and the 
trustee shall immediately surrender such property to the lessor, if the 
trustee does not assume or reject the unexpired lease by the earlier 
of--
          ``(i) the date that is 120 days after the date of the order 
        for relief; or
          ``(ii) the date of the entry of an order confirming a plan.
  ``(B)(i) The court may extend the period determined under 
subparagraph (A) for 120 days upon motion of the trustee or the lessor 
for cause.
  ``(ii) If the court grants an extension under clause (i), the court 
may grant a subsequent extension only upon prior written consent of the 
lessor.''.

SEC. 206. CREDITORS AND EQUITY SECURITY HOLDERS COMMITTEES.

  Section 1102(a)(2) of title 11, United States Code, is amended by 
inserting before the first sentence the following: ``On its own motion 
or on request of a party in interest, and after notice and hearing, the 
court may order a change in the membership of a committee appointed 
under this subsection, if the court determines that the change is 
necessary to ensure adequate representation of creditors or equity 
security holders.''.

SEC. 207. AMENDMENT TO SECTION 546 OF TITLE 11, UNITED STATES CODE.

  Section 546 of title 11, United States Code, is amended by inserting 
at the end thereof:
  ``(i) Notwithstanding section 545 (2) and (3) of this title, the 
trustee may not avoid a warehouseman's lien for storage, transportation 
or other costs incidental to the storage and handling of goods, as 
provided by section 7-209 of the Uniform Commercial Code.''.

SEC. 208. LIMITATION.

  Section 546(c)(1)(B) of title 11, United States Code, is amended by 
striking ``20'' and inserting ``45''.

SEC. 209. AMENDMENT TO SECTION 330(A) OF TITLE 11, UNITED STATES CODE.

  Section 330(a) of title 11, United States Code, is amended--
          (1) in paragraph (3)--
                  (A) in subparagraph (A) after ``awarded'', by 
                inserting ``to an examiner, chapter 11 trustee, or 
                professional person''; and
                  (B) by redesignating subdivisions (A) through (E) as 
                clauses (i) through (iv), respectively; and
          (2) by adding at the following:
          ``(B) In determining the amount of reasonable compensation to 
        be awarded a trustee, the court shall treat such compensation 
        as a commission based on the results achieved.''.

SEC. 210. POSTPETITION DISCLOSURE AND SOLICITATION.

  Section 1125 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(g) Notwithstanding subsection (b), an acceptance or rejection of 
the plan may be solicited from a holder of a claim or interest if such 
solicitation complies with applicable nonbankruptcy law and if such 
holder was solicited before the commencement of the case in a manner 
complying with applicable nonbankruptcy law.''.

SEC. 211. PREFERENCES.

  Section 547(c) of title 11, United States Code, is amended--
          (1) by amending paragraph (2) to read as follows:
          ``(2) to the extent that such transfer was in payment of a 
        debt incurred by the debtor in the ordinary course of business 
        or financial affairs of the debtor and the transferee, and such 
        transfer was--
                  ``(A) made in the ordinary course of business or 
                financial affairs of the debtor and the transferee; or
                  ``(B) made according to ordinary business terms;'';
          (2) in paragraph (7) by striking ``or'' at the end;
          (3) in paragraph (8) by striking the period at the end and 
        inserting ``; or''; and
          (4) by adding at the end the following:
          ``(9) if, in a case filed by a debtor whose debts are not 
        primarily consumer debts, the aggregate value of all property 
        that constitutes or is affected by such transfer is less than 
        $5,000.''.

SEC. 212. VENUE OF CERTAIN PROCEEDINGS.

  Section 1409(b) of title 28, United States Code, is amended by 
inserting ``, or a nonconsumer debt against a noninsider of less than 
$10,000,'' after ``$5,000''.

SEC. 213. PERIOD FOR FILING PLAN UNDER CHAPTER 11.

  Section 1121(d) of title 11, United States Code, is amended--
          (1) by striking ``On'' and inserting ``(1) Subject to 
        paragraph (1), on''; and
          (2) by adding at the end the following:
  ``(2)(A) Such 120-day period may not be extended beyond a date that 
is 18 months after the date of the order for relief under this chapter.
  ``(B) Such 180-day period may not be extended beyond a date that is 
20 months after the date of the order for relief under this chapter.''.

SEC. 214. FEES ARISING FROM CERTAIN OWNERSHIP INTERESTS.

  Section 523(a)(16) of title 11, United States Code, is amended--
          (1) by striking ``dwelling'' the first place it appears;
          (2) by striking ``ownership or'' and inserting 
        ``ownership,'';
          (3) by striking ``housing'' the first place it appears; and
          (4) by striking ``but only'' and all that follows through 
        ``such period,'', and inserting ``or a lot in a homeowners 
        association, for as long as the debtor or the trustee has a 
        legal, equitable, or possessory ownership interest in such 
        unit, such corporation, or such lot,''.

SEC. 215. CLAIMS RELATING TO INSURANCE DEPOSITS IN CASES ANCILLARY TO 
                    FOREIGN PROCEEDINGS.

  Section 304 of title 11, United States Code, is amended to read as 
follows:

``Sec. 304. Cases ancillary to foreign proceedings

  ``(a) For purposes of this section--
          ``(1) the term `domestic insurance company' means a domestic 
        insurance company, as such term is used in section 109(b)(2);
          ``(2) the term `foreign insurance company' means a foreign 
        insurance company, as such term is used in section 109(b)(3);
          ``(3) the term `United States claimant' means a beneficiary 
        of any deposit referred to in subsection (b) or any 
        multibeneficiary trust referred to in subsection (b);
          ``(4) the term `United States creditor' means, with respect 
        to a foreign insurance company--
                  ``(A) a United States claimant; or
                  ``(B) any business entity that operates in the United 
                States and that is a creditor; and
          ``(5) the term `United States policyholder' means a holder of 
        an insurance policy issued in the United States.
  ``(b) The court may not grant relief under chapter 15 of this title 
with respect to any deposit, escrow, trust fund, or other security 
required or permitted under any applicable State insurance law or 
regulation for the benefit of claim holders in the United States.''.

SEC. 216. DEFAULTS BASED ON NONMONETARY OBLIGATIONS.

  (a) Executory Contracts and Unexpired Leases.--Section 365 of title 
11, United States Code, is amended--
          (1) in subsection (b)--
                  (A) in paragraph (1)(A) by striking the semicolon at 
                the end and inserting the following:
        ``other than a default that is a breach of a provision relating 
        to--
                  ``(i) the satisfaction of any provision (other than a 
                penalty rate or penalty provision) relating to a 
                default arising from any failure to perform nonmonetary 
                obligations under an unexpired lease of real property 
                (excluding executory contracts that transfer a right or 
                interest under a filed or issued patent, copyright, 
                trademark, trade dress, or trade secret), if it is 
                impossible for the trustee to cure such default by 
                performing nonmonetary acts at and after the time of 
                assumption; or
                  ``(ii) the satisfaction of any provision (other than 
                a penalty rate or penalty provision) relating to a 
                default arising from any failure to perform nonmonetary 
                obligations under an executory contract, if it is 
                impossible for the trustee to cure such default by 
                performing nonmonetary acts at and after the time of 
                assumption and if the court determines, based on the 
                equities of the case, that this subparagraph should not 
                apply with respect to such default;''; and
                  (B) by amending paragraph (2)(D) to read as follows:
          ``(D) the satisfaction of any penalty rate or penalty 
        provision relating to a default arising from a failure to 
        perform nonmonetary obligations under an executory contract 
        (excluding executory contracts that transfer a right or 
        interest under a filed or issued patent, copyright, trademark, 
        trade dress, or trade secret) or under an unexpired lease of 
        real or personal property.'';
          (2) in subsection (c)--
                  (A) in paragraph (2) by adding ``or'' at the end;
                  (B) in paragraph (3) by striking ``; or'' at the end 
                and inserting a period; and
                  (C) by striking paragraph (4);
          (3) in subsection (d)--
                  (A) by striking paragraphs (5) through (9); and
                  (B) by redesignating paragraph (10) as paragraph (5); 
                and
          (4) in subsection (f)(1) by striking ``; except that'' and 
        all that follows through the end of the paragraph and inserting 
        a period.
  (b) Impairment of Claims or Interests.--Section 1124(2) of title 11, 
United States Code, is amended--
          (1) in subparagraph (A) by inserting ``or of a kind that 
        section 365(b)(1)(A) of this title expressly does not require 
        to be cured'' before the semicolon at the end;
          (2) in subparagraph (C) by striking ``and'' at the end;
          (3) by redesignating subparagraph (D) as subparagraph (E); 
        and
          (4) by inserting after subparagraph (C) the following:
                  ``(D) if such claim or such interest arises from any 
                failure to perform a nonmonetary obligation, 
                compensates the holder of such claim or such interest 
                (other than the debtor or an insider) for any actual 
                pecuniary loss incurred by such holder as a result of 
                such failure; and''.

SEC. 217. SHARING OF COMPENSATION.

  Section 504 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(c) This section shall not apply with respect to sharing, or 
agreeing to share, compensation with a bona fide public service 
attorney referral program that operates in accordance with non-Federal 
law regulating attorney referral services and with rules of 
professional responsibility applicable to attorney acceptance of 
referrals.''.

SEC. 218. PRIORITY FOR ADMINISTRATIVE EXPENSES.

  Section 503(b) of title 11, United States Code, is amended--
          (1) by deleting ``and'' at the end of paragraph (5);
          (2) by striking the period at the end of paragraph (6) and 
        inserting ``; and'';
          (3) by inserting the following after paragraph (6):
          ``(7) with respect to a nonresidential real property lease 
        previously assumed under section 365, and subsequently 
        rejected, a sum equal to all monetary obligations due, 
        excluding those arising from or relating to a failure to 
        operate or penalty provisions, for the period of one year 
        following the later of the rejection date or date of actual 
        turnover of the premises, without reduction or setoff for any 
        reason whatsoever except for sums actually received or to be 
        received from a nondebtor; and the claim for remaining sums due 
        for the balance of the term of the lease shall be a claim under 
        section 502(b)(6).''.

           TITLE III--GENERAL BUSINESS BANKRUPTCY PROVISIONS

SEC. 301. DEFINITION OF DISINTERESTED PERSON.

  Section 101(14) of title 11, United States Code, is amended to read 
as follows:
          ``(14) `disinterested person' means a person that--
                  ``(A) is not a creditor, an equity security holder, 
                or an insider;
                  ``(B) is not and was not, within 2 years before the 
                date of the filing of the petition, a director, 
                officer, or employee of the debtor; and
                  ``(C) does not have an interest materially adverse to 
                the interest of the estate or of any class of creditors 
                or equity security holders, by reason of any direct or 
                indirect relationship to, connection with, or interest 
                in, the debtor, or for any other reason;''.

SEC. 302. MISCELLANEOUS IMPROVEMENTS.

  (a) Who May Be a Debtor.--Section 109 of title 11, United States 
Code, is amended by adding at the end the following:
  ``(h)(1) Subject to paragraphs (2) and (3) and notwithstanding any 
other provision of this section, an individual may not be a debtor 
under this title unless that individual has, during the 90-day period 
preceding the date of filing of the petition of that individual, 
received credit counseling, including, at a minimum, participation in 
an individual or group briefing that outlined the opportunities for 
available credit counseling and assisted that individual in performing 
an initial budget analysis, through a credit counseling program 
(offered through an approved credit counseling service described in 
section 111(a)).
  ``(2)(A) Paragraph (1) shall not apply with respect to a debtor who 
resides in a district for which the United States trustee or bankruptcy 
administrator of the bankruptcy court of that district determines that 
the approved credit counseling services for that district are not 
reasonably able to provide adequate services to the additional 
individuals who would otherwise seek credit counseling from those 
programs by reason of the requirements of paragraph (1).
  ``(B) Each United States trustee or bankruptcy administrator that 
makes a determination described in subparagraph (A) shall review that 
determination not later than one year after the date of that 
determination, and not less frequently than every year thereafter.
  ``(3)(A) Subject to subparagraph (B), the requirements of paragraph 
(1) shall not apply with respect to a debtor who submits to the court a 
certification that--
          ``(i) describes exigent circumstances that merit a waiver of 
        the requirements of paragraph (1);
          ``(ii) states that the debtor requested credit counseling 
        services from an approved credit counseling service, but was 
        unable to obtain the services referred to in paragraph (1) 
        during the 5-day period beginning on the date on which the 
        debtor made that request or that the exigent circumstances 
        require filing before such 5-day period expires; and
          ``(iii) is satisfactory to the court.
  ``(B) With respect to a debtor, an exemption under subparagraph (A) 
shall cease to apply to that debtor on the date on which the debtor 
meets the requirements of paragraph (1), but in no case may the 
exemption apply to that debtor after the date that is 30 days after the 
debtor files a petition.''.
  (b) Chapter 7 Discharge.--Section 727(a) of title 11, United States 
Code, is amended--
          (1) in paragraph (9), by striking ``or'' at the end;
          (2) in paragraph (10), by striking the period and inserting 
        ``; or''; and
          (3) by adding at the end the following:
          ``(11) after the filing of the petition, the debtor failed to 
        complete an instructional course concerning personal financial 
        management described in section 111 unless the debtor resides 
        in a district for which the United States trustee or bankruptcy 
        administrator of the bankruptcy court of that district 
        determines that the approved instructional courses are not 
        adequate to provide service to the additional individuals who 
        would be required to compete the instructional course by reason 
        of the requirements of this section Each United States trustee 
        or bankruptcy administrator that makes such a determination 
        shall review that determination not later than 1 year after the 
        date of that determination, and not less frequently than every 
        year thereafter.''.
  (c) Chapter 13 Discharge.--Section 1328 of title 11, United States 
Code, as amended by section 137, is amended by adding at the end the 
following:
  ``(g) The court shall not grant a discharge under this section to a 
debtor, unless after filing a petition the debtor has completed an 
instructional course concerning personal financial management described 
in section 111.
  ``(h) Subsection (g) shall not apply with respect to a debtor who 
resides in a district for which the United States trustee or bankruptcy 
administrator of the bankruptcy court of that district determines that 
the approved instructional courses are not adequate to provide service 
to the additional individuals who would be required to complete the 
instructional course by reason of the requirements of this section.
  ``(i) Each United States trustee or bankruptcy administrator that 
makes a determination described in subsection (h) shall review that 
determination not later than 1 year after the date of that 
determination, and not less frequently than every year thereafter.''.
  (d) Debtor's Duties.--Section 521 of title 11, United States Code, as 
amended by sections 604 and 120, is amended by adding at the end the 
following:
  ``(d) In addition to the requirements under subsection (a), an 
individual debtor shall file with the court--
          ``(1) a certificate from the credit counseling service that 
        provided the debtor services under section 109(h); and
          ``(2) a copy of the debt repayment plan, if any, developed 
        under section 109(h) through the credit counseling service 
        referred to in paragraph (1).''.
  (e) General Provisions.--
          (1) In general.--Chapter 1 of title 11, United States Code, 
        is amended by adding at the end the following:

``Sec. 111. Credit counseling services; financial management 
                    instructional courses

  ``The clerk of each district shall maintain a list of credit 
counseling services that provide 1 or more programs described in 
section 109(h) and a list of instructional courses concerning personal 
financial management that have been approved by--
          ``(1) the United States trustee; or
          ``(2) the bankruptcy administrator for the district.''.
          (2) Clerical amendment.--The table of sections at the 
        beginning of chapter 1 of title 11, United States Code, is 
        amended by adding at the end the following:

``111. Credit counseling services; financial management instructional 
courses.''.

  (e) Definitions.--Section 101 of title 11, United States Code, is 
amended--
          (1) by inserting after paragraph (13) the following:
          ``(13A) `debtor's principal residence' means a residential 
        structure including incidental property when the structure 
        contains 1 to 4 units, whether or not that structure is 
        attached to real property, and includes, without limitation, an 
        individual condominium or cooperative unit or mobile or 
        manufactured home or trailer;'';
          (2) by inserting after paragraph (27A), as added by section 
        318 of this Act, the following:
          ``(27B) `incidental property' means property incidental to 
        such residence including, without limitation, property commonly 
        conveyed with a principal residence where the real estate is 
        located, window treatments, carpets, appliances and equipment 
        located in the residence, and easements, appurtenances, 
        fixtures, rents, royalties, mineral rights, oil and gas rights, 
        escrow funds and insurance proceeds;'';
          (3) in section 362(b), as amended by sections 117, 118, 132, 
        136, 141 203, 818, and 1007,--
                  (A) in paragraph (28) by striking ``or'' at the end 
                thereof;
                  (B) in paragraph (29) by striking the period at the 
                end and inserting ``; or''; and
                  (C) by inserting after paragraph (29) the following:
          ``(30) under subsection (a), until a prepetition default is 
        cured fully in a case under chapter 13 of this title by actual 
        payment of all arrears as required by the plan, of the 
        postponement, continuation or other similar delay of a 
        prepetition foreclosure proceeding or sale in accordance with 
        applicable nonbankruptcy law, but nothing herein shall imply 
        that such postponement, continuation or other similar delay is 
        a violation of the stay under subsection (a).''; and
          (4) by amending section 1322(b)(2) to read as follows:
          ``(2) modify the rights of holders of secured claims, other 
        than a claim secured primarily by a security interest in 
        property used as the debtor's principal residence at any time 
        during 180 days prior to the filing of the petition, or of 
        holders of unsecured claims, or leave unaffected the rights of 
        holders of any class of claims;''.
  (f) Limitation.--Section 362 of title 11, United States Code, is 
amended by adding at the end the following:
  ``(j) If one case commenced under chapter 7, 11, or 13 of this title 
is dismissed due to the creation of a debt repayment plan administered 
by a credit counseling agency approved pursuant to section 111 of this 
title, then for purposes of section 362(c)(3) of this title the 
subsequent case commenced under any such chapter shall not be presumed 
to be filed not in good faith.''.
  (g) Return of Goods Shipped.--Section 546(g) of title 11, United 
States Code, as added by section 222(a) of Public Law 103-394, is 
amended to read as follows:
  ``(h) Notwithstanding the rights and powers of a trustee under 
sections 544(a), 545, 547, 549, and 553 of this title, if the court 
determines on a motion by the trustee made not later than 120 days 
after the date of the order for relief in a case under chapter 11 of 
this title and after notice and hearing, that a return is in the best 
interests of the estate, the debtor, with the consent of the creditor, 
and subject to the prior rights, if any, of third parties in such 
goods, may return goods shipped to the debtor by the creditor before 
the commencement of the case, and the creditor may offset the purchase 
price of such goods against any claim of the creditor against the 
debtor that arose before the commencement of the case.''.

SEC. 303. EXTENSIONS.

  Section 302(d)(3) of the Bankruptcy, Judges, United States Trustees, 
and Family Farmer Bankruptcy Act of 1986 (28 U.S.C 581 note) is 
amended--
          (1) in subparagraph (A), in the matter following clause (ii), 
        by striking ``or October 1, 2002, whichever occurs first''; and
          (2) in subparagraph (F)--
                  (A) in clause (i)--
                          (i) in subclause (II), by striking ``or 
                        October 1, 2002, whichever occurs first''; and
                          (ii) in the matter following subclause (II), 
                        by striking ``October 1, 2003, or''; and
                  (B) in clause (ii), in the matter following subclause 
                (II)--
                          (i) by striking ``before October 1, 2003, 
                        or''; and
                          (ii) by striking ``, whichever occurs 
                        first''.

SEC. 304. LOCAL FILING OF BANKRUPTCY CASES.

  Section 1408 of title 28, United States Code, is amended--
          (1) by striking ``Except'' and inserting ``(a) Except''; and
          (2) by adding at the end the following:
  ``(b) For the purposes of subsection (a), if the debtor is a 
corporation, the domicile and residence of the debtor are conclusively 
presumed to be where the debtor's principal place of business in the 
United States is located.''.

SEC. 305. PERMITTING ASSUMPTION OF CONTRACTS.

  (a) Section 365(c) of title 11, United States Code, is amended to 
read as follows:
  ``(c)(1) The trustee may not assume or assign an executory contract 
or unexpired lease of the debtor, whether or not the contract or lease 
prohibits or restricts assignment of rights or delegation of duties, 
if--
          ``(A)(i) applicable law excuses a party to the contract or 
        lease from accepting performance from or rendering performance 
        to an assignee of the contract or lease, whether or not the 
        contract or lease prohibits or restricts assignment of rights 
        or delegation of duties; and
          ``(ii) the party does not consent to the assumption or 
        assignment; or
          ``(B) the contract is a contract to make a loan, or extend 
        other debt financing or financial accommodations, to or for the 
        benefit of the debtor, or to issue a security of the debtor.
  ``(2) Notwithstanding paragraph (1)(A) and applicable nonbankruptcy 
law, in a case under chapter 11 of this title, a trustee in a case in 
which a debtor is a corporation, or a debtor in possession, may assume 
an executory contract or unexpired lease of the debtor, whether or not 
the contract or lease prohibits or restricts assignment of rights or 
delegation of duties.
  ``(3) The trustee may not assume or assign an unexpired lease of the 
debtor of nonresidential real property, whether or not the contract or 
lease prohibits or restricts assignment of rights or delegation of 
duties, if the lease has been terminated under applicable nonbankruptcy 
law before the order for relief.''.
  (b) Section 365(d) of title 11, United States Code, is amended by 
striking paragraphs (5), (6), (7), (8), and (9), and redesignating 
paragraph (10) as paragraph (5).
  (c) Section 365(e) of title 11, United States Code, is amended to 
read as follows:
  ``(e)(1) Notwithstanding a provision in an executory contract or 
unexpired lease, or in applicable law, an executory contract or 
unexpired lease of the debtor may not be terminated or modified, and 
any right or obligation under such contract or lease may not be 
terminated or modified, at any time after the commencement of the case 
solely because of a provision in such contract or lease that is 
conditioned on--
          ``(A) the insolvency or financial condition of the debtor at 
        any time before the closing of the case;
          ``(B) the commencement of a case under this title; or
          ``(C) the appointment of or taking possession by a trustee in 
        a case under this title or a custodian before such 
        commencement.
  ``(2) Paragraph (1) does not apply to an executory contract or 
unexpired lease of the debtor if the trustee may not assume or assign, 
and the debtor in possession may not assume, the contract or lease by 
reason of the provisions of subsection (c) of this section.''.
  (d) Section 365(f)(1) of title 11, United States Code, is amended by 
striking the semicolon and all that follows through ``event''.

             TITLE IV SMALL BUSINESS BANKRUPTCY PROVISIONS

SEC. 401. FLEXIBLE RULES FOR DISCLOSURE STATEMENT AND PLAN.

  (a) Section 1125(a)(1) of title 11, United States Code, is amended by 
inserting before the semicolon following:
``and in determining whether a disclosure statement provides adequate 
information, the court shall consider the complexity of the case, the 
benefit of additional information to creditors and other parties in 
interest, and the cost of providing additional information''.
  (b) Section 1125(f) of title 11, United States Code, is amended to 
read as follows:
  ``(f) Notwithstanding subsection (b)--
          ``(1) the court may determine that the plan itself provides 
        adequate information and that a separate disclosure statement 
        is not necessary;
          ``(2) the court may approve a disclosure statement submitted 
        on standard forms approved by the court or adopted pursuant to 
        section 2075 of title 28; and
          ``(3)(A) the court may conditionally approve a disclosure 
        statement subject to final approval after notice and a hearing;
          ``(B) acceptances and rejections of a plan may be solicited 
        based on a conditionally approved disclosure statement if the 
        debtor provides adequate information to each holder of a claim 
        or interest that is solicited, but a conditionally approved 
        disclosure statement shall be mailed not less than 20 days 
        before the date of the hearing on confirmation of the plan; and
  ``(C) the hearing on the disclosure statement may be combined with 
the hearing on confirmation of a plan.''.

SEC. 402. DEFINITIONS.

  (a) Definitions Section 101 of title 11, United States Code, is 
amended by striking paragraph (51C) and inserting the following:
          ``(51C) `small business case' means a case filed under 
        chapter 11 of this title in which the debtor is a small 
        business debtor; and
          ``(51D) `small business debtor' means (A) a person (including 
        affiliates of such person that are also debtors under this 
        title) that has aggregate noncontingent, liquidated secured and 
        unsecured debts as of the date of the petition orthe order for 
relief in an amount not more than $4,000,000 (excluding debts owed to 1 
or more affiliates or insiders), except that if a group of affiliated 
debtors has aggregate noncontingent liquidated secured and unsecured 
debts greater than $4,000,000 (excluding debt owed to 1 or more 
affiliates or insiders), then no member of such group is a small 
business debtor;''.
  (b) Conforming Amendment.--Section 1102(a)(3) of title 11, United 
States Code, is amended by inserting ``debtor'' after ``small 
business'' .

SEC. 403. STANDARD FORM DISCLOSURE STATEMENT AND PLAN.

  The Advisory Committee on Bankruptcy Rules of the Judicial Conference 
of the United States shall, within a reasonable period of time after 
the date of the enactment of this Act, propose for adoption standard 
form disclosure statements and plans of reorganization for small 
business debtors (as defined in section 101 of title 11, United States 
Code, as amended by this Act), designed to achieve a practical balance 
between--
          (1) the reasonable needs of the courts, the United States 
        trustee, creditors, and other parties in interest for 
        reasonably complete information; and
          (2) economy and simplicity for debtors.

SEC. 404. UNIFORM NATIONAL REPORTING REQUIREMENTS.

  (a) Reporting Required.--
          (1) Title 11 of the United States Code is amended by 
        inserting after section 307 the following:

``Sec. 308. Debtor reporting requirements

  ``A small business debtor shall file periodic financial and other 
reports containing information including--
          ``(1) the debtor's profitability, that is, approximately how 
        much money the debtor has been earning or losing during current 
        and recent fiscal periods;
          ``(2) reasonable approximations of the debtor's projected 
        cash receipts and cash disbursements over a reasonable period;
          ``(3) comparisons of actual cash receipts and disbursements 
        with projections in prior reports; and
          ``(4) whether the debtor is--
                  ``(A) in compliance in all material respects with 
                postpetition requirements imposed by this title and the 
                Federal Rules of Bankruptcy Procedure; and
                  ``(B) timely filing tax returns and paying taxes and 
                other administrative claims when due, and, if not, what 
                the failures are and how, at what cost, and when the 
                debtor intends to remedy such failures; and
          ``(5) such other matters as are in the best interests of the 
        debtor and creditors, and in the public interest in fair and 
        efficient procedures under chapter 11 of this title.''.
          (2) The table of sections of chapter 3 of title 11, United 
        States Code, is amended by inserting after the item relating to 
        section 307 the following:

``308. Debtor reporting requirements.''.

  (b) Effective Date.--The amendments made by subsection (a) shall take 
effect 60 days after the date on which rules are prescribed pursuant to 
section 2075, title 28, United States Code to establish forms to be 
used to comply with section 308 of title 11, United States Code, as 
added by subsection (a).

SEC. 405. UNIFORM REPORTING RULES AND FORMS FOR SMALL BUSINESS CASES.

  (a) Proposal of Rules and Forms.--The Advisory Committee on 
Bankruptcy Rules of the Judicial Conference of the United States shall 
propose for adoption amended Federal Rules of Bankruptcy Procedure and 
Official Bankruptcy Forms to be used by small business debtors to file 
periodic financial and other reports containing information, including 
information relating to--
          (1) the debtor's profitability;
          (2) the debtor's cash receipts and disbursements; and
          (3) whether the debtor is timely filing tax returns and 
        paying taxes and other administrative claims when due.
  (b) Purpose.--The rules and forms proposed under subsection (a) shall 
be designed to achieve a practical balance between--
          (1) the reasonable needs of the bankruptcy court, the United 
        States trustee, creditors, and other parties in interest for 
        reasonably complete information;
          (2) the small business debtor's interest that required 
        reports be easy and inexpensive to complete; and
          (3) the interest of all parties that the required reports 
        help the small business debtor to understand its financial 
        condition and plan its future.

SEC. 406. DUTIES IN SMALL BUSINESS CASES.

  (a) Duties in Chapter 11 Cases.--Title 11 of the United States Code 
is amended by inserting after section 1114 the following:

``Sec. 1115. Duties of trustee or debtor in possession in small 
                    business cases

  ``(a) In a small business case, a trustee or the debtor in 
possession, in addition to the duties provided in this title and as 
otherwise required by law, shall--
          ``(1) append to the voluntary petition or, in an involuntary 
        case, file within 3 days after the date of the order for 
        relief--
                  ``(A) its most recent balance sheet, statement of 
                operations, cash-flow statement, Federal income tax 
                return; or
                  ``(B) a statement made under penalty of perjury that 
                no balance sheet, statement of operations, or cash-flow 
                statement has been prepared and no Federal tax return 
                has been filed;
          ``(2) attend, through its responsible individual, meetings 
        scheduled by the court or the United States trustee, including 
        initial debtor interviews and meetings of creditors convened 
        under section 341 of this title;
          ``(3) timely file all schedules and statements of financial 
        affairs, unless the court, after notice and a hearing, grants 
        an extension, which shall not extend such time period to a date 
        later than 30 days after the date of the order for relief, 
        absent extraordinary and compelling circumstances;
          ``(4) file all postpetition financial and other reports 
        required by the Federal Rules of Bankruptcy Procedure or by 
        local rule of the district court;
          ``(5) subject to section 363(c)(2) of this title, maintain 
        insurance customary and appropriate to the industry;
          ``(6)(A) timely file tax returns;
          ``(B) subject to section 363(c)(2) of this title, timely pay 
        all administrative expense tax claims, except those being 
        contested by appropriate proceedings being diligently 
        prosecuted; and
          ``(C) subject to section 363(c)(2) of this title, establish 1 
        or more separate deposit accounts not later than 10 business 
        days after the date of order for relief (or as soon thereafter 
        as possible if all banks contacted decline the business) and 
        deposit therein, not later than 1 business day after receipt 
        thereof or a responsible time set by the court, all taxes 
        payable for periods beginning after the date the case is 
        commenced that are collected or withheld by the debtor for 
        governmental units unless the court waives this requirement 
        after notice and hearing; and
          ``(7) allow the United States trustee, or its designated 
        representative, to inspect the debtor's business premises, 
        books, and records at reasonable times, after reasonable prior 
        written notice, unless notice is waived by the debtor.''.
  (b) Technical Amendment.--The table of sections of chapter 11, United 
States Code, is amended by inserting after the item relating to section 
1114 the following:

``1115. Duties of trustee or debtor in possession in small business 
cases.''.

SEC. 407. PLAN FILING AND CONFIRMATION DEADLINES.

  Section 1121(e) of title 11, United States Code, is amended to read 
as follows:
  ``(e) In a small business case--
          ``(1) only the debtor may file a plan until after 90 days 
        after the date of the order for relief, unless a trustee has 
        been appointed under this chapter, or unless the court, on 
        request of a party in interest and after notice and hearing, 
        shortens such time;
          ``(2) the debtor shall file a plan, and any necessary 
        disclosure statement, not later than 90 days after the date of 
        the order for relief, unless the United States Trustee has 
        appointed under section 1102(a)(1) of this title a committee of 
        unsecured creditors that the court has determined, before the 
        90 days has expired, is sufficiently active and representative 
        to provide effective oversight of the debtor; and
          ``(3) the time periods specified in paragraphs (1) and (2) of 
        this subsection and the time fixed in section 1129(e) of this 
        title for confirmation of a plan, may be extended only as 
        follows:
                  ``(A) On request of a party in interest made within 
                the respective periods, and after notice and hearing, 
                the court may for cause grant one or more extensions, 
                cumulatively not to exceed 60 days, if the movant 
                establishes--
                          ``(i) that no cause exists to dismiss or 
                        convert the case or appoint a trustee or 
                        examiner under subparagraphs (A) (I) of section 
                        1112(b) of this title; and
                          ``(ii) that there is a reasonable possibility 
                        the court will confirm a plan within a 
                        reasonable time;
                  ``(B) On request of a party in interest made within 
                the respective periods, and after notice and hearing, 
                the court may for cause grant one or more extensions in 
                excess of those authorized under subparagraph (A) of 
                this paragraph, if the movant establishes--
                          ``(i) that no cause exists to dismiss or 
                        convert the case or appoint a trustee or 
                        examiner under subparagraphs (A) (I) of section 
                        1112(b)(3) of this title; and
                          ``(ii) that it is more likely than not that 
                        the court will confirm a plan within a 
                        reasonable time; and
                  ``(C) a new deadline shall be imposed whenever an 
                extension is granted.''.

SEC. 408. PLAN CONFIRMATION DEADLINE.

  Section 1129 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(e) In a small business case, the debtor shall confirm a plan not 
later than 150 days after the date of the order for relief unless--
          ``(1) the United States Trustee has appointed, under section 
        1102(a)(1) of this title, a committee of unsecured creditors 
        that the court has determined, before the 150 days has expired, 
        is sufficiently active and representative to provide effective 
        oversight of the debtor; or
          ``(2) such 150-day period is extended as provided in section 
        1121(e)(3) of this title.''.

SEC. 409. PROHIBITION AGAINST EXTENSION OF TIME.

  Section 105(d) of title 11, United States Code, is amended--
          (1) in paragraph (2)(B)(vi) by striking the period at the end 
        and inserting ``; and''; and
          (2) by adding at the end the following:
          ``(3) in a small business case, not extend the time periods 
        specified in sections 1121(e) and 1129(e) of this title except 
        as provided in section 1121(e)(3) of this title.''.

SEC. 410. DUTIES OF THE UNITED STATES TRUSTEE.

  (a) Duties of the United States Trustee.--
  Section 586(a) of title 28, United States Code, is amended--
          (1) in paragraph (3)--
                  (A) in subparagraph (G) by striking ``and at the 
                end'';
                  (B) by redesignating subparagraph (H) as subparagraph 
                (I); and
                  (C) by inserting after subparagraph (G) the 
                following:
                  ``(H) in small business cases (as defined in section 
                101 of title 11), performing the additional duties 
                specified in title 11 pertaining to such cases'';
          (2) in paragraph (5) by striking ``and at the end'';
          (3) in paragraph (6) by striking the period at the end and 
        inserting ``; and''; and
          (4) by inserting after paragraph (7) the following:
          ``(7) in each of such small business cases--
                  ``(A) conduct an initial debtor interview as soon as 
                practicable after the entry of order for relief but 
                before the first meeting scheduled under section 341(a) 
                of title 11 at which time the United States trustee 
                shall begin to investigate the debtor's viability, 
                inquire about the debtor's business plan, explain the 
                debtor's obligations to file monthly operating reports 
                and other required reports, attempt to develop an 
                agreed scheduling order, and inform the debtor of other 
                obligations;
                  ``(B) when determined to be appropriate and 
                advisable, visit the appropriate business premises of 
                the debtor and ascertain the state of the debtor's 
                books and records and verify that the debtor has filed 
                its tax returns; and
                  ``(C) review and monitor diligently the debtor's 
                activities, to identify as promptly as possible whether 
                the debtor will be unable to confirm a plan; and
          ``(8) in cases in which the United States trustee finds 
        material grounds for any relief under section 1112 of title 11, 
        the United States trustee shall apply promptly to the court for 
        relief.''.

SEC. 411. SCHEDULING CONFERENCES.

  Section 105(d) of title 11, United States Code, is amended--
          (1) in the matter preceding paragraph (1) by striking ``, 
        may'';
          (2) by amending paragraph (1) to read as follows:
          ``(1) shall hold such status conferences as are necessary to 
        further the expeditious and economical resolution of the case; 
        and''; and
          (3) in paragraph (2) by striking ``unless inconsistent with 
        another provision of this title or with applicable Federal 
        Rules of Bankruptcy Procedure'', and inserting ``may''.

SEC. 412. SERIAL FILER PROVISIONS.

  Section 362 of title 11, United States Code, as amended by section 
302, is amended--
          (1) in subsection (i) as so redesignated by section 122--
                  (A) by striking ``An'' and inserting ``(1) Except as 
                provided in paragraph (2), an''; and
                  (B) by adding at the end the following:
  ``(2) If such violation is based on an action taken by an entity in 
the good-faith belief that subsection (h) applies to the debtor, then 
recovery under paragraph (1) against such entity shall be limited to 
actual damages.''; and
          (2) by inserting after subsection (j), as added by section 
        302, the following:
  ``(k)(1) Except as provided in paragraph (2) of this subsection, the 
provisions of subsection (a) of thissection shall not apply in a case 
in which the debtor--
          ``(A) is a debtor in a case under this title pending at the 
        time the petition is filed;
          ``(B) was a debtor in a case under this title which was 
        dismissed for any reason by an order that became final in the 
        2-year period ending on the date of the order for relief 
        entered with respect to the petition;
          ``(C) was a debtor in a case under this title in which a 
        chapter 11, 12, or 13 plan was confirmed in the 2-year period 
        ending on the date of the order for relief entered with respect 
        to the petition; or
          ``(D) is an entity that has succeeded to substantially all of 
        the assets or business of a debtor described in subparagraph 
        (A), (B), or (C).
  ``(2) This subsection shall not apply--
          ``(A) to a case initiated by an involuntary petition filed by 
        a creditor that is not an insider or affiliate of the debtor; 
        or
          ``(B) after such time as the debtor, after notice and a 
        hearing, demonstrates by a preponderance of the evidence, that 
        the filing of such petition resulted from circumstances beyond 
        the control of the debtor and not foreseeable at the time the 
        earlier case was filed; and that it is more likely than not 
        that the court will confirm a plan, other than a liquidating 
        plan, within a reasonable time.''.

SEC. 413. EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION AND APPOINTMENT 
                    OF TRUSTEE OR EXAMINER.

  (a) Expanded Grounds for Dismissal or Conversion.--Section 1112(b) of 
title 11, United States Code, is amended to read as follows:
  ``(b)(1) Except as provided in paragraphs (2) and (4) of this 
subsection, and in subsection (c) of this section, on request of a 
party in interest, and after notice and a hearing, the court shall 
convert a case under this chapter to a case under chapter 7 of this 
title or dismiss a case under this chapter, or appoint a trustee or 
examiner under section 1104(e) of this title, whichever is in the best 
interest of creditors and the estate, if the movant establishes cause
  ``(2) The court may decline to grant the relief specified in 
paragraph (1) of this subsection if the debtor or another party in 
interest objects and establishes by a preponderance of the evidence 
that--
          ``(A) it is more likely than not that a plan will be 
        confirmed within a time as fixed by this title or by order of 
        the court entered pursuant to section 1121(e)(3), or within a 
        reasonable time if no time has been fixed; and
          ``(B) if the cause is an act or omission of the debtor that--
                  ``(i) there exists a reasonable justification for the 
                act or omission; and
                  ``(ii) the act or omission will be cured within a 
                reasonable time fixed by the court not to exceed 30 
                days after the court decides the motion, unless the 
                movant expressly consents to a continuance for a 
                specific period of time, or compelling circumstances 
                beyond the control of the debtor justify an extension.
  ``(3) For purposes of this subsection, cause includes--
          ``(A) substantial or continuing loss to or diminution of the 
        estate;
          ``(B) gross mismanagement of the estate;
          ``(C) failure to maintain insurance that poses a material 
        risk to the estate or the public;
          ``(D) unauthorized use of cash collateral harmful to 1 or 
        more creditors;
          ``(E) failure to comply with an order of the court;
          ``(F) failure timely to satisfy any filing or reporting 
        requirement established by this title or by any rule applicable 
        to a case under this chapter;
          ``(G) failure to attend the meeting of creditors convened 
        under section 341(a) of this title;
          ``(H) failure timely to provide information or attend 
        meetings reasonably requested by the United States trustee or 
        bankruptcy administrator;
          ``(I) failure timely to pay taxes due after the date of the 
        order for relief or to file tax returns due after the order for 
        relief;
          ``(J) failure to file a disclosure statement, or to file or 
        confirm a plan, within the time fixed by this title or by order 
        of the court;
          ``(K) failure to pay any fees or charges required under 
        chapter 123 of title 28;
          ``(L) revocation of an order of confirmation under section 
        1144 of this title;
          ``(M) inability to effectuate substantial consummation of a 
        confirmed plan;
          ``(N) material default by the debtor with respect to a 
        confirmed plan; and
          ``(O) termination of a plan by reason of the occurrence of a 
        condition specified in the plan.
  ``(4) The court may grant relief under this subsection for cause as 
defined in subparagraphs C, F, G, H, or K of paragraph 3 of this 
subsection only upon motion of the United States trustee or bankruptcy 
administrator or upon the court s own motion.
  ``(5) The court shall commence the hearing on any motion under this 
subsection not later than 30 days after filing of the motion, and shall 
decide the motion within 15 days after commencement of the hearing, 
unless the movant expressly consents to a continuance for a specific 
period of time or compelling circumstances prevent the court from 
meeting the time limits established by this paragraph.''.
  (b) Additional Grounds for Appointment of Trustee or Examiner.--
Section 1104 of title 11, United States Code, is amended by adding at 
the end the following:
  ``(e) If grounds exist to convert or dismiss the case under section 
1112 of this title, the court may instead appoint a trustee or 
examiner, if it determines that such appointment is in the best 
interests of creditors and the estate.''.

SEC. 414. STUDY OF OPERATION OF TITLE 11 OF THE UNITED STATES CODE WITH 
                    RESPECT TO SMALL BUSINESSES.

  Not later than 2 years after the date of the enactment of this Act, 
the Administrator of the Small Business Administration, in consultation 
with the Attorney General, the Director of the Administrative Office of 
United States Trustees, and the Director of the Administrative Office 
of the United States Courts, shall--
          (1) conduct a study to determine--
                  (A) the internal and external factors that cause 
                small businesses, especially sole proprietorships, to 
                become debtors in cases under title 11 of the United 
                States Code and that cause certain small businesses to 
                successfully complete cases under chapter 11 of such 
                title; and
                  (B) how Federal laws relating to bankruptcy may be 
                made more effective and efficient in assisting small 
                businesses to remain viable; and
          (2) submit to the President pro tempore of the Senate and the 
        Speaker of the House of Representatives a report summarizing 
        that study.

SEC. 415. PAYMENT OF INTEREST.

  Section 362(d)(3) of title 11, United States Code, is amended--
          (1) by inserting ``or 30 days after the court determines that 
        the debtor is subject to this paragraph, whichever is later'' 
        after ``90-day period)''; and
          (2) by amending subparagraph (B) to read as follows:
                  ``(B) the debtor has commenced monthly payments 
                (which payments may, in the debtor's sole discretion, 
                notwithstanding section 363(c)(2) of this title, be 
                made from rents or other income generated before or 
                after the commencement of the case by or from the 
                property) to each creditor whose claim is secured by 
                such real estate (other than a claim secured by a 
                judgment lien or by an unmatured statutory lien), which 
                payments are in an amount equal to interest at the 
                then-applicable nondefault contract rate of interest on 
                the value of the creditor's interest in the real 
                estate; or''

                TITLE V--MUNICIPAL BANKRUPTCY PROVISIONS

SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETITION.

  (a) Technical Amendment Relating to Municipalities.--Section 921(d) 
of title 11, United States Code, is amended by inserting 
``notwithstanding section 301(b)'' before the period at the end.
  (b) Conforming Amendment.--Section 301 of title 11, United States 
Code, is amended--
          (1) by inserting ``(a)'' before ``A voluntary''; and
          (2) by amending the last sentence to read as follows:
  ``(b) The commencement of a voluntary case under a chapter of this 
title constitutes an order for relief under such chapter.''.

SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAPTER 9.

  Section 901(a) of title 11, United States Code, is amended--
          (1) by inserting ``555, 556,'' after ``553,''; and
          (2) by inserting ``559, 560, 561, 562'' after ``557,''.

              TITLE VI--STREAMLINING THE BANKRUPTCY SYSTEM

SEC. 601. CREDITOR REPRESENTATION AT FIRST MEETING OF CREDITORS.

  Section 341(c) of title 11, United States Code, is amended by 
inserting after the first sentence the following: ``Notwithstanding any 
local court rule, provision of a State constitution, any other Federal 
or State law that is not a bankruptcy law, or other requirement that 
representation at the meeting of creditors under subsection (a) be by 
an attorney, a creditor holding a consumer debt or any representative 
of the creditor (which may include an entity or an employee of an 
entity and may be a representative for more than one creditor) shall be 
permitted to appear at and participate in the meeting of creditors and 
activities related thereto in a case under chapter 7 or 13, either 
alone or in conjunction with an attorney for the creditor Nothing in 
this subsection shall be construed to require any creditor to be 
represented by an attorney at any meeting of creditors.''.

SEC. 602. AUDIT PROCEDURES.

  (a) Amendments.--Section 586 of title 28, United States Code, is 
amended--
          (1) in subsection (a) by amending striking paragraph (6) to 
        read as follows:
          ``(6) make such reports as the Attorney General directs, 
        including the results of audits performed under subsection (f); 
        and''; and
          (2) by adding at the end the following:
  ``(f)(1)(A) The Attorney General shall establish procedures to 
determine the accuracy, veracity, and completeness of petitions, 
schedules, and other information which the debtor is required to 
provide under sections 521 and 1322 of title 11, and, if applicable, 
section 111 of title 11, in individual cases filed under chapter 7 or 
13 of such title Such audits shall be in accordance with generally 
accepted auditing standards and performed by independent certified 
public accountants or independent licensed public accountants.
  ``(B) Those procedures shall--
          ``(i) establish a method of selecting appropriate qualified 
        persons to contract to perform those audits;
          ``(ii) establish a method of randomly selecting cases to be 
        audited, except that not less than 1 out of every 250 cases in 
        each Federal judicial district shall be selected for audit;
          ``(iii) require audits for schedules of income and expenses 
        which reflect greater than average variances from the 
        statistical norm of the district in which the schedules were 
        filed; and
          ``(iv) establish procedures for providing, not less 
        frequently than annually, public information concerning the 
        aggregate results of such audits including the percentage of 
        cases, by district, in which a material misstatement of income 
        or expenditures is reported.
  ``(2) The United States trustee for each district is authorized to 
contract with auditors to perform audits in cases designated by the 
United States trustee according to the procedures established under 
paragraph (1).
  ``(3)(A) The report of each audit conducted under this subsection 
shall be filed with the court and transmitted to the United States 
trustee Each report shall clearly and conspicuously specify any 
material misstatement of income or expenditures or of assets identified 
by the person performing the audit In any case where a material 
misstatement of income or expenditures or of assets has been reported, 
the clerk of the bankruptcy court shall give notice of the misstatement 
to the creditors in the case.
  ``(B) If a material misstatement of income or expenditures or of 
assets is reported, the United States trustee shall--
          ``(i) report the material misstatement, if appropriate, to 
        the United States Attorney pursuant to section 3057 of title 
        18, United States Code; and
          ``(ii) if advisable, take appropriate action, including but 
        not limited to commencing an adversary proceeding to revoke the 
        debtor's discharge pursuant to section 727(d) of title 11, 
        United States Code.''.
  (b) Amendments to Section 521 of Title 11, U.S.C.--Section 521(a) of 
title 11, United States Code, as amended by section 603, is amended in 
paragraphs (3) and (4) by adding ``or an auditor appointed pursuant to 
section 586 of title 28, United States Code'' after ``serving in the 
case''.
  (c) Amendments to Section 727 of Title 11, U.S.C.--Section 727(d) of 
title 11, United States Code, is amended--
          (1) by deleting ``or'' at the end of paragraph (2);
          (2) by substituting ``; or'' for the period at the end of 
        paragraph (3); and
          (3) by adding the following at the end the following:
          ``(4) the debtor has failed to explain satisfactorily--
                  ``(A) a material misstatement in an audit performed 
                pursuant to section 586(f) of title 28, United States 
                Code; or
                  ``(B) a failure to make available for inspection all 
                necessary accounts, papers, documents, financial 
                records, files, and all other papers, things, or 
                property belonging to the debtor that are requested for 
                an audit conducted pursuant to section 586(f) of title 
                28, United States Code.''.
  (d) Effective Date.--The amendments made by this section shall take 
effect 18 months after the date of enactment of this Act.

SEC. 603. GIVING CREDITORS FAIR NOTICE IN CHAPTER 7 AND 13 CASES.

  (a) Notice.--Section 342 of title 11, United States Code, is 
amended--
          (1) in subsection (c)--
                  (A) by striking ``, but the failure of such notice to 
                contain such information shall not invalidate the legal 
                effect of such notice''; and
                  (B) by adding the following at the end:
``If the credit agreement between the debtor and the creditor or the 
last communication before the filing of the petition in a voluntary 
case from the creditor to a debtor who is an individual states an 
account number of the debtor which is the current account number of the 
debtor with respect to any debt held by the creditor against the 
debtor, the debtor shall include such account number in any notice to 
the creditor required to be given under this title If the creditor has 
specified to the debtor an address at which the creditor wishes to 
receive correspondence regarding the debtor's account, any notice to 
the creditor required to be given by the debtor under this title shall 
be given at such address For the purposes of this section, `notice' 
shall include, but shall not be limited to, any correspondence from the 
debtor to the creditor after the commencement of the case, any 
statement of the debtor's intention under section 521(a)(2) of this 
title, notice of the commencement of any proceeding in the case to 
which the creditor is a party, and any notice of the hearing under 
section 1324 of this title.'';
          (2) by adding at the end the following:
  ``(d) At any time, a creditor in a case of an individual debtor under 
chapter 7 or 13 may file with the court and serve on the debtor a 
notice of the address to be used to notify the creditor in that case 
After 5 days following receipt of such notice, any notice the court or 
the debtor is required to give the creditor shall be given at that 
address.
  ``(e) An entity may file with the court a notice stating its address 
for notice in cases under chapters 7 and 13 After 30 days following the 
filing of such notice, any notice in any case filed under chapter 7 or 
13 given by the court shall be to that address unless specific notice 
is given under subsection (d) with respect to a particular case.
  ``(f) Notice given to a creditor other than as provided in this 
section shall not be effective notice until it has been brought to the 
attention of the creditor If the creditor has designated a person or 
department to be responsible for receiving notices concerning 
bankruptcy cases and has established reasonable procedures so that
    bankruptcy notices received by the creditor will be delivered to 
such department or person, notice will not be brought to the attention 
of the creditor until received by such person or department No sanction 
under section 362(h) of this title or any other sanction which a court 
may impose on account of violations of the stay under section 362(a) of 
this title or failure to comply with section 542 or 543 of this title 
may be imposed on any action of the creditor unless the action takes 
place after the creditor has received notice of the commencement of the 
case effective under this section.''.
  (b) Debtor's Duties.--Section 521 of title 11, United States Code, as 
amended by sections 604, 120, and 302, is amended--
          (1) by inserting ``(a)'' before ``The debtor shall--'';
          (2) by striking paragraph (1) and inserting the following:
          ``(1) file--
                  ``(A) a list of creditors; and
                  ``(B) unless the court orders otherwise--
                          ``(i) a schedule of assets and liabilities;
                          ``(ii) a schedule of current monthly income 
                        and current expenditures prepared in accordance 
                        with section 707(b)(2);
                          ``(iii) a statement of the debtor's financial 
                        affairs and, if applicable, a certificate--
                                  ``(I) of an attorney whose name is on 
                                the petition as the attorney for the 
                                debtor or any bankruptcy petition 
                                preparer signing the petition pursuant 
                                to section 110(b)(1) of this title 
                                indicating that such attorney or 
                                bankruptcy petition preparer delivered 
                                to the debtor any notice required by 
                                section 342(b) of this title; or
                                  ``(II) if no attorney for the debtor 
                                is indicated and no bankruptcy petition 
                                preparer signed the petition, of the 
                                debtor that such notice was obtained 
                                and read by the debtor;
                          ``(iv) copies of any Federal tax returns, 
                        including any schedules or attachments, filed 
                        by the debtor for the 3-year period preceding 
                        the order for relief;
                          ``(v) copies of all payment advices or other 
                        evidence of payment, if any, received by the 
                        debtor from any employer of the debtor in the 
                        period 60 days prior to the filing of the 
                        petition; and
                          ``(vi) a statement disclosing any reasonably 
                        anticipated increase in income or expenditures 
                        over the 12-month period following the date of 
                        filing;'';
          (3) by adding at the end the following:
  ``(e)(1) At any time, a creditor, in the case of an individual under 
chapter 7 or 13, may file with the court notice that the creditor 
requests the petition, schedules, and a statement of affairs filed by 
the debtor in the case and the court shall make those documents 
available to the creditor who requests those documents at a reasonable 
cost within 5 business days after such request.
  ``(2) At any time, a creditor in a case under chapter 13 may file 
with the court notice that the creditor requests the plan filed by the 
debtor in the case, and the court shall make such plan available to the 
creditor who requests such plan at a reasonable cost and not later than 
5 days after such request
  ``(f) An individual debtor in a case under chapter 7 or 13 shall file 
with the court--
          ``(1) at the time filed with the taxing authority, all tax 
        returns, including any schedules or attachments, with respect 
        to the period from the commencement of the case until such time 
        as the case is closed;
          ``(2) at the time filed with the taxing authority, all tax 
        returns, including any schedules or attachments, that were not 
        filed with the taxing authority when the schedules under 
        subsection (a)(1) were filed with respect to the period that is 
        3 years before the order for relief;
          ``(3) any amendments to any of the tax returns, including 
        schedules or attachments, described in paragraph (1) or (2); 
        and
          ``(4) in a case under chapter 13, a statement subject to the 
        penalties of perjury by the debtor of the debtor's current 
        monthly income and expenditures in the preceding tax year and 
        current monthly income less expenditures for the month 
        preceding the statement prepared in accordance with section 
        707(b)(2) that shows how the amounts are calculated--
                  ``(A) beginning on the date that is the later of 90 
                days after the close of the debtor's tax year or 1 year 
                after the order for relief, unless a plan has been 
                confirmed; and
                  ``(B) thereafter, on or before the date that is 45 
                days before each anniversary of the confirmation of the 
                plan until the case is closed
  ``(g)(1) A statement referred to in subsection (f)(4) shall 
disclose--
          ``(A) the amount and sources of income of the debtor;
          ``(B) the identity of any persons responsible with the debtor 
        for the support of any dependents of the debtor; and
          ``(C) the identity of any persons who contributed, and the 
        amount contributed, to the household in which the debtor 
        resides
  ``(2) The tax returns, amendments, and statement of income and 
expenditures described in paragraph (1) shall be available to the 
United States trustee, any bankruptcy administrator, any trustee, and 
any party in interest for inspection and copying, subject to the 
requirements of subsection (h).
  ``(h)(1) Not later than 30 days after the date of enactment of the 
Consumer Bankruptcy Reform Act of 1999, the Director of the 
Administrative Office of the United States Courts shall establish 
procedures for safeguarding the confidentiality of any tax information 
required to be provided under this section.
  ``(2) The procedures under paragraph (1) shall include reasonable 
restrictions on creditor access to tax information that is required to 
be provided under this section to verify creditor identity and to 
restrict use of the information except with respect to the case.
  ``(3) Not later than 1 year after the date of enactment of the 
Consumer Bankruptcy Reform Act of 1999, the Director of the 
Administrative Office of the United States Courts shall prepare, and 
submit to Congress a report that--
          ``(A) assesses the effectiveness of the procedures under 
        paragraph (1) to provide timely and sufficient information to 
        creditors concerning the case; and
          ``(B) if appropriate, includes proposed legislation--
                  ``(i) to further protect the confidentiality of tax 
                information or to make it better available to 
                creditors; and
                  ``(ii) to provide penalties for the improper use by 
                any person of the tax information required to be 
                provided under this section.
  ``(i) If requested by the United States trustee or a trustee serving 
in the case, the debtor provide a document that establishes the 
identity of the debtor, including a driver's license, passport, or 
other document that contains a photograph of the debtor and such other 
personal identifying information relating to the debtor that 
establishes the identity of the debtor.''.
  (c) Section 1324 of title 11, United States Code, is amended--
          (1) by inserting ``(a)'' before ``After''; and
          (2) by inserting at the end thereof--
  ``(c) Whenever a party in interest is given notice of a hearing on 
the confirmation or modification of a plan under this chapter, such 
notice shall include the information provided by the debtor on the most 
recent statement filed with the court pursuant to section 
521(a)(1)(B)(ii) or (f)(4) of this title.''.

SEC. 604. DISMISSAL FOR FAILURE TO TIMELY FILE SCHEDULES OR PROVIDE 
                    REQUIRED INFORMATION.

  Section 521 of title 11, United States Code, as amended by section 
603 is amended by inserting after subsection (a) the following:
  ``(b)(1) Notwithstanding section 707(a) of this title, and subject to 
paragraph (2), if an individual debtor in a voluntary case under 
chapter 7 or 13 fails to file all of the information required under 
subsection (a)(1) within 45 days after the filing of the petition 
commencing the case, the case shall be automatically dismissed 
effective on the 46th day after the filing of the petition.
  ``(2) With respect to a case described in paragraph (1), any party in 
interest may request the court to enter an order dismissing the case 
The court shall, if so requested, enter an order of dismissal not later 
than 5 days after such request
  ``(3) Upon request of the debtor made within 45 days after the filing 
of the petition commencing a case described in paragraph (1), the court 
may allow the debtor an additional period not to exceed 45 days to file 
the information required under subsection (a)(1) if the court finds 
justification for extending the period for the filing.''.

SEC. 605. ADEQUATE TIME TO PREPARE FOR HEARING ON CONFIRMATION OF THE 
                    PLAN.

  (a) Hearing.--Section 1324 of title 11, United States Code, is 
amended--
          (1) by striking ``After'' and inserting the following:
  ``(a) Except as provided in subsection (b) and after''; and
          (2) by adding at the end the following:
  ``(b) The hearing on confirmation of the plan may be held not earlier 
than 20 days, and not later than 45 days, after the meeting of 
creditors under section 341(a) of this title.''.

SEC. 606. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION IN CERTAIN CASES.

  Title 11, United States Code, is amended--
          (1) by amending section 1322(d) to read as follows:
  ``(d) If the current monthly income of the debtor and the debtor's 
spouse combined, when multiplied by 12, is not less than the highest 
national median family income last reported by the Bureau of the Census 
for a family of equal or lesser size or, in the case of a household of 
1 person, not less than the national median household income for 1 
earner, the plan may not provide for payments over a period that is 
longer than 5 years If the current monthly income of the debtor and the 
debtor's spouse combined, when multiplied by 12, is less than the 
highest national median family income for a family of equal or lesser 
size, or in the case of a household of 1 person, the national median 
household income for 1 earner, the plan may not provide for payments 
over a period that is longer than 3 years, unless the court, for cause, 
approves a longer period, but the court may not approve a period that 
is longer than 5 years Notwithstanding the foregoing, the national 
median family income for a family of more than 4 individuals shall be 
the national median family income last reported by the Bureau of the 
Census for a family of 4 individuals plus $583 for each additional 
member of the family.'';
          (2) in section 1325(b)(1)(B) as amended by section 130--
                  (A) by striking ``three year period'' and inserting 
                ``applicable commitment period''; and
                  (B) by inserting at the end of subparagraph (B) the 
                following: ``The `applicable commitment period' shall 
                be not less than 5 years if the current monthly income 
                of the debtor and the debtor's spouse combined, when 
                multiplied by 12, is not less than the highest national 
                median family income last reported by the Bureau of the 
                Census for a family of equal or lesser size, or in the 
                case of a household of 1 person, the national median 
                household income for 1 earner Notwithstanding the 
                foregoing, the national median family income for a 
                family of more than 4 individuals shall be the national 
                median family income last reported by the Bureau of the 
                Census for a family of 4 individuals plus $583 for each 
                additional member of the family.''; and
          (3) in section 1329--
                  (A) by striking in subsection (c) ``three years'' and 
                inserting ``the applicable commitment period under 
                section 1325(b)(1)(B)''; and
                  (B) by inserting at the end of subsection (c) the 
                following:
``The duration period shall be 5 years if the current monthly income of 
the debtor and the debtor's spouse combined, when multiplied by 12, is 
not less than the highest national median family income last reported 
by the Bureau of the Census for a family of equal or lesser size or, in 
the case of a household of 1 person, the national median household 
income for 1 earner, as of the date of the modification and shall be 3 
years if the current monthly total income of the debtor and the 
debtor's spouse combined, when multiplied by 12, is less than the 
highest national median family income last reported by the Bureau of 
the Census for a family of equal or lesser size or, in the case of a 
household of 1 person, less than the national median household income 
for 1 earner as of the date of the modification Notwithstanding the 
foregoing, the national median family income for a family of more than 
4 individuals shall be the national median family income last reported 
by the Bureau of the Census for a family of 4 individuals plus $583 for 
each additional member of the family.''.

SEC. 607. SENSE OF THE CONGRESS REGARDING EXPANSION OF RULE 9011 OF THE 
                    FEDERAL RULES OF BANKRUPTCY PROCEDURE.

  It is the sense of the Congress that rule 9011 of the Federal Rules 
of Bankruptcy Procedure (11 U.S.C App) should be modified to include a 
requirement that all documents (including schedules), signed and 
unsigned, submitted to the court or to a trustee by debtors who 
represent themselves and debtors who are represented by an attorney be 
submitted only after the debtor or the debtor's attorney has made 
reasonable inquiry to verify that the information contained in such 
documents is well grounded in fact, and is warranted by existing law or 
a good-faith argument for the extension, modification, or reversal of 
existing law.

SEC. 608. ELIMINATION OF CERTAIN FEES PAYABLE IN CHAPTER 11 BANKRUPTCY 
                    CASES.

  (a) Amendments.--Section 1930(a)(6) of title 28, United States Code, 
is amended--
          (1) in the 1st sentence by striking ``until the case is 
        converted or dismissed, whichever occurs first''; and
          (2) in the 2d sentence--
                  (A) by striking ``The'' and inserting ``Until the 
                plan is confirmed or the case is converted (whichever 
                occurs first) the''; and
                  (B) by striking ``less than $300,000;'' and inserting 
                ``less than $300,000 Until the case is converted, 
                dismissed, or closed (whichever occurs first and 
                without regard to confirmation of the plan) the fee 
                shall be''.
  (b) Delayed Effective Date.--The amendments made by subsection (a) 
shall take effect on October 1, 1999.

SEC. 609. STUDY OF BANKRUPTCY IMPACT OF CREDIT EXTENDED TO DEPENDENT 
                    STUDENTS.

  Not later than 1 year after the date of the enactment of this Act, 
the Comptroller General of the United States shall--
          (1) conduct a study regarding the impact that the extension 
        of credit to individuals who are--
                  (A) claimed as dependents for purposes of the 
                Internal Revenue Code of 1986; and
                  (B) enrolled in post-secondary educational 
                institutions,
        has on the rate of cases filed under title 11 of the United 
        States Code; and
          (2) submit to the Speaker of the House of Representatives and 
        the President pro tempore of the Senate a report summarizing 
        such study.

SEC. 610. PROMPT RELIEF FROM STAY IN INDIVIDUAL CASES.

  Section 362(e) of title 11, United States Code, is amended--
          (1) by inserting ``(1)'' after ``(e)''; and
          (2) by adding at the end the following:
  ``(2) Notwithstanding paragraph (1), in the case of an individual 
filing under chapter 7, 11, or 13, the stay under subsection (a) shall 
terminate on the date that is 60 days after a request is made by a 
party in interest under subsection (d), unless--
          ``(A) a final decision is rendered by the court during the 
        60-day period beginning on the date of the request; or
          ``(B) that 60-day period is extended--
                  ``(i) by agreement of all parties in interest; or
                  ``(ii) by the court for such specific period of time 
                as the court finds is required by for good cause as 
                described in findings made by the court.''.

SEC. 611. STOPPING ABUSIVE CONVERSIONS FROM CHAPTER 13.

  Section 348(f)(1) of title 11, United States Code, is amended--
          (1) in subparagraph (A), by striking ``and'' at the end;
          (2) in subparagraph (B)--
                  (A) by striking ``in the converted case, with allowed 
                secured claims'' and inserting ``only in a case 
                converted to chapter 11 or 12 but not in a case 
                converted to chapter 7, with allowed secured claims in 
                cases under chapters 11 and 12''; and
                  (B) by striking the period and inserting ``; and''; 
                and
          (3) by adding at the end the following:
          ``(C) with respect to cases converted from chapter 13--
                  ``(i) the claim of any creditor holding security as 
                of the date of the petition shall continue to be 
                secured by that security unless the full amount of such 
                claim determined under applicable nonbankruptcy law has 
                been paid in full as of the date of conversion, 
                notwithstanding any valuation or determination of the 
                amount of an allowed secured claim made for the 
                purposes of the chapter 13 proceeding; and
                  ``(ii) unless a prebankruptcy default has been fully 
                cured pursuant to the plan at the time of conversion, 
                in any proceeding under this title or otherwise, the 
                default shall have the effect given under applicable 
                nonbankruptcy law.''.

SEC. 612. BANKRUPTCY APPEALS.

  Title 28 of the United States Code is amended by inserting after 
section 1292 the following:

``Sec. 1293 Bankruptcy appeals

  ``(a) The courts of appeals (other than the United States Court of 
Appeals for the Federal Circuit) shall have jurisdiction of appeals 
from the following:
          ``(1) Final orders and judgments entered by bankruptcy courts 
        and district courts in cases under title 11, in proceedings 
        arising under title 11, and in proceedings arising in or 
        related to a case under title 11, including final orders in 
        proceedings regarding the automatic stay of section 362 of 
        title 11.
          ``(2) Interlocutory orders entered by bankruptcy courts and 
        district courts granting, continuing, modifying, refusing or 
        dissolving injunctions, or refusingto dissolve or modify 
injunctions in cases under title 11, in proceedings arising under title 
11, and in proceedings arising in or related to a case under title 11, 
other than interlocutory orders in proceedings regarding the automatic 
stay of section 362 of title 11.
          ``(3) Interlocutory orders of bankruptcy courts and district 
        courts entered under section 1104(a) or 1121(d) of title 11, or 
        the refusal to enter an order under such section.
          ``(4) An interlocutory order of a bankruptcy court or 
        district court entered in a case under title 11, in a 
        proceeding arising under title 11, or in a proceeding arising 
        in or related to a case under title 11, if the court of appeals 
        that would have jurisdiction of an appeal of a final order 
        entered in such case or such proceeding permits, in its 
        discretion, appeal to be taken from such interlocutory order.
  ``(b) Final decisions, judgments, orders, and decrees entered by a 
bankruptcy appellate panel under subsection (b) of this section.
  ``(c)(1) The judicial council of a circuit may establish a bankruptcy 
appellate panel composed of bankruptcy judges in the circuit who are 
appointed by the judicial council, which panel shall exercise the 
jurisdiction to review orders and judgments of bankruptcy courts 
described in paragraphs (1)-(4) of subsection (a) of this section 
unless--
          ``(A) the appellant elects at the time of filing the appeal; 
        or
          ``(B) any other party elects, not later than 10 days after 
        service of the notice of the appeal;
to have such jurisdiction exercised by the court of appeals.
  ``(2) An appeal to be heard by a bankruptcy appellate panel under 
this subsection (b) shall be heard by 3 members of the bankruptcy 
appellate panel, provided that a member of such panel may not hear an 
appeal originating in the district for which such member is appointed 
or designated under section 152 of this title.
  ``(3) If authorized by the Judicial Conference of the United States, 
the judicial councils of 2 or more circuits may establish a joint 
bankruptcy appellate panel.''.

SEC. 613. GAO STUDY.

  (a) Study.--Not later than 270 days after the date of the enactment 
of this Act, the Comptroller General of the United States shall conduct 
a study of the feasibility, effectiveness, and cost of requiring 
trustees appointed under title 11 of the United States Code, or the 
bankruptcy courts, to provide to the Office of Child Support 
Enforcement promptly after the commencement of cases by individual 
debtors under such title, the names and social security numbers of such 
debtors for the purposes of allowing such Office to determine whether 
such debtors have outstanding obligations for child support (as 
determined on the basis of information in the Federal Case Registry or 
other national database).
  (b) Report.--Not later than 300 days after the date of the enactment 
of this Act, the Comptroller General shall submit to the Speaker of the 
House of Representatives and the President pro tempore of the Senate, a 
report containing the results of the study required by subsection (a).

                       TITLE VII--BANKRUPTCY DATA

SEC. 701. IMPROVED BANKRUPTCY STATISTICS.

  (a) Amendment.--Chapter 6 of part I of title 28, United States Code, 
is amended by adding at the end the following:

``Sec. 159. Bankruptcy statistics

  ``(a) The clerk of each district shall compile statistics regarding 
individual debtors with primarily consumer debts seeking relief under 
chapters 7, 11, and 13 of title 11 Those statistics shall be in a form 
prescribed by the Director of the Administrative Office of the United 
States Courts (referred to in this section as the `Office')
  ``(b) The Director shall--
          ``(1) compile the statistics referred to in subsection (a);
          ``(2) make the statistics available to the public; and
          ``(3) not later than October 31, 2000, and annually 
        thereafter, prepare, and submit to Congress a report concerning 
        the information collected under subsection (a) that contains an 
        analysis of the information.
  ``(c) The compilation required under subsection (b) shall--
          ``(1) be itemized, by chapter, with respect to title 11;
          ``(2) be presented in the aggregate and for each district; 
        and
          ``(3) include information concerning--
                  ``(A) the total assets and total liabilities of the 
                debtors described in subsection (a), and in each 
                category of assets and liabilities, as reported in the 
                schedules prescribed pursuant to section 2075 of this 
                title and filed by those debtors;
                  ``(B) the current monthly income, and average income 
                and average expenses of those debtors as reported on 
                the schedules and statements that each such debtor 
                files under sections 521 and 1322 of title 11;
                  ``(C) the aggregate amount of debt discharged in the 
                reporting period, determined as the difference between 
                the total amount of debt and obligations of a debtor 
                reported on the schedules and the amount of such debt 
                reported in categories which are predominantly 
                nondischargeable;
                  ``(D) the average period of time between the filing 
                of the petition and the closing of the case;
                  ``(E) for the reporting period--
                          ``(i) the number of cases in which a 
                        reaffirmation was filed; and
                          ``(ii)(I) the total number of reaffirmations 
                        filed;
                          ``(II) of those cases in which a 
                        reaffirmation was filed, the number in which 
                        the debtor was not represented by an attorney; 
                        and
                          ``(III) of those cases, the number of cases 
                        in which the reaffirmation was approved by the 
                        court;
                  ``(F) with respect to cases filed under chapter 13 of 
                title 11, for the reporting period--
                          ``(i)(I) the number of cases in which a final 
                        order was entered determining the value of 
                        property securing a claim in an amount less 
                        than the amount of the claim; and
                          ``(II) the number of final orders determining 
                        the value of property securing a claim issued;
                          ``(ii) the number of cases dismissed, the 
                        number of cases dismissed for failure to make 
                        payments under the plan, the number of cases 
                        refiled after dismissal, and the number of 
                        cases in which the plan was completed, 
                        separately itemized with respect to the number 
                        of modifications made before completion of the 
                        plan, if any; and
                          ``(iii) the number of cases in which the 
                        debtor filed another case within the 6 years 
                        previous to the filing;
                  ``(G) the number of cases in which creditors were 
                fined for misconduct and any amount of punitive damages 
                awarded by the court for creditor misconduct; and
                  ``(H) the number of cases in which sanctions under 
                rule 9011 of the Federal Rules of Bankruptcy Procedure 
                were imposed against debtor's counsel and damages 
                awarded under such Rule.''.
  (b) Clerical Amendment.--The table of sections at the beginning of 
chapter 6 of title 28, United States Code, is amended by adding at the 
end the following:

``159. Bankruptcy statistics.''.

  (c) Effective Date.--The amendments made by this section shall take 
effect 18 months after the date of enactment of this Act.

SEC. 702. UNIFORM RULES FOR THE COLLECTION OF BANKRUPTCY DATA.

  (a) Amendment.--Title 28 of the United States Code is amended by 
inserting after section 589a the following:

``Sec. 589b. Bankruptcy data

  ``(a) Rules.--The Attorney General shall, within a reasonable time 
after the effective date of this section, issue rules requiring uniform 
forms for (and from time to time thereafter to appropriately modify and 
approve)--
          ``(1) final reports by trustees in cases under chapters 7, 
        12, and 13 of title 11; and
          ``(2) periodic reports by debtors in possession or trustees, 
        as the case may be, in cases under chapter 11 of title 11.
  ``(b) Reports.--All reports referred to in subsection (a) shall be 
designed (and the requirements as to place and manner of filing shall 
be established) so as to facilitate compilation of data and maximum 
possible access of the public, both by physical inspection at 1 or more 
central filing locations, and by electronic access through the Internet 
or other appropriate media.
  ``(c) Required Information.--The information required to be filed in 
the reports referred to in subsection (b) shall be that which is in the 
best interests of debtors and creditors, and in the public interest in 
reasonable and adequate information to evaluate the efficiency and 
practicality of the Federal bankruptcy system Inissuing rules proposing 
the forms referred to in subsection (a), the Attorney General shall 
strike the best achievable practical balance between--
          ``(1) the reasonable needs of the public for information 
        about the operational results of the Federal bankruptcy system; 
        and
          ``(2) economy, simplicity, and lack of undue burden on 
        persons with a duty to file reports.
  ``(d) Final Reports.--Final reports proposed for adoption by trustees 
under chapters 7, 12, and 13 of title 11 shall, in addition to such 
other matters as are required by law or as the Attorney General in the 
discretion of the Attorney General, shall propose, include with respect 
to a case under such title--
          ``(1) information about the length of time the case was 
        pending;
          ``(2) assets abandoned;
          ``(3) assets exempted;
          ``(4) receipts and disbursements of the estate;
          ``(5) expenses of administration;
          ``(6) claims asserted;
          ``(7) claims allowed; and
          ``(8) distributions to claimants and claims discharged 
        without payment,
in each case by appropriate category and, in cases under chapters 12 
and 13 of title 11, date of confirmation of the plan, each modification 
thereto, and defaults by the debtor in performance under the plan.
  ``(e) Periodic Reports.--Periodic reports proposed for adoption by 
trustees or debtors in possession under chapter 11 of title 11 shall, 
in addition to such other matters as are required by law or as the 
Attorney General, in the discretion of the Attorney General, shall 
propose, include--
          ``(1) information about the standard industry classification, 
        published by the Department of Commerce, for the businesses 
        conducted by the debtor;
          ``(2) length of time the case has been pending;
          ``(3) number of full-time employees as at the date of the 
        order for relief and at end of each reporting period since the 
        case was filed;
          ``(4) cash receipts, cash disbursements and profitability of 
        the debtor for the most recent period and cumulatively since 
        the date of the order for relief;
          ``(5) compliance with title 11, whether or not tax returns 
        and tax payments since the date of the order for relief have 
        been timely filed and made;
          ``(6) all professional fees approved by the court in the case 
        for the most recent period and cumulatively since the date of 
        the order for relief (separately reported, in for the 
        professional fees incurred by or on behalf of the debtor, 
        between those that would have been incurred absent a bankruptcy 
        case and those not); and
          ``(7) plans of reorganization filed and confirmed and, with 
        respect thereto, by class, the recoveries of the holders, 
        expressed in aggregate dollar values and, in the case of 
        claims, as a percentage of total claims of the class 
        allowed.''.
  (b) Technical Amendment.--The table of sections of chapter 39 of 
title 28, United States Code, is amended by adding at the end the 
following:

``589b. Bankruptcy data.''.

SEC. 703. SENSE OF THE CONGRESS REGARDING AVAILABILITY OF BANKRUPTCY 
                    DATA.

  It is the sense of the Congress that--
          (1) the national policy of the United States should be that 
        all data held by bankruptcy clerks in electronic form, to the 
        extent such data reflects only public records (as defined in 
        section 107 of title 11 of the United States Code), should be 
        released in a usable electronic form in bulk to the public 
        subject to such appropriate privacy concerns and safeguards as 
        the Judicial Conference of the United States may determine; and
          (2) there should be established a bankruptcy data system in 
        which--
                  (A) a single set of data definitions and forms are 
                used to collect data nationwide; and
                  (B) data for any particular bankruptcy case are 
                aggregated in the same electronic record.

                 TITLE VIII--BANKRUPTCY TAX PROVISIONS

SEC. 801. TREATMENT OF CERTAIN LIENS.

  (a) Treatment of Certain Liens.--Section 724 of title 11, United 
States Code, is amended--
          (1) in subsection (b), in the matter preceding paragraph (1), 
        by inserting ``(other than to the extent that there is a 
        properly perfected unavoidable tax lien arising in connection 
        with an ad valorem tax on real or personal property of the 
        estate)'' after ``under this title'';
          (2) in subsection (b)(2), after ``507(a)(1)'', insert 
        ``(except that such expenses, other than claims for wages, 
        salaries, or commissions which arise after the filing of a 
        petition, shall be limited to expenses incurred under chapter 7 
        of this title and shall not include expenses incurred under 
        chapter 11 of this title)''; and
          (3) by adding at the end the following:
  ``(e) Before subordinating a tax lien on real or personal property of 
the estate, the trustee shall--
          ``(1) exhaust the unencumbered assets of the estate; and
          ``(2) in a manner consistent with section 506(c) of this 
        title, recover from property securing an allowed secured claim 
        the reasonable, necessary costs and expenses of preserving or 
        disposing of that property.
  ``(f) Notwithstanding the exclusion of ad valorem tax liens set forth 
in this section and subject to the requirements of subsection (e)--
          ``(1) claims for wages, salaries, and commissions that are 
        entitled to priority under section 507(a)(3) of this title; or
          ``(2) claims for contributions to an employee benefit plan 
        entitled to priority under section 507(a)(4) of this title,
may be paid from property of the estate which secures a tax lien, or 
the proceeds of such property.''.
  (b) Determination of Tax Liability.--Section 505(a)(2) of title 11, 
United States Code, is amended--
          (1) in subparagraph (A), by striking ``or'' at the end;
          (2) in subparagraph (B), by striking the period at the end 
        and inserting ``; or''; and
          (3) by adding at the end the following:
          ``(C) the amount or legality of any amount arising in 
        connection with an ad valorem tax on real or personal property 
        of the estate, if the applicable period for contesting or 
        redetermining that amountunder any law (other than a bankruptcy 
law) has expired.''.

SEC. 802. EFFECTIVE NOTICE TO GOVERNMENT.

  (a) Effective Notice to Governmental Units.--Section 342 of title 11, 
United States Code, as amended by section 603, is amended by adding at 
the end the following:
  ``(g) If a debtor lists a governmental unit as a creditor in a list 
or schedule, any notice required to be given by the debtor under this 
title, any rule, any applicable law, or any order of the court, shall 
identify the department, agency, or instrumentality through which the 
debtor is indebted The debtor shall identify (with information such as 
a taxpayer identification number, loan, account or contract number, or 
real estate parcel number, where applicable), and describe the 
underlying basis for the governmental unit's claim If the debtor's 
liability to a governmental unit arises from a debt or obligation owed 
or incurred by another individual, entity, or organization, or under a 
different name, the debtor shall identify such individual, entity, 
organization, or name.
  ``(h) The clerk shall keep and update quarterly, in the form and 
manner as the Director of the Administrative Office of the United 
States Courts prescribes, and make available to debtors, a register in 
which a governmental unit may designate a safe harbor mailing address 
for service of notice in cases pending in the district A governmental 
unit may file a statement with the clerk designating a safe harbor 
address to which notices are to be sent, unless such governmental unit 
files a notice of change of address.''.
  (b) Adoption of Rules Providing Notice.--The Advisory Committee on 
Bankruptcy Rules of the Judicial Conference shall, within a reasonable 
period of time after the date of the enactment of this Act, propose for 
adoption enhanced rules for providing notice to State, Federal, and 
local government units that have regulatory authority over the debtor 
or which may be creditors in the debtor's case Such rules shall be 
reasonably calculated to ensure that notice will reach the 
representatives of the governmental unit, or subdivision thereof, who 
will be the proper persons authorized to act upon the notice At a 
minimum, the rules should require that the debtor--
          (1) identify in the schedules and the notice, the 
        subdivision, agency, or entity in respect of which such notice 
        should be received;
          (2) provide sufficient information (such as case captions, 
        permit numbers, taxpayer identification numbers, or similar 
        identifying information) to permit the governmental unit or 
        subdivision thereof, entitled to receive such notice, to 
        identify the debtor or the person or entity on behalf of which 
        the debtor is providing notice where the debtor may be a 
        successor in interest or may not be the same as the person or 
        entity which incurred the debt or obligation; and
          (3) identify, in appropriate schedules, served together with 
        the notice, the property in respect of which the claim or 
        regulatory obligation may have arisen, if any, the nature of 
        such claim or regulatory obligation and the purpose for which 
        notice is being given.
  (c) Effect of Failure of Notice.--Section 342 of title 11, United 
States Code, as amended by section 603 and subsection (a), is amended 
by adding at the end the following:
  ``(i) A notice that does not comply with subsections (d) and (e) 
shall not be effective unless the debtor demonstrates, by clear and 
convincing evidence, that timely notice was given in a manner 
reasonably calculated to satisfy the requirements of this section was 
given, and that--
          ``(1) either the notice was timely sent to the safe harbor 
        address provided in the register maintained by the clerk of the 
        district in which the case was pending for such purposes; or
          ``(2) no safe harbor address was provided in such list for 
        the governmental unit and that an officer of the governmental 
        unit who is responsible for the matter or claim had actual 
        knowledge of the case in sufficient time to act.''.

SEC. 803. NOTICE OF REQUEST FOR A DETERMINATION OF TAXES.

  Section 505(b) of title 11, United States Code, is amended by 
striking ``Unless'' at the beginning of the second sentence thereof and 
inserting ``If the request is made substantially in the manner 
designated by the governmental unit and unless''.

SEC. 804. RATE OF INTEREST ON TAX CLAIMS.

  (a) Amendment.--Chapter 5 of title 11, United States Code, is amended 
by adding at the end the following:

``Sec. 511. Rate of interest on tax claims

  ``If any provision of this title requires the payment of interest on 
a tax claim or requires the payment of interest to enable a creditor to 
receive the present value of the allowed amount of a tax claim, the 
rate of interest shall be as follows:
          ``(1) In the case of ad valorem tax claims, whether secured 
        or unsecured, other unsecured tax claims where interest is 
        required to be paid under section 726(a)(5) of this title, 
        secured tax claims, and administrative tax claims paid under 
        section 503(b)(1) of this title, the rate shall be determined 
        under applicable nonbankruptcy law.
          ``(2) In the case of all other tax claims, the minimum rate 
        of interest shall be the Federal short-term rate rounded to the 
        nearest full percent, determined under section 1274(d) of the 
        Internal Revenue Code of 1986, plus 3 percentage points.
                  ``(A) In the case of claims for Federal income taxes, 
                such rate shall be subject to any adjustment that may 
                be required under section 6621(d) of the Internal 
                Revenue Code of 1986.
                  ``(B) In the case of taxes paid under a confirmed 
                plan or reorganization, such rate shall be determined 
                as of the calendar month in which the plan is 
                confirmed.''.
  (b) Conforming Amendment.--The table of sections of chapter 5 of 
title 11, United States Code, is amended by inserting after the item 
relating to section 510 the following:

``511. Rate of interest on tax claims.''.

SEC. 805. TOLLING OF PRIORITY OF TAX CLAIM TIME PERIODS.

  Section 507(a)(8)(A) of title 11, United States Code, as so 
redesignated, is amended--
          (1) in clause (i) by inserting after ``petition'' and before 
        the semicolon ``, plus any time, plus 6 months, during which 
        the stay of proceedings was in effect in a prior case under 
        this title''; and
          (2) amend clause (ii) to read as follows:
                          ``(ii) assessed within 240 days before the 
                        date of the filing of the petition, exclusive 
                        of--
                                  ``(I) any time plus 30 days during 
                                which an offer in compromise with 
                                respect of such tax, was pending or in 
                                effect during such 240-day period;
                                  ``(II) any time plus 30 days during 
                                which an installment agreement with 
                                respect of such tax was pending or in 
                                effect during such 240-day period, up 
                                to 1 year; and
                                  ``(III) any time plus 6 months during 
                                which a stay of proceedings against 
                                collections was in effect in a prior 
                                case under this title during such 240-
                                day period.''.

SEC. 806. PRIORITY PROPERTY TAXES INCURRED.

  Section 507(a)(8)(B) of title 11, United States Code, is amended by 
striking ``assessed'' and inserting ``incurred''.

SEC. 807. CHAPTER 13 DISCHARGE OF FRAUDULENT AND OTHER TAXES.

  Section 1328(a)(2) of title 11, United States Code, is amended by 
inserting ``(1),'' after ``paragraph''.

SEC. 808. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.

  Section 1141(d) of title 11, United States Code, is amended by adding 
at the end the following:
  ``(6) Notwithstanding the provisions of paragraph (1), the 
confirmation of a plan does not discharge a debtor which is a 
corporation from any debt for a tax or customs duty with respect to 
which the debtor made a fraudulent return or willfully attempted in any 
manner to evade or defeat such tax.''.

SEC. 809. STAY OF TAX PROCEEDINGS.

  (a) Section 362 Stay Limited to Prepetition Taxes.--Section 362(a)(8) 
of title 11, United States Code, is amended by striking the period at 
the end and inserting ``, in respect of a tax liability for a taxable 
period ending before the order for relief.''.
  (b) Appeal of Tax Court Decisions Permitted.--Section 362(b)(9) of 
title 11, United States Code, is amended--
          (1) in subparagraph (C) by striking ``or'' at the end;
          (2) in subparagraph (D) by striking the period at the end and 
        inserting ``; or''; and
          (3) by adding at the end the following:
                  ``(E) the appeal of a decision by a court or 
                administrative tribunal which determines a tax 
                liability of the debtor without regard to whether such 
                determination was made prepetition or postpetition.''.

SEC. 810. PERIODIC PAYMENT OF TAXES IN CHAPTER 11 CASES.

  Section 1129(a)(9) of title 11, United States Code, is amended--
          (1) in subparagraph (B) by striking ``and'' at the end; and
          (2) in subparagraph (C)--
                  (A) by striking ``deferred cash payments, over a 
                period not exceeding six years after the date of 
                assessment of such claim,'' and inserting ``regular 
                installment payments in cash, but in no case with a 
                balloon provision, and no more than three months apart, 
                beginning no later than the effective date of the plan 
                and ending on the earlier of five years after the 
                petition date or the last date payments are to be made 
                under the plan to unsecured creditors,'';
                  (B) by striking the period at the end and inserting 
                ``; and''; and
          (3) by adding at the end the following:
                  ``(D) with respect to a secured claim which would be 
                described in section 507(a)(8) of this title but for 
                its secured status, the holder of such claim will 
                receive on account of such claim cash payments of not 
                less than is required in subparagraph (C) and over a 
                period no greater than is required in such 
                subparagraph.''.

SEC. 811. AVOIDANCE OF STATUTORY TAX LIENS PROHIBITED.

  Section 545(2) of title 11, United States Code, is amended by 
striking the semicolon at the end and inserting ``, except where such 
purchaser is a purchaser described in section 6323 of the Internal 
Revenue Code of 1986 or similar provision of State or local law;''.

SEC. 812. PAYMENT OF TAXES IN THE CONDUCT OF BUSINESS.

  (a) Payment of Taxes Required.--Section 960 of title 28, United 
States Code, is amended--
          (1) by inserting ``(a)'' before ``Any''; and
          (2) by adding at the end the following:
  ``(b) Such taxes shall be paid when due in the conduct of such 
business unless--
          ``(1) the tax is a property tax secured by a lien against 
        property that is abandoned within a reasonable time after the 
        lien attaches, by the trustee of a bankruptcy estate, pursuant 
        to section 554 of title 11; or
          ``(2) payment of the tax is excused under a specific 
        provision of title 11.
  ``(c) In a case pending under chapter 7 of title 11, payment of a tax 
may be deferred until final distribution is made under section 726 of 
title 11 if--
          ``(1) the tax was not incurred by a trustee duly appointed 
        under chapter 7 of title 11; or
          ``(2) before the due date of the tax, the court has made a 
        finding of probable insufficiency of funds of the estate to pay 
        in full the administrative expenses allowed under section 
        503(b) of title 11 that have the same priority in distribution 
        under section 726(b) of title 11 as such tax.''.
  (b) Payment of Ad Valorem Taxes Required.--Section 503(b)(1)(B) of 
title 11, United States Code, is amended in clause (i) by inserting 
after ``estate,'' and before ``except'' the following: ``whether 
secured or unsecured, including property taxes for which liability is 
in rem only, in personam or both,''.
  (c) Request for Payment of Administrative Expense Taxes Eliminated.--
Section 503(b)(1) of title 11, United States Code, is amended by adding 
at the end the following:
          ``(D) notwithstanding the requirements of subsection (a) of 
        this section, a governmental unit shall not be required to file 
        a request for the payment of a claim described in subparagraph 
        (B) or (C);''.
  (d) Payment of Taxes and Fees as Secured Claims.--Section 506 of 
title 11, United States Code, is amended--
          (1) in subsection (b) by inserting ``or State statute'' after 
        ``agreement''; and
          (2) in subsection (c) by inserting ``, including the payment 
        of all ad valorem property taxes in respect of the property'' 
        before the period at the end.

SEC. 813. TARDILY FILED PRIORITY TAX CLAIMS.

  Section 726(a)(1) of title 11, United States Code, is amended by 
striking ``before the date on which the trustee commences distribution 
under this section'' and inserting ``on or before the earlier of 10 
days after the mailing to creditors of the summary of the trustee's 
final report or the date on which the trustee commences final 
distribution under this section''.

SEC. 814. INCOME TAX RETURNS PREPARED BY TAX AUTHORITIES.

  Section 523(a)(1)(B) of title 11, United States Code, is amended--
          (1) by inserting ``or equivalent report or notice,'' after 
        ``a return,'';
          (2) in clause (i)--
                  (A) by inserting ``or given'' after ``filed''; and
                  (B) by striking ``or'' at the end;
          (3) in clause (ii)--
                  (A) by inserting ``or given'' after ``filed''; and
                  (B) by inserting ``, report, or notice'' after 
                ``return''; and
          (4) by adding at the end the following:
                          ``(iii) for purposes of this subsection, a 
                        return--
                                  ``(I) must satisfy the requirements 
                                of applicable nonbankruptcy law, and 
                                includes a return prepared pursuant to 
                                section 6020(a) of the Internal Revenue 
                                Code of 1986, or similar State or local 
                                law, or a written stipulation to a 
                                judgment entered by a nonbankruptcy 
                                tribunal, but does not include a return 
                                made pursuant to section 6020(b) of the 
                                Internal Revenue Code of 1986, or 
                                similar State or local law; and
                                  ``(II) must have been filed in a 
                                manner permitted by applicable 
                                nonbankruptcy law; or''.

SEC. 815. DISCHARGE OF THE ESTATE'S LIABILITY FOR UNPAID TAXES.

  Section 505(b) of title 11, United States Code, is amended in the 
second sentence by inserting ``the estate,'' after 
``misrepresentation,''.

SEC. 816. REQUIREMENT TO FILE TAX RETURNS TO CONFIRM CHAPTER 13 PLANS.

  (a) Filing of Prepetition Tax Returns Required for Plan 
Confirmation.--Section 1325(a) of title 11, United States Code, as 
amended by section 140, is amended--
          (1) in paragraph (6) by striking ``and'' at the end;
          (2) in paragraph (7) by striking the period at the end and 
        inserting ``; and''; and
          (3) by adding at the end the following:
          ``(8) if the debtor has filed all Federal, State, and local 
        tax returns as required by section 1308 of this title.''.
  (b) Additional Time Permitted for Filing Tax Returns.--(1) Chapter 13 
of title 11, United States Code, as amended by section 135, is amended 
by adding at the end the following:

``Sec. 1308. Filing of prepetition tax returns

  ``(a) On or before the day prior to the day on which the first 
meeting of the creditors is convened under section 341(a) of this 
title, the debtor shall have filed with appropriate tax authorities all 
tax returns for all taxable periods ending in the 3-year period ending 
on the date of filing of the petition.
  ``(b) If the tax returns required by subsection (a) have not been 
filed by the date on which the first meeting of creditors is convened 
under section 341(a) of this title, the trustee may continue such 
meeting for a reasonable period of time, to allow the debtor additional 
time to file any unfiled returns, but such additional time shall be no 
more than--
          ``(1) for returns that are past due as of the date of the 
        filing of the petition, 120 days from such date;
          ``(2) for returns which are not past due as of the date of 
        the filing of the petition, the later of 120 days from such 
        date or the due date for such returns under the last automatic 
        extension of time for filing such returns to which the debtor 
        is entitled, and for which request has been timely made, 
        according to applicable nonbankruptcy law; and
          ``(3) upon notice and hearing, and order entered before the 
        lapse of any deadline fixed according to this subsection, where 
        the debtor demonstrates, by clear and convincing evidence, that 
        the failure to file the returns as required is because of 
        circumstances beyond the control of the debtor, the court may 
        extend the deadlines set by the trustee as provided in this 
        subsection for--
                  ``(A) a period of no more than 30 days for returns 
                described in paragraph (1) of this subsection; and
                  ``(B) for no more than the period of time ending on 
                the applicable extended due date for the returns 
                described in paragraph (2).
  ``(c) For purposes of this section only, a return includes a return 
prepared pursuant to section 6020 (a) or (b) of the Internal Revenue 
Code of 1986 or similar State or local law, or a written stipulation to 
a judgment entered by a nonbankruptcy tribunal.''.
  (2) The table of sections of chapter 13 of title 11, United States 
Code, is amended by inserting after the item relating to section 1307 
the following:

``1308. Filing of prepetition tax returns.''.

  (c) Dismissal or Conversion on Failure To Comply.--Section 1307 of 
title 11, United States Code, is amended--
          (1) by redesignating subsections (e) and (f) as subsections 
        (f) and (g), respectively; and
          (2) by inserting after subsection (d) the following:
  ``(e) Upon the failure of the debtor to file tax returns under 
section 1308 of this title, on request of a party in interest or the 
United States trustee and after notice and a hearing, the court shall 
dismiss a case or convert a case under this chapter to a case under 
chapter 7 of this title, whichever is in the best interests of 
creditors and the estate.''.
  (d) Timely Filed Claims.--Section 502(b)(9) of title 11, United 
States Code, is amended by striking the period at the end and inserting 
``, and except that in a case under chapter 13 of this title, a claim 
of a governmental unit for a tax in respect of a return filed under 
section 1308 of this title shall be timely if it is filed on or before 
60 days after such return or returns were filed as required.''.
  (e) Rules for Objections to Claims and to Confirmation.--It is the 
sense of the Congress that the Advisory Committee on Bankruptcy Rules 
of the Judicial Conference should, within a reasonable period of time 
after the date of the enactment of this Act, propose for adoption 
amended Federal Rules of Bankruptcy Procedure which provide that--
          (1) notwithstanding the provisions of Rule 3015(f), in cases 
        under chapter 13 of title 11, United States Code, a 
        governmental unit may object to the confirmation of a plan on 
        or before 60 days after the debtor files all tax returns 
        required under sections 1308 and 1325(a)(7) of title 11, United 
        States Code; and
          (2) in addition to the provisions of Rule 3007, in a case 
        under chapter 13 of title 11, United States Code, no objection 
        to a tax in respect of a return required to be filed under such 
        section 1308 shall be filed until such return has been filed as 
        required.

SEC. 817. STANDARDS FOR TAX DISCLOSURE.

  Section 1125(a) of title 11, United States Code, is amended in 
paragraph (1)--
          (1) by inserting after ``records,'' the following: 
        ``including a full discussion of the potential material 
        Federal, State, and local tax consequences of the plan to the 
        debtor, any successor to the debtor, and a hypothetical 
        investor domiciled in the State in which the debtor resides or 
        has its principal place of business typical of the holders of 
        claims or interests in the case,'';
          (2) by inserting ``such'' after ``enable''; and
          (3) by striking ``reasonable'' where it appears after 
        ``hypothetical'' and by striking ``typical of holders of claims 
        or interests'' after ``investor''.

SEC. 818. SETOFF OF TAX REFUNDS.

  Section 362(b) of title 11, United States Code, as amended by 
sections 118, 132, 136, and 203, is amended--
          (1) in paragraph (29) by striking ``or'';
          (2) in paragraph (30) by striking the period at the end and 
        inserting ``; or''; and
          (3) by inserting after paragraph (30) the following:
          ``(31) under subsection (a) of the setoff of an income tax 
        refund, by a governmental unit, in respect of a taxable period 
        which ended before the order for relief against an income tax 
        liability for a taxable period which also ended before the 
        order for relief, unless--
                  ``(A) prior to such setoff, an action to determine 
                the amount or legality of such tax liability under 
                section 505(a) was commenced; or
                  ``(B) where the setoff of an income tax refund is not 
                permitted because of a pending action to determine the 
                amount or legality of a tax liability, the governmental 
                unit may hold the refund pending the resolution of the 
                action.''.

            TITLE IX--ANCILLARY AND OTHER CROSS-BORDER CASES

SEC. 901. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11, UNITED STATES CODE.

  (a) In General.--Title 11, United States Code, is amended by 
inserting after chapter 13 the following:

          ``CHAPTER 15--ANCILLARY AND OTHER 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.
``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.

``Sec. 1501. Purpose and scope of application

  ``(a) The purpose of this chapter is to incorporate the Model Law on 
Cross-Border Insolvency so as to provide effective mechanisms for 
dealing with cases of cross-border insolvency with the objectives of--
          ``(1) cooperation between--
                  ``(A) United States courts, United States trustees, 
                trustees, examiners, debtors, and debtors in 
                possession; and
                  ``(B) the courts and other competent authorities of 
                foreign countries involved in cross-border insolvency 
                cases;
          ``(2) greater legal certainty for trade and investment;
          ``(3) fair and efficient administration of cross-border 
        insolvencies that protects the interests of all creditors, and 
        other interested entities, including the debtor;
          ``(4) protection and maximization of the value of the 
        debtor's assets; and
          ``(5) facilitation of the rescue of financially troubled 
        businesses, thereby protecting investment and preserving 
        employment.
  ``(b) This chapter applies where--
          ``(1) assistance is sought in the United States by a foreign 
        court or a foreign representative in connection with a foreign 
        proceeding;
          ``(2) assistance is sought in a foreign country in connection 
        with a case under this title;
          ``(3) a foreign proceeding and a case under this title with 
        respect to the same debtor are taking place concurrently; or
          ``(4) creditors or other interested persons in a foreign 
        country have an interest in requesting the commencement of, or 
        participating in, a case or proceeding under this title.
  ``(c) This chapter does not apply to--
          ``(1) a proceeding concerning an entity identified by 
        exclusion in subsection 109(b);
          ``(2) an individual, or to an individual and such 
        individual's spouse, who have debts within the limits specified 
        in section 109(e) and who are citizens of the United States or 
        aliens lawfully admitted for permanent residence in the United 
        States; or
          ``(3) an entity subject to a proceeding under the Securities 
        Investor Protection Act, a stockbroker subject to subchapter 
        III of chapter 7 of this title, or a commodity broker subject 
        to subchapter IV of chapter 7 of this title.

                   ``SUBCHAPTER I--GENERAL PROVISIONS

``Sec. 1502. Definitions

  ``For the purposes of this chapter, the term--
          ``(1) `debtor' means an entity that is the subject of a 
        foreign proceeding;
          ``(2) `establishment' means any place of operations where the 
        debtor carries out a nontransitory economic activity;
          ``(3) `foreign court' means a judicial or other authority 
        competent to control or supervise a foreign proceeding;
          ``(4) `foreign main proceeding' means a foreign proceeding 
        taking place in the country where the debtor has the center of 
        its main interests;
          ``(5) `foreign nonmain proceeding' means a foreign 
        proceeding, other than a foreign main proceeding, taking place 
        in a country where the debtor has an establishment;
          ``(6) `trustee' includes a trustee, a debtor in possession in 
        a case under any chapter of this title, or a debtor under 
        chapter 9 of this title; and
          ``(7) `within the territorial jurisdiction of the United 
        States' when used with reference to property of a debtor refers 
        to tangible property located within the territory of the United 
        States and intangible property deemed under applicable 
        nonbankruptcy law to be located within that territory, 
        including any property subject to attachment or garnishment 
        that may properly be seized or garnished by an action in a 
        Federal or State court in the United States.

``Sec. 1503. International obligations of the United States

  ``To the extent that this chapter conflicts with an obligation of the 
United States arising out of any treaty or other form of agreement to 
which it is a party with 1 or more other countries, the requirements of 
the treaty or agreement prevail.

``Sec. 1504. Commencement of ancillary case

  ``A case under this chapter is commenced by the filing of a petition 
for recognition of a foreign proceeding under section 1515.

``Sec. 1505. Authorization to act in a foreign country

  ``A trustee or another entity (including an examiner) may be 
authorized by the court to act in a foreign country on behalf of an 
estate created under section 541 An entity authorized to act under this 
section may act in any way permitted by the applicable foreign law.

``Sec. 1506. Public policy exception

  ``Nothing in this chapter prevents the court from refusing to take an 
action governed by this chapter if the action would be manifestly 
contrary to the public policy of the United States.

``Sec. 1507. Additional assistance

  ``(a) Subject to the specific limitations stated elsewhere in this 
chapter the court, upon recognition of a foreign proceeding, the court 
may provide additional assistance to a foreign representative under 
this title or under other laws of the United States.
  ``(b) In determining whether to provide additional assistance under 
this title or under other laws of the United States, the court shall 
consider whether such additional assistance, consistent with the 
principles of comity, will reasonably assure--
          ``(1) just treatment of all holders of claims against or 
        interests in the debtor's property;
          ``(2) protection of claim holders in the United States 
        against prejudice and inconvenience in the processing of claims 
        in such foreign proceeding;
          ``(3) prevention of preferential or fraudulent dispositions 
        of property of the debtor;
          ``(4) distribution of proceeds of the debtor's property 
        substantially in accordance with the order prescribed by this 
        title; and
          ``(5) if appropriate, the provision of an opportunity for a 
        fresh start for the individual that such foreign proceeding 
        concerns.

``Sec. 1508. Interpretation

  ``In interpreting this chapter, the court shall consider its 
international origin, and the need to promote an application of this 
chapter that is consistent with the application of similar statutes 
adopted by foreign jurisdictions.

``SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE 
                                 COURT

``Sec. 1509. Right of direct access

  ``(a) A foreign representative may commence a case under section 1504 
of this title by filing with the court a petition for recognition of a 
foreign proceeding under section 1515 of this title.
  ``(b) If the court grants recognition under section 1515 of this 
title, and subject to any limitations that the court may impose 
consistent with the policy of this chapter--
          ``(1) the foreign representative has the capacity to sue and 
        be sued in a court in the United States;
          ``(2) the foreign representative may apply directly to a 
        court in the United States for appropriate relief in that 
        court; and
          ``(3) a court in the United States shall grant comity or 
        cooperation to the foreign representative.
  ``(c) A request for comity or cooperation by a foreign representative 
in a court in the United States shall be accompanied by a certified 
copy of an order granting recognition under section 1517 of this title.
  ``(d) If the court denies recognition under this chapter, the court 
may issue any appropriate order necessary to prevent the foreign 
representative from obtaining comity or cooperation from courts in the 
United States.
  ``(e) Whether or not the court grants recognition, and subject to 
sections 306 and 1510 of this title, a foreign representative is 
subject to applicable nonbankruptcy law.
  ``(f) Notwithstanding any other provision of this section, the 
failure of a foreign representative to commence a case or to obtain 
recognition under this chapter does not affect any right the foreign 
representative may have to sue in a court in the United State to 
collect or recover a claim which is the property of the debtor.''.

``Sec. 1510. Limited jurisdiction

  ``The sole fact that a foreign representative files a petition under 
section 1515 does not subject the foreign representative to the 
jurisdiction of any court in the United States for any other purpose.

``Sec. 1511. Commencement of case under section 301 or 303

  ``(a) Upon recognition, a foreign representative may commence--
          ``(1) an involuntary case under section 303; or
          ``(2) a voluntary case under section 301 or 302, if the 
        foreign proceeding is a foreign main proceeding.
  ``(b) The petition commencing a case under subsection (a) must be 
accompanied by certified copy of an order granting recognition The 
court where the petition for recognition has been filed must be advised 
of the foreign representative's intent to commence a case under 
subsection (a) prior to such commencement.

``Sec. 1512. Participation of a foreign representative in a case under 
                    this title

  ``Upon recognition of a foreign proceeding, the foreign 
representative in that proceeding is entitled to participate as a party 
in interest in a case regarding the debtor under this title.

``Sec. 1513. Access of foreign creditors to a case under this title

  ``(a) Foreign creditors have the same rights regarding the 
commencement of, and participation in, a case under this title as 
domestic creditors.
  ``(b)(1) Subsection (a) does not change or codify present law as to 
the priority of claims under section 507 or 726 of this title, except 
that the claim of a foreign creditor under those sections shall not be 
given a lower priority than that of general unsecured claims without 
priority solely because the holder of such claim is a foreign creditor.
  ``(2)(A) Subsection (a) and paragraph (1) do not change or codify 
present law as to the allowability of foreign revenue claims or other 
foreign public law claims in a proceeding under this title.
  ``(B) Allowance and priority as to a foreign tax claim or other 
foreign public law claim shall be governed by any applicable tax treaty 
of the United States, under the conditions and circumstances specified 
therein.

``Sec. 1514. Notification to foreign creditors concerning a case under 
                    this title

  ``(a) Whenever in a case under this title notice is to be given to 
creditors generally or to any class or category of creditors, such 
notice shall also be given to the known creditors generally, or to 
creditors in the notified class or category, that do not have addresses 
in the United States The court may order that appropriate steps be 
taken with a view to notifying any creditor whose address is not yet 
known.
  ``(b) Such notification to creditors with foreign addresses described 
in subsection (a) shall be given individually, unless the court 
considers that, under the circumstances, some other form of 
notification would be more appropriate No letters rogatory or other 
similar formality is required.
  ``(c) When a notification of commencement of a case is to be given to 
foreign creditors, the notification shall--
          ``(1) indicate the time period for filing proofs of claim and 
        specify the place for their filing;
          ``(2) indicate whether secured creditors need to file their 
        proofs of claim; and
          ``(3) contain any other information required to be included 
        in such a notification to creditors under this title and the 
        orders of the court.
  ``(d) Any rule of procedure or order of the court as to notice or the 
filing of a claim shall provide such additional time to creditors with 
foreign addresses as is reasonable under the circumstances.

    ``SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

``Sec. 1515. Application for recognition of a foreign proceeding

  ``(a) A foreign representative applies to the court for recognition 
of the foreign proceeding in which the foreign representative has been 
appointed by filing a petition for recognition.
  ``(b) A petition for recognition shall be accompanied by--
          ``(1) a certified copy of the decision commencing the foreign 
        proceeding and appointing the foreign representative;
          ``(2) a certificate from the foreign court affirming the 
        existence of the foreign proceeding and of the appointment of 
        the foreign representative; or
          ``(3) in the absence of evidence referred to in paragraphs 
        (1) and (2), any other evidence acceptable to the court of the 
        existence of the foreign proceeding and of the appointment of 
        the foreign representative.
  ``(c) A petition for recognition shall also be accompanied by a 
statement identifying all foreign proceedings with respect to the 
debtor that are known to the foreign representative.
  ``(d) The documents referred to in paragraphs (1) and (2) of 
subsection (b) must be translated into English The court may require a 
translation into English of additional documents.

``Sec. 1516. Presumptions concerning recognition

  ``(a) If the decision or certificate referred to in section 1515(b) 
indicates that the foreign proceeding is a foreign proceeding as 
defined in section 101 and that the person or body is a foreign 
representative as defined in section 101, the court is entitled to so 
presume.
  ``(b) The court is entitled to presume that documents submitted in 
support of the petition for recognition are authentic, whether or not 
they have been legalized.
  ``(c) In the absence of evidence to the contrary, the debtor's 
registered office, or habitual residence in the case of an individual, 
is presumed to be the center of the debtor's main interests.

``Sec. 1517. Order recognizing a foreign proceeding

  ``(a) Subject to section 1506, after notice and a hearing an order 
recognizing a foreign proceeding shall be entered if--
          ``(1) the foreign proceeding is a foreign main proceeding or 
        foreign nonmain proceeding within the meaning of section 1502;
          ``(2) the foreign representative applying for recognition is 
        a person or body as defined in section 101; and
          ``(3) the petition meets the requirements of section 1515.
  ``(b) The foreign proceeding shall be recognized--
          ``(1) as a foreign main proceeding if it is taking place in 
        the country where the debtor has the center of its main 
        interests; or
          ``(2) as a foreign nonmain proceeding if the debtor has an 
        establishment within the meaning of section 1502 in the foreign 
        country where the proceeding is pending.
  ``(c) A petition for recognition of a foreign proceeding shall be 
decided upon at the earliest possible time Entry of an order 
recognizing a foreign proceeding constitutes recognition under this 
chapter.
  ``(d) The provisions of this subchapter do not prevent modification 
or termination of recognition if it is shown that the grounds for 
granting it were fully or partially lacking or have ceased to exist, 
but in considering such action the court shall give due weight to 
possible prejudice to parties that have relied upon the granting of 
recognition The case under this chapter may be closed in the manner 
prescribed under section 350.

``Sec. 1518. Subsequent information

  ``From the time of filing the petition for recognition of the foreign 
proceeding, the foreign representative shall file with the court 
promptly a notice of change of status concerning--
          ``(1) any substantial change in the status of the foreign 
        proceeding or the status of the foreign representative's 
        appointment; and
          ``(2) any other foreign proceeding regarding the debtor that 
        becomes known to the foreign representative.

``Sec. 1519. Relief that may be granted upon petition for recognition 
                    of a foreign proceeding

  ``(a) From the time of filing a petition for recognition until the 
court rules on the petition, the court may, at the request of the 
foreign representative, where relief is urgently needed to protect the 
assets of the debtor or the interests of the creditors, grant relief of 
a provisional nature, including--
          ``(1) staying execution against the debtor's assets;
          ``(2) entrusting the administration or realization of all or 
        part of the debtor's assets located in the United States to the 
        foreign representative or another person authorized by the 
        court, including an examiner, in order to protect and preserve 
        the value of assets that, by their nature or because of 
othercircumstances, are perishable, susceptible to devaluation or 
otherwise in jeopardy; and
          ``(3) any relief referred to in paragraph (3), (4), or (7) of 
        section 1521(a).
  ``(b) Unless extended under section 1521(a)(6), the relief granted 
under this section terminates when the petition for recognition is 
decided upon.
  ``(c) It is a ground for denial of relief under this section that 
such relief would interfere with the administration of a foreign main 
proceeding.
  ``(d) The court may not enjoin a police or regulatory act of a 
governmental unit, including a criminal action or proceeding, under 
this section.
  ``(e) The standards, procedures, and limitations applicable to an 
injunction shall apply to relief under this section.

``Sec. 1520. Effects of recognition of a foreign main proceeding

  ``(a) Upon recognition of a foreign proceeding that is a foreign main 
proceeding--
          ``(1) sections 361 and 362 with respect to the debtor and 
        that property of the debtor that is within the territorial 
        jurisdiction of the United States;
          ``(2) sections 363, 549, and 552 of this title apply to a 
        transfer of an interest of the debtor in property that is 
        within the territorial jurisdiction of the United States to the 
        same extent that the sections would apply to property of an 
        estate;
          ``(3) unless the court orders otherwise, the foreign 
        representative may operate the debtor's business and may 
        exercise the rights and powers of a trustee under and to the 
        extent provided by sections 363 and 552; and
          ``(4) section 552 applies to property of the debtor that is 
        within the territorial jurisdiction of the United States.''.
  ``(b) Subsection (a) does not affect the right to commence an 
individual action or proceeding in a foreign country to the extent 
necessary to preserve a claim against the debtor.
  ``(c) Subsection (a) does not affect the right of a foreign 
representative or an entity to file a petition commencing a case under 
this title or the right of any party to file claims or take other 
proper actions in such a case.

``Sec. 1521. Relief that may be granted upon recognition of a foreign 
                    proceeding

  ``(a) Upon recognition of a foreign proceeding, whether main or 
nonmain, where necessary to effectuate the purpose of this chapter and 
to protect the assets of thedebtor or the interests of the creditors, 
the court may, at the request of the foreign representative, grant any 
appropriate relief, including--
          ``(1) staying the commencement or continuation of an 
        individual action or proceeding concerning the debtor's assets, 
        rights, obligations or liabilities to the extent they have not 
        been stayed under section 1520(a);
          ``(2) staying execution against the debtor's assets to the 
        extent it has not been stayed under section 1520(a);
          ``(3) suspending the right to transfer, encumber or otherwise 
        dispose of any assets of the debtor to the extent this right 
        has not been suspended under section 1520(a);
          ``(4) providing for the examination of witnesses, the taking 
        of evidence or the delivery of information concerning the 
        debtor's assets, affairs, rights, obligations or liabilities;
          ``(5) entrusting the administration or realization of all or 
        part of the debtor's assets within the territorial jurisdiction 
        of the United States to the foreign representative or another 
        person, including an examiner, authorized by the court;
          ``(6) extending relief granted under section 1519(a); and
          ``(7) granting any additional relief that may be available to 
        a trustee, except for relief available under sections 522, 544, 
        545, 547, 548, 550, and 724(a).
  ``(b) Upon recognition of a foreign proceeding, whether main or 
nonmain, the court may, at the request of the foreign representative, 
entrust the distribution of all or part of the debtor's assets located 
in the United States to the foreign representative or another person, 
including an examiner, authorized by the court, provided that the court 
is satisfied that the interests of creditors in the United States are 
sufficiently protected.
  ``(c) In granting relief under this section to a representative of a 
foreign nonmain proceeding, the court must be satisfied that the relief 
relates to assets that, under the law of the United States, should be 
administered in the foreign nonmain proceeding or concerns information 
required in that proceeding.
  ``(d) The court may not enjoin a police or regulatory act of a 
governmental unit, including a criminal action or proceeding, under 
this section.
  ``(e) The standards, procedures, and limitations applicable to an 
injunction shall apply to relief under paragraphs (1), (2), (3), and 
(6) of subsection (a).

``Sec. 1522. Protection of creditors and other interested persons

  ``(a) The court may grant relief under section 1519 or 1521, or may 
modify or terminate relief under subsection (c), only if the interests 
of the creditors and other interested entities, including the debtor, 
are sufficiently protected.
  ``(b) The court may subject relief granted under section 1519 or 
1521, or the operation of the debtor's business under section 
1520(a)(3) of this title, to conditions it considers appropriate, 
including the giving of security or the filing of a bond.
  ``(c) The court may, at the request of the foreign representative or 
an entity affected by relief granted under section 1519 or 1521, or at 
its own motion, modify or terminate such relief.
  ``(d) Section 1104(d) shall apply to the appointment of an examiner 
under this chapter Any examiner shall comply with the qualification 
requirements imposed on a trustee by section 322.

``Sec. 1523. Actions to avoid acts detrimental to creditors

  ``(a) Upon recognition of a foreign proceeding, the foreign 
representative has standing in a case concerning the debtor pending 
under another chapter of this title to initiate actions under sections 
522, 544, 545, 547, 548, 550, and 724(a).
  ``(b) When the foreign proceeding is a foreign nonmain proceeding, 
the court must be satisfied that an action under subsection (a) relates 
to assets that, under United States law, should be administered in the 
foreign nonmain proceeding.

``Sec. 1524. Intervention by a foreign representative

  ``Upon recognition of a foreign proceeding, the foreign 
representative may intervene in any proceedings in a State or Federal 
court in the United States in which the debtor is a party.

     ``SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN 
                            REPRESENTATIVES

``Sec. 1525. Cooperation and direct communication between the court and 
                    foreign courts or foreign representatives

  ``(a) Consistent with section 1501, the court shall cooperate to the 
maximum extent possible with foreign courts or foreign representatives, 
either directly or through the trustee.
  ``(b) The court is entitled to communicate directly with, or to 
request information or assistance directly from, foreign courts or 
foreign representatives, subject to the rights of parties in interest 
to notice and participation.

``Sec. 1526. Cooperation and direct communication between the trustee 
                    and foreign courts or foreign representatives

  ``(a) Consistent with section 1501, the trustee or other person, 
including an examiner, authorized by the court, shall, subject to the 
supervision of the court, cooperate to the maximum extent possible with 
foreign courts or foreign representatives.
  ``(b) The trustee or other person, including an examiner, authorized 
by the court is entitled, subject to the supervision of the court, to 
communicate directly with foreign courts or foreign representatives.

``Sec. 1527. Forms of cooperation

  ``Cooperation referred to in sections 1525 and 1526 may be 
implemented by any appropriate means, including--
          ``(1) appointment of a person or body, including an examiner, 
        to act at the direction of the court;
          ``(2) communication of information by any means considered 
        appropriate by the court;
          ``(3) coordination of the administration and supervision of 
        the debtor's assets and affairs;
          ``(4) approval or implementation of agreements concerning the 
        coordination of proceedings; and
          ``(5) coordination of concurrent proceedings regarding the 
        same debtor.

                 ``SUBCHAPTER V--CONCURRENT PROCEEDINGS

``Sec. 1528. Commencement of a case under this title after recognition 
                    of a foreign main proceeding

  ``After recognition of a foreign main proceeding, a case under 
another chapter of this title may be commenced only if the debtor has 
assets in the United States The effects of such case shall be 
restricted to the assets of the debtor that are within the territorial 
jurisdiction of the United States and, to the extent necessary to 
implement cooperation and coordination under sections 1525, 1526, and 
1527, to other assets of the debtor that are within the jurisdiction of 
the court under sections 541(a) of this title, and 1334(e) of title 28, 
to the extent that such other assets are not subject to the 
jurisdiction and control of a foreign proceeding that has been 
recognized under this chapter.

``Sec. 1529. Coordination of a case under this title and a foreign 
                    proceeding

  ``Where a foreign proceeding and a case under another chapter of this 
title are taking place concurrently regarding the same debtor, the 
court shall seek cooperation and coordination under sections 1525, 
1526, and 1527, and the following shall apply:
          ``(1) When the case in the United States is taking place at 
        the time the petition for recognition of the foreign proceeding 
        is filed--
                  ``(A) any relief granted under sections 1519 or 1521 
                must be consistent with the relief granted in the case 
                in the United States; and
                  ``(B) even if the foreign proceeding is recognized as 
                a foreign main proceeding, section 1520 does not apply.
          ``(2) When a case in the United States under this title 
        commences after recognition, or after the filing of the 
        petition for recognition, of the foreign proceeding--
                  ``(A) any relief in effect under sections 1519 or 
                1521 shall be reviewed by the court and shall be 
                modified or terminated if inconsistent with the case in 
                the United States; and
                  ``(B) if the foreign proceeding is a foreign main 
                proceeding, the stay and suspension referred to in 
                section 1520(a) shall be modified or terminated if 
                inconsistent with the relief granted in the case in the 
                United States.
          ``(3) In granting, extending, or modifying relief granted to 
        a representative of a foreign nonmain proceeding, the court 
        must be satisfied that the relief relates to assets that, under 
        the law of the United States, should be administered in the 
        foreign nonmain proceeding or concerns information required in 
        that proceeding.
          ``(4) In achieving cooperation and coordination under 
        sections 1528 and 1529, the court may grant any of the relief 
        authorized under section 305.

``Sec. 1530. Coordination of more than 1 foreign proceeding

  ``In matters referred to in section 1501, with respect to more than 1 
foreign proceeding regarding the debtor, the court shall seek 
cooperation and coordination under sections 1525, 1526, and 1527, and 
the following shall apply:
          ``(1) Any relief granted under section 1519 or 1521 to a 
        representative of a foreign nonmain proceeding after 
        recognition of a foreign main proceeding must be consistent 
        with the foreign main proceeding.
          ``(2) If a foreign main proceeding is recognized after 
        recognition, or after the filing of a petition for recognition, 
        of a foreign nonmain proceeding, any relief in effect under 
        section 1519 or 1521 shall be reviewed by the court and shall 
        be modified or terminated if inconsistent with the foreign main 
        proceeding.
          ``(3) If, after recognition of a foreign nonmain proceeding, 
        another foreign nonmain proceeding is recognized, the court 
        shall grant, modify, or terminate relief for the purpose of 
        facilitating coordination of the proceedings.

``Sec. 1531. Presumption of insolvency based on recognition of a 
                    foreign main proceeding

  ``In the absence of evidence to the contrary, recognition of a 
foreign main proceeding is for the purpose of commencing a proceeding 
under section 303, proof that the debtor is generally not paying its 
debts as such debts become due.

``Sec. 1532. Rule of payment in concurrent proceedings

  ``Without prejudice to secured claims or rights in rem, a creditor 
who has received payment with respect to its claim in a foreign 
proceeding pursuant to a law relating to insolvency may not receive a 
payment for the same claim in a case under any other chapter of this 
title regarding the debtor, so long as the payment to othercreditors of 
the same class is proportionately less than the payment the creditor 
has already received.''.
  (b) Clerical Amendment.--The table of chapters for title 11, United 
States Code, is amended by inserting after the item relating to chapter 
13 the following:

``15. Ancillary and Other Cross-Border Cases................    1501''.

SEC. 902. AMENDMENTS TO OTHER CHAPTERS IN TITLE 11, UNITED STATES CODE.

  (a) Applicability of Chapters.--Section 103 of title 11, United 
States Code, is amended--
          (1) in subsection (a), by inserting before the period the 
        following: ``, and this chapter, sections 307, 304, 555 through 
        557, 559, and 560 apply in a case under chapter 15''; and
          (2) by adding at the end the following:
  ``(j) Chapter 15 applies only in a case under such chapter, except 
that--
          ``(1) sections 1505, 1513, and 1514 apply in all cases under 
        this title; and
          ``(2) section 1509 applies whether or not a case under this 
        title is pending.''.
  (b) Definitions.--Paragraphs (23) and (24) of title 11, United States 
Code, are amended to read as follows:
          ``(23) `foreign proceeding' means a collective judicial or 
        administrative proceeding in a foreign country, including an 
        interim proceeding, under a law relating to insolvency or 
        adjustment of debt in which proceeding the assets and affairs 
        of the debtor are subject to control or supervision by a 
        foreign court, for the purpose of reorganization or 
        liquidation;
          ``(24) `foreign representative' means a person or body, 
        including a person or body appointed on an interim basis, 
        authorized in a foreign proceeding to administer the 
        reorganization or the liquidation of the debtor's assets or 
        affairs or to act as a representative of the foreign 
        proceeding;''.
  (c) Amendments to Title 28, United States Code.--
          (1) Procedures.--Section 157(b)(2) of title 28, United States 
        Code, is amended--
                  (A) in subparagraph (N), by striking ``and'' at the 
                end;
                  (B) in subparagraph (O), by striking the period at 
                the end and inserting ``; and''; and
                  (C) by adding at the end the following:
          ``(P) recognition of foreign proceedings and other matters 
        under chapter 15 of title 11.''.
          (2) Bankruptcy cases and proceedings.--Section 1334(c) of 
        title 28, United States Code, is amended by striking ``Nothing 
        in'' and inserting ``Except with respect to a case under 
        chapter 15 of title 11, nothing in''.
          (3) Duties of trustees.--Section 586(a)(3) of title 28, 
        United States Code, is amended by striking ``or 13'' and 
        inserting ``13, or 15,'' after ``chapter''.
          (4) Section 305(a)(2) of title 11, United States Code, is 
        amended to read:
          ``(2)(A) a petition under section 1515 of this title for 
        recognition of a foreign proceeding has been granted; and
          ``(B) the purposes of chapter 15 of this title would be best 
        served by such dismissal or suspension.''.
          (5) Section 508 of title 11, United States Code, is amended 
        by striking subsection (a) and by striking out the letter 
        ``(b)'' at the beginning of the second paragraph.

                 TITLE X--FINANCIAL CONTRACT PROVISIONS

SEC. 1001. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS OR --
                    RECEIVERS OF INSURED DEPOSITORY INSTITUTIONS.

  (a) Definition of Qualified Financial Contract.--Section 
11(e)(8)(D)(i) of the Federal Deposit Insurance Act (12 U.S.C 
1821(e)(8)(D)(i)) is amended by inserting ``, resolution or order'' 
after ``any similar agreement that the Corporation determines by 
regulation''.
  (b) Definition of Securities Contract.--Section 11(e)(8)(D)(ii) of 
the Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(ii)) is 
amended to read as follows:
                          ``(ii) Securities contract.--The term 
                        `securities contract'--
                                  ``(I) means a contract for the 
                                purchase, sale, or loan of a security, 
                                a certificate of deposit, a mortgage 
                                loan, or any interest in a mortgage 
                                loan, a group or index of securities, 
                                certificates of deposit, or mortgage 
                                loans or interests therein (including 
                                any interest therein or based on the 
                                value thereof) or any option on any of 
                                theforegoing, including any option to 
purchase or sell any such security, certificate of deposit, loan, 
interest, group or index, or option;
                                  ``(II) does not include any purchase, 
                                sale, or repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the Corporation determines 
                                by regulation, resolution, or order to 
                                include any such agreement within the 
                                meaning of such term;
                                  ``(III) means any option entered into 
                                on a national securities exchange 
                                relating to foreign currencies;
                                  ``(IV) means the guarantee by or to 
                                any securities clearing agency of any 
                                settlement of cash, securities, 
                                certificates of deposit, mortgage loans 
                                or interests therein, group or index of 
                                securities, certificates of deposit, or 
                                mortgage loans or interests therein 
                                (including any interest therein or 
                                based on the value thereof) or option 
                                on any of the foregoing, including any 
                                option to purchase or sell any such 
                                security, certificate of deposit, loan, 
                                interest, group or index or option;
                                  ``(V) means any margin loan;
                                  ``(VI) means any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(VII) means any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                  ``(VIII) means any option to enter 
                                into any agreement or transaction 
                                referred to in this clause;
                                  ``(IX) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), (IV), (V), (VI), (VII), or 
                                (VIII), together with all supplements 
                                to any such master agreement, without 
                                regard to whether the master agreement 
                                provides for an agreement or 
                                transaction that is not a securities 
                                contract under this clause, except that 
                                the master agreement shall be 
                                considered to be a securities contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (III), (IV), (V), (VI), 
                                (VII), or (VIII); and
                                  ``(X) means any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause.''.
  (c) Definition of Commodity Contract.--Section 11(e)(8)(D)(iii) of 
the Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(iii)) is 
amended to read as follows:
                          ``(iii) Commodity contract.--The term 
                        `commodity contract' means--
                                  ``(I) with respect to a futures 
                                commission merchant, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade;
                                  ``(II) with respect to a foreign 
                                futures commission merchant, a foreign 
                                future;
                                  ``(III) with respect to a leverage 
                                transaction merchant, a leverage 
                                transaction;
                                  ``(IV) with respect to a clearing 
                                organization, a contract for the 
                                purchase or sale of a commodity for 
                                future delivery on, or subject to the 
                                rules of, a contract market or board of 
                                trade that is cleared by such clearing 
                                organization, or commodity option 
                                traded on, or subject to the rules of, 
                                a contract market or board of trade 
                                that is cleared by such clearing 
                                organization;
                                  ``(V) with respect to a commodity 
                                options dealer, a commodity option;
                                  ``(VI) any other agreement or 
                                transaction that is similar to any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(VII) any combination of the 
                                agreements or transactions referred to 
                                in this clause;
                                  ``(VIII) any option to enter into any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(IX) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), (IV), (V), (VI), 
                                (VII), or (VIII), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                commodity contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a commodity 
                                contract under this clause only 
withrespect to each agreement or transaction under the master agreement 
that is referred to in subclause (I), (II), (III), (IV), (V), (VI), 
(VII), or (VIII); or
                                  ``(X) a security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in this clause.''.
  (d) Definition of Forward Contract.--Section 11(e)(8)(D)(iv) of the 
Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(iv)) is amended 
to read as follows:
                          ``(iv) Forward contract.--The term `forward 
                        contract' means--
                                  ``(I) a contract (other than a 
                                commodity contract) for the purchase, 
                                sale, or transfer of a commodity or any 
                                similar good, article, service, right, 
                                or interest which is presently or in 
                                the future becomes the subject of 
                                dealing in the forward contract trade, 
                                or product or byproduct thereof, with a 
                                maturity date more than 2 days after 
                                the date the contract is entered into, 
                                including, but not limited to, a 
                                repurchase agreement, reverse 
                                repurchase agreement, consignment, 
                                lease, swap, hedge transaction, 
                                deposit, loan, option, allocated 
                                transaction, unallocated transaction, 
                                or any other similar agreement;
                                  ``(II) any combination of agreements 
                                or transactions referred to in 
                                subclauses (I) and (III);
                                  ``(III) any option to enter into any 
                                agreement or transaction referred to in 
                                subclause (I) or (II);
                                  ``(IV) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclauses 
                                (I), (II), or (III), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                forward contract under this clause, 
                                except that the master agreement shall 
                                be considered to be a forward contract 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), or (III); or
                                  ``(V) a security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in subclause (I), (II), 
                                (III), or (IV).''.
  (e) Definition of Repurchase Agreement.--Section 11(e)(8)(D)(v) of 
the Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(v)) is 
amended to read as follows:
                          ``(v) Repurchase agreement.--The term 
                        `repurchase agreement' (which definition also 
                        applies to a reverse repurchase agreement)--
                                  ``(I) mean an agreement, including 
                                related terms, which provides for the 
                                transfer of 1 or more certificates of 
                                deposit, mortgage-related securities 
                                (as such term is defined in the 
                                Securities Exchange Act of 1934), 
                                mortgage loans, interests in mortgage-
                                related securities or mortgage loans, 
                                eligible bankers' acceptances, 
                                qualified foreign government securities 
                                or securities that are direct 
                                obligations of, or that are fully 
                                guaranteed by, the United States or any 
                                agency of the United States against the 
                                transfer of funds by the transferee of 
                                such certificates of deposit, eligible 
                                bankers' acceptances, securities, 
                                loans, or interests with a simultaneous 
                                agreement by such transferee to 
                                transfer to the transferor thereof 
                                certificates of deposit, eligible 
                                bankers' acceptances, securities, 
                                loans, or interests as described above, 
                                at a date certain not later than 1 year 
                                after such transfers or on demand, 
                                against the transfer of funds, or any 
                                other similar agreement;
                                  ``(II) does not include any 
                                repurchase obligation under a 
                                participation in a commercial mortgage 
                                loan unless the Corporation determines 
                                by regulation, resolution, or order to 
                                include any such participation within 
                                the meaning of such term;
                                  ``(III) means any combination of 
                                agreements or transactions referred to 
                                in subclauses (I) and (IV);
                                  ``(IV) means any option to enter into 
                                any agreement or transaction referred 
                                to in subclause (I) or (III);
                                  ``(V) means a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (III), or (IV), together with all 
                                supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement provides for an 
                                agreement or transaction that is not a 
                                repurchase agreement under thisclause, 
except that the master agreement shall be considered to be a repurchase 
agreement under this subclause only with respect to each agreement or 
transaction under the master agreement that is referred to in subclause 
(I), (III), or (IV); and
                                  ``(VI) means a security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreement or transaction 
                                referred to in subclause (I), (III), 
                                (IV), or (V).
                        For purposes of this clause, the term 
                        `qualified foreign government security' means a 
                        security that is a direct obligation of, or 
                        that is fully guaranteed by, the central 
                        government of a member of the Organization for 
                        Economic Cooperation and Development (as 
                        determined by regulation or order adopted by 
                        the appropriate Federal banking authority).''.
  (f) Definition of Swap Agreement.--Section 11(e)(8)(D)(iv) of the 
Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(vi)) is amended 
to read as follows:
                          ``(vi) Swap agreement.--The term `swap 
                        agreement' means--
                                  ``(I) any agreement, including the 
                                terms and conditions incorporated by 
                                reference in any such agreement, which 
                                is an interest rate swap, option, 
                                future, or forward agreement, including 
                                a rate floor, rate cap, rate collar, 
                                cross-currency rate swap, and basis 
                                swap; a spot, same day-tomorrow, 
                                tomorrow-next, forward, or other 
                                foreign exchange or precious metals 
                                agreement; a currency swap, option, 
                                future, or forward agreement; an equity 
                                index or equity swap, option, future, 
                                or forward agreement; a debt index or 
                                debt swap, option, future, or forward 
                                agreement; a credit spread or credit 
                                swap, option, future, or forward 
                                agreement; a commodity index or 
                                commodity swap, option, future, or 
                                forward agreement;
                                  ``(II) any agreement or transaction 
                                similar to any other agreement or 
                                transaction referred to in this clause 
                                that is presently, or in the future 
                                becomes, regularly entered into in the 
                                swap market (including terms and 
                                conditions incorporated by reference in 
                                such agreement) and that is a forward, 
                                swap, future, or option on 1 or more 
                                rates, currencies, commodities, equity 
                                securities or other equity instruments, 
                                debt securities or other debt 
                                instruments, or economic indices or 
                                measures of economic risk or value;
                                  ``(III) any combination of agreements 
                                or transactions referred to in this 
                                clause;
                                  ``(IV) any option to enter into any 
                                agreement or transaction referred to in 
                                this clause;
                                  ``(V) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in subclause 
                                (I), (II), (III), or (IV), together 
                                with all supplements to any such master 
                                agreement, without regard to whether 
                                the master agreement contains an 
                                agreement or transaction that is not a 
                                swap agreement under this clause, 
                                except that the master agreement shall 
                                be considered to be a swap agreement 
                                under this clause only with respect to 
                                each agreement or transaction under the 
                                master agreement that is referred to in 
                                subclause (I), (II), (III), or (IV); 
                                and
                                  ``(VI) any security agreement or 
                                arrangement or other credit enhancement 
                                related to any agreements or 
                                transactions referred to in 
                                subparagraph (I), (II), (III), or (IV).
                        Such term is applicable for purposes of this 
                        title only and shall not be construed or 
                        applied so as to challenge or affect the 
                        characterization, definition, or treatment of 
                        any swap agreement under any other statute, 
                        regulation, or rule, including the Securities 
                        Act of 1933, the Securities Exchange Act of 
                        1934, the Public Utility Holding Company Act of 
                        1935, the Trust Indenture Act of 1939, the 
                        Investment Company Act of 1940, the Investment 
                        Advisers Act of 1940, the Securities Investor 
                        Protection Act of 1970, the Commodity Exchange 
                        Act, and the regulations promulgated by the 
                        Securities and Exchange Commission or the 
                        Commodity Futures Trading Commission.''.
  (g) Definition of Transfer.--Section 11(e)(8)(D)(viii) of the Federal 
Deposit Insurance Act (12 U.S.C 1821(e)(8)(D)(viii)) is amended to read 
as follows:
                          ``(viii) Transfer.--The term `transfer' means 
                        every mode, direct or indirect, absolute or 
                        conditional, voluntary or involuntary, of 
                        disposing of or parting with property or with 
                        an interest in property, including retention of 
                        title as a security interest and foreclosure of 
                        the depository institutions's equity of 
                        redemption.''.
  (h) Treatment of Qualified Financial Contracts.--Section 11(e)(8) of 
the Federal Deposit Insurance Act (12 U.S.C 1821(e)(8)) is amended--
          (1) in subparagraph (A), by striking ``paragraph (10)'' and 
        inserting ``paragraphs (9) and (10)'';
          (2) in subparagraph (A)(i), by striking ``to cause the 
        termination or liquidation'' and inserting ``such person has to 
        cause the termination, liquidation, or acceleration'';
          (3) by amending subparagraph (A)(ii) to read as follows:
                          ``(ii) any right under any security agreement 
                        or arrangement or other credit enhancement 
                        related to 1 or more qualified financial 
                        contracts described in clause (i);''; and
          (4) by amending subparagraph (E)(ii) to read as follows:
                          ``(ii) any right under any security agreement 
                        or arrangement or other credit enhancement 
                        related to 1 or more qualified financial 
                        contracts described in clause (i);''.
  (i) Avoidance of Transfers.--Section 11(e)(8)(C)(i) of the Federal 
Deposit Insurance Act (12 U.S.C 1821(e)(8)(C)(i)) is amended by 
inserting ``section 5242 of the Revised Statutes of the United States 
(12 U.S.C 91) or any other Federal or State law relating to the 
avoidance of preferential or fraudulent transfers,'' before ``the 
Corporation''.

SEC. 1002. AUTHORITY OF THE CORPORATION WITH RESPECT TO FAILED AND 
                    FAILING INSTITUTIONS.

  (a) In General.--Section 11(e)(8) of the Federal Deposit Insurance 
Act (12 U.S.C 1821(e)(8)) is amended--
          (1) in subparagraph (E), by striking ``other than paragraph 
        (12) of this subsection, subsection (d)(9)'' and inserting 
        ``other than subsections (d)(9) and (e)(10)''; and
          (2) by adding at the end the following new subparagraphs:
                  ``(F) Clarification.--No provision of law shall be 
                construed as limiting the right or power of the 
                Corporation, or authorizing any court or agency to 
                limit or delay, in any manner, the right or power of 
                the Corporation to transfer any qualified financial 
                contract in accordance with paragraphs (9) and (10) of 
                this subsection or to disaffirm or repudiate any such 
                contract in accordance with subsection (e)(1) of this 
                section.
                  ``(G) Walkaway clauses not effective.--
                          ``(i) In general.--Notwithstanding the 
                        provisions of subparagraphs (A) and (E), and 
                        sections 403 and 404 of the Federal Deposit 
                        Insurance Corporation Improvement Act of 1991, 
                        no walkaway clause shall be enforceable in a 
                        qualified financial contract of an insured 
                        depository institution in default.
                          ``(ii) Walkaway clause defined.--For purposes 
                        of this subparagraph, the term `walkaway 
                        clause' means a provision in a qualified 
                        financial contract that, after calculation of a 
                        value of a party's position or an amount due to 
                        or from 1 of the parties in accordance with its 
                        terms upon termination, liquidation, or 
                        acceleration of the qualified financial 
                        contract, either does not create a payment 
                        obligation of a party or extinguishes a payment 
                        obligation of a party in whole or in part 
                        solely because of such party's status as a 
                        nondefaulting party.''.
  (b) Technical and Conforming Amendment.--Section 11(e)(12)(A) of the 
Federal Deposit Insurance Act (12 U.S.C 1821(e)(12)(A)) is amended by 
inserting ``or the exercise of rights or powers'' after ``the 
appointment''.

SEC. 1003. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED FINANCIAL 
                    CONTRACTS.

  (a) Transfers of Qualified Financial Contracts to Financial 
Institutions.--Section 11(e)(9) of the Federal Deposit Insurance Act 
(12 U.S.C 1821(e)(9)) is amended to read as follows:
          ``(9) Transfer of qualified financial contracts.--
                  ``(A) In general.--In making any transfer of assets 
                or liabilities of a depository institution in default 
                which includes any qualified financial contract, the 
                conservator or receiver for such depository institution 
                shall either--
                          ``(i) transfer to 1 financial institution, 
                        other than a financial institution for which a 
                        conservator, receiver, trustee in bankruptcy, 
                        or other legal custodian has been appointed or 
                        which is otherwise the subject of a bankruptcy 
                        or insolvency proceeding--
                                  ``(I) all qualified financial 
                                contracts between any person or any 
                                affiliate of such person and the 
                                depository institution in default;
                                  ``(II) all claims of such person or 
                                any affiliate of such person against 
                                such depository institution under any 
                                such contract (other than any claim 
                                which, under the terms of any such 
                                contract, is subordinated to the claims 
                                of general unsecured creditors of such 
                                institution);
                                  ``(III) all claims of such depository 
                                institution against such person or any 
                                affiliate of such person under any such 
                                contract; and
                                  ``(IV) all property securing or any 
                                other credit enhancement for any 
                                contract described in subclause (I) or 
                                any claim described in subclause (II) 
                                or (III) under any such contract; or
                          ``(ii) transfer none of the qualified 
                        financial contracts, claims, property or other 
                        credit enhancement referred to in clause (i) 
                        (with respect to such person and any affiliate 
                        of such person).
                  ``(B) Transfer to foreign bank, foreign financial 
                institution, or branch or agency of a foreign bank or 
                financial institution.--In transferring any qualified 
                financial contracts and related claims and property 
                pursuant to subparagraph (A)(i), the conservator or 
                receiver for such depository institution shall not make 
                such transfer to a foreign bank, financial institution 
                organized under the laws of a foreign country, or a 
                branch or agency of a foreign bank or financial 
                institution unless, under the law applicable to such 
                bank, financial institution, branch or agency, to the 
                qualified financial contracts, and to any netting 
                contract, any security agreement or arrangement or 
                other credit enhancement related to 1 or more qualified 
                financial contracts, the contractual rights of the 
                parties to such qualified financial contracts, netting 
                contracts, security agreements or arrangements, or 
                other credit enhancements are enforceable substantially 
                to the same extent as permitted under this section.
                  ``(C) Transfer of contracts subject to the rules of a 
                clearing organization.--In the event that a conservator 
                or receiver transfers any qualified financial contract 
                and related claims, property and credit enhancements 
                pursuant to subparagraph (A)(i) and such contract is 
                subject to the rules of a clearing organization, the 
                clearing organization shall not be required to accept 
                the transferee as a member by virtue of the transfer.
                  ``(D) Definition.--For purposes of this section, the 
                term `financial institution' means a broker or dealer, 
                a depository institution, a futures commission 
                merchant, or any other institution as determined by the 
                Corporation by regulation to be a financial 
                institution.''.
  (b) Notice to Qualified Financial Contract Counterparties.--Section 
11(e)(10)(A) of the Federal Deposit Insurance Act (12 U.S.C 
1821(e)(10)(A)) is amended by amending the flush material following 
clause (ii) to read as follows: ``the conservator or receiver shall 
notify any person who is a party to any such contract of such transfer 
by 5:00 p.m (eastern time) on the business day following the date of 
the appointment of the receiver, in the case of a receivership, or the 
business day following such transfer, in the case of a 
conservatorship.''.
  (c) Rights Against Receiver and Treatment of Bridge Banks.--Section 
11(e)(10) of the Federal Deposit Insurance Act (12 U.S.C 1821(e)(10)) 
is further amended--
          (1) by redesignating subparagraph (B) as subparagraph (D); 
        and
          (2) by inserting after subparagraph (A) the following new 
        subparagraphs:
                  ``(B) Certain rights not enforceable.--
                          ``(i) Receivership.--A person who is a party 
                        to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        any right such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(A) or section 403 or 404 of the Federal 
                        Deposit Insurance Corporation Improvement Act 
                        of 1991 solely by reason of or incidental to 
                        the appointment of a receiver for the 
                        depository institution (or the insolvency or 
                        financial condition of the depository 
                        institution for which the receiver has been 
                        appointed)--
                                  ``(I) until 5:00 p.m (eastern time) 
                                on the business day following the date 
                                of the appointment of the receiver; or
                                  ``(II) after the person has received 
                                notice that the contract has been 
                                transferred pursuant to paragraph 
                                (9)(A).
                          ``(ii) Conservatorship.--A person who is a 
                        party to a qualified financial contract with an 
                        insured depository institution may not exercise 
                        any right such person has to terminate, 
                        liquidate, or net such contract under paragraph 
                        (8)(E) or sections 403 or 404 of the Federal 
                        Deposit Insurance Corporation Improvement Act 
                        of 1991, solely by reason of or incidental to 
                        the appointment of a conservator for the 
                        depositoryinstitution (or the insolvency or 
financial condition of the depository institution for which the 
conservator has been appointed).
                          ``(iii) Notice.--For purposes of this 
                        subsection, the Corporation as receiver or 
                        conservator of an insured depository 
                        institution shall be deemed to have notified a 
                        person who is a party to a qualified financial 
                        contract with such depository institution if 
                        the Corporation has taken steps reasonably 
                        calculated to provide notice to such person by 
                        the time specified in subparagraph (A) of this 
                        subsection.
                  ``(C) Treatment of bridge banks.--The following 
                institutions shall not be considered a financial 
                institution for which a conservator, receiver, trustee 
                in bankruptcy, or other legal custodian has been 
                appointed or which is otherwise the subject of a 
                bankruptcy or insolvency proceeding for purposes of 
                subsection (e)(9)--
                          ``(i) a bridge bank; or
                          ``(ii) a depository institution organized by 
                        the Corporation, for which a conservator is 
                        appointed either--
                                  ``(I) immediately upon the 
                                organization of the institution; or
                                  ``(II) at the time of a purchase and 
                                assumption transaction between such 
                                institution and the Corporation as 
                                receiver for a depository institution 
                                in default.''.

SEC. 1004. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION OF 
                    QUALIFIED FINANCIAL CONTRACTS.

  Section 11(e) of the Federal Deposit Insurance Act (12 U.S.C 1821(e)) 
is further amended--
          (1) by redesignating paragraphs (11) through (15) as 
        paragraphs (12) through (16), respectively; and
          (2) by inserting after paragraph (10) the following new 
        paragraph:
          ``(11) Disaffirmance or repudiation of qualified financial 
        contracts.--In exercising the rights of disaffirmance or 
        repudiation of a conservator or receiver with respect to any 
        qualified financial contract to which an insured depository 
        institution is a party, the conservator or receiver for such 
        institution shall either--
                  ``(A) disaffirm or repudiate all qualified financial 
                contracts between--
                          ``(i) any person or any affiliate of such 
                        person; and
                          ``(ii) the depository institution in default; 
                        or
                  ``(B) disaffirm or repudiate none of the qualified 
                financial contracts referred to in subparagraph (A) 
                (with respect to such person or any affiliate of such 
                person).''.

SEC. 1005. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS.

  Section 11(e)(8)(D)(vii) of the Federal Deposit Insurance Act (12 
U.S.C 1821(e)(8)(D)(vii)) is amended to read as follows:
                          ``(vii) Treatment of master agreement as 1 
                        agreement.--Any master agreement for any 
                        contract or agreement described in any 
                        preceding clause of this subparagraph (or any 
                        master agreement for such master agreement or 
                        agreements), together with all supplements to 
                        such master agreement, shall be treated as a 
                        single agreement and a single qualified 
                        financial contract If a master agreement 
                        contains provisions relating to agreements or 
                        transactions that are not themselves qualified 
                        financial contracts, the master agreement shall 
                        be deemed to be a qualified financial contract 
                        only with respect to those transactions that 
                        are themselves qualified financial 
                        contracts.''.

SEC. 1006. FEDERAL DEPOSIT INSURANCE CORPORATION IMPROVEMENT ACT OF 
                    1991.

  (a) Definitions.--Section 402 of the Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C 4402) is amended--
          (1) in paragraph (6)--
                  (A) by redesignating subparagraphs (B) through (D) as 
                subparagraphs (C) through (E), respectively;
                  (B) by inserting after subparagraph (A) the following 
                new subparagraph:
                  ``(B) an uninsured national bank or an uninsured 
                State bank that is a member of the Federal Reserve 
                System if the national bank or State member bank is not 
                eligible to make application to become an insured bank 
                under section 5 of the Federal Deposit Insurance 
                Act;''; and
                  (C) by amending subparagraph (C) (as redesignated) to 
                read as follows:
                  ``(C) a branch or agency of a foreign bank, a foreign 
                bank and any branch or agency of the foreign bank, or 
                the foreign bank that establishedthe branch or agency, 
as those terms are defined in section 1(b) of the International Banking 
Act of 1978;'';
          (2) in paragraph (11), by adding before the period ``and any 
        other clearing organization with which such clearing 
        organization has a netting contract'';
          (3) by amending paragraph (14)(A)(i) to read as follows:
                          ``(i) means a contract or agreement between 2 
                        or more financial institutions, clearing 
                        organizations, or members that provides for 
                        netting present or future payment obligations 
                        or payment entitlements (including liquidation 
                        or closeout values relating to such obligations 
                        or entitlements) among the parties to the 
                        agreement; and''; and
          (4) by adding at the end the following new paragraph:
          ``(15) Payment.--The term `payment' means a payment of United 
        States dollars, another currency, or a composite currency, and 
        a noncash delivery, including a payment or delivery to 
        liquidate an unmatured obligation.''.
  (b) Enforceability of Bilateral Netting Contracts.--Section 403 of 
the Federal Deposit Insurance Corporation Improvement Act of 1991 (12 
U.S.C 4403) is amended--
          (1) by amending subsection (a) to read as follows:
  ``(a) General Rule.--Notwithstanding any other provision of State or 
Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act or any order 
authorized under section 5(b)(2) of the Securities Investor Protection 
Act of 1970, the covered contractual payment obligations and the 
covered contractual payment entitlements between any 2 financial 
institutions shall be netted in accordance with, and subject to the 
conditions of, the terms of any applicable netting contract (except as 
provided in section 561(b)(2) of title 11).''; and
          (2) by adding at the end the following new subsection:
  ``(f) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to 1 or more netting contracts between any 2 financial institutions 
shall be enforceable in accordance with their terms (except as provided 
in section 561(b)(2) of title 11) and shall not be stayed, avoided, or 
otherwise limited by any State or Federal law (other than paragraphs 
(8)(E), (8)(F), and (10)(B) of section 11(e) of the Federal Deposit 
Insurance Act and section 5(b)(2) of the Securities Investor Protection 
Act of 1970).''.
  (c) Enforceability of Clearing Organization Netting Contracts.--
Section 404 of the Federal Deposit Insurance Corporation Improvement 
Act of 1991 (12 U.S.C 4404) is amended--
          (1) by amending subsection (a) to read as follows:
  ``(a) General Rule.--Notwithstanding any other provision of State or 
Federal law (other than paragraphs (8)(E), (8)(F), and (10)(B) of 
section 11(e) of the Federal Deposit Insurance Act and any order 
authorized under section 5(b)(2) of the Securities Investor Protection 
Act of 1970, the covered contractual payment obligations and the 
covered contractual payment entitlements of a member of a clearing 
organization to and from all other members of a clearing organization 
shall be netted in accordance with and subject to the conditions of any 
applicable netting contract (except as provided in section 561(b)(2) of 
title 11, United States Code).''; and
          (2) by adding at the end the following new subsection:
  ``(h) Enforceability of Security Agreements.--The provisions of any 
security agreement or arrangement or other credit enhancement related 
to 1 or more netting contracts between any 2 members of a clearing 
organization shall be enforceable in accordance with their terms 
(except as provided in section 561(b)(2) of title 11, United States 
Code) and shall not be stayed, avoided, or otherwise limited by any 
State or Federal law other than paragraphs (8)(E), (8)(F), and (10)(B) 
of section 11(e) of the Federal Deposit Insurance Act and section 
5(b)(2) of the Securities Investor Protection Act of 1970.''.
  (d) Enforceability of Contracts With Uninsured National Banks and 
Uninsured Federal Branches and Agencies.--The Federal Deposit Insurance 
Corporation Improvement Act of 1991 (12 U.S.C 4401 et seq.) is 
amended--
          (1) by redesignating section 407 as section 408; and
          (2) by adding after section 406 the following new section:

``SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL BANKS AND 
                    UNINSURED FEDERAL BRANCHES AND AGENCIES.

  ``(a) In General.--Notwithstanding any other provision of law, 
paragraphs (8), (9), (10), and (11) of section 11(e) of the Federal 
Deposit Insurance Act shall apply to an uninsured national bank or 
uninsured Federal branch or Federal agency except--
          ``(1) any reference to the `Corporation as receiver' or `the 
        receiver or the Corporation' shall refer to the receiver of an 
        uninsured national bank or uninsuredFederal branch or Federal 
agency appointed by the Comptroller of the Currency;
          ``(2) any reference to the `Corporation' (other than in 
        section 11(e)(8)(D) of such Act), the `Corporation, whether 
        acting as such or as conservator or receiver', a `receiver', or 
        a `conservator' shall refer to the receiver or conservator of 
        an uninsured national bank or uninsured Federal branch or 
        Federal agency appointed by the Comptroller of the Currency; 
        and
          ``(3) any reference to an `insured depository institution' or 
        `depository institution' shall refer to an uninsured national 
        bank or an uninsured Federal branch or Federal agency.
  ``(b) Liability.--The liability of a receiver or conservator of an 
uninsured national bank or uninsured Federal branch or agency shall be 
determined in the same manner and subject to the same limitations that 
apply to receivers and conservators of insured depository institutions 
under section 11(e) of the Federal Deposit Insurance Act.
  ``(c) Regulatory Authority.--
          ``(1) In general.--The Comptroller of the Currency, in 
        consultation with the Federal Deposit Insurance Corporation, 
        may promulgate regulations to implement this section.
          ``(2) Specific requirement.--In promulgating regulations to 
        implement this section, the Comptroller of the Currency shall 
        ensure that the regulations generally are consistent with the 
        regulations and policies of the Federal Deposit Insurance 
        Corporation adopted pursuant to the Federal Deposit Insurance 
        Act.
  ``(d) Definitions.--For purposes of this section, the terms `Federal 
branch', `Federal agency', and `foreign bank' have the same meaning as 
in section 1(b) of the International Banking Act.''.

SEC. 1007. BANKRUPTCY CODE AMENDMENTS.

  (a) Definitions of Forward Contract, Repurchase Agreement, Securities 
Clearing Agency, Swap Agreement, Commodity Contract, and Securities 
Contract.--Title 11, United States Code, is amended--
          (1) in section 101--
                  (A) in paragraph (25)--
                          (i) by striking ``means a contract'' and 
                        inserting ``means--
                  ``(A) a contract'';
                          (ii) by striking ``, or any combination 
                        thereof or option thereon;'' and inserting ``, 
                        or any other similar agreement;''; and
                          (iii) by adding at the end the following:
                  ``(B) any combination of agreements or transactions 
                referred to in subparagraphs (A) and (C);
                  ``(C) any option to enter into an agreement or 
                transaction referred to in subparagraph (A) or (B);
                  ``(D) a master agreement that provides for an 
                agreement or transaction referred to in subparagraph 
                (A), (B), or (C), together with all supplements to any 
                such master agreement, without regard to whether such 
                master agreement provides for an agreement or 
                transaction that is not a forward contract under this 
                paragraph, except that such master agreement shall be 
                considered to be a forward contract under this 
                paragraph only with respect to each agreement or 
                transaction under such master agreement that is 
                referred to in subparagraph (A), (B) or (C); or
                  ``(E) a security agreement or arrangement, or other 
                credit enhancement related to any agreement or 
                transaction referred to in subparagraph (A), (B), (C), 
                or (D), but not to exceed the actual value of such 
                contract, option, agreement, or transaction on the date 
                of the filing of the petition;'';
                  (B) in paragraph (46), by striking ``on any day 
                during the period beginning 90 days before the date 
                of'' and replacing it with ``at any time before'';
                  (C) by amending paragraph (47) to read as follows:
          ``(47) `repurchase agreement' (which definition also applies 
        to a reverse repurchase agreement) means--
                          ``(i) an agreement, including related terms, 
                        which provides for the transfer of 1 or more 
                        certificates of deposit, mortgage-related 
                        securities (as defined in the Securities 
                        Exchange Act of 1934), mortgage loans, 
                        interests in mortgage-related securities or 
                        mortgage loans, eligible bankers' acceptances, 
                        qualified foreign government securities; or 
                        securities that are direct obligations of, or 
                        that are fully guaranteed by, the United States 
                        or any agency of the United States against the 
                        transfer of funds by the transferee of such 
                        certificates of deposit, eligible bankers' 
                        acceptances, securities, loans, or interests; 
                        with a simultaneousagreement by such transferee 
to transfer to the transferor thereof certificates of deposit, eligible 
bankers' acceptance, securities, loans, or interests of the kind 
described above, at a date certain not later than 1 year after such 
transfer or on demand, against the transfer of funds;
                          ``(ii) any combination of agreements or 
                        transactions referred to in clauses (i) and 
                        (iii);
                          ``(iii) an option to enter into an agreement 
                        or transaction referred to in clause (i) or 
                        (ii);
                          ``(iv) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clause (i), (ii), or (iii), together with all 
                        supplements to any such master agreement, 
                        without regard to whether such master agreement 
                        provides for an agreement or transaction that 
                        is not a repurchase agreement under this 
                        paragraph, except that such master agreement 
                        shall be considered to be a repurchase 
                        agreement under this paragraph only with 
                        respect to each agreement or transaction under 
                        the master agreement that is referred to in 
                        clause (i), (ii), or (iii); or
                          ``(v) a security agreement or arrangement or 
                        other credit enhancement related to any 
                        agreement or transaction referred to in clause 
                        (i), (ii), (iii), or (iv), but not to exceed 
                        the actual value of such contract on the date 
                        of the filing of the petition; and
                  ``(B) does not include a repurchase obligation under 
                a participation in a commercial mortgage loan;
        and, for purposes of this paragraph, the term `qualified 
        foreign government security' means a security that is a direct 
        obligation of, or that is fully guaranteed by, the central 
        government of a member of the Organization for Economic 
        Cooperation and Development;'';
                  (D) in paragraph (48) by inserting ``or exempt from 
                such registration under such section pursuant to an 
                order of the Securities and Exchange Commission'' after 
                ``1934''; and
                  (E) by amending paragraph (53B) to read as follows:
          ``(53B) `swap agreement'
                  ``(A) means--
                          ``(i) any agreement, including the terms and 
                        conditions incorporated by reference in such 
                        agreement, which is an interest rate swap, 
                        option, future, or forward agreement, including 
                        a rate floor, rate cap, rate collar, cross-
                        currency rate swap, and basis swap; a spot, 
                        same day-tomorrow, tomorrow-next, forward, or 
                        other foreign exchange or precious metals 
                        agreement; a currency swap, option, future, or 
                        forward agreement; an equity index or an equity 
                        swap, option, future, or forward agreement; a 
                        debt index or a debt swap, option, future, or 
                        forward agreement; a credit spread or a credit 
                        swap, option, future, or forward agreement; or 
                        a commodity index or a commodity swap, option, 
                        future, or forward agreement;
                          ``(ii) any agreement or transaction similar 
                        to any other agreement or transaction referred 
                        to in this paragraph that--
                                  ``(I) is presently, or in the future 
                                becomes, regularly entered into in the 
                                swap market (including terms and 
                                conditions incorporated by reference 
                                therein); and
                                  ``(II) is a forward, swap, future, or 
                                option on 1 or more rates, currencies 
                                commodities, equity securities, or 
                                other equity instruments, debt 
                                securities or other debt instruments, 
                                or on an economic index or measure of 
                                economic risk or value;
                          ``(iii) any combination of agreements or 
                        transactions referred to in this paragraph;
                          ``(iv) any option to enter into an agreement 
                        or transaction referred to in this paragraph;
                          ``(v) a master agreement that provides for an 
                        agreement or transaction referred to in clause 
                        (i), (ii), (iii), or (iv), together with all 
                        supplements to any such master agreement, and 
                        without regard to whether the master agreement 
                        contains an agreement or transaction that is 
                        not a swap agreement under this paragraph, 
                        except that the master agreement shall be 
                        considered to be a swap agreement under this 
                        paragraph only with respect to each agreement 
                        or transaction under the master agreement that 
                        is referred to in clause (i), (ii), (iii), or 
                        (iv); or
                  ``(B) any security agreement or arrangement or other 
                credit enhancement related to any agreements or 
                transactions referred to in subparagraph (A); and
                  ``(C) is applicable for purposes of this title only 
                and shall not be construed or applied so as to 
                challenge or affect the characterization, definition, 
                or treatment of any swap agreement under any other 
                statute, regulation, or rule, including the Securities 
                Act of 1933, the Securities Exchange Act of 1934, the 
                Public Utility Holding Company Act of 1935, the Trust 
                Indenture Act of 1939, the Investment Company Act of 
                1940, the Investment Advisers Act of 1940, the 
                Securities Investor Protection Act of 1970, the 
                Commodity Exchange Act, and the regulations prescribed 
                by the Securities and Exchange Commission or the 
                Commodity Futures Trading Commission.'';
          (2) by amending section 741(7) to read as follows:
          ``(7) `securities contract'--
                  ``(A) means--
                          ``(i) a contract for the purchase, sale, or 
                        loan of a security, a certificate of deposit, a 
                        mortgage loan or any interest in a mortgage 
                        loan, a group or index of securities, 
                        certificates of deposit or mortgage loans or 
                        interests therein (including an interest 
                        therein or based on the value thereof), or 
                        option on any of the foregoing, including an 
                        option to purchase or sell any such security 
                        certificate of deposit, loan, interest, group 
                        or index or option;
                          ``(ii) any option entered into on a national 
                        securities exchange relating to foreign 
                        currencies;
                          ``(iii) the guarantee by or to any securities 
                        clearing agency of a settlement of cash, 
                        securities, certificates of deposit mortgage 
                        loans or interests therein, group or index of 
                        securities, or mortgage loans or interests 
                        therein (including any interest therein or 
                        based on the value thereof), or option on any 
                        of the foregoing, including an option to 
                        purchase or sell any such security certificate 
                        of deposit, loan, interest, group or index or 
                        option;
                          ``(iv) any margin loan;
                          ``(v) any other agreement or transaction that 
                        is similar to an agreement or transaction 
                        referred to in this paragraph;
                          ``(vi) any combination of the agreements or 
                        transactions referred to in this paragraph;
                          ``(vii) any option to enter into any 
                        agreement or transaction referred to in this 
                        paragraph;
                          ``(viii) a master agreement that provides for 
                        an agreement or transaction referred to in 
                        clause (i), (ii), (iii), (iv), (v), (vi), or 
                        (vii), together with all supplements to any 
                        such master agreement, without regard to 
                        whether the master agreement provides for an 
                        agreement or transaction that is not a 
                        securities contract under this paragraph, 
                        except that such master agreement shall be 
                        considered to be a securities contract under 
                        this paragraph only with respect to each 
                        agreement or transaction under such master 
                        agreement that is referred to in clause (i), 
                        (ii), (iii), (iv), (v), (vi), or (vii); or
                          ``(ix) any security agreement or arrangement, 
                        or other credit enhancement, related to any 
                        agreement or transaction referred to in this 
                        paragraph, but not to exceed the actual value 
                        of such contract on the date of the filing of 
                        the petition; and
                  ``(B) does not include any purchase, sale, or 
                repurchase obligation under a participation in a 
                commercial mortgage loan.''; and
          (3) in section 761(4)--
                  (A) by striking ``or'' at the end of subparagraph 
                (D); and
                  (B) by adding at the end the following:
                  ``(F) any other agreement or transaction that is 
                similar to an agreement or transaction referred to in 
                this paragraph;
                  ``(G) any combination of the agreements or 
                transactions referred to in this paragraph;
                  ``(H) any option to enter into an agreement or 
                transaction referred to in this paragraph;
                  ``(I) a master agreement that provides for an 
                agreement or transaction referred to in subparagraph 
                (A), (B), (C), (D), (E), (F), (G), or (H), together 
                with all supplements to such master netting agreement, 
                without regard to whether the master netting agreement 
                provides for an agreement or transaction that is not a 
                commodity contract under this paragraph, except that 
                the master agreement shall be considered to be a 
                commodity contract under this paragraph only with 
                respect to each agreement or transaction underthe 
master agreement that is referred to in subparagraph (A), (B), (C), 
(D), (E), (F), (G), or (H); or
                  ``(J) a security agreement or arrangement, or other 
                credit enhancement related to any agreement or 
                transaction referred to in this paragraph, but not to 
                exceed the actual value of such contract on the date of 
                the filing of the petition;''.
  (b) Definitions of Financial Institution, Financial Participant, and 
Forward Contract Merchant.--Section 101 of title 11, United States 
Code, is amended--
          (1) by amending paragraph (22) to read as follows:
          ``(22) `financial institution' means--
                  ``(A) a Federal reserve bank, or an entity (domestic 
                or foreign) that is a commercial or savings bank, 
                industrial savings bank, savings and loan association, 
                trust company, or receiver or conservator for such 
                entity and, when any such Federal reserve bank, 
                receiver, conservator or entity is acting as agent or 
                custodian for a customer in connection with a 
                securities contract, as defined in section 741 of this 
                title, such customer; or
                  ``(B) in connection with a securities contract, as 
                defined in section 741 of this title, an investment 
                company registered under the Investment Company Act of 
                1940;'';
          (2) by inserting after paragraph (22) the following:
          ``(22A) `financial participant' means an entity that, at the 
        time it enters into a securities contract, commodity contract 
        or forward contract, or at the time of the filing of the 
        petition, has 1 or more agreements or transactions that is 
        described in section 561(a)(2) with the debtor or any other 
        entity (other than an affiliate) of a total gross dollar value 
        of at least $1,000,000,000 in notional or actual principal 
        amount outstanding on any day during the previous 15-month 
        period, or has gross mark-to-market positions of at least 
        $100,000,000 (aggregated across counterparties) in 1 or more 
        such agreement or transaction with the debtor or any other 
        entity (other than an affiliate) on any day during the previous 
        15-month period;''; and
          (3) by amending paragraph (26) to read as follows:
          ``(26) `forward contract merchant' means a Federal reserve 
        bank, or an entity whose business consists in whole or in part 
        of entering into forward contracts as or with merchants or in a 
        commodity, as defined or in section 761 of this title, or any 
        similar good, article, service, right, or interest which is 
        presently or in the future becomes the subject of dealing or in 
        the forward contract trade;''.
  (c) Definition of Master Netting Agreement and Master Netting 
Agreement Participant.--Section 101 of title 11, United States Code, is 
amended by inserting after paragraph (38) the following new paragraphs:
          ``(38A) `master netting agreement' means an agreement 
        providing for the exercise of rights, including rights of 
        netting, setoff, liquidation, termination, acceleration, or 
        closeout, under or in connection with 1 or more contracts that 
        are described in any 1 or more of paragraphs (1) through (5) of 
        section 561(a), or any security agreement or arrangement or 
        other credit enhancement related to 1 or more of the foregoing 
        If a master netting agreement contains provisions relating to 
        agreements or transactions that are not contracts described in 
        paragraphs (1) through (5) of section 561(a), the master 
        netting agreement shall be deemed to be a master netting 
        agreement only with respect to those agreements or transactions 
        that are described in any 1 or more of the paragraphs (1) 
        through (5) of section 561(a);
          ``(38B) `master netting agreement participant' means an 
        entity that, at any time before the filing of the petition, is 
        a party to an outstanding master netting agreement with the 
        debtor;''.
  (d) Swap Agreements, Securities Contracts, Commodity Contracts, 
Forward Contracts, Repurchase Agreements, and Master Netting Agreements 
Under the Automatic-Stay.--
          (1) In general.--Section 362(b) of title 11, United States 
        Code, as amended by sections 118, 132, 136, 142, 203 and 818, 
        is amended--
                  (A) in paragraph (6), by inserting ``, pledged to, 
                and under the control of,'' after ``held by'';
                  (B) in paragraph (7), by inserting ``, pledged to, 
                and under the control of,'' after ``held by'';
                  (C) by amending paragraph (17) to read as follows:
          ``(17) under subsection (a), of the setoff by a swap 
        participant of a mutual debt and claim under or in connection 
        with 1 or more swap agreements that constitutes the setoff of a 
        claim against the debtor for any payment or othertransfer of 
property due from the debtor under or in connection with any swap 
agreement against any payment due to the debtor from the swap 
participant under or in connection with any swap agreement or against 
cash, securities, or other property held by, pledged to, and under the 
control of, or due from such swap participant to margin guarantee, 
secure, or settle a swap agreement;'';
                  (D) in paragraph (30) by striking ``or'' at the end;
                  (E) in paragraph (31) by striking the period at the 
                end and inserting ``; or''; and
                  (F) by inserting after paragraph (31) the following 
                new paragraph:
          ``(32) under subsection (a), of the setoff by a master 
        netting agreement participant of a mutual debt and claim under 
        or in connection with 1 or more master netting agreements or 
        any contract or agreement subject to such agreements that 
        constitutes the setoff of a claim against the debtor for any 
        payment or other transfer of property due from the debtor under 
        or in connection with such agreements or any contract or 
        agreement subject to such agreements against any payment due to 
        the debtor from such master netting agreement participant under 
        or in connection with such agreements or any contract or 
        agreement subject to such agreements or against cash, 
        securities, or other property held by, pledged or and under the 
        control of, or due from such master netting agreement 
        participant to margin, guarantee, secure, or settle such 
        agreements or any contract or agreement subject to such 
        agreements, to the extent such participant is eligible to 
        exercise such offset rights under paragraph (6), (7), or (17) 
        for each individual contract covered by the master netting 
        agreement in issue.''.
          (2) Limitation.--Section 362 of title 11, United States Code, 
        as amended by sections 120, 302, and 412, is amended by adding 
        at the end the following:
  ``(l) Limitation.--The exercise of rights not subject to the stay 
arising under subsection (a) pursuant to paragraph (6), (7), or (17), 
or (31) of subsection (b) shall not be stayed by any order of a court 
or administrative agency in any proceeding under this title.''.
  (e) Limitation of Avoidance Powers Under Master Netting Agreement.--
Section 546 of title 11, United States Code, as amended by sections 207 
and 302, is amended--
          (1) in subsection (g) (as added by section 103 of Public Law 
        101-311)--
                  (A) by striking ``under a swap agreement'';
                  (B) by striking ``in connection with a swap 
                agreement'' and inserting ``under or in connection with 
                any swap agreement''; and
          (2) by adding at the end the following:
  ``(j) Notwithstanding sections 544, 545, 547, 548(a)(2)(B), and 
548(b) of this title, the trustee may not avoid a transfer made by or 
to a master netting agreement participant under or in connection with 
any master netting agreement or any individual contract covered thereby 
that is made before the commencement of the case, except under section 
548(a)(1)(A) of this title, and except to the extent the trustee could 
otherwise avoid such a transfer made under an individual contract 
covered by such master netting agreement.''.
  (f) Fraudulent Transfers of Master Netting Agreements.--Section 
548(d)(2) of title 11, United States Code, is amended--
          (1) in subparagraph (C), by striking ``and'';
          (2) in subparagraph (D), by striking the period and inserting 
        ``; and''; and
          (3) by adding at the end the following new subparagraph:
          ``(E) a master netting agreement participant that receives a 
        transfer in connection with a master netting agreement or any 
        individual contract covered thereby takes for value to the 
        extent of such transfer, except, with respect to a transfer 
        under any individual contract covered thereby, to the extent 
        such master netting agreement participant otherwise did not 
        take (or is otherwise not deemed to have taken) such transfer 
        for value.''.
  (g) Termination or Acceleration of Securities Contracts.--Section 555 
of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 555. Contractual right to liquidate, terminate, or accelerate a 
                    securities contract'';

        and
          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
  (h) Termination or Acceleration of Commodities or Forward 
Contracts.--Section 556 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 556. Contractual right to liquidate, terminate, or accelerate a 
                    commodities contract or forward contract''; and

          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
  (i) Termination or Acceleration of Repurchase Agreements.--Section 
559 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 559. Contractual right to liquidate, terminate, or accelerate a 
                    repurchase agreement''; and

          (2) in the first sentence, by striking ``liquidation'' and 
        inserting ``liquidation, termination, or acceleration''.
  (j) Liquidation, Termination, or Acceleration of Swap Agreements.--
Section 560 of title 11, United States Code, is amended--
          (1) by amending the section heading to read as follows:

``Sec. 560. Contractual right to liquidate, terminate, or accelerate a 
                    swap agreement''; and

          (2) in the first sentence, by striking ``termination of a 
        swap agreement'' and inserting ``liquidation, termination, or 
        acceleration of 1 or more swap agreements''; and
          (3) by striking ``in connection with any swap agreement'' and 
        inserting ``in connection with the termination, liquidation, or 
        acceleration of 1 or more swap agreements''.
  (k) Liquidation, Termination, Acceleration, or Offset Under a Master 
Netting Agreement and Across Contracts.--(1) Title 11, United States 
Code, is amended by inserting after section 560 the following:

``Sec. 561. Contractual right to terminate, liquidate, accelerate, or 
                    offset under a master netting agreement and across 
                    contracts

  ``(a) In General.--Subject to subsection (b), the exercise of any 
contractual right, because of a condition of the kind specified in 
section 365(e)(1), to cause the termination, liquidation, or 
acceleration of or to offset or net termination values, payment amounts 
or other transfer obligations arising under or in connection with 1 or 
more (or the termination, liquidation, or acceleration of 1 or more)--
          ``(1) securities contracts, as defined in section 741(7);
          ``(2) commodity contracts, as defined in section 761(4);
          ``(3) forward contracts;
          ``(4) repurchase agreements;
          ``(5) swap agreements; or
          ``(6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation of any 
provision of this title or by any order of a court or administrative 
agency in any proceeding under this title.
  ``(b) Exception.--
          ``(1) A party may exercise a contractual right described in 
        subsection (a) to terminate, liquidate, or accelerate only to 
        the extent that such party could exercise such a right under 
        section 555, 556, 559, or 560 for each individual contract 
        covered by the master netting agreement in issue.
          ``(2) If a debtor is a commodity broker subject to subchapter 
        IV of chapter 7 of this title--
                  ``(A) a party may not net or offset an obligation to 
                the debtor arising under, or in connection with, a 
                commodity contract against any claim arising under, or 
                in connection with, other instruments, contracts, or 
                agreements listed in subsection (a) except to the 
                extent the party has positive net equity in the 
                commodity accounts at the debtor, as calculated under 
                subchapter IV; and
                  ``(B) another commodity broker may not net or offset 
                an obligation to the debtor arising under, or in 
                connection with, a commodity contract entered into or 
                held on behalf of a customer of the debtor against any 
                claim arising under, or in connection with, other 
                instruments, contracts, or agreements listed in 
                subsection (a).
  ``(c) Definition.--As used in this section, the term `contractual 
right' includes a right set forth in a rule or bylaw of a national 
securities exchange, a national securities association, or a securities 
clearing agency, a right set forth in a bylaw of a clearing 
organization or contract market or in a resolution of the governing 
board thereof, and a right, whether or not evidenced in writing, 
arising under common law, under law merchant, or by reason of normal 
business practice.''.
  (2) Conforming amendment.--The table of sections of chapter 9 of 
title 11, United States Code, is amended by inserting after the item 
relating to section 560 the following:

``561. Contractual right to terminate, liquidate, accelerate, or offset 
under a master netting agreement and across contracts.

  (l) Ancillary Proceedings.--Section 304 of title 11, United States 
Code, as amended by section 215, is amended by adding at the end the 
following:
  ``(c) Any provisions of this title relating to securities contracts, 
commodity contracts, forward contracts, repurchase agreements, swap 
agreements, or master netting agreements shall apply in a case 
ancillary to a foreign proceeding under this section or any other 
section of this title, so that enforcement of contractual provisions of 
such contracts and agreements in accordance with their terms will not 
be stayed or otherwise limited by operation of any provision of this 
title or by order of a court in any case under this title, and to limit 
avoidance powers to the same extent as in a proceeding under chapter 7 
or 11 of this title (such enforcement not to be limited based on the 
presence or absence of assets of the debtor in the United States).''.
  (m) Commodity Broker Liquidations.--Title 11, United States Code, is 
amended by inserting after section 766 the following:

``Sec. 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

  ``Notwithstanding any other provision of this title, the exercise of 
rights by a forward contract merchant, commodity broker, stockbroker, 
financial institution, securities clearing agency, swap participant, 
repo participant, or master netting agreement participant under this 
title shall not affect the priority of any unsecured claim it may have 
after the exercise of such rights.''.
  (n) Stockbroker Liquidations.--Title 11, United States Code, is 
amended by inserting after section 752 the following:

``Sec. 753. Stockbroker liquidation and forward contract merchants, 
                    commodity brokers, stockbrokers, financial 
                    institutions, securities clearing agencies, swap 
                    participants, repo participants, and master netting 
                    agreement participants

  ``Notwithstanding any other provision of this title, the exercise of 
rights by a forward contract merchant, commodity broker, stockbroker, 
financial institution, securities clearing agency, swap participant, 
repo participant, financial participant, or master netting agreement 
participant under this title shall not affect the priority of any 
unsecured claim it may have after the exercise of such rights.''.
  (o) Setoff.--Section 553 of title 11, United States Code, is 
amended--
          (1) in subsection (a)(3)(C), by inserting ``(except for a 
        setoff of a kind described in section 362(b)(6), 362(b)(7), 
        362(b)(17), 362(b)(19), 555, 556, 559, 560 or 561 of this 
        title)'' before the period; and
          (2) in subsection (b)(1), by striking ``362(b)(14),'' and 
        inserting ``362(b)(17), 362(b)(19), 555, 556, 559, 560, 561''.
  (p) Securities Contracts, Commodity Contracts, and Forward 
Contracts.--Title 11, United States Code, is amended--
          (1) in section 362(b)(6), by striking ``financial 
        institutions,'' each place such term appears and inserting 
        ``financial institution, financial participant'';
          (2) in section 546(e), by inserting ``financial 
        participant,'' after ``financial institution,'';
          (3) in section 548(d)(2)(B), by inserting ``financial 
        participant,'' after ``financial institution,'';
          (4) in section 555--
                  (A) by inserting ``financial participant,'' after 
                ``financial institution,''; and
                  (B) by inserting before the period at the end ``, a 
                right set forth in a bylaw of a clearing organization 
                or contract market or in a resolution of the governing 
                board thereof, and a right, whether or not in writing, 
                arising under common law, under law merchant, or by 
                reason of normal business practice''; and
          (5) in section 556, by inserting ``, financial participant'' 
        after ``commodity broker''.
  (q) Conforming Amendments.--Title 11 of the United States Code is 
amended--
          (1) in the table of sections of chapter 5--
                  (A) by amending the items relating to sections 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
                  (B) by amending the items relating to sections 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
          (2) in the table of sections of chapter 7--
                  (A) by inserting after the item relating to 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
                  (B) by inserting after the item relating to 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.''.

SEC. 1008. RECORDKEEPING REQUIREMENTS.

  Section 11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C 
1821(e)(8)) is amended by adding at the end the following new 
subparagraph:
                  ``(H) Recordkeeping requirements.--The Corporation, 
                in consultation with the appropriate Federal banking 
                agencies, may prescribe regulations requiring more 
                detailed recordkeeping with respect to qualified 
                financial contracts (including market valuations) by 
                insured depository institutions.''.

SEC. 1009. EXEMPTIONS FROM CONTEMPORANEOUS EXECUTION ---REQUIREMENT.

  Section 13(e)(2) of the Federal Deposit Insurance Act (12 U.S.C 
1823(e)(2)) is amended to read as follows:
          ``(2) Exemptions from contemporaneous execution 
        requirement.--An agreement to provide for the lawful 
        collateralization of--
                  ``(A) deposits of, or other credit extension by, a 
                Federal, State, or local governmental entity, or of any 
                depositor referred to in section 11(a)(2), including an 
                agreement to provide collateral in lieu of a surety 
                bond;
                  ``(B) bankruptcy estate funds pursuant to section 
                345(b)(2) of title 11, United States Code;
                  ``(C) extensions of credit, including any overdraft, 
                from a Federal reserve bank or Federal home loan bank; 
                or
                  ``(D) 1 or more qualified financial contracts, as 
                defined in section 11(e)(8)(D),
        shall not be deemed invalid pursuant to paragraph (1)(B) solely 
        because such agreement was not executed contemporaneously with 
        the acquisition of the collateral or because of pledges, 
        delivery, or substitution of the collateral made in accordance 
        with such agreement.''.

SEC. 1010. DAMAGE MEASURE.

  (a) Title 11, United States Code, as amended by section 1007, is 
amended--
          (1) by inserting after section 561 the following:

``Sec. 562. Damage measure in connection with swap agreements, 
                    securities contracts, forward contracts, commodity 
                    contracts, repurchase agreements, or master netting 
                    agreements

  ``If the trustee rejects a swap agreement, securities contract as 
defined in section 741 of this title, forward contract, commodity 
contract (as defined in section 761 of this title) repurchase 
agreement, or master netting agreement pursuant to section 365(a) of 
this title, or if a forward contract merchant, stockbroker, financial 
institution, securities clearing agency, repo participant, financial 
participant, master netting agreement participant, or swap participant 
liquidates, terminates, or accelerates such contract or agreement, 
damages shall be measured as of the earlier of--
          ``(1) the date of such rejection; or
          ``(2) the date of such liquidation, termination, or 
        acceleration.''; and
          (2) in the table of sections of chapter 5 by inserting after 
        the item relating to section 561 the following:

``562. Damage measure in connection with swap agreements, securities 
contracts, forward contracts, commodity contracts, repurchase 
agreements, or master netting agreements.''.

  (b) Claims Arising From Rejection.--Section 502(g) of title 11, 
United States Code, is amended--
          (1) by designating the existing text as paragraph (1); and
          (2) by adding at the end the following:
  ``(2) A claim for damages calculated in accordance with section 561 
of this title shall be allowed under subsection (a), (b), or (c), or 
disallowed under subsection (d) or (e), as if such claim had arisen 
before the date of the filing of the petition.''.

SEC. 1011. SIPC STAY.

  Section 5(b)(2) of the Securities Investor Protection Act of 1970 (15 
U.S.C 78eee(b)(2)) is amended by adding after subparagraph (B) the 
following new subparagraph:
                  ``(C) Exception from stay.--
                          ``(i) Notwithstanding section 362 of title 
                        11, United States Code, neither the filing of 
                        an application under subsection (a)(3) nor any 
                        order or decree obtained by Securities Investor 
                        Protection Corporation from the court shall 
                        operate as a stay of any contractual rights of 
                        a creditor to liquidate, terminate, or 
                        accelerate a securities contract, commodity 
                        contract, forward contract, repurchase 
                        agreement, swap agreement, or master netting 
                        agreement, each as defined in title 11, to 
                        offset or net termination values, payment 
                        amounts, or other transfer obligations arising 
                        under or in connection with 1 or more of such 
                        contracts or agreements, or to foreclose on any 
                        cash collateral pledged by the debtor whether 
                        or not with respect to 1 or more of such 
                        contracts or agreements.
                          ``(ii) Notwithstanding clause (i), such 
                        application, order, or decree may operate as a 
                        stay of the foreclosure on securities 
                        collateral pledged by the debtor, whether or 
                        not with respect to 1 or more of such contracts 
                        or agreements, securities sold by the debtor 
                        under a repurchase agreement or securities lent 
                        under a securities lending agreement.
                          ``(iii) As used in this section, the term 
                        `contractual right' includes a right set forth 
                        in a rule or bylaw of a national securities 
                        exchange, a national securities association, or 
                        a securities clearing agency, a right set forth 
                        in a bylaw of a clearing organization or 
                        contract market or in a resolution of the 
                        governing board thereof, and a right, whether 
                        or not in writing, arising under common law, 
                        under law merchant, or by reason of normal 
                        business practice.''.

SEC. 1012. ASSET-BACKED SECURITIZATIONS.

  Section 541 of title 11, United States Code, as amended by section 
150, is amended--
          (1) by redesignating paragraph (5) of subsection (b) as 
        paragraph (6);
          (2) by inserting after paragraph (4) of subsection (b) the 
        following new paragraph:
          ``(5) any eligible asset (or proceeds thereof), to the extent 
        that such eligible asset was transferred by the debtor, before 
        the date of commencement of the case, to an eligible entity in 
        connection with an asset-backed securitization, except to the 
        extent such asset (or proceeds or value thereof) may be 
        recovered by the trustee under section 550 by virtue of 
        avoidance under section 548(a);''; and
          (3) by adding at the end the following new subsection:
  ``(e) For purposes of this section, the following definitions shall 
apply:
          ``(1) the term `asset-backed securitization' means a 
        transaction in which eligible assets transferred to an eligible 
        entity are used as the source of payment on securities, the 
        most senior of which are rated investment grade by 1 or more 
        nationally recognized securities rating organizations, issued 
        by an issuer;
          ``(2) the term `eligible asset' means--
                  ``(A) financial assets (including interests therein 
                and proceeds thereof), either fixed or revolving, 
                including residential and commercial mortgage loans, 
                consumer receivables, trade receivables, and lease 
                receivables, that, by their terms, convert into cash 
                within a finite time period, plus any residual interest 
                in property subject to receivables included in such 
                financial assets plus any rights or other assets 
                designed to assure the servicing or timely distribution 
                of proceeds to security holders;
                  ``(B) cash; and
                  ``(C) securities.
          ``(3) the term `eligible entity' means--
                  ``(A) an issuer; or
                  ``(B) a trust, corporation, partnership, or other 
                entity engaged exclusively in the business of acquiring 
                and transferring eligible assets directly or indirectly 
                to an issuer and taking actions ancillary thereto;
          ``(4) the term `issuer' means a trust, corporation, 
        partnership, or other entity engaged exclusively in the 
        business of acquiring and holding eligible assets, issuing 
        securities backed by eligible assets, and taking actions 
        ancillary thereto; and
          ``(5) the term `transferred' means the debtor, pursuant to a 
        written agreement, represented and warranted that eligible 
        assets were sold, contributed, or otherwise conveyed with the 
        intention of removing them from the estate of the debtor 
        pursuant to subsection (b)(5), irrespective, without limitation 
        of--
                  ``(A) whether the debtor directly or indirectly 
                obtained or held an interest in the issuer or in any 
                securities issued by the issuer;
                  ``(B) whether the debtor had an obligation to 
                repurchase or to service or supervise the servicing of 
                all or any portion of such eligible assets; or
                  ``(C) the characterization of such sale, 
                contribution, or other conveyance for tax, accounting, 
                regulatory reporting, or other purposes.''.

SEC. 1013. FEDERAL RESERVE COLLATERAL REQUIREMENTS.

  The 3d sentence of the 3d undesignated paragraph of section 16 of the 
Federal Reserve Act (12 U.S.C 412) is amended by striking ``acceptances 
acquired under the provisions of section 13 of this Act'' and inserting 
``acceptances acquired under section 10A, 10B, 13, or 13A of this 
Act''.

SEC. 1014. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

  (a) Effective Date.--This title shall take effect on the date of the 
enactment of this Act.
  (b) Application of Amendments.--The amendments made by this title 
shall apply with respect to cases commenced or appointments made under 
any Federal or State law after the date of enactment of this Act, but 
shall not apply with respect to cases commenced or appointments made 
under any Federal or State law before the date of enactment of this 
Act.

                    TITLE XI--TECHNICAL CORRECTIONS

SEC. 1101. DEFINITIONS.

  Section 101 of title 11, United States Code, as amended by sections 
102, 105, 132, 138, 301, 302, 402, 902, and 1007, is amended--
          (1) by striking ``In this title--'' and inserting ``In this 
        title:'';
          (2) in each paragraph, by inserting ``The term'' after the 
        paragraph designation;
          (3) in paragraph (35)(B), by striking ``paragraphs (21B) and 
        (33)(A)'' and inserting ``paragraphs (23) and (35)'';
          (4) in each of paragraphs (35A) and (38), by striking ``; 
        and'' at the end and inserting a period;
          (5) in paragraph (51B)--
                  (A) by inserting ``who is not a family farmer'' after 
                ``debtor'' the first place it appears; and
                  (B) by striking ``thereto having aggregate'' and all 
                that follows through the end of the paragraph;
          (6) by amending paragraph (54) to read as follows:
          ``(54) The term `transfer' means--
                  ``(A) the creation of a lien;
                  ``(B) the retention of title as a security interest;
                  ``(C) the foreclosure of a debtor's equity of 
                redemption; or
                  ``(D) each mode, direct or indirect, absolute or 
                conditional, voluntary or involuntary, of disposing of 
                or parting with--
                          ``(i) property; or
                          ``(ii) an interest in property;'';
          (7) in each of paragraphs (1) through (35), in each of 
        paragraphs (36) and (37), and in each of paragraphs (40) 
        through (55) (including paragraph (54), as amended by paragraph 
        (6) of this section), by striking the semicolon at the end and 
        inserting a period; and
          (8) by redesignating paragraphs (4) through (55), including 
        paragraph (54), as amended by paragraph (6) of this section, in 
        entirely numerical sequence.

SEC. 1102. ADJUSTMENT OF DOLLAR AMOUNTS.

  Section 104 of title 11, United States Code, is amended by inserting 
``522(f)(3), 707(b)(5),'' after ``522(d),'' each place it appears.

SEC. 1103. EXTENSION OF TIME.

  Section 108(c)(2) of title 11, United States Code, is amended by 
striking ``922'' and all that follows through ``or'', and inserting 
``922, 1201, or''.

SEC. 1104. TECHNICAL AMENDMENTS.

  Title 11 of the United States Code is amended--
          (1) in section 109(b)(2) by striking ``subsection (c) or (d) 
        of''; and
          (2) in section 552(b)(1) by striking ``product'' each place 
        it appears and inserting ``products''.

SEC. 1105. PENALTY FOR PERSONS WHO NEGLIGENTLY OR FRAUDULENTLY PREPARE 
                    BANKRUPTCY PETITIONS.

  Section 110(j)(3) of title 11, United States Code, is amended by 
striking ``attorney's'' and inserting ``attorneys' ''.

SEC. 1106. LIMITATION ON COMPENSATION OF PROFESSIONAL PERSONS.

  Section 328(a) of title 11, United States Code, is amended by 
inserting ``on a fixed or percentage fee basis,'' after ``hourly 
basis,''.

SEC. 1107. SPECIAL TAX PROVISIONS.

  Section 346(g)(1)(C) of title 11, United States Code, is amended by 
striking ``, except'' and all that follows through ``1986''.

SEC. 1108. EFFECT OF CONVERSION.

  Section 348(f)(2) of title 11, United States Code, is amended by 
inserting ``of the estate'' after ``property'' the first place it 
appears.

SEC. 1109. ALLOWANCE OF ADMINISTRATIVE EXPENSES.

  Section 503(b)(4) of title 11, United States Code, is amended by 
inserting ``subparagraph (A), (B), (C), (D), or (E) of'' before 
``paragraph (3)''.

SEC. 1110. PRIORITIES.

  Section 507(a) of title 11, United States Code, as amended by section 
323, is amended in paragraph (4), as so redesignated by section 142, by 
striking the semicolon at the end and inserting a period.

SEC. 1111. EXEMPTIONS.

  Section 522(g)(2) of title 11, United States Code, is amended by 
striking ``subsection (f)(2)'' and inserting ``subsection (f)(1)(B)''.

SEC. 1112. EXCEPTIONS TO DISCHARGE.

  Section 523 of title 11, United States Code, as amended by section 
146, is amended--
          (1) in subsection (a)(3), by striking ``or (6)'' each place 
        it appears and inserting ``(6), or (15)'';
          (2) as amended by section 304(e) of Public Law 103-394 (108 
        Stat 4133), in paragraph (15), by transferring such paragraph 
        so as to insert it after paragraph (14A) of subsection (a);
          (3) in subsection (a)(9), by inserting ``, watercraft, or 
        aircraft'' after ``motor vehicle'';
          (4) in subsection (a)(15), as so redesignated by paragraph 
        (2) of this subsection, by inserting ``to a spouse, former 
        spouse, or child of the debtor and'' after ``(15)''; and
          (5) in subsection (e), by striking ``a insured'' and 
        inserting ``an insured''.

SEC. 1113. EFFECT OF DISCHARGE.

  Section 524(a)(3) of title 11, United States Code, is amended by 
striking ``section 523'' and all that follows through ``or that'' and 
inserting ``section 523, 1228(a)(1), or 1328(a)(1) of this title, or 
that''.

SEC. 1114. PROTECTION AGAINST DISCRIMINATORY TREATMENT.

  Section 525(c) of title 11, United States Code, is amended--
          (1) in paragraph (1), by inserting ``student'' before 
        ``grant'' the second place it appears; and
          (2) in paragraph (2), by striking ``the program operated 
        under part B, D, or E of'' and inserting ``any program operated 
        under''.

SEC. 1115. PROPERTY OF THE ESTATE.

  Section 541(b)(4)(B)(ii) of title 11, United States Code, is amended 
by inserting ``365 or'' before ``542''.

SEC. 1116. PREFERENCES.

  (a) In General.--Section 547 of title 11, United States Code, is 
amended--
          (1) in subsection (b), by striking ``subsection (c)'' and 
        inserting ``subsections (c) and (i)''; and
          (2) by adding at the end the following:
  ``(i) If the trustee avoids under subsection (b) a transfer made 
between 90 days and 1 year before the date of the filing of the 
petition, by the debtor to an entity that is not an insider for the 
benefit of a creditor that is an insider, such transfer may be avoided 
under this section only with respect to the creditor that is an 
insider.''.
  (b) Applicability.--The amendments made by this section shall apply 
to any case that is pending or commenced on or after the date of 
enactment of this Act.

SEC. 1117. POSTPETITION TRANSACTIONS.

  Section 549(c) of title 11, United States Code, is amended--
          (1) by inserting ``an interest in'' after ``transfer of'';
          (2) by striking ``such property'' and inserting ``such real 
        property''; and
          (3) by striking ``the interest'' and inserting ``such 
        interest''.

SEC. 1118. DISPOSITION OF PROPERTY OF THE ESTATE.

  Section 726(b) of title 11, United States Code, is amended by 
striking ``1009,''.

SEC. 1119. GENERAL PROVISIONS.

  Section 901(a) of title 11, United States Code, is amended by 
inserting ``1123(d),'' after ``1123(b),''.

SEC. 1120. APPOINTMENT OF ELECTED TRUSTEE.

  Section 1104(b) of title 11, United States Code, is amended--
          (1) by inserting ``(1)'' after ``(b)''; and
          (2) by adding at the end the following:
  ``(2)(A) If an eligible, disinterested trustee is elected at a 
meeting of creditors under paragraph (1), the United States trustee 
shall file a report certifying that election Upon the filing of a 
report under the preceding sentence--
          ``(i) the trustee elected under paragraph (1) shall be 
        considered to have been selected and appointed for purposes of 
        this section; and
          ``(ii) the service of any trustee appointed under subsection 
        (d) shall terminate.
  ``(B) In the case of any dispute arising out of an election under 
subparagraph (A), the court shall resolve the dispute.''.

SEC. 1121. ABANDONMENT OF RAILROAD LINE.

  Section 1170(e)(1) of title 11, United States Code, is amended by 
striking ``section 11347'' and inserting ``section 11326(a)''.

SEC. 1122. CONTENTS OF PLAN.

  Section 1172(c)(1) of title 11, United States Code, is amended by 
striking ``section 11347'' and inserting ``section 11326(a)''.

SEC. 1123. DISCHARGE UNDER CHAPTER 12.

  Subsections (a) and (c) of section 1228 of title 11, United States 
Code, are amended by striking ``1222(b)(10)'' each place it appears and 
inserting ``1222(b)(9)''.

SEC. 1124. BANKRUPTCY CASES AND PROCEEDINGS.

  Section 1334(d) of title 28, United States Code, is amended--
          (1) by striking ``made under this subsection'' and inserting 
        ``made under subsection (c)''; and
          (2) by striking ``This subsection'' and inserting 
        ``Subsection (c) and this subsection''.

SEC. 1125. KNOWING DISREGARD OF BANKRUPTCY LAW OR RULE.

  Section 156(a) of title 18, United States Code, is amended--
          (1) in the first undesignated paragraph--
                  (A) by inserting ``(1) the term'' before `` 
                `bankruptcy''; and
                  (B) by striking the period at the end and inserting 
                ``; and''; and
          (2) in the second undesignated paragraph--
                  (A) by inserting ``(2) the term'' before `` 
                `document''; and
                  (B) by striking ``this title'' and inserting ``title 
                11''.

SEC. 1126. TRANSFERS MADE BY NONPROFIT CHARITABLE CORPORATIONS.

  (a) Sale of Property of Estate.--Section 363(d) of title 11, United 
States Code, is amended--
          (1) by striking ``only'' and all that follows through the end 
        of the subsection and inserting ``only--
          ``(1) in accordance with applicable nonbankruptcy law that 
        governs the transfer of property by a corporation or trust that 
        is not a moneyed, business, or commercial corporation or trust; 
        and
          ``(2) to the extent not inconsistent with any relief granted 
        under subsection (c), (d), (e), or (f) of section 362 of this 
        title.''.
  (b) Confirmation of Plan for Reorganization.--Section 1129(a) of 
title 11, United States Code, as amended by section 140, is amended by 
adding at the end the following:
          ``(15) All transfers of property of the plan shall be made in 
        accordance with any applicable provisions of nonbankruptcy law 
        that govern the transfer of property by a corporation or trust 
        that is not a moneyed, business, or commercial corporation or 
        trust.''.
  (c) Transfer of Property.--Section 541 of title 11, United States 
Code, as amended by section 1102, is amended by adding at the end the 
following:
  ``(f) Notwithstanding any other provision of this title, property 
that is held by a debtor that is a corporation described in section 
501(c)(3) of the Internal Revenue Code of 1986 and exempt from tax 
under section 501(a) of such Code may be transferred to an entity that 
is not such a corporation, but only under the same conditions as would 
apply if the debtor had not filed a case under this title.''.
  (d) Applicability.--The amendments made by this section shall apply 
to a case pending under title 11, United States Code, on the date of 
enactment of this Act, except that the court shall not confirm a plan 
under chapter 11 of this title without considering whether this section 
would substantially affect the rights of a party in interest who first 
acquired rights with respect to the debtor after the date of the 
petition The parties who may appear and be heard in a proceeding under 
this section include the attorney general of the State in which the 
debtor is incorporated, was formed, or does business.
  (e) Rule of Construction.--Nothing in this section shall be deemed to 
require the court in which a case under chapter 11 is pending to remand 
or refer any proceeding, issue, or controversy to any other court or to 
require the approval of any other court for the transfer of property.

SEC. 1127. PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO INCUR FINANCE 
                    CHARGES.

  Section 127 of the Truth in Lending Act (15 U.S.C 1637) is amended by 
adding at the end the following:
  ``(i) Prohibition on Certain Actions for Failure To Incur Finance 
Charges.--A creditor of an account under an open end consumer credit 
plan may not terminate an account prior to its expiration date solely 
because the consumer has not incurred finance charges on the account 
Nothing in this subsection shall prohibit a creditor from terminating 
an account for inactivity in 3 or more consecutive months.''.

SEC. 1128. PROTECTION OF VALID PURCHASE MONEY SECURITY INTERESTS.

  Section 547(c)(3)(B) of title 11, United States Code, is amended by 
striking ``20'' and inserting ``30''.

SEC. 1129. TRUSTEES.

  (a) Suspension and Termination of Panel Trustees and Standing 
Trustees.--Section 586(d) of title 28, United States Code, is amended--
          (1) by inserting ``(1)'' after ``(d)''; and
          (2) by adding at the end the following:
  ``(2) A trustee whose appointment under subsection (a)(1) or under 
subsection (b) is terminated or who ceases to be assigned to cases 
filed under title 11 of the United States Code may obtain judicial 
review of the final agency decision by commencing an action in the 
United States district court for the district for which the panel to 
which the trustee is appointed under subsection (a)(1), or in the 
United States district court for the district in which the trustee is 
appointed under subsection (b) resides, after first exhausting all 
available administrative remedies, which if the trustee so elects, 
shall also include an administrative hearing on the record Unless the 
trustee elects to have an administrative hearing on the record, the 
trustee shall be deemed to have exhausted all administrative remedies 
for purposes of this paragraph if the agency fails to make a final 
agency decision within 90 days after the trustee requests 
administrative remedies The Attorney General shall prescribe procedures 
to implement this paragraph The decision of the agency shall be 
affirmed by the district court unless it is unreasonable and without 
cause based on the administrative record before the agency.''.
  (b) Expenses of Standing Trustees.--Section 586(e) of title 28, 
United States Code, is amended by adding at the end the following:
  ``(3) After first exhausting all available administrative remedies, 
an individual appointed under subsection (b) may obtain judicial review 
of final agency action to deny a claim of actual, necessary expenses 
under this subsection by commencing an action in the United States 
district court in the district where the individual resides The 
decision of the agency shall be affirmed by the district court unless 
it is unreasonable and without cause based upon the administrative 
record before the agency.
  ``(4) The Attorney General shall prescribe procedures to implement 
this subsection.''.

      TITLE XII--GENERAL EFFECTIVE DATE; APPLICATION OF AMENDMENTS

SEC. 1201. EFFECTIVE DATE; APPLICATION OF AMENDMENTS.

  (a) Effective Date.--Except as provided otherwise in this Act, this 
Act and the amendments made by this Act shall take effect 180 days 
after the date of the enactment of this Act.
  (b) Application of Amendments.--Except as otherwise provided in this 
Act, the amendments made by this Act shall not apply with respect to 
cases commenced under title 11 of the United States Code before the 
effective date of this Act.

                             The Amendment

    Inasmuch as H.R. 833, the Bankruptcy Reform Act of 1999, 
was ordered reported with a single amendment in the nature of a 
substitute, as amended, the contents of this report constitute 
an explanation of the bill as so amended.

                          Purpose and Summary

    H.R. 833 is a comprehensive package of reform measures 
pertaining to both consumer and business bankruptcy cases. The 
purpose of H.R. 833 is to improve bankruptcy law and practice 
by restoring personal responsibility and integrity in the 
bankruptcy system and by ensuring that it is fair for both 
debtors and creditors.
    The heart of the bill's consumer bankruptcy reforms is the 
implementation of an income/expense screening mechanism 
(``needs-based bankruptcy relief'') to ensure that debtors 
repay creditors the maximum they can afford. In addition to 
implementing needs-based bankruptcy relief, H.R. 833 institutes 
a panoply of other consumer bankruptcy reforms designed to 
enhance the protections available to debtors and creditors.
    H.R. 833 also contains a comprehensive set of reforms 
pertinent to business bankruptcies. Many of these provisions 
are intended to heighten administrative scrutiny and judicial 
oversight of small business bankruptcy cases. In addition, the 
bill includes provisions designed to reduce ``systemic risk'' 
in the financial marketplace. It also creates a new form of 
bankruptcy relief for transnational insolvencies, includes 
provisions regarding the treatment of tax claims, and requires 
the collection of certain data relating to consumer bankruptcy 
cases.

                Background and Need for the Legislation

                               Background

    On February 24, 1999, Representative George Gekas (for 
himself and Representatives Rick Boucher (D-Va. ), Bill 
McCollum (R-Fla.), and James P. Moran (D-Va.)) introduced H.R. 
833, the Bankruptcy Reform Act of 1999. The bill currently has 
more than 100 bipartisan cosponsors. As introduced, H.R. 833 
was virtually identical to the conference report on H.R. 3150, 
the Bankruptcy Reform Act of 1998, which last year received 
overwhelming bipartisan support in the House as evidenced by a 
vote of 300 to 125.1
---------------------------------------------------------------------------
    \1\ 144 Cong. Rec. H10239-40 (daily ed. Oct. 9, 1998). The 
Committee reported H.R. 3150 favorably, as amended, H.R. Rep. No. 105-
540 (1998), and thereafter, the House passed the bill, as further 
amended, by a vote of 306 to 118 on June 10, 1998. 144 Cong. Rec. H4442 
(daily ed. June 10, 1998). Later that summer, the Senate Committee on 
the Judiciary favorably reported S. 1301, its consumer bankruptcy 
legislation. S. Rep. No. 105-253 (1998). The Senate then passed its 
version of H.R. 3150 by substituting the text of S. 1301, as amended, 
on September 23, 1998. On request of the Senate and consent of the 
House, a conference was appointed. On October 9, 1998, the House passed 
the conference report, H.R. Rep. No. 105-794 (1998), which had been 
filed two days earlier. The conference report was not acted upon by the 
Senate prior to the adjournment of the 105th Congress.
---------------------------------------------------------------------------

                        Need for the Legislation

Consumer bankruptcy

    Overview. According to statistics released by the 
Administrative Office of the United States Courts, more than 
1.4 million bankruptcy cases were filed in 1998.2 
Bankruptcy filings, after passing the one-million mark for the 
first time in the twelve-month period ending June 30, 1996, 
``have risen steadily ever since.'' 3 The number of 
consumer bankruptcy cases filed per million adults, according 
to the Congressional Budget Office, increased nearly 77 percent 
between the end of 1994 and the end of 1997.4 
Paradoxically, this increase in consumer bankruptcy filing 
rates is occurring while the economy is basically healthy, 
unemployment is low, personal incomes are generally rising, and 
consumer confidence is high.5
---------------------------------------------------------------------------
    \2\ Administrative Office for United States Courts News Release, 
Increase in Bankruptcy Filings Slowed in Calendar Year 1998, at 1 (Mar. 
1, 1999).
    \3\ Id. While the rate of the increase recently decreased (19.1 
percent in 1997; 2.7 percent in 1998), bankruptcy filings are at record 
levels. Id.
    \4\ Congressional Budget Office, A Report of Data and Studies About 
Personal Bankruptcy, at 5 (preliminary draft Apr. 16, 1999).
    \5\ Id.; see, e.g., Bankruptcy Reform Act of 1999: Hearings on H.R. 
833 Before the Subcomm. on Commercial and Admin. Law of the House Comm. 
on the Judiciary, 106th Cong. (1999) [hereinafter 1999 Hearings] 
(statement of Richard Stana, Associate Director, Administration of 
Justice Issues, General Government Division, General Accounting Office, 
at 1 (Mar. 17, 1999)).
---------------------------------------------------------------------------
    According to some analyses, this increase in consumer 
bankruptcy filings has significant adverse economic 
consequences. For example, they estimate that more than $40 
billion was written off as a result of losses discharged in 
bankruptcy cases in 1998, 6 which amounts to a loss 
of ``at least $110 million every day.'' 7 This loss, 
according to one study, translates into more than $400 annually 
per household.8 Last year, one economic analysis 
projected that even if the growth rate in personal bankruptcies 
slowed to 15 percent over the next three years, the American 
economy may absorb a cumulative cost of more than $220 
billion.9 In addition, certain studies conclude that 
some debtors who file for bankruptcy relief do have the ability 
to repay some portion of their otherwise dischargeable 
debts.10
---------------------------------------------------------------------------
    \6\ 1999 Hearings, supra note 5 (statement of Dean Sheaffer on 
behalf of the National Retail Federation, at 1 (Mar. 11, 1999)). A 
representative from the banking industry described the adverse economic 
consequences of the ``precipitous increase in the number of consumer 
bankruptcy filings'' and how it has impacted all Americans. Id. 
(statement of Bruce L. Hammonds, on behalf of MBNA America Bank, N.A., 
at 1 (Mar. 11, 1999)). Another witness explained the special concerns 
that increased bankruptcy filings present to credit unions and their 
members. Id. (statement of Larry Nuss on behalf of the Credit Union 
National Association, Inc., at 2 (Mar. 11, 1999)). The Committee 
received similar information last year. See, e.g., Bankruptcy Reform 
Act of 1998, Responsible Borrower Bankruptcy Protection Act, and 
Consumer Lenders and Borrowers Accountability Act of 1998: Hearings on 
H.R. 3150, 2500 and 3146 Before the Subcomm. on Commercial and Admin. 
Law of the House Comm. on the Judiciary, 105th Cong. (1998) 
[hereinafter 1998 Hearings] (statement of WEFA Group Resource Planning 
Service, Final Report: The Financial Costs of Personal Bankruptcy, at 
16 (Feb. 1998)).
    \7\ 1999 Hearings, supra note 5 (statement of Dean Sheaffer on 
behalf of the National Retail Federation, at 1 (Mar. 11, 1999)) 
(emphasis supplied). This witness also testified that bankruptcy 
filings were ``out of control.'' Id.
    \8\ 1998 Hearings, supra note 6 (statement of WEFA Group Resource 
Planning Service, Final Report: The Financial Costs of Personal 
Bankruptcy, at 16 (Feb. 1998)); see 1999 Hearings, supra note 5 
(statement of Bruce L. Hammonds on behalf of MBNA America Bank, N.A., 
at 1 (Mar. 11, 1999)). Others questioned, however, the economic 
benefits of the legislation. See, e.g., 1999 Hearings, supra note 5.
    \9\ 1998 Hearings, supra note 6 (statement of WEFA Group Resource 
Planning Service, ``Final Report: The Financial Costs of Personal 
Bankruptcy,'' at 17-18 (Feb. 1998)).
    \10\ See, e.g., Marianne B. Culhane & Michaela M. White, ``Taking 
the New Consumer Bankruptcy Model for a Test Drive: Means-Testing Real 
Chapter 7 Debtors,--Am. Bankr. L. J.--(to be published 1999) 
(concluding that 3.6% of sampled debtors ``emerged as apparent can-
pays''); 1999 Hearings, supra note 5 (statement of Dr. Thomas S. Neubig 
on behalf of Ernst & Young LLP--Policy Economics and Quantitative 
Analysis Group, at 2 (Mar. 17, 1999)) (stating, ``we can confidently 
predict that if the needs based provision had been in effect in 1997, 
10 percent of Chapter 7 filers, or about 100,000 filers, would likely 
have been required to file a Chapter 13 repayment plan''); id. 
(statement of Michael E. Staten on behalf of the Credit Research 
Center, at 2-3 (Mar. 17, 1999)) (concluding that, based on the 
debtors'' own statements of monthly living expenses, ``about 25 percent 
of Chapter 7 debtors could have repaid at least 30 percent of their 
non-housing debts over a 5-year repayment plan, after accounting for 
monthly expenses and housing payments'' and that ``[a]bout five percent 
of Chapter 7 filers appeared capable of repaying all of their non-
housing debt over a 5-year plan,'' although these ``calculations 
assumed income would remain unchanged relative to expenses over the 
five years'').
---------------------------------------------------------------------------
    This legislation responds to many of the factors 
contributing to this increase in consumer bankruptcy filings, 
such as lack of personal responsibility,11 the 
proliferation of serial filings, and the lack of effective 
oversight to eliminate abuse in the system. The consumer 
bankruptcy provisions of H.R. 833 address the needs of 
creditors as well as debtors. The bill's creditor protections 
generally are of three types: needs-based bankruptcy reforms, 
expanded protections for creditors in general, and protections 
for specific types of creditors. The debtor protections allow 
debtors to exempt certain education IRA plans, fortify the 
Bankruptcy Code's exemptions for certain retirement pension 
funds, enhance the professionalism standards for attorneys and 
others who assist consumer debtors with their bankruptcy cases, 
ensure that debtors receive notice of alternatives to 
bankruptcy relief, require debtors to participate in debt 
repayment programs, and institute a pilot program to study the 
effectiveness of consumer financial management programs.
---------------------------------------------------------------------------
    \11\ Some have likened the moral weakness of the present bankruptcy 
system to ``shoplifting.'' 1999 Hearings, supra note 5 (statement of 
Prof. Todd Zywicki, George Mason Law School, at 3 (Mar. 11, 1999)).
---------------------------------------------------------------------------
    Consumer creditor protections: needs-based reforms. Chapter 
7 is a form of bankruptcy relief where an individual debtor 
receives an immediate discharge of personal liability for 
certain debts in exchange for turning over his or her nonexempt 
assets to the bankruptcy trustee for distribution to 
creditors.12 This ``unconditional discharge'' in 
chapter 7 contrasts with the ``conditional discharge'' 
provisions of chapter 13, under which a debtor commits to repay 
some portion of his or her financial obligations in exchange 
for retaining nonexempt assets and receiving a broader 
discharge of debt than is available under chapter 7.
---------------------------------------------------------------------------
    \12\ Under the Bankruptcy Code, only an individual may obtain a 
chapter 7 discharge. 11 U.S.C. 727(a). Thus, a corporation is not 
eligible to receive a discharge under chapter 7.
---------------------------------------------------------------------------
    Allowing consumer debtors in financial distress to choose 
voluntarily an ``unconditional discharge'' has been a part of 
American bankruptcy law since the enactment of the Bankruptcy 
Act of 1898.13 The rationale of an unconditional 
discharge was explained by Congress more than 100 years ago:
---------------------------------------------------------------------------
    \13\ Bankruptcy Act of 1898, 30 Stat. 544 (1898) (repealed 1978).
---------------------------------------------------------------------------
          [W]hen an honest man is hopelessly down financially, 
        nothing is gained for the public by keeping him down, 
        but, on the contrary, the public good will be promoted 
        by having his assets distributed ratably as far as they 
        will go among his creditors and letting him start 
        anew.14

    \14\ H.R. Rep. No. 55-65, at 43 (1897).
---------------------------------------------------------------------------
    The concept of needs-based bankruptcy relief has also long 
been debated by the Congress and others. President Herbert 
Hoover, for instance, recommended:

          The discretion of the courts in granting or refusing 
        discharge should be broadened, and they should be 
        authorized to postpone discharges for a time and 
        require bankrupts, during the period of suspension to 
        make some satisfaction out of after-acquired property 
        as a condition to the granting of a full 
        discharge.15
---------------------------------------------------------------------------
    \15\ 1 Collier on Bankruptcy para. 0.04 (14th ed. 1974).

    Congressional recognition of needs-based relief has been 
gradual. In 1938, chapter XIII was enacted, a purely voluntary 
form of bankruptcy relief that allowed a debtor to voluntarily 
propose a plan to repay creditors out of future 
earnings.16 Over the ensuing years, there continued 
to be repeated expressions of support for and opposition to 
needs-based bankruptcy reform.17 The Bankruptcy 
Reform Act of 1978,18 however, retained the 
principle that a debtor's decision to choose relief premised on 
repayment to creditors had to be ``completely voluntary.'' 
19
---------------------------------------------------------------------------
    \16\ Chandler Act of 1938, 52 Stat. 840 (1938); see 1999 Hearings, 
supra note 5 (statement of Prof. Lawrence P. King, Charles Seligson 
Professor of Law at New York University School of Law, at 4 (Mar. 16, 
1999)).
    \17\ See, e.g., Report of the Commission on the Bankruptcy Laws of 
the United States--July 1973, H.R. Doc. No. 93-137, pt. I, at 158 
(1973) (observing that ``proposals have been made to Congress from time 
to time that a debtor able to obtain relief under Chapter XIII 
[predecessor of 13] should be denied relief in straight bankruptcy''); 
Hearings on H.R. 1057 and H.R. 5771 Before the Subcomm. No. 4 of the 
House Committee on the Judiciary, 90th Cong. (1967). Organizations that 
testified before Congress in 1967 in support of such reform included 
the American Bar Association, the American Bankers Association, the 
Chamber of Commerce of the United States, Credit Union National 
Association, Inc., the National Federation of Independent Businesses, 
and the American Industrial Bankers Association. Id. The Commission on 
the Bankruptcy Laws of the United States, while supporting the concept 
that repayment plans should be ``fostered,'' nevertheless concluded in 
1973 that ``forced participation by a debtor in a plan requiring 
contributions out of future income has so little prospect for success 
that it should not be adopted as a feature of the bankruptcy system.'' 
Id. at 159.
    \18\ Pub. L. No. 95-598, 92 Stat. 2549 (1978).
    \19\ Bankruptcy Law Revision: Report of the Committee on the 
Judiciary to Accompany H.R. 8200, H.R. Rep. No. 95-595, at 120 (1977) 
(observing that ``[t]he thirteenth amendment prohibits involuntary 
servitude'' and suggesting that ``a mandatory chapter 13, by forcing an 
individual to work for creditors, would violate this prohibition'').
---------------------------------------------------------------------------
    Although as originally enacted, the Bankruptcy Code 
provided that a chapter 7 case could only be dismissed for 
``cause,'' the Code was in 1984 amended to permit the court to 
dismiss a chapter 7 case for ``substantial abuse.'' 
20 This provision, codified in section 707(b) of the 
Bankruptcy Code, was added ``as part of a package of consumer 
credit amendments designed to reduce perceived abuses in the 
use of chapter 7.'' 21 It was intended to respond 
``to concerns that some debtors who could easily pay their 
creditors might resort to chapter 7 to avoid their 
obligations.'' 22 In 1986, section 707(b) was 
further amended to allow a United States trustee (a Department 
of Justice official) to move for dismissal.
---------------------------------------------------------------------------
    \20\ 11 U.S.C. Sec. 707(b).
    \21\ Collier on Bankruptcy para. 707.LH[2] (Lawrence P. King et 
al., 15th ed. rev. 1999).
    \22\ Id. at para. 707.04.
---------------------------------------------------------------------------
    Under current practice, section 707(b) motions are 
infrequently made for several reasons.First, neither the court 
nor the United States trustee is required to make these motions, even 
in cases evidencing obvious abuse of the bankruptcy system. Second, 
other parties in interest, such as chapter 7 trustees and creditors, 
are prohibited from filing these motions. In fact, section 707(b) 
provides that a section 707(b) motion may not even be made ``at the 
request or suggestion of any party in interest.'' 23 Third, 
the standard for dismissal--substantial abuse--is inherently vague, 
which has lead to its disparate interpretation and application by the 
bankruptcy bench.24 Some courts, for example, hold that a 
debtor's ability to repay a significant portion of his or her debts out 
of future income constitutes substantial abuse and therefore is cause 
for dismissal.25 Others do not, absent some evidence of 
moral turpitude.26 A fourth reason militating against filing 
section 707(b) motions is that the Bankruptcy Code codifies a 
presumption that favors granting a debtor a discharge.27
---------------------------------------------------------------------------
    \23\ 11 U.S.C. 707(b).
    \24\ See, e.g., David White, ``Disorder in the Court: Section 
707(b) of the Bankruptcy Code,'' 1995-96 Ann. Survey of Bankr. L. 333, 
355 (1996) (noting that the courts ``have taken divergent views in an 
attempt to define the term'' and have resorted to ``a variety of 
methods'').
    \25\ See, e.g., In re Kelly, 841 F.2d 908, 913-14 (9th Cir. 1988) 
(observing that the ``principal factor to be considered in determining 
substantial abuse is the debtor's ability to repay debts for which a 
discharge is sought'').
    \26\ See, e.g., In re Braley, 103 B.R. 758 (Bankr. E.D. Va. 1989), 
aff'd, 110 B.R. 211 (E.D. Va. 1990). Notwithstanding the fact that the 
debtors in Braley had disposable monthly income of nearly $2,700, the 
bankruptcy court did not dismiss the case for substantial abuse. Id. at 
760. The court concluded, ``Based upon this legislative history, we are 
persuaded that no future income tests exists in 707(b) and if it did, 
as a finding of fact, the Braley family has insufficient future income 
to merit barring the door in light of the circumstances of this Navy 
family.'' Id at 762.
    \27\ Section 707(b) of the Bankruptcy Code mandates that ``[t]here 
shall be a presumption in favor of granting the relief requested by the 
debtor.'' 11 U.S.C. 707(b).
---------------------------------------------------------------------------
    Over the course of its hearings, both this year and last 
year, the Subcommittee on Commercial and Administrative Law 
received testimony that some chapter 7 debtors do have the 
ability to repay their debts 28 and that, if needs-
based reforms and other measures were implemented, the rate of 
repayment to creditors would increase as more debtors are 
shifted into chapter 13 as opposed to chapter 7.29
---------------------------------------------------------------------------
    \28\ See supra note 10.
    \29\ See, e.g., 1998 Hearings, supra note 6 (statement of WEFA 
Group Resource Planning Service, ``Final Report: The Financial Costs of 
Personal Bankruptcy,'' at 20 (Feb. 1998)).
---------------------------------------------------------------------------
    H.R. 833's needs-based reforms strengthen section 707(b) in 
several respects to ensure that chapter 7 cases presenting 
evidence of abuse are promptly eliminated from the bankruptcy 
system. They institute a screening mechanism designed to 
identify chapter 7 debtors having the ability to repay their 
debts and to presume that their cases constitute an abuse 
thereby warranting their dismissal. Chapter 7 debtors with 
incomes below certain thresholds are not subject to this 
presumption of abuse.30
---------------------------------------------------------------------------
    \30\ This income threshold ``safe harbor'' should significantly 
reduce the number of debtors subject to the needs-based formula 
presumption of abuse based on ability to repay.
---------------------------------------------------------------------------
    The needs-based reforms of H.R. 833 are implemented as 
follows. First, it amends section 707(b) of the Bankruptcy Code 
to allow--in addition to the courts and United States 
trustees--panel trustees and parties in interest (in certain 
circumstances) to seek dismissal of a chapter 7 case or 
conversion to chapter 13 on consent of the debtor. Under 
current law, only the courts and United States Trustees may 
make a motion for dismissal. Second, it revises the ground for 
dismissal under section 707(b) from ``substantial abuse'' to 
``abuse'' and replaces the present presumption in favor of the 
debtor with one that requires the court to presume abuse if the 
debtor has income available (after deduction of certain 
specified expenses, certain payments on debts, and ten percent 
of projected plan payments to account for estimated costs of 
administration) of at least $100 per month, determined over a 
five-year repayment period. Third, it provides for dismissal of 
these cases, unless the debtors consent to conversion to 
chapter 13.
    Irrespective of a debtor's ability to repay, H.R. 833 
provides that a chapter 7 case may be dismissed if the totality 
of the circumstances (including whether the case was filed by 
the debtor for the purpose of rejecting a personal services 
contract) demonstrates abuse, based on the debtor's financial 
situation.
    Protections for creditors--in general. H.R. 833 contains a 
broad range of reforms to provide greater protections for 
creditors, while ensuring that the claims of those creditors 
entitled to priority treatment, such as spousal and child 
support claims, are not adversely impacted. The bill 
accomplishes this goal by (1) ensuring that creditors receive 
proper and timely notice of important events and proceedings in 
a bankruptcy case; (2) prohibiting abusive serial filings and 
extending the period between successive discharges; (3) 
implementing various provisions designed to improve the 
accuracy of the information contained in debtors' schedules, 
statements of financial affairs, and other documents; and (4) 
limiting abusive use of exemptions. It also clarifies that 
creditors holding consumer debts may participate without 
counsel at the section 341 meeting of creditors (which provides 
an opportunity for creditors to examine the debtor under oath) 
and with respect to activities related thereto.
    Protection of family support obligations. Domestic support 
claimants receive a number of special protections under H.R. 
833. The bill creates a uniform and expanded definition of 
domestic support obligations to include debts that accrue both 
before or after a bankruptcy case is filed. H.R. 833 accords 
the highest payment priority for these debts and gives new 
priority treatment to certain claims assigned to governmental 
units by a spouse, former spouse, child of the debtor, or 
parent of a child. The bill mandates that chapter 13 and 11 
(reorganization) debtors must be current on their postpetition 
domestic support obligations to confirm their plans of 
reorganization. The same obligation is imposed on a chapter 13 
debtor as a prerequisite to receiving a discharge. To 
facilitate the domestic support collection efforts by 
governmental units, H.R. 833 creates various exceptions to 
automatic stay provisions of the Bankruptcy Code (which enjoin 
many forms of creditor collection activities). It also broadens 
the categories of nondischargeable family support obligations 
with the result that these debts will not be extinguished at 
the end of the bankruptcy process.
    Protections for secured creditors. H.R. 833 gives secured 
creditors a broad variety of enhanced protections: (1) a 
prohibition against bifurcation or ``cramdown'' of claims 
secured by personal property acquired within five years of the 
bankruptcy filing, (2) clarification that the value of a claim 
secured by personal property is the replacement value of such 
property without deduction for the secured creditor's costs of 
sale or marketing, (3) termination of the automatic stay with 
respect to personal property if the debtor does not timely 
reaffirm the underlying obligation or redeem the property, and 
(4) a requirement that a secured claimant retain its lien in a 
chapter 13 case until the underlying debt is paid or the debtor 
receives a discharge. H.R. 833 also clarifies certain important 
issues with respect to the rights of secured creditors in the 
bankruptcy context, such as the valuation of a secured 
interest, the debtor's retention of secured property, and the 
issue of ``ride through'' with respect to personal property.
    Protections for unsecured creditors. H.R. 833 contains 
various reforms responsive to certain forms of abuse and fraud 
in the present bankruptcy system. For example, the bill 
substantially limits a debtor's ability to file successive 
bankruptcy cases. It addresses abusive practices by consumer 
debtors who, for example, knowingly load up with credit card 
purchases or recklessly obtain credit and then file for 
bankruptcy relief. In addition, H.R. 833 prevents the discharge 
of debts based on fraud, embezzlement, and malicious injury in 
a chapter 13 case.
    Protections for lessors. With respect to the interests of 
lessors, H.R. 833 requires chapter 13 debtors to remain current 
on their personal property leases and provide proof of adequate 
insurance. The bill specifies that a lessor may condition 
assumption of a personal property lease on cure of any 
outstanding default and it provides that a lessor is not 
required to permit such assumption. The bill also addresses a 
problem faced by thousands of small landlords across the nation 
regarding the widespread practice of tenants who file for 
bankruptcy relief so that they can live ``rent free.''
    Debtor protections. H.R. 833 codifies various debtor 
protections. These include provisions allowing a consumer 
debtor to exempt certain education IRA plans for their child's 
postsecondary education and fortifying the Bankruptcy Code's 
exemption provisions for certain tax-qualified retirement 
funds. Under the bill, individuals with primarily consumer 
debts must receive notice of alternatives to bankruptcy relief 
before they file for bankruptcy and it requires them to be 
informed of other matters pertaining to the integrity of the 
bankruptcy system. This requirement ensures that debtors are 
aware of viable and cost-effective alternatives to bankruptcy. 
The bill requires debtors to participate in debt repayment 
programs before filing for bankruptcy relief (unless special 
circumstances do not permit such participation). In addition, 
H.R. 833 directs the Director of the Executive Office for 
United States Trustees to institute a consumer financial 
management pilot program that will enable the effectiveness and 
costs of such programs to be evaluated.
    The bill also enhances the standards of practice for 
attorneys and others who assist consumer debtors in connection 
with their bankruptcy cases. H.R. 833 mandates that certain 
services and specified notices be provided to consumers by 
professionals and others who render bankruptcy assistance. To 
ensure compliance with these provisions, H.R. 833 institutes 
variousenforcement mechanisms.
    Business Bankruptcy. H.R. 833 contains a comprehensive set 
of reforms pertinent to business bankruptcies. They include 
provisions addressing the special problems presented by small 
business bankruptcies and single asset real estate debtors as 
well as provisions dealing with business bankruptcy cases in 
general. H.R. 833 establishes a new form of bankruptcy relief 
for transnational insolvencies intended to promote 
international comity and greater certainty. It also includes 
provisions concerning the treatment of certain financial 
contracts under the banking laws as well as under the 
Bankruptcy Code. H.R. 833 responds to the special needs of 
family farmers by making chapter 12 of the Bankruptcy Code, a 
form of bankruptcy relief available only to eligible family 
farmers, permanent.
    Small business/single asset real estate debtors. The small 
business and single asset real estate provisions of H.R. 833 
are largely derived from consensus recommendations of the 
National Bankruptcy Review Commission.31 These 
provisions have also received broad support from many in the 
bankruptcy community, including various bankruptcy judges and 
creditor groups, and the Executive Office for United States 
Trustees.
---------------------------------------------------------------------------
    \31\ See generally Report of the National Bankruptcy Review 
Commission, at 303-706 (Oct. 20, 1997).
---------------------------------------------------------------------------
    Most chapter 11 cases are filed by small business debtors. 
Although the Bankruptcy Code envisions that creditors should 
play a major role in the oversight of chapter 11 cases, this 
does not often occur with respect to small business debtors. 
The main reason is that creditors in these smaller cases do not 
have claims large enough to warrant the expenditure of the 
necessary time and money to participate actively in these 
cases. The resulting lack of creditor oversight creates a 
greater need for the United States Trustee to monitor these 
cases actively. Nevertheless, the monitoring of these debtors 
by United States Trustees varies throughout the nation.
    H.R. 833 addresses the special problems presented by small 
business cases by instituting a variety of time frames and 
enforcement mechanisms to weed out small business debtors who 
are not likely to reorganize. It also requires these cases to 
be more actively monitored by United States Trustees and the 
bankruptcy courts.
    With regard to single asset real estate debtors, H.R. 833 
makes several amendments to the Bankruptcy Code's provisions. 
First, it eliminates the monetary cap from the definition 
currently in the Bankruptcy Code. Second, it makes these 
debtors subject to the small business provisions of the bill. 
Third, H.R. 833 amends the automatic stay provisions by 
permitting a single asset real estate debtor to make requisite 
interest payments out of rents or other proceeds generated by 
the real property.
    Financial contracts. Title X of H.R. 833 contains a series 
of provisions pertaining to the treatment of certain financial 
transactions under the Bankruptcy Code and relevant banking 
laws. These provisions are intended to reduce ``systemic risk'' 
in the banking system and financial marketplace. 32 
They amend provisions of the banking and investment laws, as 
well as the Bankruptcy Code, applicable to certain types of 
financial transactions. This is to minimize the risk of 
disruption when parties to these transactions become bankrupt 
or insolvent. In addition to the Bankruptcy Code, the bill 
amends the Federal Deposit Insurance Act; Financial 
Institutions Reform, Recovery and Enforcement Act of 1989; 
Federal Deposit Insurance Corporation Improvement Act of 1991; 
Federal Reserve Act; and Securities Investor Protection Act of 
1971. Many of these provisions are derived from recommendations 
issued by a presidential interagency working group chaired by 
Treasury Secretary Robert Rubin 33 and revisions 
espoused by the financial industry. 34 Among these 
provisions is one that would treat certain asset-backed 
securitizations as valid transfers. Other provisions broaden 
the scope of certain definitions to include additional types of 
business transactions and limit the authority of a court or 
administrative agency to enjoin certain actions.
---------------------------------------------------------------------------
    \32\ ``Systemic risk'' is explained as the following:

        Systemic risk is the risk that the failure of a firm or 
      disruption of a market or settlement system will cause 
      widespread difficulties at other firms, in other market 
      segments or in the financial system as a whole. If 
      participants in certain financial activities are unable to 
      enforce their rights to terminate financial contracts with 
      an insolvent entity in a timely manner, or to offset or net 
      their various contractual obligations, the resulting 
      uncertainty and potential lack of liquidity could increase 
---------------------------------------------------------------------------
      the risk of an inter-market disruption.

H. Rep. No. 105-688, Part 1, at 2 (1998).
---------------------------------------------------------------------------
    \33\ The Working Group's members included representatives from the 
Commodity Futures Trading Commission, the Federal Deposit Insurance 
Corporation, the Board of Governors of the Federal Reserve System, the 
Federal Reserve Bank of New York, the Securities and Exchange 
Commission, and the Department of the Treasury, including the Office of 
the Comptroller of the Currency. Id. at 1.
    \34\ The Bond Market Association (a group representing securities 
firms and banks that underwrite, trade and sell debt securities) and 
the International Swaps and Derivatives Association (an international 
financial trade association whose membership is comprised of 
commercial, merchant and investment banks that engage in swaps and 
other privately negotiated derivatives transactions). See, e.g., 
Statement of John D. Hawke, Jr., Treasury Under Secretary for Domestic 
Finance, before the U.S. House of Representatives Committee on Banking 
and Financial Services, at 1 (July 24, 1998) (stating that he was 
``pleased to report that we have negotiated compromise language with 
industry participants who wanted somewhat broader legislation than we 
were prepared to propose').
---------------------------------------------------------------------------
    Transnational insolvencies. In response to the increasing 
globalization of business dealings and operations, the bill 
establishes a separate chapter under the Bankruptcy Code 
devoted to transnational insolvencies. These provisions are 
intended to provide greater legal certainty for trade and 
investment as well as to provide for the fair and efficient 
administration of these cases.
    Other Provisions Having General Impact. H.R. 833 contains 
several provisions that generally impact bankruptcy law and 
practice. For example, it requires the Executive Office for 
United States Trustees to compile various statistics regarding 
chapter 7, 11, and 13 cases and to make these data available to 
the public. Another provision allows professionals to share 
compensation with bona fide public service attorney referral 
programs. H.R. 833 mandates that a bankruptcy court conduct a 
scheduling conference in a bankruptcy case, if necessary to 
further the expeditious and economical resolution of the case.
    The bill also revises the Bankruptcy Code's preference 
provisions. Under H.R. 833, a defendant in a preference action 
may establish that the transfer was made in the ordinary course 
of the debtor's financial affairs or business, or that the 
transfer was made in accordance with ordinary business terms. 
Current law requires the defendant to establish both defenses. 
The bill also prevents a preferential transfer action from 
being filed unless the transfer exceeds a specified monetary 
minimum. In addition, H.R. 833 amends the venue provisions for 
preferential transfer actions to require a preference action 
based on a transfer of $10,000 or less to be filed in the 
district where the defendant resides. Current law fixes this 
amount at $1,000.

                                Hearings
    The Committee's Subcommittee on Commercial and 
Administrative Law began its consideration of comprehensive 
bankruptcy reform more than two years ago. On April 16, 1997, 
the Subcommittee conducted a hearing on the operation of the 
bankruptcy system, which was combined with a status report from 
the National Bankruptcy Review Commission. 35 This 
would be the first of 13 hearings that the Subcommittee held on 
the subject of bankruptcy reform over the ensuing two years. 
36 Eight of these hearings were devoted solely to 
consideration of H.R. 833 and its predecessor, H.R. 3150, the 
Bankruptcy Reform Act of 1998. Over the course of these 
hearings, more than 130 witnesses, representing nearly every 
major constituency in the bankruptcy community, testified. With 
regard to H.R. 833 alone, testimony was received from 69 
witnesses, representing 23 organizations, with additional 
material submitted by other individuals and groups.
---------------------------------------------------------------------------
    \35\ Hearing Before the Subcommittee on Commercial and 
Administrative Law on the Operation of the Bankruptcy System and Status 
Report from the National Bankruptcy Review Commission, 105th Cong. 
(1997).
    \36\ The dates and subject matters of these hearings were as 
follows:
    April 16, 1997--Hearing on the operation of the bankruptcy system 
and status report from the National Bankruptcy Review Commission.
    April 30, 1997--Hearing on H.R. 764, Bankruptcy Amendments of 1997, 
and H.R. 120, Bankruptcy Law Technical Corrections Act of 1997.
    October 9, 1997--Hearing on H.R. 2592, Private Trustee Reform Act 
of 1997 and review of post-confirmation fees in Chapter 11 cases.
    November 13, 1997--Hearing on the Report of the National Bankruptcy 
Review Commission.
    February 12, 1998--Hearing on H.R. 2604, Religious Liberty and 
Charitable Donation Protection Act of 1997.
    March 10-11, 18-19, 1998--Hearings on H.R. 3150, Bankruptcy Reform 
Act of 1998, H.R. 3146, Consumer Lenders and Borrowers Bankruptcy 
Accountability Act of 1998, and H.R. 2500, Responsible Borrower 
Protection Bankruptcy Act.
    March 11, 16-18, 1999--Hearings on H.R. 833, the Bankruptcy Reform 
Act of 1999.
---------------------------------------------------------------------------
    The Subcommittee's first hearing on H.R. 833 was held 
jointly with the Senate Subcommittee on Administrative 
Oversight and the Courts on March 11, 1999. This marked the 
first time in more than 60 years that a bicameral hearing was 
held on the subject of bankruptcyreform.37 United 
States Senators who testified at the hearing included Senators Charles 
Grassley (R-Iowa), Joseph R. Biden (D-Del.) and Christopher J. Dodd (D-
Conn.). House Members included Representatives James P. Moran (D-Va.), 
Pete Sessions (R-Texas) and Nick Smith (R-Mich.). Other witnesses 
included Dean Sheaffer, Vice President and Director of Credit at 
Boscov's Department Store, Inc., representing the National Retail 
Federation; Bruce L. Hammonds, Senior Vice Chairman and Chief Operating 
Officer, MBNA America Bank, N.A.; the Honorable Carol J. Kenner, United 
States Bankruptcy Judge for the District of Massachusetts; Larry Nuss, 
Chief Executive Officer, Cedar Falls Community Credit Union, 
representing Credit Union National Association, Inc.; Gary Klein, 
Senior Attorney with the National Consumer Law Center; the Honorable 
Edith Hollan Jones, Judge, United States Court of Appeals for the Fifth 
Circuit, and former member of the National Bankruptcy Review 
Commission; Judith Greenstone Miller, Clark Hill, PLC, representing the 
Commercial Law League of America; Professor Todd Zywicki, George Mason 
University School of Law; and Professor Elizabeth Warren, Leo Gottlieb 
Professor of Law at Harvard Law School.
---------------------------------------------------------------------------
    \37\ Statement of Charles Grassley, U.S. Senator, at 1 (Mar. 11, 
1999).
---------------------------------------------------------------------------
    Witnesses at the March 16, 1999 hearing included the 
following: Representatives James P. Moran (D-Va.), Bill 
McCollum (R-Fla.), Nick Smith (R-Mich.), Rick Boucher (D-Va.), 
Steven Rothman (D-NJ), Sheila Jackson Lee (D-Tex.), Louise 
McIntosh Slaughter (D-NY), and John LaFalce (D-NY). Other 
witnesses included: James I. Shepard, a bankruptcy tax 
consultant and former member of the National Bankruptcy Review 
Commission; Professor Eric Posner of the University of Chicago 
Law School; Professor David Skeel of the University of 
Pennsylvania Law School; Professor Lawrence P. King, Charles 
Seligson Professor of Law at New York University School of Law; 
Ralph R. Mabey, a practitioner and former United States 
Bankruptcy Judge; the Honorable Joe Lee, United States 
Bankruptcy Judge for the Eastern District of Kentucky; Leon 
Forman, a practitioner; James E. Smith, President and Chief 
Executive Officer, Union State Bank and Trust, representing the 
American Bankers Association; Janet Kubica, President and Chief 
Executive Officer, Postmark Credit Union, representing the 
Credit Union National Association; and Frank Torres, 
Legislative Counsel for Consumers Union.
    Witnesses at the March 17, 1999 hearing included the 
following: George J. Wallace of Eckert, Seamans, Cherin & 
Mellott, LLC, representing the Consumer Bankruptcy Reform 
Coalition; the Honorable William Brown, United States 
Bankruptcy Judge for the Western District of Tennessee, 
representing the American Bankruptcy Institute; Professor Todd 
Zywicki of George Mason University School of Law; Professor 
Kenneth Klee of the University of Cali-

fornia--Los Angeles School of Law, representing the National 
Bankruptcy Conference; Jeffrey A. Tassey, Senior Vice President 
of Governmental and Legal Affairs for the American Financial 
Services Association; Michael Moore, President of Badcock Home 
Furnishing Centers, representing the National Retail 
Federation; Wayne Sigmon, a partner with the law firm of Gray, 
Layton, Kersh, Solomon, Sigmon, Furr and Smith, representing 
the National Association of Consumer Bankruptcy Attorneys; the 
Honorable Thomas R. Carper, Governor of the State of Delaware, 
representing the National Governors' Association; the Honorable 
Randall J. Newsome, United States Bankruptcy Judge for the 
Northern District of California, representing the National 
Conference of Bankruptcy Judges; Robert Waldschmidt, a chapter 
7 trustee, representing the National Association of Bankruptcy 
Trustees; Henry E. Hildebrand, III, a chapter 13 trustee, 
representing the National Association of Chapter 13 Trustees; 
Prof. Michael E. Staten, Director of the Credit Research 
Center, at the McDonough School of Business, Georgetown 
University; Professor Marianne B. Culhane, Creighton University 
School of Law; Lisa H. Ryu, Staff Economist at the National 
Association of Federal Credit Unions; Dr. Thomas S. Neubig, 
Ernst & Young LLP; and Richard M. Stana, Associate Director 
Administration of Justice Issues, General Government Division 
at the General Accounting Office.
    Witnesses at the fourth and final hearing held on March 18, 
1999 included the following: Representatives Robert E. Andrews 
(D-NJ), James A. Leach (R-Iowa) and Marge Roukema (R-NJ); 
Philip L. Strauss, Assistant District Attorney, Family Support 
Bureau of the Office of the District Attorney; Joan Entmacher, 
Vice President and Director of the Family Economic Center, 
National Women's Law Center; Stephanie M. Saperstein, Assistant 
Attorney General, Office of the Utah Attorney General, 
representing the National Association of Attorneys General; 
Professor Karen Gross, New York Law School; the Honorable 
Thomas Carlson, United States Bankruptcy Judge for the Northern 
District of California; H. Elizabeth Baird, Assistant General 
Counsel for the Bank of America Corporation; William H. 
Schorling, Klett, Lieber, Rooney & Schorling, representing the 
American Bar Association--Business Bankruptcy Section; Charles 
M. Tatelbaum, a partner with the law firm of Cummings & 
Lockwood, representing the National Association of Credit 
Managers; Judith Greenstone Miller, a partner with the law firm 
of Clark Hill, PLC, representing the Commercial Law League of 
America; Damon Silvers, Associate General Counsel for the 
American Federation of Labor and Congress of Industrial 
Organizations; Jere W. Glover, Chief Counsel for the Office of 
Advocacy, United States Small Business Administration; Ray 
Valdes, Tax Collector for Seminole County in Florida, on behalf 
of the National Association of County Treasurers and Finance 
Officers, the National Association of County Officials, and the 
National League of Cities; Don Harris, Special Assistant to the 
Attorney General, State of New Mexico, representing the States' 
Association of Bankruptcy Attorneys; Paul H. Asofsky, a partner 
at the law firm of Weil, Gotshal & Manges, LLP, representing 
the American Bar Association--Section of Taxation; the 
Honorable Tina Brozman, Chief United States Bankruptcy Judge 
for the Southern District of New York; Oliver Ireland, 
Associate General Counsel for the Board of Governors of the 
Federal Reserve System; Professor Randal C. Picker, Leffmann 
Professor of Commercial Law at University of Chicago Law 
School, representing the National Bankruptcy Conference; Seth 
Grosshandler, a partner at the New York office of Cleary, 
Gottlieb, Steen & Hamilton; Joseph Peiffer, Peiffer Law Office; 
and Harley D. Bergmeyer, Chairman, President and Chief 
Executive Officer of the Saline State Bank, representing the 
American Bankers Association.

                        Committee Consideration

    On March 25, 1999, the Subcommittee on Commercial and 
Administrative Law met in open session and ordered favorably 
reported the bill H.R. 833, with a single amendment in the 
nature of a substitute, by a record vote of five to three, a 
quorum being present. On April 20, 21, 22 , 27, and 28, 1999, 
the Committee met in open session and on April 28, 1999 ordered 
favorably reported the bill H.R. 833 with amendment in the 
nature of a substitute by a recorded vote of 22 ayes to 13 nays 
with one Member voting present, a quorum being present.

                         Votes of the Committee

    1. An amendment by Mr. Hyde modifying the needs-based test 
in section 102 to require a minimum payment of at least $100 
per month to general unsecured creditors after subtracting 10 
percent of projected payments to account for the costs of 
administration. On unanimous consent, Mr. Nadler added ``and 
reasonable attorney fees'' after every reference to 
``administrative expenses'' in the Hyde amendment. Passed 18 to 
11.
        AYES                          NAYS
Mr. Hyde                            Mr. Gekas
Mr. Coble                           Mr. Smith (TX)
Mr. Hutchinson                      Mr. Gallegly
Mr. Rogan                           Mr. Canady
Ms. Bono                            Mr. Goodlatte
Mr. Bachus                          Mr. Bryant
Mr. Frank                           Mr. Chabot
Mr. Nadler                          Mr. Barr
Mr. Scott                           Mr. Jenkins
Mr. Watt                            Mr. Pease
Ms. Lofgren                         Mr. Graham
Ms. Jackson-Lee
Mr. Meehan
Mr. Delahunt
Mr. Wexler
Mr. Rothman
Ms. Baldwin
Mr. Weiner

    2. An amendment by Mr. Hyde to replace the Internal Revenue 
Service expense allowance standards with a ``reasonably 
necessary'' standard in section 102 and to direct the Executive 
Office for United States Trustees to issue guidelines to assist 
in making assessments of whether living expenses are 
``reasonably necessary.'' Passed 13 to 11.
        AYES                          NAYS
Mr. Hyde                            Mr. Sensenbrenner
Mr. Rogan                           Mr. Gekas
Ms. Bono                            Mr. Coble
Mr. Berman                          Mr. Smith (TX)
Mr. Nadler                          Mr. Canady
Mr. Scott                           Mr. Goodlatte
Mr. Watt                            Mr. Bryant
Ms. Lofgren                         Mr. Barr
Mr. Meehan                          Mr. Jenkins
Mr. Delahunt                        Mr. Hutchinson
Mr. Wexler                          Mr. Boucher
Ms. Baldwin
Mr. Weiner

    3. An amendment offered by Mr. Watt to an amendment by Mr. 
Bryant (to deem an unexpired lease of nonresidential real 
property--where the debtor is the lessee--rejected under 
certain circumstances) to limit its application to a debtor who 
is delinquent on its lease payments. Defeated 7 to 17.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Nadler                          Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Ms. Lofgren                         Mr. Coble
Mr. Meehan                          Mr. Smith (TX)
Ms. Baldwin                         Mr. Gallegly
Mr. Weiner                          Mr. Canady
                                    Mr. Goodlatte
                                    Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Frank

    4. An amendment by Mr. Nadler to an amendment by Mr. Bryant 
(to deem an unexpired lease of nonresidential real property--
where the debtor is the lessee--rejected under certain 
circumstances) to permit the court to grant a subsequent 
extension (after expiration of the initial 120-day extension), 
if such further extension is substantially likely to preserve 
five or more jobs. Defeated 6 to 18.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Nadler                          Mr. Sensenbrenner
Mr. Watt                            Mr. Gekas
Mr. Meehan                          Mr. Coble
Ms. Baldwin                         Mr. Smith (TX)
Mr. Weiner                          Mr. Gallegly
                                    Mr. Canady
                                    Mr. Goodlatte
                                    Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Frank
                                    Ms. Lofgren

    5. An amendment offered by Mr. Nadler to make specified 
debts relating to violations of law concerning certain health 
care facilities nondischargeable. Defeated 13 to 18.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. Sensenbrenner
Mr. Berman                          Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Coble
Mr. Watt                            Mr. Smith (TX)
Ms. Lofgren                         Mr. Gallegly
Ms. Jackson-Lee                     Mr. Canady
Ms. Waters                          Mr. Goodlatte
Mr. Delahunt                        Mr. Bryant
Mr. Wexler                          Mr. Chabot
Ms. Baldwin                         Mr. Barr
Mr. Weiner                          Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono

    6. An amendment offered by Mr. Nadler to strike a provision 
prohibiting class action cases for certain discharge injunction 
violations. Defeated 12 to 16.
        AYES                          NAYS
Mr. Hyde                            Mr. McCollum
Mr. Conyers                         Mr. Gekas
Mr. Berman                          Mr. Coble
Mr. Nadler                          Mr. Smith (TX)
Mr. Scott                           Mr. Gallegly
Mr. Watt                            Mr. Canady
Ms. Lofgren                         Mr. Goodlatte
Ms. Jackson-Lee                     Mr. Bryant
Mr. Meehan                          Mr. Chabot
Mr. Delahunt                        Mr. Jenkins
Ms. Baldwin                         Mr. Hutchinson
Mr. Weiner                          Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Scarborough

    7. A substitute amendment offered by Mr. Bryant to the 
amendment of Ms. Jackson-Lee (ensuring that state 
constitutional law prohibiting the forced sale of a homestead 
to pay debts is not preempted) to make the $250,000 homestead 
limitation inapplicable to debtors in states that enact 
legislation opting out of such limitation. Passed 18 to 12.
        AYES                          NAYS
Mr. McCollum                        Mr. Hyde
Mr. Gekas                           Mr. Sensenbrenner
Mr. Coble                           Mr. Pease
Mr. Smith (TX)                      Mr. Conyers
Mr. Gallegly                        Mr. Nadler
Mr. Canady                          Mr. Scott
Mr. Goodlatte                       Mr. Watt
Mr. Bryant                          Mr. Meehan
Mr. Chabot                          Mr. Delahunt
Mr. Barr                            Mr. Rothman
Mr. Jenkins                         Ms. Baldwin
Mr. Hutchinson                      Mr. Weiner
Mr. Cannon
Mr. Graham
Ms. Bono
Mr. Scarborough
Ms. Jackson-Lee
Mr. Wexler

    8. An amendment offered by Ms. Jackson Lee (ensuring that 
state constitutional law prohibiting the forced sale of a 
homestead to pay debts is not preempted), as amended by Mr. 
Bryant's amendment, to make the $250,000 homestead limitation 
inapplicable to debtors in states that enact legislation opting 
out of such limitation. Passed 18 to 15.
        AYES                          NAYS
Mr. McCollum                        Mr. Hyde
Mr. Gekas                           Mr. Sensenbrenner
Mr. Coble                           Mr. Pease
Mr. Smith (TX)                      Mr. Conyers
Mr. Gallegly                        Mr. Berman
Mr. Canady                          Mr. Nadler
Mr. Goodlatte                       Mr. Scott
Mr. Bryant                          Mr. Watt
Mr. Chabot                          Ms. Lofgren
Mr. Barr                            Ms. Waters
Mr. Jenkins                         Mr. Meehan
Mr. Hutchinson                      Mr. Delahunt
Mr. Cannon                          Mr. Rothman
Mr. Graham                          Ms. Baldwin
Ms. Bono                            Mr. Weiner
Mr. Scarborough
Ms. Jackson-Lee
Mr. Wexler

    9. An amendment offered by Mr. Watt to require individual 
chapter 7 and chapter 13 debtors to file with the court copies 
of tax returns and related documents at the request of any 
party of interest. Defeated 13 to 13.
        AYES                          NAYS
Mr. Hyde                            Mr. Sensenbrenner
Mr. Canady                          Mr. Gekas
Mr. Pease                           Mr. Coble
Mr. Conyers                         Mr. Smith (TX)
Mr. Scott                           Mr. Goodlatte
Mr. Watt                            Mr. Bryant
Ms. Lofgren                         Mr. Chabot
Ms. Jackson-Lee                     Mr. Barr
Mr. Meehan                          Mr. Jenkins
Mr. Delahunt                        Mr. Cannon
Mr. Rothman                         Mr. Rogan
Ms. Baldwin                         Mr. Graham
Mr. Weiner                          Ms. Bono

    10. An amendment offered by Mr. Meehan to prohibit the 
discharge of a debt resulting from the use or purchase of 
firearms, if such debt is based on fraud, recklessness, or 
misrepresentation or is a product liability claim. Defeated 8 
to 19.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Ms. Lofgren                         Mr. Sensenbrenner
Ms. Jackson-Lee                     Mr. Gekas
Mr. Meehan                          Mr. Coble
Mr. Delahunt                        Mr. Smith (TX)
Mr. Rothman                         Mr. Canady
Ms. Baldwin                         Mr. Goodlatte
Mr. Weiner                          Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Scott
                                    Mr. Watt

    11. An amendment offered by Mr. Delahunt to disallow 
certain claims in bankruptcy cases if the creditor engaged in 
reckless lending practices. Defeated 10 to 19.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. Sensenbrenner
Mr. Berman                          Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Watt                            Mr. Coble
Ms. Lofgren                         Mr. Smith
Ms. Jackson-Lee                     Mr. Gallegly
Mr. Meehan                          Mr. Canady
Mr. Delahunt                        Mr. Bryant
Ms. Baldwin                         Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Boucher

    12. Reconsideration of an amendment offered by Mr. Nadler 
allowing a debtor to choose state or federal exemption law 
(which was agreed to by voice vote the previous day). Defeated 
13 to 21.
        AYES                          NAYS
Mr. Canady                          Mr. Hyde
Mr. Conyers                         Mr. Sensenbrenner
Mr. Berman                          Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Coble
Mr. Watt                            Mr. Smith
Ms. Lofgren                         Mr. Goodlatte
Ms. Jackson-Lee                     Mr. Bryant
Ms. Waters                          Mr. Chabot
Mr. Meehan                          Mr. Barr
Mr. Delahunt                        Mr. Jenkins
Mr. Wexler                          Mr. Hutchinson
Ms. Baldwin                         Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Frank
                                    Mr. Boucher

    13. An amendment offered by Mr. Graham to restore the 
Internal Revenue expense allowance standards (as adjusted) and 
to require the Executive Office for United States Trustees to 
prepare a report of its findings following a three-year study 
of the utilization of the Internal Revenue Service standards 
for determining current monthly expenses of debtors. Passed 20 
to 17.
        AYES                          NAYS
Mr. McCollum                        Mr. Hyde
Mr. Gekas                           Mr. Sensenbrenner
Mr. Coble                           Mr. Bachus
Mr. Smith                           Mr. Conyers
Mr. Gallegly                        Mr. Frank
Mr. Canady                          Mr. Berman
Mr. Goodlatte                       Mr. Nadler
Mr. Bryant                          Mr. Scott
Mr. Chabot                          Mr. Watt
Mr. Barr                            Ms. Lofgren
Mr. Jenkins                         Ms. Jackson-Lee
Mr. Hutchinson                      Ms. Waters
Mr. Pease                           Mr. Meehan
Mr. Cannon                          Mr. Delahunt
Mr. Rogan                           Mr. Wexler
Mr. Graham                          Ms. Baldwin
Ms. Bono                            Mr. Weiner
Mr. Scarborough
Mr. Boucher
Mr. Rothman

    14. An amendment offered by Mr. Nadler to strike section 
132 of the bill, which makes the needs-based formula applicable 
to chapter 13. Defeated 9 to 12.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Berman                          Mr. Gekas
Mr. Nadler                          Mr. Smith (Tex.)
Mr. Scott                           Mr. Canady
Mr. Watt                            Mr. Goodlatte
Ms. Lofgren                         Mr. Chabot
Ms. Waters                          Mr. Jenkins
Mr. Delahunt                        Mr. Pease
Ms. Baldwin                         Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono

    15. An amendment offered by Mr. Watt to replace section 114 
of the bill (Enhanced Disclosures under an Open-End Credit 
Plan). Defeated 12 to 12.
        AYES                          NAYS
Mr. Canady                          Mr. Hyde
Mr. Conyers                         Mr. McCollum
Mr. Frank                           Mr. Gekas
Mr. Berman                          Mr. Smith (Tex.)
Mr. Nadler                          Mr. Gallegly
Mr. Scott                           Mr. Goodlatte
Mr. Watt                            Mr. Chabot
Ms. Lofgren                         Mr. Jenkins
Ms. Waters                          Mr. Cannon
Mr. Delahunt                        Mr. Rogan
Ms. Baldwin                         Mr. Graham
Mr. Weiner                          Ms. Bono

    16. An amendment offered by Mr. Watt to add section 151 to 
the bill (Discouraging Reckless Lending Practices). Defeated 12 
to 12.
        AYES                          NAYS
Mr. Canady                          Mr. Hyde
Mr. Conyers                         Mr. McCollum
Mr. Frank                           Mr. Gekas
Mr. Berman                          Mr. Gallegly
Mr. Nadler                          Mr. Goodlatte
Mr. Scott                           Mr. Chabot
Mr. Watt                            Mr. Jenkins
Ms. Lofgren                         Mr. Cannon
Ms. Waters                          Mr. Rogan
Mr. Wexler                          Mr. Graham
Ms. Baldwin                         Ms. Bono
Mr. Weiner                          Mr. Boucher

    17. An amendment offered by Mr. Nadler to strike a 
reference to unsecured creditors in section 1325(b)(1) of the 
Bankruptcy Code, as amended by section 132 of the bill. 
Defeated 11 to 17.
        AYES                          NAYS
Mr. Hyde                            Mr. Sensenbrenner
Mr. Conyers                         Mr. McCollum
Mr. Berman                          Mr. Gekas
Mr. Nadler                          Mr. Coble
Mr. Scott                           Mr. Smith (TX)
Mr. Watt                            Mr. Gallegly
Ms. Lofgren                         Mr. Canady
Ms. Waters                          Mr. Goodlatte
Mr. Delahunt                        Mr. Bryant
Ms. Baldwin                         Mr. Chabot
Mr. Weiner                          Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Ms. Bono
                                    Mr. Frank

    18. An amendment offered by Mr. Watt striking section 106 
of the bill (Disclosures) and part of section 107 (Debtor's 
Bill of Rights). Passed 13 to 12.
        AYES                          NAYS
Mr. Canady                          Mr. Hyde
Mr. Pease                           Mr. Sensenbrenner
Mr. Graham                          Mr. McCollum
Mr. Frank                           Mr. Gekas
Mr. Nadler                          Mr. Smith (Tex.)
Mr. Scott                           Mr. Bryant
Mr. Watt                            Mr. Chabot
Ms. Lofgren                         Mr. Barr
Ms. Jackson-Lee                     Mr. Jenkins
Ms. Waters                          Mr. Hutchinson
Mr. Meehan                          Mr. Rogan
Ms. Baldwin                         Ms. Bono
Mr. Weiner

    19. An amendment offered by Mr. Nadler to add section 151 
(Discouraging Reckless Lending Practices). Defeated 4 to 19.
        AYES                          NAYS
Mr. Nadler                          Mr. Hyde
Ms. Jackson-Lee                     Mr. Sensenbrenner
Mr. Delahunt                        Mr. McCollum
Ms. Baldwin                         Mr. Gekas
                                    Mr. Smith (Tex.)
                                    Mr. Canady
                                    Mr. Bryant
                                    Mr. Chabot
                                    Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Scarborough
                                    Mr. Frank
                                    Ms. Lofgren
                                    Ms. Waters

    20. An amendment offered by Mr. Gekas, as a substitute to 
an amendment offered by Mr. Nadler, providing for exceptions to 
the automatic stay with respect to domestic support obligation 
proceedings. Passed 17 to 10.
        AYES                          NAYS
Mr. Hyde                            Mr. Conyers
Mr. Sensenbrenner                   Mr. Frank
Mr. McCollum                        Mr. Nadler
Mr. Gekas                           Mr. Watt
Mr. Gallegly                        Ms. Lofgren
Mr. Canady                          Ms. Jackson-Lee
Mr. Goodlatte                       Ms. Waters
Mr. Bryant                          Mr. Meehan
Mr. Barr                            Ms. Baldwin
Mr. Jenkins                         Mr. Weiner
Mr. Hutchinson
Mr. Pease
Mr. Cannon
Mr. Rogan
Mr. Graham
Ms. Bono
Mr. Scarborough

    21. An amendment offered by Ms. Jackson-Lee to exclude 
federal or state disaster assistance from the income component 
of the needs-based formula in section 102 of the bill. Defeated 
12 to 21.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Berman                          Mr. Sensenbrenner
Mr. Nadler                          Mr. McCollum
Mr. Scott                           Mr. Gekas
Mr. Watt                            Mr. Coble
Ms. Lofgren                         Mr. Smith (Tex.)
Ms. Jackson-Lee                     Mr. Gallegly
Ms. Waters                          Mr. Canady
Mr. Meehan                          Mr. Goodlatte
Mr. Wexler                          Mr. Bryant
Ms. Baldwin                         Mr. Chabot
Mr. Weiner                          Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Bachus
                                    Mr. Frank

    22. An amendment offered by Mr. Scott and Mr. Meehan to 
exclude veterans benefits from the income component of the 
needs-based formula in section 102 of the bill. Defeated 10 to 
19.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Nadler                          Mr. Sensenbrenner
Mr. Scott                           Mr. Gekas
Mr. Watt                            Mr. Coble
Ms. Lofgren                         Mr. Smith (Tex.)
Ms. Jackson-Lee                     Mr. Canady
Ms. Waters                          Mr. Goodlatte
Mr. Meehan                          Mr. Bryant
Mr. Delahunt                        Mr. Chabot
Ms. Baldwin                         Mr. Barr
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Bachus
                                    Mr. Frank

    23. An amendment offered by Mr. Nadler to exclude 
disability payments from the income component of the needs-
based formula in section 102. Defeated 8 to 16.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Nadler                          Mr. Sensenbrenner
Mr. Scott                           Mr. McCollum
Mr. Watt                            Mr. Gekas
Ms. Lofgren                         Mr. Coble
Ms. Jackson-Lee                     Mr. Gallegly
Ms. Baldwin                         Mr. Canady
Mr. Weiner                          Mr. Goodlatte
                                    Mr. Chabot
                                    Mr. Jenkins
                                    Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Scarborough
                                    Mr. Frank

    24. An amendment offered by Mr. Nadler to exclude 
compensation to victims of war crimes or crimes against 
humanity from the income component of the needs-based formula 
of section 102 of the bill. Passed 21 to 7.
        AYES                          NAYS
Mr. Hyde                            Mr. Gekas
Mr. Sensenbrenner                   Mr. Coble
Mr. McCollum                        Mr. Canady
Mr. Gallegly                        Mr. Jenkins
Mr. Goodlatte                       Mr. Hutchinson
Mr. Chabot                          Mr. Pease
Mr. Rogan                           Mr. Cannon
Mr. Scarborough
Mr. Conyers
Mr. Frank
Mr. Berman
Mr. Nadler
Mr. Scott
Mr. Watt
Ms. Lofgren
Ms. Jackson-Lee
Ms. Waters
Mr. Meehan
Mr. Rothman
Ms. Baldwin
Mr. Weiner

    25. An amendment offered by Mr. Gekas striking the 
requirement of extraordinary circumstances in section 406 of 
the bill (duties in small business cases). Passed 17 to 12.
        AYES                          NAYS
Mr. Hyde                            Mr. Hutchinson
Mr. Sensenbrenner                   Mr. Conyers
Mr. Gekas                           Mr. Frank
Mr. Coble                           Mr. Berman
Mr. Smith (TX)                      Mr. Nadler
Mr. Gallegly                        Mr. Scott
Mr. Canady                          Mr. Watt
Mr. Goodlatte                       Ms. Lofgren
Mr. Bryant                          Ms. Jackson-Lee
Mr. Chabot                          Ms. Waters
Mr. Jenkins                         Mr. Wexler
Mr. Pease                           Ms. Baldwin
Mr. Cannon
Mr. Rogan
Mr. Graham
Mr. Scarborough
Mr. Boucher

    26. Amendment offered by Ms. Jackson-Lee to make certain 
debts relating to consumption or consumer purchase of a tobacco 
product nondischargeable in a chapter 11 case. Defeated 11 to 
21.
        AYES                          NAYS
Mr. Conyers                         Mr. Sensenbrenner
Mr. Berman                          Mr. Gekas
Mr. Nadler                          Mr. Coble
Ms. Lofgren                         Mr. Smith (TX)
Ms. Jackson-Lee                     Mr. Gallegly
Ms. Waters                          Mr. Canady
Mr. Meehan                          Mr. Goodlatte
Mr. Wexler                          Mr. Bryant
Mr. Rothman                         Mr. Chabot
Ms. Baldwin                         Mr. Jenkins
Mr. Weiner                          Mr. Hutchinson
                                    Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Frank
                                    Mr. Boucher
                                    Mr. Scott
                                    Mr. Watt

    27. An amendment offered by Ms. Jackson-Lee substituting a 
new section 148 of the bill (relating to the definition of 
household goods). Passed 21 to 13.
        AYES                          NAYS
Mr. Hyde                            Mr. McCollum
Mr. Sensenbrenner                   Mr. Gekas
Mr. Canady                          Mr. Coble
Mr. Hutchinson                      Mr. Gallegly
Mr. Rogan                           Mr. Goodlatte
Mr. Bachus                          Mr. Bryant
Mr. Conyers                         Mr. Chabot
Mr. Frank                           Mr. Jenkins
Mr. Berman                          Mr. Pease
Mr. Boucher                         Mr. Cannon
Mr. Nadler                          Mr. Graham
Mr. Scott                           Ms. Bono
Mr. Watt                            Mr. Scarborough
Ms. Lofgren
Ms. Jackson-Lee
Ms. Waters
Mr. Delahunt
Mr. Wexler
Mr. Rothman
Ms. Baldwin
Mr. Weiner

    28. An amendment offered by Mr. Nadler making various 
amendments to section 143 of the bill (Requirements to Obtain 
Confirmation and Discharge in Cases Involving DomesticSupport 
Obligations). Defeated 13 to 20.
        AYES                          NAYS
Mr. Conyers                         Mr. Hyde
Mr. Frank                           Mr. Sensenbrenner
Mr. Berman                          Mr. McCollum
Mr. Nadler                          Mr. Gekas
Mr. Scott                           Mr. Coble
Mr. Watt                            Mr. Gallegly
Ms. Lofgren                         Mr. Canady
Ms. Jackson-Lee                     Mr. Goodlatte
Ms. Waters                          Mr. Bryant
Mr. Wexler                          Mr. Chabot
Mr. Rothman                         Mr. Jenkins
Ms. Baldwin                         Mr. Hutchinson
Mr. Weiner                          Mr. Pease
                                    Mr. Cannon
                                    Mr. Rogan
                                    Mr. Graham
                                    Ms. Bono
                                    Mr. Bachus
                                    Mr. Scarborough
                                    Mr. Boucher

    29. Motion to report favorably the amendment in the nature 
of a substitute to H.R. 833, as amended. Passed 22 to 13, with 
one present.

                  AYES                                 NAYS                                 PRESENT

Mr. Hyde                             Mr. Conyers                          Mr. Frank
Mr. Sensenbrenner                    Mr. Berman
Mr. McCollum                         Mr. Nadler
Mr. Gekas                            Mr. Scott
Mr. Coble                            Mr. Watt
Mr. Smith (Tex.)                     Ms. Lofgren
Mr. Gallegly                         Ms. Jackson-Lee
Mr. Canady                           Ms. Waters
Mr. Goodlatte                        Mr. Meehan
Mr. Bryant                           Mr. Delahunt
Mr. Chabot                           Mr. Wexler
Mr. Jenkins                          Ms. Baldwin
Mr. Hutchinson                       Mr. Weiner
Mr. Pease
Mr. Cannon
Mr. Rogan
Mr. Graham
Ms. Bono
Mr. Bachus
Mr. Scarborough
Mr. Boucher
Mr. Rothman

                      Committee Oversight Findings

    In compliance with clause 3(c)(1) of rule XIII of the Rules 
of the House of Representatives, the Committee reports that the 
findings and recommendations of the Committee, based on 
oversight activities under clause 2(b)(1) of rule X of the 
Rules of the House of Representatives, are incorporated in the 
descriptive portions of this report.

                Committee on Government Reform Findings

    No findings or recommendations of the Committee on 
Government Reform were received as referred to in clause 
3(c)(4) of rule XIII of the Rules of the House of 
Representatives.

               New Budget Authority and Tax Expenditures

    Clause 3(c)(2) of House Rule XIII is inapplicable because 
this legislation does not provide new budgetary authority or 
increased tax expenditures.

                        Committee Cost Estimate

    The estimate of the Congressional Budget Office (CBO) was 
not available at the time of the filing of this report. In 
compliance with clause 3(d)(2) of rule XIII of the rules of the 
House of Representatives, the Committee believes that the 
enactment of H.R. 833 will have a budget effect for fiscal year 
2000 and subsequent years similar to that projected by the CBO 
for H.R. 3150, the Bankruptcy Reform Act of 1998, a bill 
substantially similar to H.R. 833 that was passed by the House 
during the 105th Congress, with some differences.
    H.R. 833 authorizes 18 new temporary bankruptcy judges 
(which H.R. 3150 did not) and extends five existing judgeships, 
with salaries and benefits considered as mandatory costs that 
the Committee estimates at approximately $11 million a year 
over five years. However, the Committee believes that this 
provision is necessary to facilitate the improvements proposed 
by the legislation and will enhance the efficiency of the 
system. In addition, an amendment offered by Mr. Berman was 
adopted during the Committee's consideration that would waive 
bankruptcy filing fees for indigents. The Committee believes 
that this would have an effect on revenues to the government 
but is unable to project the extent of that effect other than 
to conclude it may not be substantial.
    As indicated, H.R. 833 is substantially similar to H.R. 
3150. In a letter dated June 5, 1998, the CBO prepared an 
initial federal cost estimate and an assessment of H.R. 3150's 
impact on state, local, and tribal governments. In that cost 
estimate, the CBO stated that implementing H.R. 3150 would have 
increased ``discretionary spending by $214 million over the 
1999-2003 period, subjectto appropriation of the necessary 
funds.'' It also concluded that the bill would have affected direct 
spending and governmental receipts, so pay-as-you-go procedures apply. 
It estimated that the ``net annual impact on direct spending would be 
negligible'' and that a certain provision in Title I of that bill would 
have increased receipts ``by about $3 million a year.'' In a 
supplemental letter, dated June 10, 1998, the CBO prepared a summary 
review of H.R. 3150 for private sector mandates. It found that certain 
provisions in the bill pertaining to its needs-based reforms would have 
imposed ``new private sector mandates, as defined in the Unfunded 
Mandates Reform Act (UMRA) with costs that exceed the statutory 
threshold ($100 million in 1996, adjusted for inflation).''
    The Committee notes that H.R. 833 could result in some 
increased discretionary expenditures with regard to such 
matters integral to the reforms proposed as: a debtor financial 
management training test program; increased auditing 
procedures; the maintenance of tax returns; the compilation and 
publication of bankruptcy data and statistics as well as other 
provisions. However, costs related to some of these 
expenditures, such as increased auditing, are subject to 
appropriations and are likely to be offset by enhanced 
collections resulting from greater protections accorded to 
federal taxing authorities in Title VIII of the H.R. 833, as 
amended by the amendment in the nature of a substitute.

                   Constitutional Authority Statement

    Pursuant to clause 3(d)(1) of rule XIII of the Rules of the 
House of Representatives, the Committee finds the authority for 
this legislation in Article I, Section 8, Clauses 3 and 4 of 
the Constitution.

                        Preemption of State Law

    Pursuant to Section 423(e) of the Congressional Budget and 
Impoundment Act, the Committee states that the following 
provisions of H.R. 833 may preempt state law to the extent 
described herein.
    Section 108 contains provisions delineating the 
responsibilities that a ``debt relief agency'' is held to with 
respect to ``an assisted person'' and provides numerous 
procedures for those responsibilities to be enforced. Section 
108(c) states that neither this section, nor sections 526 and 
527, as enacted under the bill, ``annul, alter, affect or 
exempt any persons subject to these provisions from complying 
with any law of any State except to the extent that such law is 
inconsistent with these sections, and then only to the extent 
of the inconsistency.'' While the provision is intended to 
preempt any inconsistent state laws, the Committee makes no 
determination as to which state laws may at this time be 
inconsistent.
    Section 147 of H.R. 833 provides for a monetary limitation 
of certain exempt property not to exceed $250,000 under state 
or local law. While this is intended to be a uniform upper 
limit on property that can be exempted under state or local 
law, the Committee does not place any minimum requirement on 
states. Furthermore, the section provides that a state may 
enact legislation to make this limitation inapplicable to its 
citizens.

               Section-by-Section Analysis and Discussion

                Title I. Consumer Bankruptcy Provisions

                   subtitle a. needs based bankruptcy

Section 101. Conversion

    Section 101 of the bill amends section 706(c) of the 
Bankruptcy Code, which provides that a court may not convert a 
chapter 7 case to a case under chapter 12 or chapter 13 unless 
the debtor requests such conversion, to add that such 
conversion is also permissible if the debtor consents to it.
    Section 102. Dismissal or conversion
    Section 102 implements H.R. 833's needs-based bankruptcy 
reforms by making various amendments to the Bankruptcy Code's 
consumer bankruptcy provisions.
    Subsection (a) amends section 707(b) of the Bankruptcy Code 
to allow--in addition to thecourts and United States Trustees--
panel trustees and parties in interest (in certain circumstances) to 
seek dismissal of a chapter 7 case or its conversion to a case under 
chapter 13 on consent of the debtor. Under current law, only the courts 
and United States Trustees may seek dismissal of a chapter 7 case under 
section 707(b).
    In addition, it revises the ground for dismissal under 
section 707(b) from ``substantial abuse'' to ``abuse'' and 
replaces the present presumption in favor of the debtor with 
one that requires the court to presume abuse if the debtor has: 
(1) a certain threshold of income available after deduction of 
specified expenses and liabilities, and (2) income is not less 
than adjusted regional median income figures. Codified as 
section 707(b)(2), this provision requires the court to presume 
abuse exists if the debtor has at least $100 a month available 
to pay general (nonpriority) unsecured debts after subtracting 
from the debtor's current monthly income (1) ten percent of 
projected plan payments to account for estimated administrative 
expenses and reasonable attorney's fees, (2) monthly expenses 
(as determined under this provision) of the debtor, the 
debtor's dependents and the spouse of the debtor (if not 
otherwise a dependent), and (3) the debtor's monthly payments 
on account of secured and unsecured priority debts.
    The court, the United States trustee, trustee or other 
party in interest, however, are prohibited from filing a motion 
under section 707(b)(2) if the current monthly income of the 
debtor and the debtor's spouse combined (as of the date of the 
order for relief) equals or is less than the regional median 
household income (calculated on a semi-annual basis) for a 
household of equal size. For households of more than four 
individuals, the median income is that of a household of four 
individuals plus $583 for each additional member of that 
household.
    To determine whether the presumption of abuse based on 
ability to repay under section 707(b)(2) of the Bankruptcy Code 
applies, section 102 provides that the debtor's monthly 
expenses shall consist of: (1) the debtor's actual expenses for 
the education of a dependent child under the age of 18 for 
tuition, books and required fees at a private elementary or 
secondary school, not to exceed $10,000 per year (as adjusted 
pursuant to section 104(b) of the Bankruptcy Code), providing 
the child was a student at such school before the filing of the 
bankruptcy case; and (2) the applicable monthly expense amounts 
for certain categories of expenditures specified by the 
Internal Revenue Service in connection with the collection and 
compromise of delinquent tax obligations.
    The specified Internal Revenue Service expense categories 
are the National Standards, Local Standards, and Other 
Necessary Expenses 38 in effect for the area in 
which the debtor resides on the date when the bankruptcy case 
is commenced.39 The National Standards category 
applies to expenditures for food, housekeeping supplies, 
apparel and services (e.g., laundry and dry cleaning), personal 
care products, and miscellaneous items (up to $100 for one 
person and $25 for each additional person in a debtor's 
family).40 If the debtor is able to demonstrate that 
it is reasonable and necessary, he or she may claim expenses 
for food and clothing up to five percent above the amounts 
specified by the Internal Revenue Service for these 
expenditures.
---------------------------------------------------------------------------
    \38\ The Conditional Expenses category of expenditures, although 
permitted by the Internal Revenue Service, may not be claimed by a 
debtor.
    \39\ The Internal Revenue Service Restructuring and Reform Act of 
1998, Pub. L. 105-206 (1998), directs the Internal Revenue Service to 
promulgate guidelines instructing its employees to ``determine, on the 
basis of the facts and circumstances of each taxpayer, whether the use 
of the schedules . . . is appropriate'' and to direct that they not be 
used ``to the extent such use would result in the taxpayer not having 
adequate means to provide for basic living expenses.'' Internal Revenue 
Service Restructuring and Reform Act of 1998, Pub. L. 105-206, 
Sec. 3462 (1998).
    \40\ Internal Revenue Manual Collecting Contact Handbook (IRM 
105.1), at 3-3-4, 3-5, 3-13. (Sept. 25, 1996) [hereinafter ``IRS 
Manual'']. The permissible amount is based on the taxpayer's total 
gross monthly income and number of persons in the taxpayer's family. 
These standards are derived from the Bureau of Labor Statistics 
Consumer Expenditure Survey, except for a miscellaneous item expense 
category. Id. at 3-5.
---------------------------------------------------------------------------
    The Local Standards category applies to two general types 
of expenses: (1) housing and utilities (which includes mortgage 
or rent, property taxes, interest, necessary maintenance and 
repair, insurance, homeowner's and condominium fees, 
electricity, telephone, heat, and garbage collection); and (2) 
transportation (which includes public transportation, fuel, 
state/local license, registration, and inspection fees, tolls 
and auto insurance).41
---------------------------------------------------------------------------
    \41\ Id. at 3-13. These standards are determined based on a 
combination of national and regional factors. The housing standards are 
based on the taxpayer's county of residence and the size of taxpayer's 
family. The transportation standard consists of two components: (1) 
ownership and (2) maintenance/public transportation costs. Id. at 3-7, 
3-13.
---------------------------------------------------------------------------
    The ``Other Necessary Expenses'' category does not set 
forth specified amounts for the types of expenses to which it 
applies.42 Accordingly, the debtor must claim his or 
her actual expenses for the items listed under this category. 
They include the following:
---------------------------------------------------------------------------
    \42\ Under the Internal Revenue Manual, the only requirement is 
that the expense must provide for (1) the health and welfare of the 
taxpayer and the taxpayer's family, or (2) the production of income. 
Id. at 3-7.
---------------------------------------------------------------------------
          (1) child care;
          (2) dependent care: elderly, invalid, or disabled;
          (3) taxes;
          (4) health care;
          (5) court-ordered payments and involuntary 
        deductions;
          (6) minimum payments on secured or legally perfected 
        debts, if necessary for (a) the health or welfare of 
        the debtor or the debtor's dependents, or (b) for the 
        production of income;
          (7) life insurance, if limited to term policies 
        (expensive premiums must be justified), and disability 
        insurance for self-employed individuals;
          (8) education, if it is: (a) for a physically or 
        mentally handicapped dependent of the debtor and is not 
        provided by public schools, or (b) a condition of 
        employment;
          (9) union dues, professional association dues;
          (10) minimum payments on unsecured debts, if 
        necessary for (a) the health or welfare of the debtor 
        or the debtor's dependents, or (b) for the production 
        of income; 43 and
---------------------------------------------------------------------------
    \43\  The Internal Revenue Manual states that payments on credit or 
charge cards are not permitted if the taxpayer can repay the tax 
liability within 90 days if such payments are eliminated. Id. at 3-7-8.
---------------------------------------------------------------------------
          (11) optional telephone service (e.g., call waiting, 
        caller identification) or long distance calls (if they 
        meet the necessary expense test of health or welfare 
        and/or the production of income). 44
---------------------------------------------------------------------------
    \44\ Id. at 3-7-8. Examples of expenses that, according to the 
Internal Revenue Service, may not qualify as Other Necessary Expenses 
are voluntary (i.e., not pursuant to a court order) child support 
payments and payments to an IRA by a self-employed taxpayer who has no 
other source of retirement income. Id. at 3-14-18.
---------------------------------------------------------------------------
    If the debtor does not have an applicable expense under 
these categories, the debtor may not claim it as an expense for 
purposes of this provision. Thus, for example, if the debtor 
does not own a car, he or she may not claim the car ownership 
and expense allowance under the Internal Revenue Service's 
Local Standards. In addition, the expenditures claimed by a 
debtor under the specified Internal Revenue expense categories 
may not include any payments for debts. 45
---------------------------------------------------------------------------
    \45\ Section 102(a) also provides that not later than three years 
after the bill's date of enactment, the Director of the Executive 
Office for United States Trustees shall submit a report to the House 
and Senate Judiciary Committees containing its findings regarding the 
utilization of the Internal Revenue Service expense standards for 
determining current monthly expenses under section 707(b)(2), as 
amended. In addition, the report must assess the impact that the 
application of these standards has on debtors and the bankruptcy 
courts. The report may also include recommendations for amendment of 
the Bankruptcy Code.
---------------------------------------------------------------------------
    Under section 707(b)(2) of the Bankruptcy Code, as amended 
by section 102(a) of the bill, the debtor may deduct from his 
or her current monthly income the debtor's average monthly 
payments on account of secured debts. These payments are 
calculated as the total of all amounts scheduled as 
contractually due to the debtor's secured creditors in each 
month of the 60 months following the filing of the bankruptcy 
case and dividing that total by 60 months. In addition, the 
debtor may deduct his or her payments on priority claims, such 
as child support and alimony claims, which is calculated as the 
total amount of debts entitled to priority, divided by 60 
months.
    Section 707(b), as amended by section 102(a) of the bill, 
provides that, for purposes of this subsection, a family or 
household of the debtor consists of the debtor, the debtor's 
spouse, and the debtor's dependents. It does not, however, 
include a legally separated spouse, unless such spouse filed a 
joint case with the debtor.
    As amended by section 102(a) of the bill, section 707(b) 
provides that the presumption of abuse may be rebutted only if 
the debtor demonstrates extraordinary circumstances justifying 
additional expenses in excess of the amounts set forth above or 
requiring adjustment of the debtor's current monthly income. To 
establish extraordinary circumstances, the debtor must provide 
a detailed statement under oath explaining why each additional 
expense or adjustment of income is necessary and reasonable. 
The presumption of abuse may only be rebutted if such 
additional expenses or adjustment of income cause the debtor's 
current monthly income less various amounts to fall below the 
$100 per month threshold.
    If the presumption does not apply or has been rebutted, the 
court must still consider (1) whether the debtor filed the 
chapter 7 case in bad faith; or (2) whether the totality of the 
circumstances based on the debtor's financial situation 
(including whether the debtor filed the chapter 7 case for the 
purpose of having a personal services contract rejected, and 
the debtor's financial need for such rejection) demonstrates 
abuse.
    Should a court grant a motion filed by a trustee or 
bankruptcy administrator under section 707(b) and find that the 
action of debtor's counsel violated Federal Rule of Bankruptcy 
Procedure 9011 (a rule that allows courts to impose sanctions 
for frivolous or other inappropriate filings), section 102(a) 
mandates that the court shall assess sanctions. Section 102(a) 
specifies that these damages may include the payment of the 
trustee's reasonable attorney's fees and costs in connection 
with the motion. The court may also assess an appropriate civil 
penalty against debtor's counsel to be paid to the trustee, 
bankruptcy administrator, or the United States trustee.
    Section 102(a) also mandates that for a voluntary, joint, 
or involuntary case, that a signature of an attorney 
constitutes a certificate the attorney has (1) performed a 
reasonable investigation into the circumstances that gave rise 
to the petition, and (2) determined that the petition, 
schedules, lists, and related documents are well grounded in 
fact, are warranted by existing law or a good faith argument 
for the extension, modification, or reversal of existing law, 
and do not constitute an abuse under section 707(b) of the 
Bankruptcy Code, as amended.
    Under section 102(a) of the bill, a court may award a 
debtor all reasonable costs, including reasonable attorney's 
fees, incurred by the debtor in contesting a section 707(b) 
motion brought by a party in interest (other than a trustee or 
the United States trustee), under certain circumstances. These 
circumstances exist if the court denies the motion and finds 
that either the creditor's action in filing the motion was not 
substantially justified or the motion was filed solely for the 
purpose of coercing the debtor into waiving a right guaranteed 
to the debtor under the Bankruptcy Code.
    Section 102(a) specifies that a court, in determining 
whether to dismiss a case under section 707, may not take into 
consideration whether a debtor has made, or continues to make 
charitable contributions, as defined in section 548(d)(3) of 
the Bankruptcy Code, to any qualified religious or charitable 
entity or organization, as defined in section 548(d)(4) of the 
Bankruptcy Code.
    Section 102(a) also requires the Director of the Office for 
United States Trustees to prepare a report containing findings 
with regard to the use of the Internal Revenue Service expense 
standards for determining a debtor's current monthly income.
    Section 102(b) creates two new definitions under section 
101 of the Bankruptcy Code. First, it defines ``current monthly 
income'' as the average monthly income from all sources derived 
that the debtor or, in a joint case, the debtor and the 
debtor's spouse receive, without regard to whether it is 
taxable income, in the 180 days preceding the date of 
determination. It includes any amount paid on a regular basis 
by anyone other than the debtor or, in a joint case, the debtor 
and the debtor's spouse to the household expenses of the debtor 
or the debtor's dependents and, in a joint case, the debtor's 
spouse, if not otherwise a dependent. It excludes compensation 
paid to victims of war crimes or crimes against humanity. 
Second it defines ``estimated administrative expenses and 
reasonable attorneys'' fees as ten percent of projected 
payments under a chapter 13 plan.
    Section 102(c) requires a trustee, after reviewing all 
materials filed by a debtor and considering all information 
presented at the first meeting of creditors, to file a 
statement with the court as to whether or not the filing of the 
chapter 7 case should be presumed to be an abuse under section 
707(b)(2). The court must provide a copy of the statement to 
all creditors within five days of its filing.
    If the trustee determines that the chapter 7 case should be 
presumed to be an abuse under section 707(b)(2) and if the 
debtor's current monthly income and that of the debtor's spouse 
combined is not less than the highest national median family 
income for a family of equal or lesser size (or in the case of 
a household of one person, the national median household income 
for one earner),46 section 102(c) of the bill 
requires the trustee to file within 30 days of filing such 
statement either a motion to dismiss the case under section 
707(b) or a statement explaining why such motion is not 
appropriate.
---------------------------------------------------------------------------
    \46\ For families with more than four members, section 102 provides 
that the national family income shall be the national median family 
income last reported by the Bureau of the Census for a family of four 
individuals plus $583 for each additional family member.
---------------------------------------------------------------------------
    To implement the income and expense screening mechanism of 
this provision, section 102 of the bill amends section 521(a) 
of the Bankruptcy Code to require an individual debtor to file 
a statement of current monthly income together with the 
calculations to permit determination of whether a presumption 
of abuse arises under section 707(b)(2)(A)(i), as amended.
    Other provisions of section 102 amend section 2075 of title 
28 of the United State Code to direct that the Federal Rules of 
Bankruptcy Procedure and the Official Forms be revised to 
implement these additional mandatory disclosure requirements. 
Specifically, the rules must prescribe a form for the statement 
of current monthly income that a debtor is required to file 
under section 521 of the Bankruptcy Code, as amended by section 
102 of this bill. In addition, it provides that general rules 
may be promulgated describing the content of such statement.
    Section 102(d) makes a clerical amendment to the table of 
sections for chapter 7 of title 11.

Section 103. Notice of alternatives

    Under current law, the bankruptcy clerk is required to 
provide written notice of the forms of bankruptcy relief to 
consumer debtors before they file for bankruptcy 
relief.47 Nevertheless, some debtors may not be 
aware that there are alternatives to bankruptcy and the adverse 
consequences that bankruptcy relief may present.
---------------------------------------------------------------------------
    \47\ 11 U.S.C. Sec. 342; Official Form 1--Voluntary Petition. This 
notice requirement is effectuated by requiring the consumer debtor and 
his or her attorney to sign a statement that appears on the petition 
used to commence the bankruptcy case: ``I am aware that I may proceed 
under chapter 7, 11, or 12, or 13 of title 11, United States Code, 
understand the relief available under such chapter, and choose to 
proceed under chapter 7 of such title.''
---------------------------------------------------------------------------
    To ensure that debtors know about alternatives to 
bankruptcy before they file for bankruptcy relief, section 103 
mandates that notice of these alternatives to bankruptcy be 
supplied to these individuals before they file for bankruptcy 
relief.48 The notice must provide a brief 
description of the various forms of bankruptcy relief and the 
general purpose, benefits, and costs of proceeding under each. 
In addition, the notice must briefly describe the services 
available from a credit counseling service approved by the 
United States trustee for that district. The debtor must also 
receive a warning specifying that a person who knowingly and 
fraudulently conceals assets or makes a false oath or statement 
under penalty of perjury shall be subject to fine, 
imprisonment, or both. In addition, the debtor must be advised 
that all information supplied by a debtor in connection with 
the case is subject to examination by the Attorney General.
---------------------------------------------------------------------------
    \48\ This requirement only applies to individuals with primarily 
consumer debts. Section 101(8) of the Bankruptcy Code defines 
``consumer debt'' as debt incurred by an individual primarily for a 
personal, family, or household purpose.
---------------------------------------------------------------------------

Section 104. Debtor financial management training test program

    This provision requires the Director of the Executive 
Office for United States Trustees, after consultation with a 
wide range of individuals who are experts in the field of 
debtor education (such as Chapter 13 trustees who operate 
financial management education programs for debtors), to 
develop a financial management training curriculum to educate 
individual debtors on how to better manage their finances. It 
mandates that the Director select six judicial districts in 
which to test the effectiveness of the financial management 
training curriculum for an 18-month period beginning not later 
than 270days after the bill's enactment date. In addition, the 
Director must evaluate the effectiveness of: (1) the financial 
management training curriculum; and (2) a sample of existing consumer 
education programs described in the Report of the National Bankruptcy 
Review Commission,49 which are representative of consumer 
education programs sponsored by the credit industry, Chapter 13 
trustees, and consumer counseling groups. Not later than 3 months after 
concluding such evaluation, the Director must submit a report to the 
Speaker of the House of Representatives and the President pro tempore 
of the Senate, for referral to the appropriate committees of the 
Congress, containing the findings of the Director regarding the 
effectiveness and cost of such curriculum and programs. The 
instructional course materials that the Director of the Executive 
Office for United States Trustees must make available in the six test 
districts must be the materials described in section 111 of the 
Bankruptcy Code, as enacted by the bill.
---------------------------------------------------------------------------
    \49\ Report of the National Bankruptcy Review Commission, at 293-
94; Recommendations for Reform of Consumer Bankruptcy Law by Four 
Dissenting Commissioners, at 49-51 (1997).
---------------------------------------------------------------------------

              Subtitle B. Consumer Bankruptcy Protections

Section 105. Definitions

    Section 105 of the bill creates several mechanisms designed 
to regulate the activities of a ``debt relief agency.'' As 
defined under this section, a debt relief agency includes any 
person who provides ``bankruptcy assistance'' to ``assisted 
persons.'' 50 It applies to attorneys as well as to 
non-attorneys, such as petition preparers. It does not, 
however, apply to nonprofit organizations, creditors (to the 
extent a creditor assists the debtor to restructure a debt owed 
by the debtor to such creditor), or state and federal credit 
unions. The term ``bankruptcy assistance'' includes the 
provision of any goods or services with the ``express or 
implied purpose of providing information, advice, counsel, 
document preparation, or filing,'' including the provision of 
legal representation.
---------------------------------------------------------------------------
    \50\ H.R. 833 provides that the term, ``assisted person,'' includes 
any person with primarily consumer debts and whose nonexempt assets 
were less than $150,000.
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Section 105A. Requirements for debt relief agencies

    Section 105A of H.R. 833 mandates that a debt relief agency 
perform all services as stated to the assisted person in 
connection with the bankruptcy case. It prohibits a debt relief 
agency from advising any assisted person to make an untrue or 
misleading statement in connection with a bankruptcy case. In 
addition, such agency is prohibited from advising an assisted 
person or prospective assisted person to incur additional debt 
in contemplation of filing for bankruptcy relief or for the 
purpose of paying fees for services rendered by an attorney or 
petition preparer in connection with the filing of a bankruptcy 
case. An exception applies for debts owed directly to the 
attorney or bankruptcy petition preparer for required legal 
fees.

Section 106. Enforcement

    A series of enforcement and penalty mechanisms with regard 
to debt relief agencies are instituted under section 106 of the 
bill. It provides that any waiver by an assisted person of the 
protections and rights as established by this legislation is 
invalid. Section 106 mandates that any debt-relief-agency 
contract that does not comply with the requirements specified 
in the bill are not enforceable against the debtor. A debt 
relief agency may be required to return to the assisted person 
all fees such person paid to agency for any of the following 
reasons:
          (1) the debt relief agency failed to comply with 
        certain specified requirements;
          (2) the debt relief agency provided assistance to a 
        debtor whose case was dismissed or converted because of 
        the agency's failure to file any requisite documents 
        under section 521 of the Bankruptcy Code; or
          (3) the debt relief agency negligently or 
        intentionally disregarded the requirements of the 
        Bankruptcy Code or Federal Rules of Bankruptcy 
        Procedure.
    Section 106 authorizes states to seek various remedies 
51 for violation of the requirements imposed on debt 
relief agencies. It authorizes a federal court, under certain 
circumstances, to issue injunctions and to impose appropriate 
civil penalties. The United States District Court, under this 
provision, has concurrent jurisdiction with the state courts to 
hear such actions.
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    \51\ These include injunctions, actual damages, and the imposition 
of costs, including reasonable attorney's fees.
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Section 107. Sense of the Congress

    This provision states that it is the sense of the Congress 
that States should develop curricula relating to the subject of 
personal finance for use in elementary and secondary schools.

Section 108. Discouraging abusive reaffirmation practices

    This provision adds a further requirement with respect to 
reaffirmation agreements. If the consideration for the 
agreement is based on a wholly unsecured consumer debt, the 
agreement must contain a clear and conspicuous statement 
advising the debtor that the debtor is entitled to a hearing 
before the court at which the debtor shall appear in person. 
The purpose of the hearing is to allow the court to determine 
if the agreement presents an undue hardship to the debtor, 
whether the agreement is in the debtor's best interest, and 
whether the debtor entered into the agreement as the result of 
a threat by the creditorto take any action that it cannot 
legally take or that it does not intend to take. If, however, the 
debtor is represented by counsel, the debtor may waive the right to 
such hearing by signing a statement waiving the hearing, stating that 
the debtor is represented by counsel, and identifying such counsel.
    The provisions in this section do not apply to wholly 
unsecured debts owed to credit unions.

Section 109. Promotion of alternative dispute resolution

    Section 109 of the bill permits the court, on motion of the 
debtor and after a hearing, to reduce an unsecured claim for a 
consumer debt by up to 20 percent, if the debtor can prove by 
clear and convincing evidence that the claim was filed by a 
creditor who unreasonably refused to negotiate an alternative 
repayment schedule proposed by an approved credit counseling 
agency acting on behalf of the debtor. The provision applies 
only if: (1) the offer was made within 60 days of the filing of 
the petition; (2) the offer provided for payment of at least 60 
percent of the amount of the debt over a period not to exceed 
the repayment period of the loan, or a reasonable extension 
thereof; and (3) no portion of the debt is nondischargeable, 
entitled to priority under section 507 of the Bankruptcy Code, 
or would be paid more under a chapter 13 plan than the amount 
offered by the debtor. The debtor has the burden of proving 
that the proposed alternative repayment schedule was made in 
the specified 60-day period and that the creditor unreasonably 
refused to consider the debtor's proposal.
    Section 109 also prevents a trustee from setting aside a 
preferential transfer received by a creditor as part of an 
alternative repayment plan between the debtor and any creditor 
of the debtor created by an approved credit counseling agency.

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

    Section 110 of the bill requires the Board of Governors of 
the Federal Reserve to study the adequacy of information 
provided to a borrower with regard to the tax deductibility of 
interest paid in connection with an open-end credit transaction 
secured by the borrower's principal dwelling.

Section 111. Dual use debit card

    Section 111 requires the Board of Governors of the Federal 
Reserve to study current protections limiting the liability of 
consumers for the unauthorized use of a debit card or similar 
access device.

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

    Section 112 of the bill amends section 127 of the Truth in 
Lending Act to require certain open-end consumer credit plans 
with minimum monthly or periodic payments to include the 
following language on the billing statement:

        The minimum payment amount shown on your billing 
        statement is the smallest payment which you can make in 
        order to keep the account in good standing. This 
        payment option is offered as a convenience and you may 
        make larger payments at any time. Making only the 
        minimum payment each month will increase the amount of 
        interest you pay and the length of time it takes to 
        repay your outstanding balance.

    If the creditor allows a consumer to forgo making a minimum 
payment during a specified billing cycle, the billing statement 
must state that finance charges will continue to accrue. In 
addition, the billing statement must contain an example that 
utilizes an annual percentage rate and method for determining 
minimum periodic payments recently in effect for that creditor 
based on a $500 outstanding balance. The example must disclose 
the estimated minimum periodic payment and approximate period 
of time it would take to repay the $500 outstanding balance if 
the consumer paid only the minimum periodic payment on each 
monthly or periodic statement and obtained no additional 
extensions of credit. These additional disclosures must be made 
with respect to one billing cycle per calendar year. In 
addition, it requires the creditor to give the consumer a 
worksheet prescribed by the Board of Governors of the Federal 
Reserve to assist the consumer in determining his or her 
household income and debt obligations.
    In addition, section 112 requires the Federal Reserve Board 
to promulgate regulations regarding the above and to issue a 
model disclosure form to accompany the previously described 
example. The statement must advise the consumer that the 
example is intended to illustrate the approximate length of 
time it could take to repay a $500 balance based on the 
assumptions set forth therein without regard to any other 
factors that could impact an approximate repayment period. 
Compliance with such regulations would be enforceable 
exclusively by the Federal agencies. These regulations may not 
take effect for three years following the bill's date of 
enactment.
    Section 114 also requires the Board to conduct a study to 
determine whether consumers have adequate information about 
borrowing activities that may lead to financial problems. In 
studying this issue, the Board must consider the extent to 
which:
          (1) consumers, in establishing new credit 
        arrangements, are aware of their existing payment 
        obligations, the need to consider those obligations in 
        deciding to take on new credit, and how taking on 
        excessive credit can result in financial difficulty;
          (2) minimum periodic payment features offered in 
        connection with open-end creditplans impact consumer 
default rates;
          (3) consumers always make only the minimum payment 
        throughout the life of the plan;
          (4) consumers are aware that making only minimum 
        payments will increase the cost and repayment period of 
        an open-end loan; and
          (5) the availability of low minimum payment options 
        is a cause of consumers experiencing financial 
        difficulty.
The results of the study must be filed with Congress in two 
years.
    Finally, this provision requires the Federal Reserve Board, 
pursuant to its authority under the Truth in Lending Act, to 
promulgate regulations requiring additional disclosures to 
consumers regarding minimum payment features, if the Board 
determines that such disclosures are necessary based on its 
findings. Any such regulations must become effective before 
January 1, 2002.

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

    This provision permits a debtor to exempt funds placed in 
an education individual retirement account (as described in 
section 530(b)(1) of the Internal Revenue Code) not less than 
365 days before the filing of the bankruptcy case if such funds 
have not been pledged or promised to any person in connection 
with any extension of credit. Other restrictions include the 
following:
          (1) the funds are not excess contributions (as 
        described in section 4973(e) of the Internal Revenue 
        Code);
          (2) the designated beneficiary of the account was a 
        dependent child of the debtor for the taxable year in 
        which the funds were placed in the account; and
          (3) the amounts in such postsecondary accounts may 
        not exceed the lesser of $50,000 (in the aggregate) in 
        accounts attributable to each such dependent child or 
        $100,000 (in the aggregate) attributable to all such 
        dependent children.

Section 114. Effect of discharge

    This provision makes the willful failure of a creditor to 
credit payments received under a confirmed chapter 11, 12, or 
13 plan in the manner required by the plan a violation of the 
discharge injunction. It also mandates that an individual 
injured by the willful failure of a creditor to comply with the 
requirements for a reaffirmation agreement, or by any willful 
violation of the discharge injunction, is entitled to recover 
costs and attorneys' fees and the greater of (1) the amount of 
actual damages or (2) $1,000. This provision prevents the 
imposition of punitive damages and prohibits the filing of a 
class action.

Section 115. Limiting trustee liability

    Section 115 of the bill provides that a trustee is not 
liable personally or on the trustee's bond for acts taken 
within the scope of the trustee's duties or authority, except 
to the extent the trustee acted with gross negligence. It 
defines gross negligence as reckless indifference or deliberate 
disregard of a trustee's fiduciary duty. It also prohibits a 
suit against a trustee in his or her personal or representative 
capacity, or against the trustee's bond, for certain actions, 
including the dissemination of statistics and other 
information.

Section 116. Reinforce the fresh start

    This provision makes a technical amendment with respect to 
the nondischargeability of certain court fees under section 
523(a)(17) of the Bankruptcy Code.

Section 117. Discouraging bad faith repeat filings

    Under current law, debtors may file successive bankruptcy 
cases following the dismissal of their prior cases with limited 
exceptions. 52 The filing of a bankruptcy case 
causes the immediate imposition of an automatic stay, which 
prevents creditors from pursuing actions against debtors and 
their property. 53 In light of this, some debtors 
file successive bankruptcy cases to prevent secured creditors 
from foreclosing on their collateral.
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    \52\ Section 109(g) of title 11 only imposes a limited ban on 
repeat filings. Under this provision, a debtor is ineligible for 
bankruptcy relief if, within the preceding 180 days, the prior case was 
dismissed based on the debtor's willful failure to abide by orders of 
the court or ``to appear before the court in proper prosecution of the 
case.'' 11 U.S.C. Sec. 109(g)(1). the preceding 180 days, he or she in 
the prior case sought and obtained its dismissal following the filing 
of a request for relief from the automatic stay.
    \53\ 11 U.S.C. Sec. 362(a). Exceptions to the automatic stay are 
set forth in 11 U.S.C. Sec. 362(b).
---------------------------------------------------------------------------
    Section 117 of the bill remedies this problem by 
terminating the automatic stay with respect to cases where the 
debtor has previously filed for bankruptcy relief, under 
certain circumstances. A case is deemed to be presumptively 
filed in bad faith as to all creditors if:
          (1) the debtor was the subject of a bankruptcy case 
        under chapter 7, 11, or 13 pending within the one-year 
        period preceding the filing of the instant bankruptcy 
        case;
          (2) a prior chapter 7, 11, or 13 case of the debtor 
        was dismissed within such one-year period for the 
        debtor's failure to file any requisite bankruptcy 
        document or to amend any bankruptcy document without 
        substantial excuse; 54
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    \54\ Mere inadvertence or negligence does not constitute 
substantial excuse, unless the dismissal was caused by the debtor's 
attorney.
---------------------------------------------------------------------------
          (3) the prior bankruptcy case was dismissed for the 
        debtor's failure to provide ``adequate protection'' (as 
        defined in section 361 of the Bankruptcy Code); or
          (4) there has not been a substantial change in the 
        debtor's financial or personal affairssince the 
dismissal of the prior case, or there is no reason to conclude that the 
current case will successfully conclude.
In addition, a case is presumptively deemed filed in bad faith 
as to any creditor who sought relief from the automatic stay in 
the prior case if such action was still pending at the time of 
dismissal or had been resolved by the granting of relief from 
the automatic stay.
    On request of a party in interest, the court must promptly 
enter an order confirming that the automatic stay does not 
apply in a bankruptcy case. Section 117 also permits the 
bankruptcy court to consider in reimposing the automatic stay 
in a later-filed bankruptcy case, whether the later case was 
filed in good faith as to the creditors who are stayed by the 
filing, subject to such conditions or limitations as the court 
directs. The presumption of bad faith under this provision may 
be rebutted by clear and convincing evidence.
    If two or more bankruptcy cases were pending in the one-
year preceding the filing of the pending case, the automatic 
stay will not apply in the pending case. A party in interest 
may make a request to the court within 30 days of the filing of 
the later case to reimpose the automatic stay if the party 
demonstrates that the later case was filed in good faith as to 
the creditors who are stayed by the filing. The provision 
provides that a case is presumptively not filed in good faith 
under certain specified circumstances.

Section 118. Curbing abusive filings

    Section 118 of the bill terminates the Bankruptcy Code's 
automatic stay provisions with respect to creditors secured by 
real property if the bankruptcy case was filed as part of a 
scheme to delay, hinder, and defraud creditors involving either 
a transfer of all or part ownership of the real property 
without the consent of the secured creditor or court approval, 
or if the bankruptcy case is one of several other bankruptcy 
filings affecting the real property.
    If recorded in compliance with applicable federal, State, 
or local law governing notices of interests or liens in real 
property, an order entered pursuant to this provision is 
binding in any other bankruptcy case filed within two years 
from the date of such recordation. It permits, however, a 
debtor in a subsequent case to move for relief from this order 
based upon changed circumstances or for good cause shown, after 
notice and a hearing. In addition, it requires any federal, 
State, or local agency that accepts notices of interests or 
liens in property to accept any certified copy of an order 
described in this section. Further, it references the good 
faith standard of section 362(c) of the Bankruptcy Code, as 
amended by the bill. It also responds to another problem 
presented by successive filings. Occasionally, debtors transfer 
their property interests to others who then file for bankruptcy 
relief to invoke the protection of the automatic stay under 
section 362 of the Bankruptcy Code. Under section 121 of the 
bill, this type of abuse is addressed by allowing bankruptcy 
courts to grant prospective in rem relief from the automatic 
stay with respect to real or personal property in future 
bankruptcy cases filed by the debtor. It also extends this 
protection to bankruptcy cases filed by other entities to whom 
the subject property was transferred.55 In addition, 
it requires in rem orders pertaining to real property to be 
recorded. Such recording constitutes notice to all parties 
having or claiming an interest in such property.
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    \55\ Both the majority and minority viewpoints expressed by the 
National Bankruptcy Review Commission's members supported in rem relief 
from the automatic stay. See Report of the National Bankruptcy Review 
Commission at 281-287; Recommendations for Reform of Consumer 
Bankruptcy Law by Four Dissenting Commissioners, at 57-59 (1997).
---------------------------------------------------------------------------
    This provision also excepts from the automatic stay an act 
to enforce any lien against or security interest in real 
property if the debtor is ineligible to be a debtor in a 
bankruptcy case or the debtor filed the bankruptcy case in 
violation of a bankruptcy court order issued in a prior 
bankruptcy case filed by the debtor.

Section 119. Debtor retention of personal property security

    Section 119 of the bill responds to two areas of 
uncertainty in the law with regard to how personal property 
interests are treated under the current law. One concerns the 
unsettled law as to whether a chapter 7 debtor may retain 
personal property without having either to reaffirm the 
underlying obligation 56 or redeem it.57
---------------------------------------------------------------------------
    \56\ 11 U.S.C. Sec. 524(c).
    \57\ 11 U.S.C. Sec. 722. See, e.g., Capital Communications Fed. 
Credit Union v. Boodrow (In re Boodrow), 126 F.3d 43, 53 (2d Cir. 1997) 
(holding that 11 U.S.C. Sec. 521(2) ``does not prevent a bankruptcy 
court from allowing a debtor who is current on loan obligations to 
retain the collateral and keep making payments under the original loan 
agreement.'').
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    Section 129(1) responds to this problem by not allowing an 
individual chapter 7 debtor to retain possession of personal 
property securing, in whole or in part, a purchase money 
security interest unless the debtor, within 45 days after the 
first meeting of creditors, enters into a reaffirmation 
agreement with the creditor or redeems the property. If the 
debtor fails to so act within the prescribed period, the 
subject property is no longer property of the estate, unless 
the court determines on motion of the trustee filed before the 
expiration of the 45-day that the property has consequential 
value or would benefit the bankruptcy estate. Thus, if no 
timely determination is made, a creditor, under this provision, 
would be permitted to take any action with respect to such 
property as permitted by applicable nonbankruptcy law.
    This section also clarifies that the automatic stay 
terminates not only with respect to personal property that is 
property of the estate, but to property of the debtor as well. 
Further, it provides that the court must order appropriate 
adequate protection of the creditor's interest and it directs 
the debtor to deliver the collateral to the trustee if the 
debtor is in possession of such property.
    Subsection 119(2) of the bill also responds to a current 
split in authority regarding the debtor's redemption rights 
under section 722 of the Bankruptcy Code. While most courts 
have interpreted this provision to require chapter 7 debtors to 
pay the redemption value in a lump sum payment, some permit 
debtors to stretch this payment out over time. This section 
specifies that the required payment must be made in full at the 
time of redemption.

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

    This section of the bill provides that the automatic stay 
in an individual chapter 7, 11, or 13 case terminates with 
respect to property securing, in whole or in part, a claim or 
with respect to leased property if the debtor fails to file a 
statement of intention with respect to such property. The 
debtor must indicate in this statement whether he or she will 
surrender the property or retain it and, if retaining it, 
whether the debtor will (1) redeem the property, (2) reaffirm 
the debt, or (3) assume the obligation if it is an unexpired 
lease, if the trustee does not. This provision also terminates 
the automatic stay if the debtor fails to undertake the actions 
specified in his or her statement of intention, unless the 
statement of intention specifies reaffirmation and the creditor 
refuses to enter into the reaffirmation agreement on the 
original contract terms. An exception pertains where the court 
determines, on the motion of the trustee made within the 
specified 45-day period and after notice and a hearing, that 
such property is of consequential value or benefit to the 
estate.
    This section also makes the requirement with respect to 
filing a statement of intention applicable to all debts, not 
just consumer debts, and it requires the debtor to carry out 
his or her intention within 30 days from the first date set for 
the meeting of creditors. As a result, the debtor's duty to 
surrender property, or to reaffirm or redeem, applies to all 
secured debts.
    In addition, this section provides that a provision in a 
lease or agreement that places the debtor in default on the 
lease or agreement by reason of the debtor's filing for 
bankruptcy relief applies in the bankruptcy case, if otherwise 
valid under applicable nonbankruptcy law.
    Further, section 120 clarifies that, if the debtor does not 
timely file his or her statement of intention or carry out his 
or her stated intention with respect to personal property, the 
property is no longer property of the estate. It also requires 
the court to order appropriate adequate protection of the 
creditor's interest and to direct the debtor to deliver the 
collateral to the trustee if the debtor is in possession of the 
property.

Section 121. Giving secured creditors fair treatment in chapter 13

    This provision requires a chapter 13 plan to provide that a 
secured creditor must retain its lien until the underlying debt 
is paid or the debtor receives a discharge. If the case is 
dismissed or converted prior to completion of the plan, section 
121 of the bill provides that the secured creditor shall retain 
its lien to the extent recognized by applicable nonbankruptcy 
law.

Section 122. Restraining abusive purchases on secured credit

    This provision addresses the following problem. Under 
present law, a debtor, for instance, can finance the purchase 
of a new automobile with a showroom value of $20,000 by giving 
the lender a security interest in the vehicle. If the debtor 
then files for bankruptcy relief one day later, then the value 
of the secured creditor's lien must be determined under section 
506 of the Bankruptcy Code. Even though the vehicle is one day 
old, the amount of the secured creditor's claim is, under 
current law, limited to the value of the automobile taking into 
account the immediate effect of depreciation upon purchase. 
Accordingly, that secured creditor has an allowed secured claim 
in a reduced amount based on the value of a used automobile and 
an allowed unsecured claim for the difference between the 
present value of the automobile and the amount owed to the 
secured creditor.
    Section 122 of the bill prevents the bifurcation of a 
secured claim in an individual chapter 7, 11, 12, or 13 case to 
the extent the claim is attributable in whole or in part to the 
purchase price of personal property acquired by the debtor 
within the five-year period preceding the bankruptcy filing. 
``Personal property'' generally includes all property other 
than real estate. If the claim is secured only by personal 
property, the amount of the claim is the sum of the unpaid 
principal balance of the purchase price together with accrued 
and unpaid interest along with charges at the contract rate. If 
the claim is secured by other property, the amount of the claim 
cannot be not less than the unpaid principal balance of the 
purchase price of the personal property acquired and unpaid 
interest and charges at the contract rate. This amount, 
however, must be reduced by any payments actually received.
    The valuations under section 122 apply to any subsequent 
case filed by or against the debtor in the two-year period 
beginning on date the original bankruptcy case is filed.

Section 123. Fair valuation of collateral

    Section 123 of the bill provides that the value of personal 
property of individual Chapter 7 and 13 debtors is the 
``replacement value of such property'' as of the filing date of 
the bankruptcy case without deduction for costs of sale or 
marketing. With respect to property acquired for personal, 
family, or household purposes, replacement value is the price a 
retail merchant would charge for property of that kind 
considering the age and condition of the property at the time 
its value is determined.

Section 124. Domiciliary requirements for exemptions

    This provision extends the time that a debtor must be 
domiciled in a state before he or she may claim that state's 
exemptions to 730 days. In addition, it clarifies that if the 
debtor's domicile was not located in a single state for the 
730-day period, the state where the debtor was domiciled in the 
180-day period preceding the 730-day period controls, or such 
longer portion of the 180-day period controls.

Section 125. Restrictions on certain exempt property obtained through 
        fraud

    This provision creates an exception to the exempt property 
provisions of the Bankruptcy Code. It provides that the value 
of an interest in (1) real or personal property that the debtor 
or a dependent of the debtor uses as a residence, (2) a 
cooperative that owns property that the debtor or a dependent 
of the debtor uses as a residence, or (3) a burial plot must be 
reduced to the extent such value derived from the conversion of 
nonexempt property in the 730-day period preceding the filing 
of the bankruptcy case, if the conversion was done with the 
intent to hinder, delay, or defraud a creditor.

Section 126. Rolling stock equipment

    Section 126 of the bill amends section 1168 of the 
Bankruptcy Code to better define the rights of parties in 
rolling stock equipment. It also amends section 1110(a)(1) of 
the Bankruptcy Code, which defines the rights of secured 
creditors and lessors having an interest in aircraft and 
aircraft equipment. It clarifies that a default under a 
security agreement, lease, or conditional sale contract with 
respect to both types of property must be cured within 60 days 
from the filing of the bankruptcy case. Section 126 also 
provides that if the default occurs after the expiration of 
this time period, it must be cured in accordance with the terms 
of the underlying security agreement, lease, or conditional 
sales contract.

Section 127. Discharge under chapter 13

    Section 129 of the bill prevents the following debts from 
being discharged in a chapter 13 case:
          (1) debts for money, property, services, or 
        extensions of credit obtained through fraud or a false 
        statement in writing;
          (2) consumer debts owed to a single creditor that 
        aggregate to more than $250 for ``luxury goods or 
        services,'' incurred by an individual debtor within 90 
        days before the filing of the bankruptcy case, and cash 
        advances aggregating more than $250 that are extensions 
        of consumer credit obtained by a debtor under an open-
        end credit plan within 90 days before the order for 
        relief;
          (3) debts resulting from fraud or defalcation by the 
        debtor acting as a fiduciary;
          (4) certain debts that require timely request for a 
        dischargeability determination, if the creditor lacks 
        notice or does not have actual knowledge of the case in 
        time to make such request; and
          (5) debts for restitution or damages, awarded in a 
        civil action against the debtor as a result of willful 
        or malicious conduct by the debtor that caused personal 
        injury to an individual or the death of an individual.

Section 128. Bankruptcy judgeships

    The ever-spiraling number of bankruptcy case filings 
clearly creates a need for additional bankruptcy judgeships. In 
the 105th Congress, the House responded to this need by passing 
H.R. 1596, which would have created additional permanent and 
temporary bankruptcy judgeships and extended an existing 
temporary position. Section 128 of the bill generally 
incorporates H.R. 1596 as it passed the House with provisions 
extending five existing temporary judgeships and requiring that 
bankruptcy judges submit annual reports to their chief 
bankruptcy judges with respect to certain travel expenses.

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

    Section 129 adds a tenth-level priority for claims based on 
death or personal injuries resulting from the debtor's 
operation of a motor vehicle or vessel while intoxicated.

Section 130. Amendment to section 1325

    Section 130 of the bill excepts from the definition of 
disposable income under section 102 of the bill child support 
payments, foster care payments, or disability payments for a 
dependent child made in accordance with applicable 
nonbankruptcy law and which are reasonably necessary to be 
expended for such purposes. It also clarifies that disposable 
income is determined under the needs-based formula set out in 
section 102 of the bill.

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

    Section 131 of the bill terminates the chapter 13 codebtor 
stay 30 days from the filing of the bankruptcy case where the 
debtor did not receive the consideration for the claim held by 
a creditor. An exception applies where the debtor is primarily 
obligated to pay the creditor with respect to a claim under a 
legally binding separation or property settlement agreement, or 
a divorce or dissolution decree.
    In addition, this section terminates the Chapter 13 
codebtor stay as of the date on which the Chapter 13 plan is 
confirmed if the plan provides that the debtor's interest in 
leased personal property (where the debtor is the lessee) will 
be surrendered or abandoned, or if the plan does not provide 
for payments to be made on account of such lease obligation.

Section 132. Adequate protection for investors

    Section 132 creates an exception to the automatic stay for 
certain enforcement actions by a ``securities self regulatory 
organization,'' a defined term which is defined in this 
provision.

Section 133. Limitation on luxury goods

    This provision establishes a presumption that consumer 
debts owed to a single creditor and aggregating more than $250 
for ``luxury goods or services'' incurred by an individual 
debtor within 90 days before the order for relief under this 
title, or cash advances aggregating more than $250 that are 
extensions of consumer credit under an open-end credit plan 
obtained by an individual debtor within 90 days prepetition, 
are nondischargeable. The term, ``luxury goods or services,'' 
does not apply to goods or services reasonably necessary for 
the support or maintenance of the debtor or a dependent of the 
debtor. In addition, ``an extension of consumer credit under an 
open-end credit plan'' has the same meaning under this 
provision as it has under the Consumer Credit Protection Act.

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

    Section 134 of the bill provides that if a personal 
property lease is rejected or not timely assumed by the 
trustee, the leased property is no longer property of the 
estate and the automatic stay terminates. With regard to 
individual chapter 7 cases, it allows the debtor to notify the 
creditor in writing of his or her desire to assume the lease. 
Upon being so notified, the creditor may, at its option, notify 
the debtor that it is willing to have the lease assumed and may 
condition such assumption on cure of any outstanding default on 
terms set by the contract. If, within 30 days of such notice, 
the debtor notifies the lessor in writing that the lease is 
assumed, the liability under the lease will be assumed by the 
debtor and not by the bankruptcy estate.
    In an individual chapter 11 or chapter 13 case where the 
debtor is the lessee with respect to personal property and the 
lease is not assumed in the confirmed plan, the lease is deemed 
rejected as of the conclusion of the hearing on confirmation. 
If the lease is rejected, the automatic stay as well as the 
chapter 13 codebtor stay are automatically terminated with 
respect to such property.

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

    This amendment requires a chapter 13 debtor to commence 
making postpetition payments in the ``contract amount'' within 
30 days of the filing of the bankruptcy case to personal 
property lessors and creditors secured by personal property to 
the extent that the claim is attributable to the purchase of 
such property. It requires these payments to be made until the 
creditor receives ``actual payments under the plan'' or the 
debtor surrenders the property. While the court may, after 
notice and a hearing, alter the amount and timing of the 
payments, they must be at least monthly and not less than the 
amount of any weekly, biweekly, monthly, or other periodic 
payment schedule pursuant to the contract between the debtor 
and creditor.
    This requirement is in addition to the debtor's obligation 
to make payments under a plan, which must be commenced within 
30 days after the plan is filed, although the amount of the 
plan payments must be reduced by the amount the debtor pays as 
adequate protection. In addition, section 135 permits a secured 
creditor or lessor to retain possession of property seized 
prepetition until the creditor or lessor receives the first 
required payment under this provision.
    With respect to chapter 13 cases, section 135 requires the 
debtor to provide a secured creditor or lessor, within 60 days 
from the filing of the case, reasonable evidence of the 
maintenance of any required insurance coverage with respect to 
the use or ownership of such property. This requirement 
pertains for as long as the debtor retains possession of such 
property.

Section 136. Automatic stay

    Section 136 of the bill amends the Bankruptcy Code's 
automatic stay provisions to except the following:
          (1) transfers that are not avoidable under section 
        544 (trustee as lien creditor) or section 549 
        (postpetition transfers) of the Bankruptcy Code;
          (2) the continuation of any eviction, unlawful 
        detainer action, or similar proceeding by a lessor 
        against a debtor involving residential real property 
        where the debtor has not paid rent to the lessor 
        pursuant to the terms of the lease agreement or 
        applicable State law after the filing of the bankruptcy 
        case;
          (3) the commencement or continuation of any eviction, 
        unlawful detainer action, or similar proceeding by a 
        lessor against a debtor involving residential real 
        property where the rental agreement has terminated 
        pursuant to the lease agreement or applicable State 
        law;
          (4) any eviction, unlawful detainer action, or 
        similar proceeding, if the debtor has filed for 
        bankruptcy relief within the preceding year and failed 
        to pay postpetition rent during the prior case; and
          (5) eviction actions based on endangerment to 
        property or person, or the use of illegal drugs.

Section 137. Extend period between bankruptcy discharges

    Section 137 of the bill extends the period that a chapter 7 
debtor may receive a subsequent chapter 7 discharge from six to 
eight years. In addition, it prohibits the issuance of a 
discharge in a subsequent chapter 13 case if the debtor 
received a discharge within 5 years preceding the filing of the 
subsequent chapter 13 case.

Section 138. Definition of domestic support obligation

    Section 138 adds a definition to the Bankruptcy Code for 
``domestic support obligation.'' It defines this term as a debt 
that accrues pre- or postpetition and is owed or recoverable by 
a spouse, former spouse, or child of the debtor, or that 
child's legal guardian. It also includes a claim by a 
governmental unit. To qualify as a domestic support obligation, 
the debt must be in the nature of alimony, maintenance, or 
support (including assistance provided by a governmental unit) 
of such spouse, former spouse, or child, without regard to 
whether such debt is expressly so designated. It must be 
established or subject to establishment either pre- or 
postpetition pursuant to a (i) separation agreement, divorce 
decree, or property settlement agreement; (ii) an order of a 
court of record; or (iii) a determination made in accordance 
with applicable nonbankruptcy law by a governmental unit. It 
does not apply to a debt assigned to a nongovernmental entity, 
unless it was assigned voluntarily by the spouse, former 
spouse, child, or parent solely for the purpose of collecting 
the debt.

Section 139. Priorities for claims for domestic support obligations

    Section 139 makes domestic support obligations payable 
before all other expenses, including expenses of administration 
(e.g., fees of the trustee and counsel for the trustee). Within 
this priority, allowed claims for domestic support obligations 
must be paid on the condition that funds received under this 
provision by a governmental unit be applied first to claims 
owed directly to a spouse, former spouse, or child of the 
debtor, or the parent of such child, without regard to whether 
the claim is filed by the spouse, former spouse, child, or 
parent, or is filed by a governmental unit on behalf of that 
person. Remaining funds may be used to satisfy claims assigned 
by a spouse, former spouse, child of the debtor, or the parent 
of that child to a governmental unit or which are owed directly 
to a governmental unit under applicable nonbankruptcy law.

Section 140. Requirements to obtain confirmation and discharge in cases 
        involving domestic support obligations

    Section 140 of the bill requires, as a condition of 
confirmation in a chapter 11 or 13 case, the debtor--if 
required by a judicial or administrative order or statute to 
pay a domestic support obligation--pay all postpetition amounts 
payable under such order or statute. It also requires a chapter 
13 debtor to be current with these obligations as a condition 
of obtaining a discharge.

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

    Section 141 of the bill creates the following additional 
exceptions to the automatic stay: the withholding of income 
pursuant to an order as specified in section 466(b) of the 
Social Security Act; the withholding, suspension, or 
restriction of a driver's license, or a professional, 
occupational or recreational license pursuant to State law, as 
specified in section 466(a)(16) of the Social Security Act; the 
reporting of overdue support owed by an absent parent to any 
consumer reporting agency as specified in section 466(a)(7) of 
the Social Security Act; the interception of tax refunds, as 
specified in sections 464 and 466(a)(3) of the Social Security 
Act; and the enforcement of medical obligations as specified 
under title IV of the Social Security Act.

Section 142. Nondischargeability of certain debts for alimony, 
        maintenance and support

    Section 142 of the bill clarifies that ``domestic support 
obligations,'' as defined in section 138 of the bill, are 
nondischargeable. It also makes obligations that are not 
domestic support obligations, but that are incurred in 
connection with a divorce or separation or related action, 
nondischargeable.

Section 143. Continued liability of property

    This section makes exempt property liable for 
nondischargeable tax and domestic support obligations 
``notwithstanding any provision of applicable nonbankruptcy law 
to the contrary.'' It also makes a technical amendment to 
section 522(f)(1)(A) of the Bankruptcy Code, which pertains to 
the avoidability of certain liens.

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

    This section makes a technical amendment to section 
547(c)(7), which prohibits a prepetition transfer from being 
avoided as a preferential transfer to the extent it was a bona 
fide payment of a debt for a domestic support obligation.

Section 145. Clarification of meaning of household goods

    Under current law, debtors must list all personal property 
that they own. 58 The applicable official bankruptcy 
form requires inter alia that a description and current market 
valuation of these items be stated. Among the types of personal 
property items that are required to be disclosed by debtors are 
``household goods.'' 59 The Bankruptcy Code, 
however, does not define this term.
---------------------------------------------------------------------------
    \58\ 11 U.S.C. Sec. 521(1); Official Form 6--Schedule B.
    \59\ Official Form 6--Schedule B.
---------------------------------------------------------------------------
    Section 145 defines ``household goods'' as including 
tangible personal property that is normally found in or around 
a residence. The term, however, does not include motorized 
vehicles used for transportation purposes.

Section 146. Nondischargeable debts

    Section 146 of the bill creates two new categories 
ofnondischargeable debts. First, it makes nondischargeable any debt 
incurred to pay a nondischargeable debt, without regard to intent, if 
such subsequent debt was incurred within 90 days of the filing of the 
bankruptcy case. Second, it makes nondischargeable any debt incurred 
with the intent to pay a nondischargeable debt, regardless of when such 
subsequent debt was incurred.

Section 147. Monetary limitation on certain exempt property

    This provision imposes an aggregate monetary limitation of 
$250,000 for exempt property consisting of the following:
          (1) real or personal property of the debtor or that a 
        dependent of the debtor uses as a residence;
          (2) an interest in a cooperative that owns property, 
        which the debtor or the debtor's dependent uses as a 
        residence; or
          (3) a burial plot for the debtor or the debtor's 
        dependent.
Two exceptions apply to this limitation. First, it does not 
apply to a family farmer's principal residence. Second, it does 
not apply to a debtor who resides in a state that enacts 
legislation opting out of this provision.

Section 148. Bankruptcy fees

    This provision of the bill amends section 1930 of title 28 
of the United States Code to permit a bankruptcy court or the 
district court to waive the requisite chapter 7 filing fee for 
an individual debtor who is unable to pay such fee in 
installments. In addition, this provision permits such courts 
to waive other specified fees.

Section 149. Collection of child support

    Section 149 requires a chapter 7 and chapter 13 trustee to 
provide certain notices to child support claimants and certain 
governmental units. First, the trustee must notify the claimant 
in writing of the claimant's right to use the services of a 
state child support enforcement agency established under 
sections 464 and 466 of the Social Security Act located in the 
state where the claimant resides. The notice must include the 
address and telephone number of the child support agency. 
Second, the trustee must supply in writing to the child support 
enforcement agency in the state where the claimant resides the 
name, address, and telephone number of the child support 
claimant.
    Thereafter, the trustee must notify both the child support 
claimant and the state agency that the debtor was granted a 
discharge and supply the debtor's last known address together 
with the name of each creditor holding a debt that is not 
discharged under section 523(a)(2), (4) or (14A) of the 
Bankruptcy Code.
    If a child support claimant or state agency is not able to 
locate the debtor, this section permits them to request such 
information from a creditor holding a nondischargeable debt 
described in the prior paragraph.

Section 150. Excluding employee benefit plan participant contributions 
        and other property from the estate

    Section 150 of the bill excludes as property of the estate 
any interest in property to the extent that an employer has 
withheld it from the wages of employees for the purpose of 
contribution to an employee benefit plan subject to title I of 
the Employee Retirement Income Security Act of 1974. It also 
excludes any interest in property that the employer received as 
the result of payments by participants or beneficiaries to an 
employer for contribution to an employee benefit plan subject 
to title I of the Employee Retirement Income Security Act of 
1974. Section 150 applies to bankruptcy cases commenced 180 
days after the bill's effective date.

Section 151. Clarification of postpetition wages and benefits

    This provision of the bill amends section 503(b)(1)(A) of 
the Bankruptcy Code (which accords administrative expense 
priority to certain claims for wages, salaries or commissions 
for services rendered after the commencement of a bankruptcy 
case) to clarify that it includes claims attributable to any 
period of time that commences after a bankruptcy case is filed 
as a result of the debtor's violation of federal law, without 
regard to when the original unlawful act occurred or whether 
any services were rendered.

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

    This section of the bill clarifies that the withholding of 
the debtor's income for the payment of certain domestic support 
obligations is not enjoined by the automatic stay provisions of 
section 362 of the Bankruptcy Code.

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

    This section excepts the commencement or continuation of 
the following proceedings from the automatic stay: (1) a 
proceeding concerning child custody or visitation; (2) an 
action alleging domestic violence; and (3) a proceeding seeking 
a dissolution of marriage, unless the proceeding concerns 
property of the estate.

                Title II. Discouraging Bankruptcy Abuse

Section 201. Reenactment of Chapter 12

    Chapter 12 is a specialized form of bankruptcy relief 
available only to a ``family farmer with regular annual 
income,'' 60 a defined term. 61 It 
permits eligible family farmers, under the supervision of a 
bankruptcy trustee, 62 to reorganize their debts 
pursuant to a repayment plan. 63 The special 
attributes of chapter 12 make it better suited to meet the 
particularized needs of family farmers in financial distress 
than other forms of bankruptcy relief, such as chapter 11 
64 and chapter 13.65
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    \60\ 11 U.S.C. Sec. 109(f).
    \61\ 11 U.S.C. Sec. 101(19).
    \62\ 11 U.S.C. Sec. 1202.
    \63\ 11 U.S.C. Sec. 1222.
    \64\ For example, chapter 12 is typically less complex and 
expensive than chapter 11, a form of bankruptcy relief generally 
utilized to effectuate large corporate reorganizations.
    \65\ Chapter 13, a form of bankruptcy relief for individuals 
seeking to reorganize their debts, limits its eligibility to debtors 
with debts in lower amounts than permitted for eligibility purposes 
under chapter 12. Cf. 11 U.S.C. Sec. Sec. 109(e), 101(18).
---------------------------------------------------------------------------
    Chapter 12 was enacted on a temporary seven-year basis as 
part of the Bankruptcy Judges, United States Trustees, and 
Family Farmer Bankruptcy Act of 1986 66 in response 
to the farm financial crisis of the early- to mid-
1980's.67 It was subsequently extended on August 6, 
1993 to September 30, 1998.68 Last year, chapter 12 
was further extended until April 1, 1999 as part of the Omnibus 
Consolidated and Emergency Supplemental Appropriations Act, 
1999.69
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    \66\ Pub. L. No. 99-554, Sec. 255, 100 Stat. 3088, 3105 (1986).
    \67\ See U.S. Dept. of Agriculture, Info. Bull. No. 724-09, Issues 
in Agricultural and Rural Finance: Do Farmers Need a Separate Chapter 
in the Bankruptcy Code? (Oct. 1997). As one of the principal proponents 
of this legislation explained:

      I doubt there will be anything that we do that will have 
      such an immediate impact in the grassroots of our country 
      with respect to the situation that exists in most of the 
      heartland, and that is in the agricultural sector. . . .
          * * * * * * *
      You know, William Jennings Bryan in his famous speech, the 
      Cross of Gold, almost 60 years ago [sic], stated these 
      words: ``Destroy our cities and they will spring up again 
      as if by magic; but destroy our farms, and the grass will 
      grow in every city in ouir country.''
      This legislation will hopefully stem the tide that we have 
      seen so recently in the massive bankruptcies in the family 
      farm area.

132 Cong Rec. 28,147 (1986) (statement of Rep. Mike Synar (D-Okla.)).
---------------------------------------------------------------------------
    \68\ Pub. L. No. 103-65, 107 Stat. 311 (1993).
    \69\ Pub. L. No. 105-277, Sec. 149 (1998).
---------------------------------------------------------------------------
    Section 201 makes chapter 12 a permanent component of the 
Bankruptcy Code. The National Bankruptcy Review Commission made 
a similar recommendation.70
---------------------------------------------------------------------------
    \70\ See Report of the National Bankruptcy Review Commission, at 
1014-16 (1997).
---------------------------------------------------------------------------
Section 202. Meetings of creditors and equity security holders
    Under current law, all chapter 11 debtors must appear for 
examination under oath pursuant to section 341 of the 
Bankruptcy Code. This examination provides an opportunity for 
the United States Trustee, creditors, and other parties in 
interest to assess the debtor's financial condition.
    On request of a party in interest and after notice and a 
hearing, this section allows the bankruptcy court to dispense 
with this requirement for cause where the chapter 11 debtor 
solicited prepetition acceptances of its plan of 
reorganization.71 This provision particularly 
applies to ``prepackaged chapter 11 plans,'' that is, plans 
where the debtor, before filing for bankruptcy relief, obtained 
the acceptance of creditors and interest holders in its plan of 
reorganization.
---------------------------------------------------------------------------
    \71\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 487-89 (1997).
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Section 203. Protection of retirement savings in bankruptcy
    This provision permits a debtor to exempt certain 
retirement funds to the extent that those funds are in a fund 
or account that is exempt from taxation under section 401, 403, 
408, 408A, 414, 457, or 501(a) of the Internal Revenue Code. It 
also applies to retirement monies in a fund that received a 
favorable determination pursuant to Internal Revenue Code 
section 7805. If the retirement monies are in a retirement fund 
that has not received a favorable determination pursuant to 
section 7805 of the Internal Revenue Code, those funds are 
exempt if the debtor demonstrates that no prior unfavorable 
determination has been made by a court or the Internal Revenue 
Service, and the retirement fund is in substantial compliance 
with the applicable requirements of the Internal Revenue Code. 
This section also applies to certain rollover distributions and 
ensures that certain retirement funds are exempt under state as 
well as federal law.
    In addition, this provision creates an exception to the 
automatic stay for the withholding of income from a debtor's 
wages pursuant to an agreement authorizing such withholding for 
the benefit of a pension, profit-sharing, stock bonus, or other 
employer-sponsored plan established under Internal Revenue Code 
section 401, 403, 408, 408A, 414, 457, or 501(a) to the extent 
that the amounts withheld are used solely to repay a loan from 
a plan as authorized by section 408(b)(1) of the Employee 
Retirement Income Security Act of 1974 or that they are subject 
to Internal Revenue Code section 72(p). It also applies to 
certain thrift savings plan loans.
    Section 203 also excepts from discharge any amount owed to 
a pension, profit-sharing, stock bonus, or other plan 
established under the Internal Revenue Code section 401, 403, 
408, 408A, 414, 457, or 501(c) that is for a loan as authorized 
under section 408(b)(1) of the Employee Retirement Income 
Security Act of 1974 or that is subject to section 72(p) of the 
Internal RevenueCode of 1986. It also applies to certain thrift 
savings plan loans. Section 203 prohibits a Chapter 13 plan from 
including a provision materially altering the terms of a loan described 
above.

Section 204. Protection of refinance of security interest

    Section 204 of the bill amends section 547(e)(2) of the 
Bankruptcy Code to extend the time period for determining when 
a transfer is made based on when it is perfected from ten days 
to 30 days.

Section 205. Unexpired leases of nonresidential real property

    Under current law, a bankruptcy trustee or a chapter 11 
debtor in possession has 60 days to either assume, assign, or 
reject a nonresidential lease of real property in which the 
bankruptcy estate is a lessee.72 In practice, 
however, trustees and chapter 11 debtors typically seek and 
obtain multiple extensions of this period.
---------------------------------------------------------------------------
    \72\ See 11 U.S.C. Sec. 365(d)(4).
---------------------------------------------------------------------------
    Section 205 of the bill amends section 365(d)(4) of the 
Bankruptcy Code to establish finite deadlines by which a 
nonresidential lease of real property must be assumed or 
rejected. It provides that this period is the earlier of 120 
days after the date of the order for relief or the entry of an 
order confirming a plan. The failure to act within that period 
causes the lease to be deemed rejected automatically.
    Section 205 does permit the 120-day period to be extended 
for an additional 120 days on motion of the trustee or lessor 
for cause. If such extension is granted, the court may permit a 
subsequent extension only upon the lessor's written consent.

Section 206. Creditors and equity security holders committees

    An important premise of a chapter 11 case is active 
creditor participation and oversight. This participation 
theoretically fosters the debtor's reorganization and serves an 
oversight function as well. One of the principal means by which 
creditor participation is encouraged and implemented is through 
the appointment of a creditors' committee.73 The 
United States trustee is charged with the responsibility to 
appoint creditors' and equity security holders' committees. The 
membership of a committee ordinarily consists of creditors 
holding the seven largest claims that are representative of the 
types of creditors in the chapter 11 case.
---------------------------------------------------------------------------
    \73\ Correlatively, if the debtor has equity security holders, a 
committee representing these interests can also be appointed. See 11 
U.S.C. Sec. 1102.
---------------------------------------------------------------------------
    Section 206 clarifies that, after notice and a hearing, a 
bankruptcy court may, on its own motion or on motion of a party 
in interest, order a change in a committee's membership to 
ensure adequate representation of other parties in a 
case.74
---------------------------------------------------------------------------
    \74\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 492-01 (1997).
---------------------------------------------------------------------------

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

    Section 207 of the bill amends section 546 of the 
Bankruptcy Code to provide that a trustee may not avoid a 
warehouse lien for storage, transportation, or other costs 
incidental to the storage and handling of goods, as provided by 
section 7-209 of the Uniform Commercial Code.

Section 208. Limitation

    This section of the bill extends the period in which a 
seller may reclaim goods from 20 to 45 days after receipt of 
such goods by the debtor.

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

    Section 209 of the bill clarifies that the compensation 
provisions of section 330(a)(3)(A) of the Bankruptcy Code apply 
to examiners, chapter 11 trustees, and professional persons. It 
adds a provision requiring the court to treat compensation 
awarded to a trustee as a commission based on results achieved.

Section 210. Postpetition disclosure and solicitation

    Under current law, the acceptance or rejection of a chapter 
11 plan of reorganization may not be solicited from parties 
affected by the plan absent a court-approved disclosure 
statement.75 The disclosure statement is required to 
ensure that these parties receive adequate information about 
the plan and its consequences.
---------------------------------------------------------------------------
    \75\ See 11 U.S.C. Sec. 1125(b).
---------------------------------------------------------------------------
    Section 210 permits postpetition solicitation of creditors 
and equity security holders in chapter 11 cases if they were 
solicited prepetition in compliance with applicable 
nonbankruptcy law.76 This creates an exception to 
the requirement that these parties receive a court-approved 
disclosure statement prior to their solicitation.
---------------------------------------------------------------------------
    \76\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 595-98 (1997).
---------------------------------------------------------------------------

Section 211. Preferences

    One of the linchpins of the Bankruptcy Code is equality of 
treatment among similarly situated creditors. To effectuate 
this goal, section 547 of the Bankruptcy Code permits the 
avoidance of certain prepetition transfers of property made by 
the debtor that effectively prefer some creditors over others. 
While the Bankruptcy Code acknowledges defenses to preferential 
transfer actions,77 defendants cite the difficulty 
of establishing certain defenses as well as the attendant 
inconvenience and costs of litigation.
---------------------------------------------------------------------------
    \77\ See, e.g., 11 U.S.C. Sec. 547(c).
---------------------------------------------------------------------------
    Section 211 of the bill allows a defendant in a preference 
action to establish that the transfer was made in the ordinary 
course of the debtor's financial affairs or business or that 
the transfer was made in accordance with ordinary business 
terms.78 Presently, the Bankruptcy Code requires 
both of these grounds to be established in order to sustain a 
defense to a preferential transfer action.
---------------------------------------------------------------------------
    \78\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 800-03 (1997).
---------------------------------------------------------------------------
    This section also establishes a threshold amount for a 
preferential transfer action.79 To file a 
preferential transfer action in a case where the claims are not 
primarily consumer debts, the aggregate amount of all property 
constituting the transfer must be at least $5,000 or more.
---------------------------------------------------------------------------
    \79\ Id. at 797-98.
---------------------------------------------------------------------------

Section 212. Venue of certain proceedings

    This section of the bill amends the venue provisions for 
preferential transfer actions. A preferential transfer action 
in the amount of $10,000 or less must be filed in the district 
where the defendant resides.80 Currently, this 
amount is fixed at $1,000.81
---------------------------------------------------------------------------
    \80\ Id. at 799-00.
    \81\ See 28 U.S.C. Sec. 1409(b).
---------------------------------------------------------------------------

Section 213. Period for filing plan under chapter 11

    Section 213 of the bill mandates that a chapter 11 debtor's 
exclusive period for filing a plan may not be extended beyond a 
date that is 18 months after the order for relief. It likewise 
provides that the debtor's exclusive period for obtaining 
acceptances of the plan may not be extended beyond 20 months 
after the order for relief.

Section 214. Fees arising from certain ownership interests

    Section 214 of the bill amends section 523(a)(16) of the 
Bankruptcy Code to clarify that it applies to fees or 
assessments arising from the debtor's interest in a 
condominium, cooperative or homeowners association 
(irrespective of whether or not the debtor physically occupies 
such property) for as long as the debtor or the trustee has a 
legal, equitable, or possessory ownership interest in such 
property.

Section 215. Cases relating to insurance deposits in cases ancillary to 
        foreign proceedings

    Section 215 of the bill amends section 304 of the 
Bankruptcy Code to prohibit relief under chapter 15, as enacted 
by this bill, with respect to certain types of property. The 
property interests that are protected under this provision 
include a deposit, escrow, trust fund, or other security 
required or permitted under applicable State insurance law or 
regulation for the benefit of claim holders in the United 
States. Section 215 also defines several relevant terms.

Section 216. Defaults based on nonmonetary obligations

    Section 216 of the bill amends section 365(b) of the 
Bankruptcy Code in response to the Claremont case,82 
which presented the issue of whether the debtors (operators of 
several automobile dealerships) had to cure certain nonmonetary 
defaults that were, in fact, incurable as a condition of their 
assumption and assignment of their dealer agreements to third 
parties, which would generate value for the estate.
---------------------------------------------------------------------------
    \82\ Worthington v. General Motors Corp. (In re Claremont 
Acquisition Corp., Inc.), 113 F.3d 1029 (9th Cir. 1997).
---------------------------------------------------------------------------
    Section 365(b)(2)(D) of the Bankruptcy Code provides that 
the requirement to cure a default prior to assumption and 
assignment does not apply to a default that is a breach of a 
provision relating to ``the satisfaction of any penalty rate or 
provision relating to a default arising from any failure by the 
debtor to perform nonmonetary obligations under the executory 
contract or unexpired lease.'' 83
---------------------------------------------------------------------------
    \83\ 11 U.S.C. Sec. 365(b)(2)(D).
---------------------------------------------------------------------------
    The district court in Claremont, which affirmed the 
bankruptcy court's interpretation of this provision, held that 
section 365(b)(2)(D) means that ``a trustee or debtor in 
possession is not required to cure nonmonetary defaults in 
order to assume and assign executory contracts and leases.'' 
84
---------------------------------------------------------------------------
    \84\ In re Claremont Acquisition Corp., Inc., 186 B.R. 977, 989-90 
(C.D. Cal. 1995).
---------------------------------------------------------------------------
    Although this issue arose in the context of the treatment 
in bankruptcy of an automobile franchise agreement, a broad 
exemption from curing nonmonetary defaults would be 
particularly troublesome to equipment lessors. The failure to 
adhere to a specified maintenance schedule, for instance, could 
cause rapid deterioration or irreparable harm to the leased 
equipment. With personal property leases, the failure to 
perform nonmonetary obligations is an appropriate bar to a 
bankruptcy trustee's assumption of the lease.
    The court of appeals in Claremont concluded that 
``subsection (D) provides an exception from cure for 
satisfaction of ``penalty rates'' and ``penalty provisions,''' 
refuting the argument that the clause following ``or'' in (D) 
is a catch-all provision excepting from cure any ``nonmonetary 
obligations.'' 85 Under this construction, 
therefore, nonmonetary defaults (with very limited exceptions) 
would have to be cured. Such a rule, although reasonable as a 
matter of public policy for a lease of equipment that can lose 
value quickly, might lead to inappropriate results in other 
potential applications. For that reason, the Committee sought 
to give legislative expression to principled approaches that 
would fairly treat the parties to a range of leases and 
executory contracts and protect the interests of creditors 
collectively.
---------------------------------------------------------------------------
    \85\ Worthington v. General Motors Corp. (In re Claremont 
Acquisition Corp., Inc.), 113 F.3d at 1034.
---------------------------------------------------------------------------
    Section 216 accords recognition to different policy 
considerations that are implicated in leasing arrangements and 
executory contracts. For reasons noted above, failure to 
perform nonmonetary obligations under a personal property lease 
bars assumption. With real estate leases, a bankruptcy trustee 
reasonably should be expected to cure defaults that are 
curable, but is not to be required to do the impossible and 
cure incurable defaults before assumption. The debtor's estate 
in the real estate context, for example, should not be deprived 
of a retail lease that is a valuable asset and may be needed 
for reorganization merely because the store has conducted a 
going-out-of-business sale or violated a clause against closing 
for a period of time. With contracts requiring substantial 
future performance on both sides--so-called executory 
contracts--the courts shall determine, based on the equities, 
whether incurable defaults prevent assumption. This would be 
the fairest approach, for example, with franchise agreements.
    In the case of an automobile franchise agreement, for 
instance, the trustee for the estate of the dealer must cure 
curable defaults and may assume or assign the franchise only 
when defaults are impossible to cure and a bankruptcy judge--
based on the equities--determines that the bar to assumption 
and assignment should not apply. It is expected that the court 
would be mindful of the ability of the trustee or debtor in 
possession to meet the manufacturer's contractual requirements 
with regard to quality assurance, warranty service, and 
trademark protection.
    It is not the intention of the Committee to restrict the 
ability of the nondebtor party to a lease or executory contract 
to obtain compensation for any actual pecuniary loss resulting 
from the debtor's incurable nonmonetary default or to obtain 
adequate assurance of future performance under such contract or 
lease.
    Section 216 of the bill also amends section 1124(2) of the 
Bankruptcy Code, which concerns the impairment of claims and 
interests, to provide that the creditor remains entitled to 
compensation for actual pecuniary loss resulting from a default 
for the purpose of determining whether the creditor's claim or 
interest arising from the default is impaired.

Section 217 Sharing of compensation

    Current law prohibits professionals in bankruptcy cases 
from sharing their fees with other persons.86 
Section 217 of the bill carves out a limited exception to this 
prohibition to allow compensation to be shared with bona fide 
public service attorney referral programs.87
---------------------------------------------------------------------------
    \86\ See 11 U.S.C. Sec. 504.
    \87\ This proposal comports with one adopted by the National 
Bankruptcy Review Commission. See Report of the National Bankruptcy 
Review Commission, at 892-94 (1997).
---------------------------------------------------------------------------

Section 218. Priority for administrative expenses

    Section 218 provides that if a lease is assumed under 
section 365 of the Bankruptcy Code and thereafter rejected, the 
resulting claim is equal to all monetary obligations due under 
the lease (excluding penalties and obligations arising from or 
relating to a failure to operate) for a one year period 
commencing the latter of the rejection date or actual turnover 
of the premises. Any claims for the remaining sums due under 
the lease are subject to section 502(b)(6) of the Bankruptcy 
Code.

           Title III. General Business Bankruptcy Provisions

Section 301. Definition of disinterested person

    Section 301 of the bill amends the definition of a 
disinterested person under section 101(14) of the Bankruptcy 
Code by eliminating its references to investment 
bankers.88
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    \88\ Section 101(14) of the Bankruptcy Code provides that an 
investment banker is not a disinterested person nor an attorney for 
such investment banker. See 11 U.S.C. Sec. 101(14)(B), (C), (D).
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Section 302. Miscellaneous Improvements

    Section 302 of the Bankruptcy Code amends section 109 of 
the Bankruptcy Code to create an additional eligibility 
requirement for individuals seeking bankruptcy relief. Under 
this provision, an individual is not eligible for bankruptcy 
relief unless such individual received credit counseling during 
the 90-day period preceding the filing of his or her bankruptcy 
case. The credit counseling must include, at a minimum, 
participation in an individual or group briefing that outlined 
the opportunities for available credit counseling and assisted 
the individual in performing an initial budget analysis.
    This requirement does not apply to an individual who 
resides in a district for which the United States trustee or 
bankruptcy administrator has determined that the approved 
counseling services in that district are not reasonably able to 
provide adequate services. To effectuate this provision, 
section 302(a) requires the United States trustee or bankruptcy 
administrator to annually determine whether counseling services 
in the district are reasonably able to provide these services.
    In addition, this requirement does not apply to a debtor 
who submits to the court a certification (1) describing exigent 
circumstances that merit a waiver of this requirement, and (2) 
stating that the debtor requested credit counseling services 
from an approved credit counseling service, but was unable to 
obtain them within a specified five-day period. Such 
certification mustbe satisfactory to the court. This exemption 
terminates when the debtor meets the requirements for credit counseling 
participation, but not longer than 30 days after the case is filed.
    Section 302(b) of the bill amends section 727(a) of the 
Bankruptcy Code to add, as a ground for denying a debtor a 
discharge, the failure to complete an instructional course 
concerning personal financial management, unless the debtor 
resides in a district for which the United States trustee or 
bankruptcy administrator has determined that the approved 
counseling services in that district are not reasonably able to 
provide adequate services.
    Section 302(c) of the bill provides that the bankruptcy 
court shall not grant a chapter 13 debtor a discharge unless 
the debtor completed an instructional course concerning 
personal financial management. An exception pertains if the 
debtor resides in a district for which the United States 
trustee or bankruptcy administrator has determined that the 
approved counseling services in that district are not 
reasonably able to provide adequate services.
    Section 302(d) of the bill amends section 521 of the 
Bankruptcy Code to mandate that a debtor file a certificate 
from the credit counseling service that rendered the requisite 
services described under section 109(h) of the Bankruptcy Code, 
as amended. In addition, the debtor must file a copy of the 
repayment plan, if any, that was developed through such credit 
counseling service.
    Section 302(e) of the bill institutes a new provision 
requiring the clerk for each district to maintain a list of 
credit counseling services that provide certain services and a 
list of instructional personal financial management courses 
that have been approved by the United States trustee or 
bankruptcy administrator for the district.
    Section 302(g) of the bill defines the term, ``debtor's 
principal residence,'' as a residential structure including 
incidental property that contains up to four units, whether or 
not such structure is attached to real property. The definition 
includes individual condominium or cooperative units as well as 
mobile homes, trailers, and manufactured homes.
    This provision also defines ``incidental property'' as 
property incidental to such residence including, without 
limitation, property commonly conveyed with a principal 
residence in the area where the residence is located, including 
such items as window treatments, carpets, appliances, and 
equipment located in the residence as well as easements, 
appurtenances, fixtures, rents, royalties, mineral rights, oil 
and gas rights, escrow funds and insurance proceeds.
    In addition, Section 302(g) of the bill creates an 
exception to the automatic stay provisions of the Bankruptcy 
Code with respect to the postponement, continuation, or similar 
delay of a prepetition foreclosure proceeding or sale pending 
in a chapter 13 case where the debtor has not fully cured the 
prepetition default with respect to the underlying obligation 
that is the subject of such foreclosure proceeding or sale. It 
also prevents a chapter 13 debtor from modifying the rights of 
a creditor secured by property used as the debtor's principal 
residence within the 180-day period preceding the filing of the 
bankruptcy case.
    Section 302(h) of the bill provides that if a chapter 7, 
11, or 13 case is dismissed due to the creation of a debt 
repayment plan administered by an approved credit counseling 
agency, the presumption under section 362(c)(3) of the 
Bankruptcy Code, as amended, in the subsequent case shall not 
apply.
    Section 302(i) amends section 546(g) of the Bankruptcy Code 
to institute certain protections if the court determines, on 
motion of the trustee made not later than 120 days after the 
order for relief in a chapter 11 case, that a return of goods 
is in the best interests of the estate. It provides that the 
debtor, on consent of the creditor and subject to prior rights 
of third parties, may return goods shipped prepetition and the 
creditor may offset the purchase price of such goods against 
any prepetition claim it has against the debtor.

Section 303. Extensions

    This section of the bill amends section 302(d) of the 
Bankruptcy Judges, United States Trustees, and Family Farmer 
Bankruptcy Act of 1986 to make the Bankruptcy Administrator 
Program permanent.

Section 304. Local filing of bankruptcy cases

    Section 304 of the bill amends section 1408 of title 28, 
which pertains to the venue of bankruptcy cases, to provide 
that if the debtor is a corporation, the domicile and residence 
of the debtor are conclusively presumed to be where the 
debtor's principal place of business in the United States is 
located.

Section 305. Permitting assumption of contracts

    Section 365(c)(1) of the Bankruptcy Code prohibits a 
trustee from assuming or assigning a contract that is, by its 
terms, personal to the debtor and thus, under applicable 
nonbankruptcy law, nonassignable. Section 305 makes a technical 
correction to section 365(c) of the Bankruptcy Code to clarify 
that in a corporate chapter 11 case the trustee or debtor in 
possession may assume an executory contract or unexpired lease 
of the debtor, whether or not the contract or lease prohibits 
or restricts assignment of rights or the delegation of 
duties.89 This section also makes several technical 
amendments to Section 365.
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    \89\ See, e.g., Perlman v. Catapult Entertainment, Inc. (In re 
Catapult Entertainment, Inc.), 165 F.3d 747 (9th Cir. 1999) (holding 
that where applicable nonbankruptcy law makes an executory contract 
nonassignable because the identity of the nondebtor party is material, 
a debtor in possession may not assume the contract absent consent of 
the nondebtor party).
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             Title IV. Small Business Bankruptcy Provisions

Section 401. Flexible rules for disclosure statements and plans

    Under current law, a chapter 11 debtor must obtain court 
approval of a disclosure statement before it can solicit 
acceptances of its reorganization plan.90 The 
disclosure statement must provide creditors and other 
interested parties basic information about the plan, including 
its feasibility and consequences. Typically, court approval is 
obtained after a hearing on 25 days' notice to all creditors 
and parties in interest. The current process can be costly and 
time-consuming.
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    \90\ See 11 U.S.C. Sec. 1125(b).
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    Section 401 of the bill authorizes a bankruptcy court, in 
determining whether a disclosure statement provides adequate 
information, to consider the complexity of the small business 
debtor's case, the benefit of additional information to 
creditors and other parties in interest, and the cost of 
providing such additional information. If, for example, the 
court finds that the plan of reorganization itself provides 
adequate information, it may allow the debtor to solicit 
acceptances of the plan without having to prepare and send a 
disclosure statement along with the plan. In addition, it 
permits the court to approve a disclosure statement submitted 
on standard forms approved by the court or adopted pursuant to 
section 2075 of title 28 of the United States Code. Further, it 
permits a court to conditionally approve a disclosure statement 
subject to final approval after notice and hearing, which would 
then be combined with the confirmation hearing.

Section 402. Definitions

    This section defines a ``small business debtor'' as a 
person (including affiliates that are also debtors) that has 
aggregate noncontingent, liquidated secured and unsecured debts 
in the amount of $4 million or less as of the commencement of 
the case (excluding debts owed to affiliates or insiders of the 
debtor). If a group of affiliate debtors has aggregate 
noncontingent, liquidated secured and unsecured debts in excess 
of this amount, then no member of such group is a small 
business debtor.

Section 403. Standard form disclosure statements and plans

    Section 403 directs the Advisory Committee on Bankruptcy 
Rules of the Judicial Conference of the United States Courts to 
issue standard disclosure statements and plans of 
reorganization forms for small business debtors. The forms are 
designed to achieve a practical balance between the needs of 
the court, those charged with administration of these cases, 
and parties in interest concerning reasonably complete 
information and the need for economy and simplicity.

Section 404. Uniform national reporting requirements

    The United States Trustee Guidelines generally require 
chapter 11 debtors to report their financial circumstances on a 
monthly basis. These reports are used to determine a chapter 11 
debtor's economic viability. If completed accurately, these 
reports can provide valuable information about the case to the 
bankruptcy court, the United States Trustee, and parties in 
interest, such as creditors. In practice, however, some debtors 
fail to file these reports or file incomplete or inaccurate 
reports, thereby frustrating the ability of those charged with 
the oversight of these cases to fulfill their responsibility.
    Section 404 of the bill mandates that a small business 
debtor file periodic financial reports containing the following 
information with regard to:
          (1) the debtor's profitability;
          (2) reasonable approximations of the debtor's 
        projected cash receipts and disbursements;
          (3) comparisons of actual cash receipts and 
        disbursements with projections in prior reports;
          (4) a statement as to whether or not the debtor is in 
        compliance with certain other postpetition 
        requirements; and
          (5) a statement as to whether the debtor has timely 
        filed tax returns and paid taxes and other 
        administrative expenses when due, among other matters.

Section 405. Uniform reporting rules and forms

    This section mandates that the Advisory Committee on 
Bankruptcy Rules of the Judicial Conference of the United 
States propose Federal Rules of Bankruptcy Procedure and 
Official Bankruptcy Forms to be used by small business cases to 
file periodic financial and other information set forth in 
section 404 of the bill.

Section 406. Duties in small business cases

    To implement greater administrative controls over small 
business chapter 11 debtors, section 406 of the bill institutes 
additional duties that these debtors must perform. First, the 
small business debtor must include with the bankruptcy petition 
its most recent financial statements, including a balance 
sheet, statement of operations, cash flow statement, and 
federal income tax return.91
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    \91\ If the debtor lacks such information, then it must file a 
statement under penalty of perjury verifying this fact.
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    Second, the small business debtor is required to attend, 
through its responsible individual, meetings scheduled by the 
bankruptcy court or the United States Trustee. These meetings 
include initial debtor interviews, and scheduling conferences, 
as well as the section 341 meetings of creditors. Scheduling 
conferences provide an opportunity for the court to fix 
deadlines by which aplan must be filed and confirmation 
achieved. ``Initial debtor interviews'' provide an opportunity for the 
United States Trustee to explain to the debtor various requirements 
such as the need to maintain insurance, to file periodic financial 
reports, and to remain current on postpetition obligations. Meetings 
held pursuant to section 341, alternatively known as ``section 341 
meetings'' or the ``first meetings of creditors,'' provide an 
opportunity for the debtor to be examined under oath by the United 
States Trustee and by other parties in interest, such as creditors.
    Section 406 of the bill also requires the small business 
debtor to timely file all requisite schedules and the statement 
of financial affairs, as well as postpetition financial 
reports. In addition, the small business debtor must maintain 
insurance that is customary and appropriate for the industry.
    With respect to the debtor's tax obligations, this section 
establishes special protections. All tax returns must be timely 
filed and all postpetition taxes must be paid, except for those 
that are contested, subject to section 363(c) of the Bankruptcy 
Code.92 Separate bank accounts for the deposit of 
taxes collected or withheld for government authorities must be 
established not later than ten business days following the 
entry of the order for relief. Further, this section permits 
the United States Trustee to inspect the debtor's books and 
records and business premises at reasonable hours and with 
proper notice.
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    \92\ Section 363(c)(2) prohibits the use of cash collateral without 
consent of those having an interest in such collateral or the court 
authorizes such use.
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    Nothing in this section is intended to restrict 
applicability of the court's powers under section 105 of the 
Bankruptcy Code to this provision.

Section 407. Plan filing and confirmation deadlines

    Under current law, a chapter 11 debtor has the exclusive 
right to file a plan within the 120 days following the entry of 
the order for relief.93 The Bankruptcy Court also 
extends to the chapter 11 debtor the exclusive right to effect 
confirmation of the plan within 180 days following the entry of 
the order for relief.94 As a result of amendments 
made in 1994 to the Bankruptcy Code, the exclusive period that 
a small business debtor has to file a plan and achieve 
confirmation were reduced to 100 days and 160 days respectively 
from the entry of the order for relief.95
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    \93\ See 11 U.S.C. Sec. 1121(b).
    \94\ See 11 U.S.C. Sec. 1121(c).
    \95\ See 11 U.S.C. Sec. 1121(e). Under this provision, a party in 
interest may apply for an order reducing or enlarging this period. 11 
U.S.C. Sec. 1121(e)(3).
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    Section 407 reduces the time periods for filing plans and 
achieving confirmation for small business debtors. Under this 
provision, the small business debtor's exclusive period to file 
a plan is 90 days from the entry date of the order for relief, 
unless a trustee has been appointed in the case or the 
bankruptcy court shorts such period on request of a party in 
interest. An exception pertains if a creditors'' committee is 
appointed in the case and is sufficiently active to provide 
effective oversight of the debtor.
    The small debtor's exclusive time period for filing a plan 
and achieving confirmation may be extended by the court on 
request of a party in interest and for cause. Although the 
court may grant one or more extensions, they may not accumulate 
to more than 60 days. To obtain an extension, the movant must 
establish that: (1) no cause exists to dismiss or convert the 
case or to appoint a trustee, and (2) there is a reasonable 
possibility that the court will confirm a plan in a reasonable 
time. Further extensions are available if the movant 
establishes the first ground and that, more likely than not, 
the court will confirm a plan within a reasonable time. The 
court must impose a new deadline whenever an extension is 
granted.

Section 408. Plan confirmation deadline

    This section requires a small business debtor to confirm a 
plan not later than 150 days after the order for relief, unless 
a creditors'' committee, is sufficiently active and 
representative to provide effective oversight of the debtor or 
the 150-day period is extended pursuant to section 407.

Section 409. Prohibition against extension of time

    To ensure that the strict time frames instituted by this 
bill are not eviscerated, section 409 of this bill limits a 
court's authority to avoid the impact of these provisions. This 
section specifically limits the court's authority to use 
section 105(a) of the Bankruptcy Code to extend the time frames 
fixed for filing and confirming the plans of small business 
debtors.

Section 410. Duties of the United States trustee and bankruptcy 
        administrator

    This section mandates that the United States Trustee 
conduct an ``initial debtor interview'' of all small business 
debtors. This interview, which must be held shortly after the 
case is filed, is to be used by the United States Trustee to 
begin its investigation of the debtor's viability and business 
plan. It also provides an opportunity for the United States 
Trustee to explain the debtor's obligation to file monthly 
operating reports and other requirements. During the course of 
the interview, the United States Trustee attempts to obtain an 
agreed scheduling order fixing various time frames, such as the 
date for filing a plan and effecting confirmation.
    Section 410 also authorizes the United States Trustee to 
inspect the debtor's premises, review its books and records, 
and verify that the debtor has filed its tax returns, when 
appropriate.The United States Trustee, under this provision, is 
responsible for diligently monitoring the small business debtor's 
activities and determining its ability to confirm a plan. Should the 
United States Trustee discover material grounds warranting either 
dismissal or conversion of the chapter 11 case to one under chapter 7 
for liquidation, this section requires the United States Trustee to 
apply promptly for such relief.

Section 411. Scheduling conferences

    Under current law, a bankruptcy court may conduct a 
scheduling conference on its own motion or on request of a 
party in interest in any bankruptcy case. In a chapter 11 case, 
for example, a scheduling conference provides an opportunity 
for the court to set certain dates by which the debtor must 
file and confirm a plan, among other matters.
    This section mandates that a bankruptcy court conduct 
scheduling conferences in all bankruptcy cases, if necessary, 
to further the expeditious and economical resolution of such 
cases. Section 411 also amends section 105(d) of the Bankruptcy 
Code to eliminate the restriction on the authority of the court 
to issue an order under this provision. Current law precludes a 
court from issuing an order if it is inconsistent with another 
provision in the Bankruptcy Code or applicable Federal Rule of 
Bankruptcy Procedure.

Section 412. Serial filer provisions

    This section consists of two provisions, the first one of 
which is not limited to business bankruptcies. Section 412(1) 
provides that if an individual is injured by a violation of the 
automatic stay based on a good faith belief, then that 
individual's recovery is limited to actual damages.
    Section 412(2) provides that the automatic stay does not 
apply to four categories of small business chapter 11 debtors 
who have previously sought bankruptcy relief. The effect of 
this provision is to restrict repetitive filings by these 
debtors. The automatic stay does not apply when:
          (1) the small business debtor is simultaneously a 
        debtor in another bankruptcy case pending at the time 
        of the filing of the second case;
          (2) the small business debtor's prior case was 
        dismissed for any reason by an order that became final 
        within two years preceding the filing of the second 
        case;
          (3) the second case was filed within two years 
        following the confirmation of the prior case; or
          (4) an entity that acquired substantially all of the 
        assets or business of a small business debtor described 
        in the prior subparagraphs has itself filed for 
        bankruptcy relief.
Two exceptions pertain. First, Section 412(2) provides that it 
does not apply to an involuntary petition filed by a creditor 
who is not an insider of the debtor. Second, it permits a 
debtor, after notice and a hearing, to demonstrate by a 
preponderance of the evidence that the filing of the subsequent 
case was necessitated by circumstances beyond its control and 
unforeseeable at the time the prior case was filed, and that it 
is more likely than not that it will confirm a plan of 
reorganization (but not a liquidating plan) within a reasonable 
time.

Section 413. Expanded grounds for dismissal or conversion and 
        appointment of trustee

    The Bankruptcy Code currently lists ten grounds that a 
bankruptcy court may consider in determining whether to convert 
a chapter 11 case to one under chapter 7 for liquidation, or to 
dismiss the case.96 This section revises these 
grounds and mandates that the court convert or dismiss a 
chapter 11 case or appoint a chapter 11 trustee, whichever is 
in the best interests of creditors and the estate, if the 
movant establishes cause. An exception to this mandate applies 
if (1) the debtor or other party in interest objects and 
establishes by a preponderance of the evidence that it is more 
likely than not that a plan will be timely confirmed, and (2) 
the cause for dismissal is an act or omission for which there 
exists a reasonable justification and such act or omission will 
be cured within a reasonable time period not to exceed 30 days, 
unless the movant consents to a longer period, or compelling 
circumstances beyond the debtor's control justify such 
extension.
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    \96\ See 11 U.S.C. Sec. 1112(b). The ten grounds enumerated in this 
provision, however, are not exclusive.
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    Cause warranting either mandatory conversion or dismissal 
of a chapter 11 case under section 413 includes the following:
          (1) substantial or continuing loss to or diminution 
        of the estate;
          (2) gross mismanagement of the estate;
          (3) failure to maintain appropriate insurance that 
        poses a material risk to the estate or the public;
          (4) unauthorized use of cash collateral that is 
        harmful to one or more creditors;
          (5) failure to comply with a court order;
          (6) failure to satisfy any filing or reporting 
        requirement under the Bankruptcy Code or applicable 
        rule;
          (7) failure to attend the section 341 meeting of 
        creditors;
          (8) failure to timely provide information or to 
        attend meetings reasonablyrequested by the United 
States Trustee;
          (9) failure to pay postpetition taxes or file tax 
        returns when due;
          (10) failure to file a disclosure statement or to 
        confirm a plan within the time fixed under the 
        Bankruptcy Code or by court order;
          (11) failure to pay any requisite fees or charges;
          (12) revocation of a confirmation order;
          (13) inability to effectuate substantial consummation 
        of a confirmed plan;
          (14) material default by the debtor with respect to a 
        confirmed plan; and
          (15) termination of a plan by reason of the 
        occurrence of a condition specified in the plan.
Section 413 provides that the court may grant relief based on 
certain of the above stated grounds only on its own motion or 
on motion of the United States trustee or bankruptcy 
administrator.
    The bankruptcy court must hold a hearing on a motion 
seeking either conversion or dismissal of the case within 30 
days of the filing of such motion. In addition, the bankruptcy 
court is required to decide this motion within 15 days 
following the commencement of the hearing, unless the moving 
party expressly consents to a continuance or compelling 
circumstances prevent the court from meeting such time limits.
    Section 413(b) creates additional grounds for the 
appointment of a chapter 11 trustee. If grounds exist for 
either conversion or dismissal of the chapter 11 case, the 
bankruptcy court has the authority to appoint a chapter 11 
trustee if this is in the best interests of creditors and the 
bankruptcy estate.

Section 414. Study of the operation of title 11 of the United States 
        Code with respect to small businesses

    This section directs the Administrator of the Small 
Business Administration, in consultation with the Attorney 
General, the Director of the Executive Office for United States 
Trustees, and the Director of the Administrative Office of the 
United States Courts, to conduct a study for the purpose of 
determining certain matters. These include the internal and 
external factors that cause small businesses, especially sole 
proprietorships, to seek bankruptcy relief and factors that 
cause small businesses to successfully complete their chapter 
11 cases. The study must also examine how the bankruptcy laws 
may be made more effective and efficient in assisting small 
business to remain viable.

Section 415. Payment of Interest

    This section amends the automatic stay termination 
provision that applies to single asset real estate debtors. 
Specifically, it allows a debtor in its sole discretion to make 
the requisite interest payments out of rents or other proceeds 
generated by the real property. Such payments must be an amount 
equal to the interest at the then-applicable nondefault 
contract rate based on the value of the creditor's interest in 
the property.

                Title V. Municipal Bankruptcy Provisions

Section 501. Petition and proceedings related to petition

    This section clarifies that a court must enter the order 
for relief for chapter 9 cases.

Section 502. Applicability of other sections to chapter 9

    This section makes certain specified provisions in title V 
of the Bankruptcy Code applicable to chapter 9 cases.

              Title VI. Streamlining the Bankruptcy System

Section 601. Creditor participation at first meeting of creditors

    This section permits pro se creditors to appear and 
participate at the section 341 meeting of creditors in chapter 
7 and 13 cases, and with respect to activities related thereto. 
Currently, some districts require corporate creditors and 
others to be represented by counsel in legal proceedings, such 
as the section 341 meeting of creditors. This amendment allows 
creditors to save the cost of obtaining legal representation to 
participate in the section 341 meeting and like activities.

Section 602. Audit procedures

    This section requires the Attorney General to establish 
procedures for auditing the accuracy and completeness of 
information supplied by individual debtors in connection with 
their bankruptcy cases under chapter 7 and chapter 13 of the 
Bankruptcy Code. The audit must be performed pursuant to 
generally accepted auditing standards by independent certified 
public accountants or independent licensed public accountants. 
One in every 250 cases in a district must be selected randomly 
for audit. In addition, section 602 requires audits in cases 
where the schedules reflect greater than average variances from 
the statistical norm for the district. The percentage of cases 
in which a material misstatement of income or expenditures, 
together with other information, that is obtained as a result 
of these audits by district must be made available to the 
public not less than annually.
    Should an audit disclose a material misstatement with 
regard to a debtor's income, expenses or assets, a statement 
must be filed with the court specifying the facts constituting 
the material misstatement. Notice thereof must also be provided 
to creditors. Where appropriate, thematter could be referred to 
the United States Attorney for possible criminal prosecution.
    In addition, section 602 amends section 521 of the 
Bankruptcy Code to make it a duty of the debtor to supply 
certain information to a auditor. Further, it amends section 
727 of the Bankruptcy Code to add, as grounds for revocation of 
a debtor's discharge, a chapter 7 debtor's failure to 
satisfactorily explain a material misstatement discovered as 
the result of an audit described in section 602 and the failure 
to make available all necessary documents or property belonging 
to the debtor that are requested in connection with such audit.

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

    To ensure that a creditor receives proper notice, section 
603(a)(1) requires debtors to identify in any notices to a 
creditor the account number for any debt held by such creditor 
against the debtor. In addition, the debtor must use the 
address specified by the creditor. It also strikes the 
Bankruptcy Code providing that failure to include certain 
specified information in a notice does not invalidate the legal 
effect of such notice.
    If a creditor in an individual chapter 7 or 13 case has 
specified an address for notice, section 603(a)(2) requires the 
court and the debtor to use such address starting five days 
after receiving the address. Section 603(a)(2) also permits an 
entity to file a noticing address with the court to be used 
generally in chapter 7 and chapter 13 cases.
    Section 603(a)(2) specifies that notice that does not 
comply with these requirements is not effective until it has 
been brought to the creditor's attention. If the creditor has 
designated an entity to be responsible for receiving notices 
concerning bankruptcy cases and has established reasonable 
procedures so that these notices will be delivered to such 
entity, a notice will not be deemed to have been received by 
the creditor until it has been received by such entity. Section 
603(a)(2) prohibits the imposition of any sanctions for 
violation of the automatic stay under section 362 of the 
Bankruptcy Code 97 or for the failure to comply with 
the Bankruptcy Code's turnover provisions in sections 542 and 
543, if a creditor has not received proper notice.
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    \97\ Under present law, an individual injured as a result of any 
willful violation of the automatic stay is entitled to actual damages, 
including costs and attorney's fees, and may recover punitive damages 
in appropriate circumstances. 11 U.S.C. Sec. 362(h).
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    Section 603(b) amends section 521 of the Bankruptcy Code 
(which sets forth the debtor's duties) to add further 
requirements. The debtor must file a schedule of current 
monthly income and current expenditures prepared in compliance 
with section 707(b)(2) of the Bankruptcy Code, as amended by 
section 102. It also requires the attorney for the debtor or 
the bankruptcy petitioner to file a certificate indicating that 
the requisite notices under section 342(b) of the Bankruptcy 
Code, as amended, were provided to the debtor. If the debtor 
lacks counsel or did not use the services of a bankruptcy 
petition preparer, then the debtor must sign a certificate 
stating that he or she obtained and read such notice.
    Under section 603(b), the debtor must also file copies of 
any Federal tax returns (including any schedules and 
attachments) for the three year period preceding the order for 
relief and copies of all payment advices or other evidence of 
payment from any employer within 60 days of the bankruptcy 
filing. As amended by section 603(b), section 521 of the 
Bankruptcy Code additionally requires the debtor to file copies 
of all tax returns (including any schedules and attachments) at 
the time filed with the taxing authority with respect to any 
period during the pendency of the debtor's chapter 7 or chapter 
13 case.
    Section 603(b) also requires the court to make the debtor's 
petition, schedules, statement of financial affairs, or chapter 
13 plan (if applicable), together with any amendments to such 
documents, available to a creditor upon request and at a 
reasonable cost within five days of such request. In addition, 
the debtor must file a statement disclosing any reasonably 
anticipated increase in the debtor's income or expenditures in 
the succeeding 12-month period.
    For a chapter 13 case, section 603(b) requires the debtor 
to file a statement of current monthly income and expenditures 
in accordance with section 707(b)(2) of the Bankruptcy Code, as 
amended. This requirement also pertains to the postconfirmation 
period as well until the case is closed. This statement must 
disclose the amount and sources of the debtor's income, the 
identity of any persons responsible with the debtor for the 
support of the debtor's dependents, the identity of any persons 
who contributed, and the amount contributed to the debtor's 
household.
    With respect to the privacy issue presented by the 
availability of a debtor's tax returns to third parties, 
section 603 mandates that Director of the Administrative Office 
for United States Courts establish procedures for safeguarding 
the confidentiality of these documents. The procedures must 
include reasonable restrictions on creditor access to them that 
include verification of the creditor's identity and that limit 
the use of such information to the case. In addition, the 
Director must, within one year from the date of enactment of 
the bill, prepare and submit to the Congress a report that 
assesses the effectiveness of these procedures in providing 
information to creditors and that includes, if appropriate, 
recommendations for legislation to further protect the 
confidentiality of such tax information and to impose penalties 
for improper use.
    Section 603(b) also requires the debtor to provide proof of 
identity on request of the United States trustee or case 
trustee. Such proof includes a driver's licence, passport, or 
other document that contains a photograph of the debtor.
    Section 603(b)(4) also specifies that the notice of a 
chapter 13 confirmation hearing must include the most recent 
statement filed by the debtor pursuant to section 
521(a)(1)(B)(ii) or (f)(4), as amended.

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

    Should an individual chapter 7 or 13 debtor fail to provide 
any of the information required by section 521 of the 
Bankruptcy Code, as amended, within 45 days after the petition 
filing date, this section requires the debtor's bankruptcy case 
to be automatically dismissed, effective on the 46th day. No 
court order is necessary to effectuate this dismissal, unless a 
party in interest so requests. This 45-day time period may be 
extended on request of the debtor made before its expiration if 
the court finds justification for extending this period. In no 
event, however, may it be extended more than an additional 45 
days.

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

    This section requires the chapter 13 confirmation hearing 
to be held not earlier than 20 days following the first date 
set for the meeting of creditors and not later than 45 days 
from this date.

Section 606. Chapter 13 plans to have a five-year duration in certain 
        cases

    Under present law, the duration of a chapter 13 plan is 
three years, unless the court, for cause, extends it to a 
maximum of five years.98 To ensure that creditors 
receive the maximum amount of repayment in a chapter 13 case, 
this section extends the permissible duration of a chapter 13 
plan up to five years, under certain circumstances. If the 
total current monthly income of the debtor and the debtor's 
spouse, when multiplied by 12, is not less than the highest 
national family median income last reported by the Census 
Bureau for a family of equal or lesser size (or, for a 
household of one person, not less than the national median 
household income for one earner),99 then the length 
of the debtor's plan may be as long as five years. If the 
income of the debtor and the debtor's spouse fall below this 
threshold, then the length of the plan may be three years, but 
not longer than five years.
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    \98\ 11 U.S.C. Sec. 1322(d).
    \99\ Section 606 provides that the national median family income 
for a family of more than four individuals shall be the national median 
family income last reported by the Census Bureau for a family of four 
individuals plus $583 for each additional member of the debtor's 
family.
---------------------------------------------------------------------------
    Section 606(b)(2) mandates that the applicable commitment 
period for confirmation of a chapter 13 plan to be not less 
than five years if the current monthly income of the debtor and 
the debtor's spouse exceeds the thresholds stated above. 
Likewise, section 606(b)(3) mandates the same requirement with 
regard to chapter 13 plans modified postconfirmation.

Section 607. Sense of the Congress regarding expansion of rule 9011 of 
        the Federal Rules of Bankruptcy Procedure

    To reaffirm the need for accuracy, completeness and 
truthfulness of documents filed by debtors and their counsel 
(both signed and unsigned), section 607 states that it is the 
sense of the Congress that all such documents may be filed only 
after the debtor or the debtor's attorney has made reasonable 
inquiry to verify that the information they contain is well 
grounded in fact and warranted by existing law or a good faith 
argument for the extension, modification, or reversal of 
existing law. This requirement applies to signed as well as 
unsigned documents. Federal Rule of Bankruptcy Procedure 9011 
presently only applies to signed documents.

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

    Section 1930(6) of title 28 of the United States Code 
requires a chapter 11 debtor to pay a quarterly fee to the 
United States Trustee based on the amount of the debtor's 
disbursements made during the quarter. This requirement applies 
until the case is converted or dismissed and applies even after 
confirmation until the case is closed.100
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    \100\ Pub. L. 104-91, Sec. 101 (1996), as amended, Pub. L. No. 104-
99, title II, Sec. 211 (1996).
---------------------------------------------------------------------------
    This section limits this requirement's applicability to 
certain chapter 11 debtors. Specifically, debtors with 
disbursements of less than $300,000 would be required to pay 
this fee only until the case is converted or confirmation is 
obtained, whichever occurs first. For debtors having 
disbursements of $300,000 or more, the requirement to pay these 
quarterly fees would remain the same as under current law.

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

    This section directs the Comptroller General of the United 
States to conduct a study regarding the impact that the 
extension of credit to dependents (defined under the Internal 
Revenue Code of 1986) who are enrolled in postsecondary 
educational institutions has on the bankruptcy case filing 
rate.

Section 610. Prompt relief from stay in individual cases

    Under current law, Section 362(e) of the Bankruptcy Code 
provides that within 30 days of a request for relief from the 
automatic stay, such stay is terminated unless the bankruptcy 
court orders the stay continued after notice and hearing. The 
hearing, as contemplated under section 362(e), can be 
preliminary or deemed final. If the hearing is preliminary, the 
final hearing must be concluded not later than 30 days from the 
conclusion of the preliminary hearing. This 30-day period can 
be extended by the court with consent of the parties or if the 
court finds that such extension is warranted based on 
compelling circumstances.
    For chapter 7, 11, or 13 cases filed by individuals, this 
section creates an exception tosection 362(e). Specifically, 
this section requires the automatic stay to terminate within 60 days 
following a request for relief from the stay, unless the bankruptcy 
court renders a final decision prior to the expiration of such 60-day 
time period, such 60-day time period is extended pursuant to agreement 
of all parties in interest, or a specific extension of time is required 
for good cause as described in findings made by the court.

Section 611. Stopping abusive conversions from chapter 13

    Section 506 of the Bankruptcy Code provides that a creditor 
secured by a lien on property of the estate has an allowed 
secured claim to the extent of the value of the creditor's 
interest in the property and an unsecured claim to the extent 
that the value of the creditor's interest is less than the 
amount of the claim. A chapter 13 debtor may apply for a 
determination from the bankruptcy court that fixes the value of 
a secured creditor's interest in property of the estate. Under 
present law, if the chapter 13 case is subsequently converted 
to another chapter under the Bankruptcy Code, such valuations 
apply in the converted case, with allowance, of course, for any 
payments made on such secured claims.101
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    \101\ 11 U.S.C. Sec. 348(f)(1)(B).
---------------------------------------------------------------------------
    This section carves out an exception for a chapter 13 case 
converted to chapter 7. It specifies that a secured creditor in 
any bankruptcy case converted from chapter 13 continues to be 
secured unless its claim was paid in full as of the date of 
conversion, notwithstanding any valuation determination made 
during the pendency of the chapter 13 case.

Section 612. Bankruptcy appeals

    Currently, appeals from decisions rendered by the 
bankruptcy court are either heard by the district court or a 
bankruptcy appellate panel. In addition to the time and cost 
factors attendant to the present appellate system, decisions 
rendered by a district court as an appellate court are not 
binding and lack stare decisis value.
    To address these problems, section 612 permits appeals from 
final orders and judgments entered by a bankruptcy court 
decisions to be heard directly by the circuit court of appeals 
if the appellant so elects at the time of filing the notice of 
appeal.102 Any other party may so elect not later 
than ten days after service of the notice of appeal. Absent 
such election, the bankruptcy appellate panel would hear the 
appeal. Direct appeal is also permitted for specified 
interlocutory orders.
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    \102\ The National Bankruptcy Review Commission made a similar 
recommendation. See National Bankruptcy Review Commission Report, at 
752-67 (1997).
---------------------------------------------------------------------------

Section 613. GAO study

    Section 613 of the bill directs the Comptroller General of 
the United States to conduct a study of the feasibility, 
efficacy and cost of requiring pertinent information about 
debtors to be supplied to the Office of Child Support 
Enforcement. The purpose of this requirement would be to 
determine whether a debtor has outstanding child support 
obligations.

                       Title VII. Bankruptcy Data

Section 701. Improved bankruptcy statistics

    Section 701 requires the clerk for each district to compile 
various statistics regarding chapter 7, 11, and 13 cases in a 
form prescribed by the Director of the Administrative Office of 
the United States Courts and to make these data available to 
the public. In addition, the Director is required to report 
annually to the Congress on the information so collected and to 
prepare an analysis of it.
    The statistics required to be compiled must be itemized by 
chapter of the Bankruptcy Code and presented in the aggregate. 
The specific categories of information that must be gathered 
include the following:
          (1) the total assets and liabilities as scheduled by 
        the debtor;
          (2) the debtor's current monthly income, average 
        income, and average expenses;
          (3) the aggregate amount of debt discharged during 
        the reporting period (determined based on the 
        difference between the total amount of debt scheduled 
        by the debtor and the total amount of debt scheduled by 
        the debtor in categories that are predominantly 
        nondischargeable);
          (4) the average time between the filing of the 
        bankruptcy case and the closing of the case;
          (5) specified information regarding reaffirmation 
        agreements;
          (6) for chapter 13 cases, information on the number 
        of (a) orders determining the value of secured property 
        in an amount less than the amount of the secured claim, 
        (b) cases dismissed for failure to make payments under 
        the plan, (c) cases refiled after dismissal of a prior 
        case by the same debtor, (d) cases in which the plan 
        was completed, (e) the number of cases in which the 
        debtor had previously sought bankruptcy relief within 
        the six years preceding the filing of the present case;
          (7) the number of cases in which creditors were fined 
        for misconduct and the amount of any punitive damages 
        awarded by the court for creditor misconduct; and
          (8) the number of cases in which sanctions under 
        Federal Rule of Bankruptcy Procedure 9011 were imposed 
        against a debtor's counsel and the damages awarded in 
        connection therewith.

Section 702. Uniform rules for the collection of bankruptcy data

    To implement the data gathering provisions of section 701, 
this section requires the Attorney General to issue rules 
requiring the establishment of uniform forms for final reports 
filed by bankruptcy trustees and monthly operating reports 
filed by chapter 11 debtors in possession. It also specifies 
what information these reports should contain and that they be 
made publicly available for physical inspection (at one or more 
central filing locations) and by electronic access through the 
Internet or other appropriate media.

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

    This section expresses the sense of the Congress that it is 
a national policy of the United States that all data collected 
by the bankruptcy clerks in electronic form (to the extent such 
data relates to public records, as defined in section 107 of 
the Bankruptcy Code) should be made available to the public in 
a usable electronic form in bulk, subject to appropriate 
privacy concerns and safeguards as determined by the Judicial 
Conference of the United States. It also states that a single 
bankruptcy data system should be established that uses a single 
set of data definitions and forms to collect such data and that 
data for any particular bankruptcy case be aggregated in such 
electronic record.

                 Title VIII. Bankruptcy Tax Provisions

Section 801. Treatment of certain liens

    This section makes several amendments to section 724 of the 
Bankruptcy Code to provide greater protection for holders of ad 
valorem tax liens on real or personal property of the estate. 
Although their subordination is still possible under section 
724(b), the purposes are limited to pay for chapter 7 
administrative expenses and priority claims for postpetition 
wages, salaries, and commissions, as well as claims for 
contributions to an employee plan entitled to priority under 
section 507(a)(4) of the Bankruptcy Code. Thus, subordination 
for the purpose of paying chapter 11 administrative expenses is 
not permitted.
    Before subordinating a tax lien on real or personal 
property, the trustee, must exhaust all other unencumbered 
estate assets and, pursuant to section 506(c) of the Bankruptcy 
Code, recover from property securing an allowed secured claim 
the reasonable and necessary costs and expenses of preserving 
or disposing of such property.
    In addition, this section prevents a bankruptcy court from 
determining the amount or legality of an ad valorem tax on real 
or personal property if the applicable period for contesting or 
redetermining the amount of the claim under nonbankruptcy law 
has expired. This amendment addresses those instances where 
debtors or trustees use section 505 of the Bankruptcy Code as a 
means to have bankruptcy courts set aside these types of taxes 
to the detriment of the local communities that depend on them 
for revenue.

Section 802. Effective notice to government

    To ensure that government units receive effective notice, 
section 802(a) requires the debtor to identify in the notice 
the specific department, agency, or instrumentality to which 
the debtor is indebted and to supply to such entity specified 
identifying information (e.g., taxpayer identification number, 
the number of the loan, account or contract, or real estate 
parcel number, if applicable). The debtor must also describe 
the basis of the claim. If the debtor's liability to a 
governmental unit arises from a debt or obligation owed or 
incurred by another entity, the debtor must identify such other 
entity. In addition, section 802(a) requires the bankruptcy 
clerk to maintain a current list, updated quarterly, of 
addresses designated by government units as ``safe harbor'' 
addresses for service of notices in cases pending in the 
district. This list is to be made available to debtors.
    Section 802(b) requires the Advisory Committee on 
Bankruptcy Rules of the Judicial Conference of the United 
States to adopt rules that enhance the provision of notice to 
Federal, State, and local governmental units that have 
regulatory authority over a debtor or who may be creditors in a 
bankruptcy case. The rules must be reasonably calculated to 
ensure that notice will reach the governmental unit by 
requiring that the debtor provide specified information.
    Should the debtor fail to provide notice to governmental 
entities pursuant to the requirements of section 802(c), such 
notice is deemed to be ineffective unless the debtor 
demonstrates by clear and convincing evidence that timely 
notice was given in a manner reasonably calculated to satisfy 
the requirements of section 802(c). In addition, it must be 
established that either the notice was sent to the safe harbor 
address listed in the register maintained by the clerk for the 
district where the bankruptcy case is pending or, if no safe 
harbor address was specified by the governmental unit, an 
officer of such unit who has responsibility for the matter and 
claim had actual knowledge of the case in sufficient time to 
act.

Section 803. Notice of request for a determination of taxes

    This section amends section 505(b) of the Bankruptcy Code 
to require that notice of a request for a determination of 
taxes substantially comply with the taxing authority's notice 
procedures.103
---------------------------------------------------------------------------
    \103\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 951 (1997).
---------------------------------------------------------------------------

Section 804. Rate of interest on tax claims

    This section enacts a new provision in the Bankruptcy Code 
specifying the rate of interest for tax claims. For secured and 
unsecured ad valorem tax claims, other unsecured tax claims for 
which interest must be paid under Section 726(a)(5) of the 
Bankruptcy Code, secured tax claims, and administrative tax 
claims pursuant to section 503(b)(1) of the Bankruptcy Code, 
the rate is determined under applicable nonbankruptcy law.
    For all other tax claims, this section mandates that the 
minimum interest rate shall be the Federal short-term rate 
rounded to the nearest full percent, as determined under 
section 1274(d) of the Internal Revenue Code of 1986, plus 
three percentage points. The rate for Federal income tax claims 
is subject to any adjustment required under section 6621(d) of 
the Internal Revenue Code. As to taxes paid under a confirmed 
plan of reorganization, the rate is determined as of the 
calendar month in which the plan is confirmed.

Section 805. Tolling of priority of tax claim time periods

    This section suspends the applicable time periods 
pertaining to the priority status of tax claims determined. 
Under section 507(a) of the Bankruptcy Code. Specifically, it 
provides that the three-year period in section 507(a)(8)(A)(i) 
is extended for the period during which a stay of proceedings 
was in effect plus six months. This section also amends the 
240-day provisions of section 507(a)(8)(A)(ii) to take into 
account the pendency of an installment agreement and a stay of 
proceedings against collection. Specifically, it tolls this 
period for 30 days plus the time that an installment agreement 
was pending during the240-day period, up to one year. It also 
tolls the period for six months if a stay of proceedings against 
collections was in effect in a prior bankruptcy case during such 240-
day period.

Section 806. Priority property taxes incurred

    This section amends the Bankruptcy Code's priority 
provisions with respect to property taxes. Under section 
507(a)(8)(B) of the Bankruptcy Code, these taxes are determined 
based on date of assessment. At the time a bankruptcy case is 
filed, however, a property tax may not have been assessed. This 
amendment addresses this problem by revising section 
507(a)(8)(B) to make the determination based on when a priority 
tax claim is incurred.

Section 807. Chapter 13 discharge of fraudulent and other taxes

    Debtors who seek bankruptcy relief under chapter 7 of the 
Bankruptcy Code are not able to discharge certain types of tax 
claims as specified in section 523(a)(1) of the Bankruptcy 
Code. Under current law, however, these same tax claims are 
dischargeable in a chapter 13 case.104 This section 
modifies chapter 13's discharge provisions to make these debts 
nondischargeable.
---------------------------------------------------------------------------
    \104\ 11 U.S.C. Sec. 1328(a).
---------------------------------------------------------------------------

Section 808. Chapter 11 discharge of fraudulent taxes

    Where the chapter 11 debtor is a corporation, this section 
amends chapter 11's discharge provisions to prohibit the 
discharge of any debt for a tax or customs duty resulting from 
a fraudulent tax return filed by the debtor. It also prevents 
the discharge of any unpaid tax or customs duty resulting from 
a corporate chapter 11 debtor's willful attempt to evade or 
defeat such obligation.

Section 809. Stay of tax proceedings

    Upon the filing of a bankruptcy case, a broad stay of most 
creditor collection actions immediately and automatically goes 
into effect.105 This section modifies the scope of 
the automatic stay to provide that it only prevents the 
commencement or continuation of tax proceedings for tax 
liabilities incurred for a tax period ending before the date on 
which the order for relief is entered. This section also carves 
out a specific exception from the automatic stay for appeals of 
tax determinations by courts or administrative tribunals. Under 
this provision, the automatic stay does not apply to an appeal 
of a decision in either a court or administrative tribunal that 
determines a tax liability of a debtor, regardless of whether 
such determination was made pre- or postpetition.
---------------------------------------------------------------------------
    \105\ See 11 U.S.C. Sec. 362(a).
---------------------------------------------------------------------------

Section 810. Periodic payment of taxes in chapter 11 cases

    Section 1129(a)(9)(C) of the Bankruptcy Code requires, as a 
condition of confirmation, that a chapter 11 plan must provide 
for payment of priority tax claims over a period that does not 
exceed six years from the date of assessment of such claims. 
This section amends this provision to require that these claims 
must be paid in cash by regular installment payments, not 
longer than three months apart, that begin on the plan's 
effective date. This provision specifically prohibits balloon 
payments. It also requires all payments to be made within five 
years of the petition date or the last date payments are to be 
made to other creditors under the chapter 11 plan.
    For secured claims that would be entitled to priority under 
section 507(a)(8) of the Bankruptcy Code if they were unsecured 
claims, the holder of such claim must receive cash payments in 
accordance with section 1129(a)(9)(C) of the Bankruptcy Code, 
as amended by this provision.

Section 811. Avoidance of statutory tax liens prohibited

    This section creates an exception to section 545(2)'s 
avoidance provisions for statutory liens. Specifically, it 
provides that a statutory lien on property of the debtor that 
is unperfected or unenforceable against a bona fide purchaser 
at the time the case is filed may be avoided unless the 
purchaser qualifies under section 6323 of the Internal Revenue 
Code 106 or similar provision under State or local 
law.
---------------------------------------------------------------------------
    \106\  Section 6323 of the Internal Revenue Code defines 
``purchaser'' as a person who, for adequate consideration, acquires an 
interest (other than a lien or security interest) in property, which is 
valid under local law against subsequent purchasers without notice.
---------------------------------------------------------------------------

Section 812. Payment of taxes in the conduct of business

    This section provides four additional protections to ensure 
the payment of tax obligations in bankruptcy cases. Section 
812(a) requires bankruptcy trustees and chapter 11 debtors in 
possession to pay tax obligations when they are due in the 
course of the debtors' business,107 with only one 
limited exception. 108 This provision does not apply 
if such payment is excused under a provision of the Bankruptcy 
Code. In addition, it permits a chapter 7 trustee to defer this 
payment if the tax was not incurred by the trustee or if the 
court has determined that there are insufficient funds in the 
estate to pay administrative expenses that have the same 
priority in distribution under section 726 as the unpaid tax 
obligation.
---------------------------------------------------------------------------
    \107\ Section 960 of Title 28 of the United States Code presently 
requires bankruptcy trustees and debtors in possession to pay tax 
obligations, but does not state how or when such payments must be made.
    \108\ The exception applies to property of the estate, subject to a 
secured property tax lien, that is abandoned.
---------------------------------------------------------------------------
    Section 812(b) amends section 503(b)(1)(B)(i) of the 
Bankruptcy Code to clarify thatsecured and unsecured tax 
obligations incurred postpetition by a bankruptcy estate, including 
property taxes, are entitled to administrative expense priority. The 
present provisions of the Bankruptcy Code do not so 
specify.109
---------------------------------------------------------------------------
    \109\ See 11 U.S.C. Sec. 503(b)(1)(B). The National Bankruptcy 
Review Commission recommended that postpetition ad valorem real estate 
taxes be entitled to administrative expense status. See Report of the 
National Bankruptcy Review Commission, at 956 (1997).
---------------------------------------------------------------------------
    Section 812(c) amends section 503(b)(1) of the Bankruptcy 
Code to eliminate the need for a governmental unit to file a 
request for payment of an administrative expense relating to a 
tax liability, as specified in section 503(b)(1)(B) or a tax 
penalty, as specified in section 503(b)(1)(C). Under current 
law, holders of administrative expense claims must submit a 
request for payment of such claims.
    Section 812(d) amends section 506(b) of the Bankruptcy Code 
(which determines the entitlement of secured claimants to 
interest, fees, and costs pursuant to the underlying agreement) 
to extend this entitlement to state tax claimants. This 
provision also amends section 506(c) of the Bankruptcy Code 
(which allows a trustee to recover from property securing an 
allowed secured claim certain costs) to include provision for 
payment of ad valorem property taxes relating to such property.

Section 813 Tardily filed priority tax claims

    To receive a payment in an asset chapter 7 case, a creditor 
must file a proof of claim.110 Once the case is 
fully administered, the chapter 7 trustee prepares a final 
report and account,111 which then is noticed to all 
creditors and other parties in interest. Thereafter, the 
chapter 7 trustee can commence making distribution to creditors 
who have filed proofs of claim. Under current law, creditors 
holding priority claims in asset chapter 7 cases must file 
their proofs of claim before the date on which the trustee 
commences making distribution to creditors in the estate. 
Certain types of tax claims are entitled to priority 
status.112
---------------------------------------------------------------------------
    \110\ See 11 U.S.C. Sec. 502.
    \111\ See 11 U.S.C. Sec. 704(9).
    \112\ See, e.g., 11 U.S.C. Sec. 507(a).
---------------------------------------------------------------------------
    This section permits a priority tax claim to be filed 
either before the trustee commences final distribution under 
section 726 or ten days following the mailing to creditors of 
the summary of the trustee's final report, whichever is 
earlier.

Section 814. Income tax returns prepared by tax authorities

    Section 523(a)(1)(B) of the Bankruptcy Code prohibits the 
discharge of certain types of tax claims. This section extends 
these nondischargeability provisions to include obligations 
based on equivalent reports or notices. It also specifies that 
a tax return, for purposes of section 523(a)(1)(B) must satisfy 
the requirements of applicable nonbankruptcy law and that it 
must include a return prepared pursuant to section 6020(a) of 
the Internal Revenue Code of 1986 or similar State or local 
law. A return, under this provision, also includes a written 
stipulation to a judgment entered by a nonbankruptcy tribunal, 
but it does not include a tax return prepared under section 
6020(b) of the Internal Revenue Code or similar State or local 
law.

Section 815. The discharge of the estate's liability for unpaid taxes

    Under certain conditions, section 505(b) of the Bankruptcy 
Code provides for the discharge of tax liability for a 
bankruptcy trustee, debtor, and successor of the debtor after 
the expiration of certain time periods following a request made 
to a government unit for a determination of such liability. 
This section clarifies that this protection extends to the 
bankruptcy estate.

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

    As a condition of confirming a chapter 13 plan, section 
816(a) requires a chapter 13 debtor to file all Federal, State, 
and local tax returns for the three-year period preceding the 
filing of the case on or before the first meeting of 
creditors.113 If the debtor fails to meet this 
deadline, the trustee may continue the meeting for a reasonable 
period of time to give the debtor additional time to comply 
with this requirement, subject to certain limitations specified 
in section 816(b). A chapter 13 debtor may apply for an 
extension of these time periods upon a showing by clear and 
convincing evidence that the failure to file the returns was 
due to circumstances beyond his or her control.
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    \113\ For purposes of this provision, a ``return'' includes one 
prepared under section 6020(a) or (b) of the Internal Revenue Code or 
similar state or local law. In addition, it also includes a judgment 
entered by a nonbankruptcy tribunal.
---------------------------------------------------------------------------
    Pursuant to section 816(c), if the chapter 13 debtor does 
not file the requisite tax returns, the court on request of a 
party in interest or the United States trustee must dismiss the 
case or convert it to one under chapter 7, whichever is in the 
best interests of creditors.
    Section 816(d) amends section 502(b)(9) to create an 
additional exception to this provision's disallowance of 
tardily filed claims. Specifically, section 816(d) provides 
that in a chapter 13 case, a governmental unit's tax claim with 
respect to a return filed by the debtor pursuant to section 
1308, as codified by section 816(b), is timely filed if it is 
filed on or before 60 days after such return is filed.
    Section 816(e) expresses a sense of the Congress that the 
Advisory Committee on Bankruptcy Rules of the Judicial 
Conference of the United States should, within a reasonable 
period of time after enactment of the bill, propose rules 
setting forth procedures by which a governmental unit may 
object to confirmation of a chapter 13 debtor's plan under 
certain specified circumstances and with respect to the 
necessity to file an objection to certain tax claims relating 
to returns filed pursuant to section 1308, as codified by 
section 816(b).

Section 817. Standards for tax disclosure

    A key component of the plan confirmation process in chapter 
11 cases is the disclosure statement. The disclosure statement 
is a document that must be sent to creditors and other parties 
in interest who are affected by a chapter 11 
plan.114 The purpose of the disclosure statement is 
to provide adequate information about the plan so that those 
who are affected by it can make an informed judgment about the 
plan. 115
---------------------------------------------------------------------------
    \114\ See 11 U.S.C. Sec. 1125(b).
    \115\ See 11 U.S.C. Sec. 1125(a).
---------------------------------------------------------------------------
    This section mandates that the disclosure statement include 
a full discussion of the potential material Federal, State, and 
local tax consequences of the plan to the debtor, any successor 
of the debtor, and a hypothetical investor domiciled in the 
state where the debtor resides or has its principal place of 
business that is typical of creditors and interest holders in 
the case.116
---------------------------------------------------------------------------
    \116\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 960 (1997).
---------------------------------------------------------------------------

Section 818. Set off of tax refunds

    The automatic stay prevents the commencement and 
continuation of various efforts by creditors to collect 
prepetition obligations against either the debtor or the 
debtor's property.117 This section creates an 
exception to allow a governmental unit to set off an income tax 
refund relating to a prepetition tax period against a 
prepetition income tax liability for a prepetition tax 
period.118 This exception does not apply if, prior 
to such setoff, an action to determine the amount or legality 
of the underlying tax liability under section 505(a) was 
commenced. If the setoff is not permitted because of a pending 
action to determine the amount or legality of the underlying 
tax liability is pending, the governmental unit may hold the 
refund pending the resolution of such action.
---------------------------------------------------------------------------
    \117\ See 11 U.S.C. Sec. 362(a).
    \118\ The National Bankruptcy Review Commission made a similar 
recommendation. See Report of the National Bankruptcy Review 
Commission, at 818-22 (1997).
---------------------------------------------------------------------------

            Title IX--Ancillary and Other Cross-Border Cases

    Title IX adds a new chapter to the Bankruptcy Code for 
transnational bankruptcy cases. This incorporates the Model Law 
on Cross-Border Insolvency to encourage cooperation between the 
United States and foreign countries with respect to 
transnational insolvency cases. Title IX is intended to provide 
greater legal certainty for trade and investment as well as to 
provide for the fair and efficient administration of cross-
border insolvencies, which protects the interests of creditors 
and other interested parties, including the debtor. In 
addition, it serves to protect and maximize the value of 
debtor's assets.

Section 1501. Purpose and Scope of Application

    The chapter introduces into the Bankruptcy Code the Model 
Law on Cross-Border Insolvency (``Model Law''), which was 
promulgated by the United Nations Commission on International 
Trade Law (``UNCITRAL'') at its Thirtieth Session, May 12-30, 
1997.119
---------------------------------------------------------------------------
    \119\ The text of the Model Law and the Report of UNCITRAL on its 
adoption are found at U.N. G.A., 52d Sess., Supp. No. 17 (A/52/17) 
[``Report'']. That Report and the Guide to Enactment of the UNCITRAL 
Model Law on Cross-Border Insolvency, U.N. Gen. Ass., UNCITRAL 30th 
Sess. U.N. Doc. A/CN.9/442 (1997) [``Guide''], which was discussed in 
the negotiations leading to the Model Law and published by UNCITRAL as 
an aid to enacting countries, should be consulted for guidance as to 
the meaning and purpose of its provisions. The development of the 
provisions in the negotiations at UNCITRAL, in which the United States 
was an active participant, is recounted in the interim reports of the 
Working Group that are cited in the Report.
---------------------------------------------------------------------------
    Cases brought under this chapter are intended to be 
ancillary to cases brought in a debtor's home country, unless a 
full United States bankruptcy case is brought under another 
chapter. Even if a full case is brought, the court may decide 
under section 305 of the Bankruptcy Code to stay or dismiss the 
United States case under the other chapter and limit the United 
States'' role to an ancillary case under this 
chapter.120 If the full case is not dismissed, it 
will be subject to the provisions of this chapter governing 
cooperation, communication and coordination with the foreign 
courts and representatives.
---------------------------------------------------------------------------
    \120\ See section 1529 and commentary.
---------------------------------------------------------------------------
    In any case, an order granting recognition is required as a 
prerequisite to the use of sections 301 and 303 by a foreign 
representative. Section 1501 combines the Preamble to the Model 
Law (subsection 1) with its article 1 (subsections 2 and 
3).121
---------------------------------------------------------------------------
    \121\ Guide at 16-19.
---------------------------------------------------------------------------
    It largely follows the language of the Model Law and fills 
in blanks with appropriate United States references. However, 
it adds in subsection 3 an exclusion of certain natural persons 
who may be considered ordinary consumers. Although the consumer 
exclusion is not in the text of the Model Law, the discussions 
at UNCITRAL recognized that some such exclusion would be 
necessary in countries like the United States where there are 
special provisions for consumer debtors in the insolvency 
laws.122
---------------------------------------------------------------------------
    \122\ See id. at 18 para. 60; 19 para. 66.
---------------------------------------------------------------------------
    The reference to section 109(e) essentially defines 
``consumer debtors'' for purposes of the exclusion by 
incorporating the debt limitations of that section, but not its 
requirement of regular income. The exclusion adds a requirement 
that the debtor or debtor couple be citizens or long-term legal 
residents of the United States. This ensures that residents of 
other countries will not be able to manipulate this exclusion 
to avoid recognition of foreign proceedings in their home 
countries or elsewhere.
    The first exclusion in subsection c constitutes for the 
United States the exclusion provided in article 1, subsection 
2, of the Model Law.123 The reference to section 
109(b) interpolates to the entities governed by different 
insolvency regimes under United States law which are therefore 
currently excluded from liquidation proceedings under Title 11.
---------------------------------------------------------------------------
    \123\ Id. at 17.
---------------------------------------------------------------------------

Section 1502. Definitions

    ``Debtor'' is given a special definition for this chapter. 
That definition does not come from the Model Law but is 
necessary to eliminate the need to refer repeatedly to ``the 
same debtor as in the foreign proceeding.'' With certain 
exceptions, the term ``person'' used in the Model Law has been 
replaced with ``entity,'' which is defined broadly in section 
101(15) to include natural persons and various legal entities, 
thus matching the intended breadth of the term ``person'' in 
the Model Law. The exceptions include contexts in which a 
natural person is intended and those in which the Model Law 
language already refers to both persons and entities other than 
persons. The definition of ``trustee'' for this chapter ensures 
that debtors in possession and debtors; as well as trustees, 
are included in the term.124
---------------------------------------------------------------------------
    \124\ See section 1505.
---------------------------------------------------------------------------
    The definition of ``within the territorial jurisdiction of 
the United States'' in subsection (7) is not taken from the 
Model Law. It has been added because the United States, like 
some other countries, asserts insolvency jurisdiction over 
property outside its territorial limits under appropriate 
circumstances. Thus a limiting phrase is useful where the Model 
Law and this chapter intend to refer only to property within 
the territory of the enacting state.
    Two key definitions of ``foreign proceeding'' and ``foreign 
representative,'' are found in subsections 101(24)-(25), which 
have been amended consistent with Model Law article 
2.125
---------------------------------------------------------------------------
    \125\ Guide at 19-21 paras. 67-68.
---------------------------------------------------------------------------
    The definitions of ``establishment,'' ``foreign court,'' 
``foreign main proceeding,'' and ``foreign non-main 
proceeding'' have been taken from Model Law article 2, with 
only minor language variations necessary to comport with United 
States terminology. Additionally, defined terms have been 
placed in alphabetical order.126
---------------------------------------------------------------------------
    \126\ See Guide at 19, (Model Law) 21 para. 75 (concerning 
establishment) 21 para. 74 (concerning foreign court) 21 paras. 72, 73 
and 75 (concerning foreign main and non-main proceedings).
---------------------------------------------------------------------------
    In order to at least be recognized as a foreign non-main 
proceeding, the debtor must at least have an establishment in 
that foreign country.127
---------------------------------------------------------------------------
    \127\ See id. at 21 para. 75.
---------------------------------------------------------------------------

Section 1503. International obligations of the United States

    This section is taken exactly from the Model Law with only 
minor adaptations of terminology.128 Although this 
section makes an international obligation prevail, the courts 
will attempt to read the Model Law and the international 
obligation so as not to con-

flict, especially if the international obligation addresses a 
subject matter less directly related than the Model Law to a 
case before the court.
---------------------------------------------------------------------------
    \128\ See id. at 22 Art. 3.
---------------------------------------------------------------------------

Section 1504. Commencement of ancillary case

    This section paraphrases current section 304(a), which is 
repealed. Article 4 of the Model Law is designed for 
designation of the competent court which will exercise 
jurisdiction under the Model Law. In United States law, 
subsection 1334(a) of title 28, gives exclusive jurisdiction to 
the district courts in a ``case'' under this 
title.129
---------------------------------------------------------------------------
    \129\ See id. at 23 (Article 4).
---------------------------------------------------------------------------
    Therefore, since the competent court has been determined in 
title 28, this section instead provides that a petition for 
recognition opens a ``case,'' an approach that also invokes a 
number of other useful procedural provisions. In addition, a 
new subsection (P) of section 157 of title 28 makes cases under 
this chapter part of the core jurisdiction of bankruptcy courts 
when referred to them by the district courts, thus completing 
the designation of the competent court. Finally, the particular 
bankruptcy court that will rule on the petition is determined 
pursuant to section 1410 of title 28 governing venue and 
transfer.
    The title ``ancillary'' in this section and in the title of 
this chapter emphasizes the United States policy in favor of a 
general rule that countries other than the home country of the 
debtor, where a main proceeding would be brought, should 
usually act through ancillary proceedings in aid of the main 
proceedings, in preference to a system of full bankruptcies 
(often called ``secondary'' proceedings) in each state where 
assets are found. Under the Model Law, notwithstanding the 
recognition of a foreign main proceeding full bankruptcy cases 
are permitted in each country (see sections 1528 and 1529). In 
the United States, the court will have the power to suspend or 
dismiss such cases where appropriate under section 305.
    Additional assistance under the successor provision to 
current section 304 is set forth in section 1507.

Section 1505. Authorization to act in a foreign country

    The language in this section varies from the wording of 
article 5 of the Model Law as necessary to comport with United 
States law and terminology. The slight alteration to the 
language in the last sentence is meant to emphasize that the 
identification of the entity entitled to act is under United 
States law, while the scope of actions that may be taken by 
[that entity] under foreign law is limited by the foreign 
law.130
---------------------------------------------------------------------------
    \130\ Id. at 24.
---------------------------------------------------------------------------
    The related amendments to chapters 7 and 11 make acting 
pursuant to authorization under this section an additional 
power of a trustee or debtor in possession.
    While the Model Law automatically authorizes an 
administrator to act abroad, this section requires all trustees 
and debtors to obtain court approval before acting abroad. That 
requirement is a change from the language of the Model Law, but 
one that is purely internal to United States law.131
---------------------------------------------------------------------------
    \131\ See id. at 24 (Article 5).
---------------------------------------------------------------------------
    Its main purpose is to ensure that the court has knowledge 
and control of possibly expensive activities, but it will have 
the collateral benefit of providing further assurance to 
foreign courts that the United States debtor or representative 
is under judicial authority and supervision. This requirement 
means that the first-day orders in reorganization cases should 
include authorization to act under this section where 
appropriate.
    This section also contemplates the designation of an 
examiner or other natural person to act for the estate in one 
or more foreign countries where appropriate. One instance might 
be a case in which the designated person had a special 
expertise relevant to that assignment. Another might be where 
the foreign court would be more comfortable with a designated 
person than with an entity like a debtor in possession. Either 
are to be recognized under the Model Law.132
---------------------------------------------------------------------------
    \132\ See id. at 23-24 and para. 82.
---------------------------------------------------------------------------

Section 1506. Public policy exception

    This provision follows the Model Law article 5 exactly, is 
standard in UNCITRAL texts and has been narrowly interpreted on 
a consistent basis in courts around the world. The word 
``manifestly'' in international usage restricts the public 
policy exception to the most fundamental policies of the United 
States.133
---------------------------------------------------------------------------
    \133\ See id. at 25.
---------------------------------------------------------------------------

Section 1507. Additional assistance

    Subsection 1 follows the language of Model Law article 
7.134
---------------------------------------------------------------------------
    \134\ Id. at 26.
---------------------------------------------------------------------------
    Subsection 2 makes the authority for additional relief 
subject to [the conditions for relief in] existing United 
States law under section 304, which is repealed. This section 
is intended to permit the further development of international 
cooperation begun under section 304, but is not to be the basis 
for denying or limiting relief otherwise available under this 
chapter. The additional assistance is made conditional upon the 
court's consideration of the factors set forth in the current 
subsection 304(c) in a context of a reasonable balancing of 
interests following current case law. The references to 
``estate'' in the current subsection have been changed to refer 
to the debtor's property, because many foreign systems do not 
create an estate in insolvency proceedings of the sort 
recognized under this chapter. Although the case law construing 
section 304 clearly makescomity the central consideration, its 
physical placement as one of six factors in subsection (c) of section 
304 is misleading. Therefore, in subsection 2 of this section, comity 
is raised to the introductory language to make it clear that it is the 
central concept to be addressed.\135\
---------------------------------------------------------------------------
    \135\ Id. at 26.
---------------------------------------------------------------------------

Section 1508. Interpretation

    This section follows conceptually Model Law article 8 and 
is a standard one in recent UNCITRAL treaties and model laws. 
Language changes were made to express the concepts more clearly 
in United States vernacular.\136\
---------------------------------------------------------------------------
    \136\ Id. at 26 paras. 91.
---------------------------------------------------------------------------
    Interpretation of this chapter on a uniform basis will be 
aided by reference to the Guide and the Reports cited therein, 
which explain the reasons for the terms used and often cite 
their origins as well. Uniform interpretation will also be 
aided by reference to CLOUT, the UNCITRAL Case Law On Uniform 
Texts, which is a service of UNCITRAL. CLOUT receives reports 
from national reporters all over the world concerning court 
decisions interpreting treaties, model laws, and other texts 
promulgated by UNCITRAL. Not only are these sources persuasive, 
but they are important to the crucial goal of uniformity of 
interpretation. To the extent that the United States courts 
rely on these sources, their decisions will more likely be 
regarded as persuasive elsewhere.

Section 1509. Right of direct access

    This section implements the purpose of article 9 of the 
Model Law, enabling a foreign representative to commence a case 
under this chapter by filing a petition directly with the court 
without preliminary formalities that may delay or prevent 
relief. It varies the language to fit United States procedural 
requirements and it imposes recognition of the foreign 
proceeding as a condition to further rights and duties of the 
foreign representative. Only if recognition is granted; the 
foreign representative will have full capacity under U.S. law 
(subsection (b)(1)), may request such relief in a state or 
federal court other than the bankruptcy court (subsection 
(b)(2)) and may be granted comity or cooperation by such a non-
bankruptcy court (subsection (b)(3) and (c)). Subsections 
(b)(2), (b)(3) and (c) make it clear that chapter 15 is 
intended to be the exclusive door to ancillary assistance to 
foreign proceedings. The goal is to concentrate control of 
these questions in one court. That goal is important in a 
federal system like the United States with many different 
courts, state and federal, that may have pending actions 
involving the debtor or the debtor's property. This section, 
therefore, completes for the United States the work of article 
4 of the Model Law (``competent court'') as well as article 
9.\137\
---------------------------------------------------------------------------
    \137\ See id. at 23, (Article 4, paras. 79-83) 27 (Article 9, para. 
93).
---------------------------------------------------------------------------
    Although a petition under current section 304 is the proper 
method for achieving deference by a United States court to a 
foreign insolvency under present law, some cases in state and 
federal courts under current law have granted comity suspension 
or dismissal of cases involving foreign proceedings without 
requiring a section 304 petition or even referring to the 
requirements of that section. Even if the result is correct in 
a particular case, the procedure is undesirable, because there 
is room for abuse of comity. Parties would be free to avoid the 
requirements of this chapter and the expert scrutiny of the 
bankruptcy court by applying directly to a state or federal 
court unfamiliar with the statutory requirements. Such an 
application could be made after denial of a petition under this 
chapter. This section concentrates the recognition and 
deference process in one United States court, ensures against 
abuse, and empowers a court that will be fully informed of the 
current status of all foreign proceedings involving the 
debtor.\138\
---------------------------------------------------------------------------
    \138\ See id. at 27 (Article 9), 34-35 (Article 15 and paras. 116-
119, 35), 39-40 (Article 18, paras. 133-134); see also subsection 
1515(3) and Section 1518.
---------------------------------------------------------------------------
    Subsection (d) has been added to ensure that a foreign 
representative cannot seek relief in courts in the United 
States after being denied recognition by the court under this 
chapter.
    Subsection (e) makes operations in the United States by a 
foreign representative subject to applicable United States law, 
just as 28 U.S.C. 959 does for a domestic trustee in 
bankruptcy.\139\
---------------------------------------------------------------------------
    \139\ Id. at 27, para. 93.
---------------------------------------------------------------------------
    Subsection (f) provides a limited exception to the prior 
recognition requirement so that collection of a claim which is 
property of the debtor, for example an account receivable, by a 
foreign representative may proceed without commencement of a 
case or recognition under this chapter.

Section 1510. Limited jurisdiction

    Section 1510, article 10 of the Model Law, is modeled on 
section 306 of the Code. Although the language referring to 
conditional relief in section 306 is not included, the court 
has the power under section 1522 to attach appropriate 
conditions to any relief it may grant. Nevertheless, the 
authority in section 1522 is not intended to permit the 
imposition of jurisdiction over the foreign representative 
beyond the boundaries of the case under this chapter and any 
related actions the foreign representative may take, such as 
commencing a case under another chapter of this title.

Section 1511. Commencement of case under section 301 or 303

    This section follows the intent of article 11 of the Model 
Law, but adds language that conforms to United States law or 
that is otherwise necessary in the United States given its many 
bankruptcy court districts and the importance of full 
information-sharing and coordination among them.\140\ Article 
11 does not distinguish between voluntary and involuntary 
proceedings, but seems to have implicitly assumed an 
involuntary proceeding.\141\
---------------------------------------------------------------------------
    \140\ See id. at 28 (Article 11).
    \141\ Id. at 28 paras. 97-99.
---------------------------------------------------------------------------
    Subsection 1(a)(2) goes farther and permits a voluntary 
filing, with its much simpler requirements, if the foreign 
proceeding is a main proceeding.

Section 1512. Participation of a foreign representative in a case under 
        this title

    This section follows article 12 of the Model Law with a 
slight alteration to tie into United States procedural 
terminology.\142\ The effect of this section is to make the 
recognized foreign representative a party in interest in any 
pending or later commenced United States bankruptcy case.\143\
---------------------------------------------------------------------------
    \142\ Id. at 29 (Article 12).
    \143\ Id. at 29 paras. 10-102.
---------------------------------------------------------------------------
    Throughout this chapter, the word ``case'' has been 
substituted for the word ``proceeding'' in the Model Law when 
referring to cases under the United States Bankruptcy Code, to 
conform to United States usage.

Section 1513. Access of foreign creditors to a case under this title

    This section mandates nondiscriminatory or ``national'' 
treatment for foreign creditors, except as provided in 
subsection (b) and section 1514. It follows the intent of Model 
Law article 13, but the language has been altered to conform 
with the Bankruptcy Code.\144\
---------------------------------------------------------------------------
    \144\ Id. at 30 para. 103.
---------------------------------------------------------------------------
    The law as to priority for foreign claims that fit within a 
class given priority treatment under section 507 (for example, 
foreign employees or spouses) is unsettled. This section 
permitsthe continued development of case law on that subject 
and its general principle of national treatment should be an important 
factor to be considered. At a minimum, under this section, foreign 
claims must receive the treatment given to general unsecured claims 
without priority, unless they are in a class of claims in which 
domestic creditors would also be subordinated.\145\
---------------------------------------------------------------------------
    \145\ See id. at 30 para. 104.
---------------------------------------------------------------------------
    The Model Law allows for an exception to nondiscrimination 
as to foreign revenue and other public law claims.\146\ Such 
claims (such as tax and social security claims) have been 
denied enforcement in the United States traditionally, inside 
and outside of bankruptcy. The Bankruptcy Code is silent on 
this point, so the rule is purely a matter of traditional case 
law. It is not clear if this policy should be maintained or 
modified, so this section leaves it to developing case law. It 
also allows the Department of Treasury to negotiate reciprocal 
arrangements with our tax treaty partners in this regard, 
although it does not mandate any restriction of the evolution 
of case law pending such negotiations.
---------------------------------------------------------------------------
    \146\ See Id. at 31 para. 105.
---------------------------------------------------------------------------

Section 1514. Notification of foreign creditors concerning a case under 
        title 11

    This section ensures that foreign creditors receive proper 
notice of cases in the United States.\147\ As ``foreign 
creditor'' is not a defined term; foreign addresses are used as 
the distinguishing factor. The Federal Rules of Bankruptcy 
Procedure should be amended to conform to the requirements of 
this section, including a special form for notice to such 
creditors. In particular, the rules must provide for additional 
time for such creditors to file proofs of claim where 
appropriate and must provide for the court to make specific 
orders in that regard in proper circumstances. Of course, if a 
foreign creditor has made an appropriate request for notice, it 
will receive notices in every instance where notices would be 
sent to other creditors who have made such requests. The notice 
must specify that secured claims must be asserted, because in 
many countries such claims are not affected by an insolvency 
proceeding and need not be filed.\148\
---------------------------------------------------------------------------
    \147\ See Model Law Article 14 and Guide at 31-32 paras. 106-109.
    \148\ Guide at 33 para 111.
---------------------------------------------------------------------------
    Subsection (d) replaces the reference to ``a reasonable 
time period'' in Model Law article 14(3)(a).\149\ It makes 
clear that the Federal Rules of Bankruptcy Procedure, local 
rules, and court orders must make appropriate adjustments in 
time periods and bar dates so that foreign creditors have a 
reasonable time within which to receive notice or take an 
action.
---------------------------------------------------------------------------
    \149\ Id. at 31 (Article 14(3)(a)).
---------------------------------------------------------------------------

Section 1515. Application for recognition of a foreign proceeding

    This section follows article 15 of the Model Law with minor 
changes.\150\ The rules will require amendment to provide forms 
for some or all of the documents mentioned in this section, to 
make necessary additions to rules 1000 and 2002 of the Federal 
Rules of Bankruptcy Procedure to facilitate appropriate notices 
of the hearing on the petition for recognition, and to require 
filing of lists of creditors and other interested persons who 
should receive notices. Throughout the Model Law, the question 
of notice procedure is left to the law of the enacting 
state.\151\
---------------------------------------------------------------------------
    \150\ Id. at 33.
    \151\ See id. at 36 para. 121.
---------------------------------------------------------------------------

Section 1516. Presumptions concerning recognition

    This section follows article 16 of the Model Law with minor 
changes.\152\
---------------------------------------------------------------------------
    \152\ Id. at 36.
---------------------------------------------------------------------------
    Although sections 1515 and 1516 are designed to make 
recognition as simple and expedient as possible, the court may 
hear proof on any element stated. The ultimate burden as to 
each element is on the foreign representative, although the 
court is entitled to shift the burden to the extent indicated 
in section 1516. The word ``proof'' in subsection 3 has been 
changed to ``evidence'' to make it clearer using United States 
terminology that the ultimate burden is on the foreign 
representative.\153\
---------------------------------------------------------------------------
    \153\ Id. at 36 (Article 16(3)).
---------------------------------------------------------------------------
    ``Registered office'' is the term used in the Model Law to 
refer to the place of incorporation or the equivalent for an 
entity that is not a natural person.\154\
---------------------------------------------------------------------------
    \154\ Id. at 36 (Article 16(3)).
---------------------------------------------------------------------------
    The presumption that the place of the registered office is 
also the center of the debtor's main interest is included for 
speed and convenience of proof where there is no serious 
controversy.

Section 1517. Order recognizing a foreign proceeding

    This section closely follows article 17 of the Model Law, 
with a few exceptions.\155\ The decision to grant recognition 
is not dependent upon any findings about the nature of the 
foreign proceedings of the sort previously mandated by section 
304(c). The requirements of this section, which incorporates 
the definitions in section 1502 and subsections 101(23) and 
(24), are all that must be fulfilled to attain recognition.
---------------------------------------------------------------------------
    \155\ Id. at 37.
---------------------------------------------------------------------------
    The drafters of the Model Law understood that only a main 
proceeding or a non-main proceeding meeting the standards of 
section 1502 (that is, one brought where the debtor has an 
establishment) were entitled to recognition under this section. The 
Model Law has been slightly modified to make this point clear by 
referring to the section 1502 definition of main and non-main 
proceedings, as well as to the general definition of a foreign 
proceeding in section 101(23). Naturally, a petition under section 1515 
must show that proceeding is a main or a qualifying non-main proceeding 
in order to win recognition under this section.
    Consistent with the position of various civil law 
representatives in the drafting of the Model Law, recognition 
creates a status with the effects set forth in section 1520, so 
those effects are not viewed as orders to be modified, as are 
orders granting relief under sections 1519 and 1521. Subsection 
4 states the grounds for modifying or terminating recognition. 
On the other hand, the effects of recognition are subject to 
modification under section 362(d), made applicable by section 
1520(2), which permits lifting the stay of section 1520 for 
cause.
    Paragraph 1(d) of section 17 of the Model Law has been 
omitted as an unnecessary requirement for United States 
purposes, because a petition submitted to the wrong court will 
be dismissed or transferred under other provisions of United 
States law.156
---------------------------------------------------------------------------
    \156\ Id. at 37 (Article 17(1)(d)).
---------------------------------------------------------------------------
    The reference to section 350 refers to the routine closing 
of a case that has been completed and will invoke requirements 
including a final report from the foreign representative in 
such form as the rules or a court order may 
provide.157
---------------------------------------------------------------------------
    \157\ Id. at 37 (Article 17(1)(d)).
---------------------------------------------------------------------------

Section 1518. Subsequent information

    This section follows the Model Law, except to eliminate the 
word ``same'' which is rendered unnecessary by the definition 
of ``debtor'' in section 1502 and to provide for a formal 
document to be filed with the court.158
---------------------------------------------------------------------------
    \158\ Id. at 39-40 paras. 133-134.
---------------------------------------------------------------------------
    Judges in several jurisdictions, including the United 
States, have reported the need for a requirement of complete 
and candid reports to the court of all proceedings, worldwide, 
involving the debtor. This provision will ensure that such 
information is provided to the court on a timely basis. Any 
failure to comply with this section will be subject to the 
sanctions available to the court for violations of the statute. 
The section leaves to the Rules the form of the required notice 
and related questions of notice to parties in interest, the 
time for filing, and the like.

Section 1519. Relief that may be granted upon petition for recognition 
        of a foreign proceeding

    This section generally follows article 19 of the Model 
Law.159 The bankruptcy court will have jurisdiction 
to grant emergency relief under Rule 7065 pending a hearing on 
the petition for recognition. This section does not expand or 
reduce the scope of section 105 as determined by cases under 
section 105 nor does it modify the sweep of sections 555 to 
560.
---------------------------------------------------------------------------
    \159\ Id. at 40.
---------------------------------------------------------------------------

Section 1520. Effects of recognition of a foreign main proceeding

    In general, this section sets forth all the relief that is 
available as a matter of right based upon recognition 
hereunder, although additional assistance may be provided under 
section 1507. This chapter has no effect on any relief 
currently available under section 105 of the Bankruptcy Code.
    The stay created by article 20 of the Model Law is imported 
to chapter 15 from elsewhere in the Bankruptcy Code. Subsection 
(a)(1) combines subsection 1(a) and (b) of article 20 of the 
Model Law, because section 362 imposes the restrictions 
required by those two subsections and additional restrictions 
as well.160
---------------------------------------------------------------------------
    \160\ Id. at 42 (Article 20 1(a)(b)).
---------------------------------------------------------------------------
    Subsection (a)(2) and (4) apply the Bankruptcy Code 
sections that impose the restrictions called for by subsection 
1(c) of the Model Law. In both cases, the provisions are 
broader and more complete than those contemplated by the Model 
Law, but include all the restraints the Model Law provisions 
would impose.161
---------------------------------------------------------------------------
    \161\ Id. at 42, 45.
---------------------------------------------------------------------------
    As the foreign proceeding may or may not create an 
``estate'' similar to that created in cases under this title, 
the restraints are applicable to actions against the debtor 
under section 362(a) and with respect to the property of the 
debtor under the remaining sections. The only property covered 
by this section is property within the territorial jurisdiction 
of the United States as defined in section 1502. To achieve 
effects on property of the debtor which is not within the 
territorial jurisdiction of the United States, the foreign 
representative would have to commence a case under another 
chapter of this title.
    By applying section 362, subsection (a) makes applicable 
the United States exceptions and limitations to the restraints 
imposed on creditors, debtors, and others in a case under this 
title, as stated in article 20(2) of the Model 
Law.162
---------------------------------------------------------------------------
    \162\ Id. at 42 (Article 20(2)); 44, paras. 148, 150.
---------------------------------------------------------------------------
    These exceptions and limitations include those set forth in 
subsections 362(b), (c), and (d). As one result, the court has 
the power to terminate the stay pursuant to section 362(d), for 
cause.163
---------------------------------------------------------------------------
    \163\ Id. at 42 (Article 20(3)); 44, 45 paras. 151, 152.
---------------------------------------------------------------------------
    Subsection (a)(2), by its reference to sections 363 and 552 
adds to the powers of a foreign representative of a foreign 
main proceeding an automatic right to operate the debtor's 
business and exercise the power of a trustee under sections 363 
and 542, unless the court orders otherwise. A foreign representative of 
a foreign main proceeding may need to continue a business operation to 
maintain value and granting that authority automatically will eliminate 
the risk of delay. If the court is uncomfortable about this authority 
in a particular situation it can ``order otherwise'' as part of the 
order granting recognition.
    Two special exceptions to the automatic stay are embodied 
in subsections (b) and (c). To preserve a claim in certain 
foreign countries, it may be necessary to commence an action. 
Subsection (b) permits the commencement of such an action, but 
would not allow for its further prosecution. Subsection (c) 
provides that there is no stay of the commencement of a full 
United States bankruptcy case. This essentially provides an 
escape hatch through which any entity, including the foreign 
representative, can flee into a full case. The full case, 
however, will remain subject to subchapters IV and V on 
cooperation and coordination of proceedings. Section 108 of the 
Bankruptcy Code provides the tolling protection intended by 
Model Law article 20(3), so no exception is necessary as to 
claims that might be extinguished under United States 
law.164
---------------------------------------------------------------------------
    \164\ Id. at 42 (Article 20(3)); 44, 45 paras. 151, 152.
---------------------------------------------------------------------------
    Subsection 3 permits suits in other countries to the extent 
such suits are required to preserve the existence of a claim.

Section 1521. Relief that may be granted upon recognition of a foreign 
        proceeding

    This section follows article 21 of the Model Law, with 
detailed changes to fit United States law.165 The 
exceptions in subsection (a)(7) relate to avoiding powers. The 
foreign representative's status as to such powers is governed 
by section 1523 below. The avoiding power in section 549 and 
the exceptions to that power are covered by section 1520(1)(b).
---------------------------------------------------------------------------
    \165\ Id. at 45-46 (Article 21).
---------------------------------------------------------------------------
    The word ``adequately'' in the Model Law, articles 21(2)and 
22(1), has been changed to ``sufficiently'' in subsection 
1521(b) and 1522(a) to avoid confusion with a very specialized 
legal term in United States bankruptcy, ``adequate 
protection.''166
---------------------------------------------------------------------------
    \166\ Id. at 46 (Article 21(2), 47 (Article 22(1)).
---------------------------------------------------------------------------
    Subsection (c) is designed to limit relief to assets having 
some direct connection with a non-main proceeding, for example 
where they were part of an operating division in the 
jurisdiction of the non-main proceeding when they were 
fraudulently conveyed and then brought to the United 
States.167
---------------------------------------------------------------------------
    \167\ See id. at 46, 47, paras. 158, 160.
---------------------------------------------------------------------------
    This section does not expand or reduce the scope of relief 
currently available in ancillary cases under sections 105 and 
304 of the Bankruptcy Code nor does it modify the sweep of 
sections 555 through 560.

Section 1522. Protection of creditors and other interested persons

    This section follows article 22 of the Model Law with 
change for United States usage and references to relevant 
Bankruptcy Code sections.168 It gives the bankruptcy 
court broad latitude to mold relief to circumstances, including 
appropriate responses if it is shown that the foreign 
proceeding is seriously and unjustifiably injuring United 
States creditors. For a response to a showing that the 
conditions necessary to recognition did not actually exist or 
have ceased to exist, see section 1517. Concerning the change 
of ``adequately'' in the Model Law to ``sufficiently'' in this 
section, see section 1521. At the end, subsection (d) is new 
and simply makes clear that an examiner appointed in a case 
under chapter 15 shall be subject to certain duties and bonding 
requirements based on those imposed on trustees and examiners 
under other chapters of this title.
---------------------------------------------------------------------------
    \168\ Id. April 26, 1999 at 47..
---------------------------------------------------------------------------

Section 1523. Actions to avoid acts detrimental to creditors

    This section follows article 23 of the Model Law, with 
wording to fit it within procedure under this 
title.169 It confers standing on a recognized 
foreign representative to assert an avoiding action but only in 
a pending case under another chapter of this title. The Model 
Law would grant such standing in a recognized foreign 
proceeding if no full case were pending. This limitation 
reflects concerns raised by the United States delegation during 
the UNCITRAL debates that simply granting standing to bring 
avoidance actions neglected to address very difficult choice of 
law and forum issues. This limited grant of standing in section 
1523 does not create or establish any legal right of avoidance 
nor does it create or imply any legal rules with respect to the 
choice of applicable law as to the avoidance of any transfer or 
obligation.170
---------------------------------------------------------------------------
    \169\ Id. at 48, 49.
    \170\ See id. at 49, para. 166.
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    The courts will determine the nature and extent of any such 
action and what national law may be applicable to such action.

Section 1564. Intervention by a foreign representative

    This section is worded the same as the Model Law, except 
for a few clarifying words.171 This section gives 
the foreign representative the right to intervene in United 
States cases, state or federal, where the debtor is a party. 
Recognition being an act under federal bankruptcy law, it must 
take effect in state as well as federal courts. This section 
does not require substituting the foreign representative for 
the debtor, although that result may be appropriate in some 
circumstances.
---------------------------------------------------------------------------
    \171\ Id. at 49.
---------------------------------------------------------------------------

Section 1525. Cooperation and direct communication between the court 
        and foreign courts or foreign representatives

    The wording of this section is almost exactly that of the 
Model Law.172 The right of courts to communicate 
with other courts in worldwide insolvency cases is of central 
importance. This section authorizes courts to do so. This right 
must be exercised, however, with due regard to the rights of 
the parties. Guidelines for such communications should be 
promulgated.
---------------------------------------------------------------------------
    \172\ Id. at 50.
---------------------------------------------------------------------------

Section 1526. Cooperation and direct communication between the trustee 
        and foreign courts or foreign representatives

    This section follows the Model Law almost 
exactly.173 The language in Model Law article 26 
concerning the trustee's function was eliminated as unnecessary 
because it is always implied under United States law. The 
section authorizes the trustee, including a debtor in 
possession, to cooperate with other proceedings.
---------------------------------------------------------------------------
    \173\ Id. at 51.
---------------------------------------------------------------------------
    Subsection (3) is not taken from the Model Law but is added 
so that any examiner appointed under this chapter will be 
designated by the United States Trustee and will be bonded.

Section 1527. Forms of cooperation

    This section follows the Model Law exactly. Guide at 51-53. 
United States bankruptcy courts have already engaged in most of 
the forms of cooperation mentioned here, but they now have 
explicit statutory authorization for acts like the approval of 
protocols of the sort used in cases.174
---------------------------------------------------------------------------
    \174\ See e.g. Inre Maxwell Communication Corp., 93 F.2d 1036 12d 
Cir. 1966).
---------------------------------------------------------------------------

Section 1528. Commencement of a case under title 11 after recognition 
        of a foreign main proceeding

    This section follows the Model Law, with specifics of 
United States law replacing the general clause at the end to 
cover assets normally included within the jurisdiction of the 
United States courts in bankruptcy cases, except where assets 
are subject to the jurisdiction of another recognized 
proceeding.\175\
---------------------------------------------------------------------------
    \175\ Guide at 54, 55.
---------------------------------------------------------------------------
    In a full bankruptcy case, the United States bankruptcy 
court generally has jurisdiction over assets outside the United 
States. Here that jurisdiction is limited where those assets 
are controlled by another recognized proceeding.
    The court may use section 305 of this title to dismiss, 
stay, or limit a case as necessary to promote cooperation and 
coordination in a cross-border case. In addition, although the 
jurisdictional limitation applies only to United States 
bankruptcy cases commenced after recognition of a foreign 
proceeding, the court has ample authority under section 629 of 
the bill and section 305 of the Bankruptcy Code to exercise its 
discretion to dismiss, stay, or limit a United States case that 
was filed after a petition for recognition of a foreign main 
proceeding has been filed but before it has been approved, if 
recognition is ultimately granted.

Section 1529. Coordination of a case under title 11 and a foreign 
        proceeding

    This section follows the Model Law almost exactly, but 
subsection (d) adds a reference to section 305 to make it clear 
that the bankruptcy court may continue to use that section, as 
under present law, to dismiss or suspend a United States case 
as part of coordination and cooperation with foreign 
proceedings.\176\
---------------------------------------------------------------------------
    \176\ Id. at 55, 56.
---------------------------------------------------------------------------
    This provision is consistent with United States policy to 
act ancillary to a foreign main proceeding whenever possible.

Section 1530. Coordination of more than one foreign proceeding

    This section exactly follows article 30 of the Model 
Law.\177\ It ensures that a foreign main proceeding will be 
given primacy in the United States, consistent with the overall 
approach of the United States favoring assistance to foreign 
main proceedings.
---------------------------------------------------------------------------
    \177\ Id. at 57.
---------------------------------------------------------------------------

Section 1531. Presumption of insolvency based on recognition of a 
        foreign main proceeding

    This section follows the Model Law exactly, inserting a 
reference to the standard for an involuntary case under this 
title.\178\ Where an insolvency proceeding has begun in the 
home country of the debtor, and in the absence of contrary 
evidence, the foreign representative should not have to make a 
new showing that the debtor is in the sort of financial 
distress requiring a collective judicial remedy. The word 
``proof'' here means ``presumption.'' The presumption does not 
arise for any purpose outside this section.
---------------------------------------------------------------------------
    \178\ Id. at 58.
---------------------------------------------------------------------------

Section 1532. Rule of payment in concurrent proceeding

    This section follows the Model Law exactly and is very 
similar to prior section 508(a), which is repealed. The Model 
Law language is somewhat clearer and broader than the 
equivalent language of prior section 508(a).\179\
---------------------------------------------------------------------------
    \179\ Id. at 59.
---------------------------------------------------------------------------
    This section provides that the bankruptcy court in any 
district in which there has been a reference under subsection 
157(a) will have core jurisdiction over cases commenced under 
chapter 15, and ancillary cross-border cases.
    Although the United States will continue to assert 
worldwide jurisdiction over property of a domestic or foreign 
debtor in a full bankruptcy case under chapters 7 and 13 of 
this title, subject to deference to foreign proceedings under 
chapter 15 and section 305, the situation is different in a 
case commenced under chapter 15. There, the United States is 
acting solely in an ancillary position, so jurisdiction over 
property is limited to that stated in chapter 15.
     The third provision complements the automatic inclusion of 
chapter 15 in the U.S. Trustee's language of prior section 
508(a).\180\
---------------------------------------------------------------------------
    \180\ Id. at 59.
---------------------------------------------------------------------------

Amendments to other chapters in title 11, United States Code

    The first amendment provides that the bankruptcy court in 
any district in which there has been a reference under 
subsection 157(a) will have core jurisdiction over cases 
commenced under chapter 15, ancillary cross-border cases.
    Although the United States will continue to assert 
worldwide jurisdiction over property of a domestic or foreign 
debtor in a full bankruptcy case under chapter 7 and 13 of this 
title, subject to deference to foreign proceedings under 
chapter 15 and section 305, the situation is different in a 
case commenced under chapter 15. There the United States is 
acting solely in an ancillary position, so jurisdiction over 
property is limited to that stated in chapter 15.
    The third provision complements the automatic inclusion of 
chapter 15 in the United States trustee's standing under 
section 307 and provides authority for the United States 
trustee to act as necessary under section 626(3).

              Title X. Financial Contract Provisions \181\
---------------------------------------------------------------------------

    \181\ As title X is substantively very similar to H.R. 4393, the 
Financial Contract Netting Improvement Act of 1998, the Committee has 
relied on the report accompanying that bill. H.R. Rep. No. 105-688, Pt. 
1 (1998).
---------------------------------------------------------------------------

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

    Subsections (a) through (f) of section 1001 amend the 
Federal Deposit Insurance Act's definitions of ``qualified 
financial contract,'' ``securities contract,'' ``commodity 
contract,'' ``forward contract,'' ``repurchase agreement'' and 
``swap agreement'' to make them consistent with the definitions 
in the Bankruptcy Code, as amended by title X of H.R. 833.
    Subsection (a) amends the definition of ``qualified 
financial contract'' to include a reference to a resolution or 
order.
    Subsection (b) amends the definition of ``securities 
contract'' to encompass options on securities and margin loans. 
The inclusion of ``margin loans'' in the definition is intended 
to encompass only those loans commonly known in the securities 
industry as ``margin loans'' and does not include other loans 
utilizing securities as collateral, however documented. This 
provision also specifies that purchase, sale and repurchase 
obligations under a participation in a commercial mortgage loan 
do not constitute ``securities contracts.'' While a contract 
for the purchase or sale or a participation may constitute a 
``securities contract,'' the purchase, sale or repurchase 
obligation embedded in a participation agreement does not make 
that agreement a ``securities contract.''
    Subsection (c) amends the definition of ``commodity 
contract'' to conform it with section 761(4) of the Bankruptcy 
Code, as amended by title X of the bill. Likewise, subsection 
(d) amends the definition of ``forward contract'' to conform it 
with section 101(25) of the Bankruptcy Code, as amended by 
title X of the bill.
    Subsection (e) amends the definition of ``repurchase 
agreement'' to codify the substance of the Federal Deposit 
Insurance Corporation's 1995 regulation defining repurchase 
agreement to include those on qualified foreign government 
securities. \182\ For purposes of this provision, the term 
``qualified foreign government securities'' is defined to 
include securities that are direct obligations of, or fully 
guaranteed by, central governments of members of the 
Organization for Economic Cooperation and Development (OECD). 
Subsection (e) reflects developments in the repurchase 
agreement markets which increasingly use foreign government 
securities as the underlying assets. Any risk presented by this 
modification is addressed by limiting it to those obligating or 
guaranteed by OECD member states.
---------------------------------------------------------------------------
    \182\ See 12 C.F.R. 360.5.
---------------------------------------------------------------------------
    Subsection (e), like subsection (b) for ``securities 
contracts,'' specifies that repurchase obligations under a 
participation in an commercial mortgage loan do not make the 
participation agreement a ``repurchase agreement.'' Such 
repurchase obligations embedded in participations in commercial 
loans (such as recourse obligations) do not constitute a 
``repurchase agreement.'' Nevertheless, a repurchase agreement 
involving the transfer of participations in commercial mortgage 
loans with a simultaneous agreement to repurchase the 
participation on demand or at a date certain one year or less 
after such transfer could constitute a ``repurchase 
agreement.''
    Subsection (f) amends the definition of ``swap agreement'' 
to include an interest rate swap, option, future, or forward 
agreement, including a rate floor, rate cap, rate collar, 
cross-currency rate swap, and basis swap; a spot, same day-
tomorrow, tomorrow-next forward or other foreign exchange 
agreement; a currency swap, option, future, or forward 
agreement; an equity index or equity swap, option, future, or 
forward agreement; a debt index or debt swap, option, future, 
or forward agreement; a credit swap, option, future, or forward 
agreement; a commodity swap, option, future, or forward 
agreement or any other similar agreement. This amendment would 
achieve contractual netting across economically similar over-
the-counter products that can be terminated and closed out on a 
mark-to-market basis.
    The definition of ``swap agreement'' does not include 
transactions that are, in substance, commercial, consumer or 
industrial loans. Traditional commercial and lending 
arrangements, or other non-financial market transactions, such 
as commercial, residential or consumer loans, cannot be treaded 
as ``swaps'' under either the Federal Deposit Insurance Act or 
the Bankruptcy Code because the parties purport to document or 
label the transactions as ``swap agreements.'' In addition, 
these definitions apply only for purposes of the Federal 
Deposit Insurance Act and the Bankruptcy Code. These 
definitions, and the characterization of a certain transaction 
as a ``swap agreement'' are not intended to effect the 
characterization, definition, or treatment of any instruments 
under any other statute, regulation, or rule including, but not 
limited to, the statutes, regulations or rules enumerated in 
subsection (f).
    Subsection (g) amends the Federal Deposit Insurance Act by 
adding a definition of ``transfer,'' which is a key term used 
in the Act, to ensure that it is broadly construed to encompass 
dispositions of property or interests in property. The 
definition mirrors that in section 101(54) of the Bankruptcy 
Code.
    Subsection (h) makes clarifying technical changes to 
conform the receivership and conservatorship provisions of the 
Federal Deposit Insurance Act. This subsection also clarifies 
that the Act expressly protects rights under security 
agreements, arrangements or other credit enhancement related to 
one or more qualified financial contracts (QFCs). An example of 
a security arrangement is a right of set off, and examples of 
other credit enhancements are letters of credit, guarantees, 
reimbursement obligations and other similar agreements.
    Subsection (i) clarifies that no provision of Federal or 
State law relating to the avoidance or preferential or 
fraudulent transfer (including the anti-preference provision of 
the National Bank Act) can be invoked to avoid a transfer made 
in connection with any QFC of an insured depository institution 
in conservatorship or receivership, absent actual fraudulent 
intent on the part of the transferee.

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

    Section 1002 provides that no provision of law, including 
FDICIA, shall be construed to limit the power of the FDIC to 
transfer or to repudiate any QFC in accordance with its powers 
under the FDIA. As discussed below, there has been some 
uncertainty regarding whether or not FDICIA limits the 
authority of the FDIC to transfer or to repudiate QFCs of an 
insolvent financial institution. Section 1002, as well as other 
provisions in the Act, clarify that FDICIA does not limit the 
transfer powers of the FDIC with respect to QFC.
    In addition, Section 1002 denies enforcement to 
``walkaway'' clauses in QFCs. A walkaway clause is defined as a 
provision that, after calculation of a value of a party's 
position or an amount due to or from one of the parties upon 
termination, liquidation or acceleration of the QFC, either 
does not create a payment obligation of a party or extinguishes 
a payment obligation of a party in whole or in part solely 
because of such party's status as a non-defaulting party.

Section 1003. Amendments relating to transfers of qualified financial 
        contracts

    Subsection (a) amends the FDIA to expand the transfer 
authority of the FDIC to permit transfer of QFCs to ``financial 
institutions'' as defined in FDICIA or in regulations. This 
provision will allow the FDIC to transfer QFCs to a non-
depository financial institution, provided the institution is 
not subject to bankruptcy or insolvency proceedings. The new 
FDIA provisions specify that when the FDIC transfers QFCs that 
are subject to the rules of a particular clearing organization, 
the transfer will not require the clearing organization to 
accept the transferee as a member of the organization. This 
provision gives the FDIC flexibility in resolving QFCs subject 
to the rules of a clearing organization, while preserving the 
ability of such organizations to enforce appropriate risk 
reducing membership requirements.
    The new FDIA provision also permits transfers to an 
eligible financial institution that is a non-U.S. person, or 
the branch or agency of a non-U.S. person if, following the 
transfer, the contractual rights of the parties would be 
enforceable substantially to the same extent as under the FDIA.
    Subsection (b) amends the notification requirements 
following a transfer of the QFCs of a failed depository 
institution to require the FDIC to notify any party to a 
transferred QFC of such transfer by 5:00 p.m. (Eastern Time) on 
the business day following the date of the appointment of the 
FDIC acting as a receiver or following the date of such 
transfer by the FDIC acting as a conservator. This amendment is 
consistent with the policy statement on QFCs issued by the FDIC 
on December 12, 1989.
    Subsection (c) amends the FDIA to clarify the relationship 
between the FDIA and FDICIA. There has been some uncertainty 
whether FDICIA permits counterparties to terminate or liquidate 
a QFC before the expiration of the time period provided by the 
FDIA during which the FDIC mayrepudiate or transfer a QFC in a 
conservatorship or receivership. Subsection (c) provides that a party 
may not terminate a QFC based solely on the appointment of the FDIC as 
receiver until 5:00 p.m. (Eastern Time) on the business day following 
the appointment of the receiver or after the person has received notice 
of a transfer under FDIA section 11(d)(9), or based solely on the 
appointment of the FDIC as conservator, notwithstanding the provisions 
of FDICIA. This provides the FDIC with an opportunity to undertake an 
orderly of the insured depository institution.
    The amendment also prohibits the enforcement of rights of 
termination or liquidation that are based solely on the 
``financial condition'' of the depository institution in 
receivership or conservatorship. For example, termination based 
on a cross-default provision in a QFC that is triggered upon a 
default under another contract could be stayed if such other 
default was caused by an acceleration of amounts due under that 
other contract, and such acceleration was based solely on the 
appointment of a conservator or receiver for that depository 
institution. Similarly, a provision in a QFC permitting 
termination of the QFC based solely on a downgraded credit 
rating of a party will not be enforceable in an FDIC 
receivership or conservatorship because the provision is based 
solely on the financial condition of the depository institution 
in default. Nevertheless, any payment, delivery or other 
performance-based default, or breach of a representation or 
covenant putting in question the enforceability of the 
agreement, will not be deemed to be based solely on financial 
condition for purposes of this provision. The amendment is not 
intended to prevent counterparties from taking all actions 
permitted and recovering all damages authorized upon 
repudiation of any QFC by a conservator or receiver.
    The amendment allows the FDIC to meet its obligation to 
provide notice to parties to transferred QFCs by taking steps 
reasonably calculated to provide notice to such parties by the 
required time. This is consistent with the existing policy 
statement on QFCs issued by the FDIC on December 12, 1989.
    Finally, the amendment permits the FDIC to transfer QFCs of 
a failed depository institution to a bridge bank or a 
depository institution organized by the FDIC for which a 
conservator is appointed either (i) immediately upon the 
organization of such institution or (ii) at the time of a 
purchase and assumption transaction between the FDIC and the 
institution. This provision clarifies that such institutions 
are not to be considered financial institutions that are 
ineligible to receive such transfers under FDIA section 
11(e)(9). This is consistent with the existing policy statement 
on QFCs issued by the FDIC on December 12, 1989.

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

    Section 1004 limits the disaffirmance and repudiation 
authority of the FDIC with respect to QFCs so that such 
authority is consistent with the FDIC's transfer authority 
under FDIA section 11(e)(9). This ensures that no 
disaffirmance, repudiation or transfer authority of the FDIC 
may be exercised to ``cherry-pick'' or otherwise treat 
independently all the QFCs between a depository institution in 
default and a person or any affiliate of such person. The FDIC 
has announced that its policy is not to repudiate or disaffirm 
QFCs selectively. This unified treatment is fundamental to the 
reduction of systemic risk.

Section 1005. Clarifying amendment relating to master agreements

    Section 1005 states that a master agreement for one or more 
securities contracts, commodity contracts, forward contracts, 
repurchase agreements or swap agreements will be treated as a 
single QFC under the FDIA. This provision ensures that cross-
product netting pursuant to a master agreement will be 
enforceable under the FDIA. Cross-product netting permits a 
wide variety of financial transactions between two parties to 
be netted, thereby maximizing the present and potential future 
risk-reducing benefits of the netting arrangement between the 
parties.
    Express recognition of the enforceability of such cross-
product master agreements furthers the policy of increasing 
legal certainty and reducing systemic risks in the case of an 
insolvency of a large financial participant. Similar Bankruptcy 
Code clarifications to recognize cross-product netting both 
under a master agreement and in the absence of a master 
agreement are described below.

Section 1006. Federal Deposit Insurance Corporation Improvement Act of 
        1991

    The FDICIA provides that a netting arrangement will be 
enforced pursuant to its terms, notwithstanding the failure of 
a party to the agreement. However, the current netting 
provisions of FDICIA limit this protection to ``financial 
institutions,'' which include depository institutions. 
Subsection (a)(1) amends the FDICIA definition of covered 
institutions to include (i) uninsured national and State member 
banks, irrespective of their eligibility for deposit insurance 
and (ii) foreign banks (including the foreign bank and its 
branches or agencies as a combined group or only the foreign 
bank parent of a branch or agency). The Federal Reserve Board 
already has by regulation included certain foreign banks in the 
definition of a ``financial institution'' for purposes of 
FDICIA and the latter change will statutorily extend the 
protections of FDICIA to ensure that U.S. financial 
organizations participating in netting agreements with foreign 
banks are covered by the Act, thereby enhancing the safety and 
soundness of these arrangements.
    Subsection (a)(2) amends FDICIA to provide that, for 
purposes of FDICIA, two or more clearing organizations that 
enter into a netting contract are considered ``members'' of 
each other. This assures the enforceability of netting 
arrangements involving two or more clearing organizations and a 
member common to all such organizations, thus reducing systemic 
risk in the event of the failure of such a member. Under the 
current FDICIA provisions, the enforceability of such 
arrangements depends on a case-by-case determination that 
clearing organizations could be regarded as members of each 
other for purposes of FDICIA.
    Subsection (a)(3) amends the FDICIA definition of netting 
contract and the general rules applicable to netting contracts. 
The current FDICIA provisions require that the netting 
agreement must be governed by the law of the United States or a 
State to receive the protections of FDICIA. Many of these 
agreements, particularly netting arrangements covering 
positions taken in foreign exchange dealings, however, are 
governed by the laws of a foreign country. This subsection 
broadens the definition of ``netting contract'' to include 
those agreements governed by foreign law, and preserves the 
FDICIA requirement that a netting contract is not invalid 
under, or precluded by, Federal law.
    Subsections (b) and (c) establish two exceptions to 
FDICIA's protection of the enforceability of the provisions of 
netting contracts between financial institutions and among 
clearing organization members. First, the termination 
provisions of netting contracts will not be enforceable based 
solely on (i) the appointment of a conser-

vator for an insolvent depository institution under the FDIA or 
(ii) the appointment of a receiver for such institution under 
the FDIA, if such receiver transfers or repudiates QFCs in 
accordance with the FDIA and gives notice of a transfer by 5:00 
p.m. on the business day following the appointment of a 
receiver. This change is made to confirm the FDIC's flexibility 
to transfer or repudiate the QFCs of an insolvent depository 
institution in accordance with the terms of the FDIA. This 
modification also provides important legal certainty regarding 
the treatment of QFCs under the FDIA, because the current 
relationship between the FDIA and FDICIA is unclear.
    The second exception provides that FDICIA does not override 
a stay order under SIPA with respect to foreclosure on 
securities (but not cash) collateral of a debtor.
    Subsections (b) and (c) also clarify that a security 
agreement or other credit enhancement related to a netting 
contract is enforceable to the same extent as the underlying 
netting contract.
    Subsection (d) adds a new section 407 to FDICIA. This new 
section provides that, notwithstanding any other law, QFCs with 
uninsured national banks or uninsured Federal branches or 
agencies that are placed in receivership or conservatorship 
will be treated in the same manner as if the contract were with 
an insured national bank or insured Federal branch for which a 
receiver or conservator was appointed. This provision will 
ensure that parties to QFCs with uninsured national banks or 
uninsured Federal branches or agencies will have the same 
rights and obligations as parties entering into the same 
agreements with insured depository institutions. The new 
section also specifically limits the powers of a receiver or 
conservator for an uninsured national bank or uninsured Federal 
branch or agency to those contained in 12 U.S.C. 1821(e) (8), 
(9), and (11), which address QFCs. While the amendment would 
apply the same rules to uninsured national banks and Federal 
branches and agencies that apply to insured institutions, the 
provision would not change the rules that apply to insured 
institutions. Nothing in this section would amend the 
International Banking Act, the Federal Deposit Insurance Act, 
the National Bank Act, or other statutory provisions with 
respect to receivership of insured national banks or Federal 
branches. It is noted that new section 407 may need to be 
amended if legislation is enacted to permit the creation of so-
called ``wholesale financial institutions.''

Section 1007. Bankruptcy Code amendments

    Subsection (a)(1) amends the Bankruptcy Code definitions of 
``repurchase agreement'' and ``swap agreement'' to conform with 
the amendments to the FDIA contained in sections 1001. In 
connection with the definition of ``repurchase agreement,'' the 
term, ``qualified foreign government securities'' is defined to 
include securities that are direct obligations of, or fully 
guaranteed by, central governments of members of the 
Organization for Economic Cooperation and Development (OECD). 
This language reflects developments in the repurchase agreement 
markets, which increasingly use foreign government securities 
as the underlying asset. Any risk presented by this 
modification is addressed by limiting it to those obligating or 
guaranteed by OECD member states.
    Subsection (a)(1) specifies that repurchase obligations 
under a participation in a commercial mortgage loan do not make 
the participation agreement a ``repurchase agreement.'' Such 
repurchase obligations embedded in participations in commercial 
loans (such as recourse obligations) do not constitute a 
``repurchase agreement.'' A repurchase agreement involving the 
transfer of participations in commercial mortgage loans with a 
simultaneous agreement to repurchase the participation on 
demand or at a date certain one year or less after such 
transfer, however, could constitute a ``repurchase agreement.''
    The amendments to the definition of ``repurchase 
agreement'' are not intended to affect the interpretation of 
the definition of ``securities contract.'' The definition of 
``swap agreement,'' in conjunction with the addition of ``spot 
foreign exchange transactions'' that was added to the 
definition in 1994, will achieve contractual netting across 
economically similar over-the-counter products that can be 
terminated and closed out on a mark-to-market basis.
    The definition of ``swap agreement'' originally was 
intended to provide sufficient flexibility to avoid the need to 
amend the definition as the nature and use of swap transactions 
matured. For that reason, the phrase ``or any other similar 
agreement'' was included in the definition. The phrase ``other 
similar agreement'' encompasses any agreement that is, or in 
the future becomes, regularly entered into in the swap market 
that is a forward, swap or option on one or more rates, 
currencies, commodities, equity or debt securities or 
instruments, economic indices or measures of economic risk or 
value. Traditional commercial and lending arrangements, or 
other non-financial market transactions, such as commercial, 
residential or consumer loans, however, cannot be treated as 
``swaps'' under either the FDIA or the Bankruptcy Code because 
the parties purport to document or label the transactions as 
``swap agreements.''
    Subsection (a)(1)(C) specifies that this definition of swap 
agreement applies only for purposes of the Bankruptcy Code and 
is inapplicable to the other statutes, rules and regulations 
enumerated in that section. The definition also includes any 
security agreement or arrangement, or other credit enhancement, 
related to a swap agreement. This ensures that any such 
agreement, arrangement or enhancement is itself deemed to be a 
swap agreement, and therefore eligible for treatment as such 
for purposes of termination, liquidation, acceleration, offset 
and netting under the Bankruptcy Code and the FDIA. Similar 
changes are made in the definition of ``forward contract, 
``commodity contract'' and ``repurchase agreement.'' An example 
of a security arrangement is a right of set off; examples of 
other credit enhancements are letters of credit, guarantees, 
reimbursement obligations and other similar agreements.
    Subsections (a)(2) and (a)(3) amend the Bankruptcy Code 
definitions of ``securities contract'' and ``forward 
contract,'' respectively, to conform them to the definition in 
the FDIA, and also to include any security agreements or 
arrangements or other credit enhancements related to one or 
more such contracts.
    Subsection (a)(2), like the amendments to the FDIA amends 
the definition of ``securities contract'' to encompass options 
on securities and margin loans. The inclusion of ``margin 
loans'' in the definition is intended to encompass only those 
loans commonly known in the securities industry as ``margin 
loans'' and does not include other loans utilizing securities 
as collateral, however, documented.
    Subsection (a)(2) also specifies that purchase, sale and 
repurchase obligations under a participation in a commercial 
mortgage loan do not constitute ``securities contracts.'' While 
a contract for the purchase or sale or a participation may 
constitute a ``securities contract,'' the purchase, sale or 
repurchase obligation embedded in a participation agreement 
does not make that agreement a ``securities contract.''
    Subsection (b) amends the Bankruptcy Code definitions of 
``financial institution'' and ``forward contract merchant.'' 
The definition for ``financial institution'' includes Federal 
Reserve Banks and the receivers or conservators of insolvent 
depository institutions. Subsection (b) also adds a new 
definition of ``financial participant'' to limit the potential 
impact of insolvencies upon other major market participants. 
This definition will allow such market participants to close-
out and net agreements with insolvent entities under sections 
362(b)(6), 546, 548, 555, and 556 even if the creditor could 
not qualify as, for example, a commodity broker. The new 
subsection preserves the limitations of the right to close-out 
and net such contracts, in most cases, to entities who qualify 
under the Bankruptcy Code's counterparty limitations. Where the 
counterparty, however, has transactions with a total gross 
dollar value of at least $1 billion in notional principal 
amount outstanding on any day during the previous 15-month 
period, or has gross mark-to-market positions of at least $100 
million (aggregated across counterparties) in one or more 
agreements or transactions on any day during the previous 15-
month period, the new subsection and corresponding amendments 
would permit it to exercise netting rights irrespective of its 
inability otherwise to satisfy those counterparty limitations. 
This change will help prevent systemic impacts upon the markets 
from a single failure.
    Subsection (c) adds to the Bankruptcy Code new definitions 
for the terms ``master netting agreement'' and ``master netting 
agreement participant.'' The definition of ``master netting 
agreement'' is designed to protect the termination and close-
out netting provisions of cross-product master agreements 
between parties. Such an agreement may be used (i) to document 
a wide variety of securities contracts, commodity contracts, 
forward contracts, repurchase agreements and swap agreements, 
or (ii) as an umbrella agreement for separate master agreements 
between the same parties, each of which is used to document a 
discrete type of transaction. The definition includes security 
agreements or arrangements or other credit enhancements related 
to one or more such agreements and clarifies that a master 
netting agreement will be treated as such even if it documents 
transactions that are not within the enumerated categories of 
qualifying transactions (but the provisions of the Bankruptcy 
Code relating to master netting agreements and the other 
categories of transactions will not apply to such other 
transactions).
    A ``master netting agreement participant'' is any entity 
that is a party to an outstanding master netting agreement with 
a debtor before the filing of a bankruptcy petition.
    Subsection (d) amends section 362(b) of the Bankruptcy Code 
to protect enforcement, free from the automatic stay, of setoff 
or netting provisions in swap agreements and in master netting 
agreements and security agreements or arrangements related to 
one or more swap agreements or master netting agreements. This 
provision parallels the other provisions of the Bankruptcy Code 
that protect netting provisions of securities contracts, 
commodity contracts, forward contracts, and repurchase 
agreements. Because the relevant definitions include related 
security agreements, the reference to ``setoff'' in this 
provisions, as well as in section 362(b) (6) and (7) of the 
Bankruptcy Code, are intended to refer also to rights to 
foreclose on, and to set off against, obligations to return 
collateral security swap agreements, master netting 
arrangements, repurchase agreements, securities contracts, 
commodity contracts, or forward contracts. Collateral may be 
pledged to cover the cost of replacing the defaulted 
transactions in the relevant market, as well as other costs and 
expenses incurred or estimated to be incurred for the purpose 
of hedging or reducing the risks arising out of such 
termination. Enforcement of these agreements and arrangements 
is consistent with the policy goal of minimizing systemic risk.
    Subsection (d) also clarifies that the provisions 
protecting setoff and foreclosure in relation to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, and master netting agreements free 
from the automatic stay apply to collateral pledged by the 
debtor that is under the control of the creditor but that 
cannot technically be ``held by'' the creditor, such as 
receivables and book-entry securities, and to collateral that 
has been repledged by the creditor.
    Subsection (e) amends section 546 of the Bankruptcy Code to 
provide that transfers made under or in connection with a 
master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay 
or defraud. This section also clarifies the limitations on a 
trustee's power to avoid transfers made under swap agreements. 
In addition subsection (e) makes a technical correction to 
section 546 of the Bankruptcy Code to redesignate the second 
``(g)'' subsection as ``(h)''.
    Subsection (f) amends section 548(d) of the Bankruptcy Code 
to provide that transfers made under or in connection with a 
master netting agreement may not be avoided by a trustee except 
where such transfer is made with actual intent to hinder, delay 
or defraud. This amendment provides the same protections for 
transfers made under, or in connection with, master netting 
agreements as currently is provided for margin payments and 
settlement payments received by commodity brokers, forward 
contract merchants, stockbrokers, financial institutions, 
securities clearing agencies, repo participants, and swap 
participants under paragraphs (B), (C) and (D) of section 
548(d).
    Subsections (g), (h), (i) and (j) clarify that the 
provisions of the Bankruptcy Code that protect (i) rights of 
liquidation under securities contracts, commodity contracts, 
forward contracts and repurchase agreements also protect rights 
of termination or acceleration under such contracts, and (ii) 
rights to terminate under swap agreements also protect rights 
of liquidation and acceleration.
    Subsection (k) adds a new section 561 to the Bankruptcy 
Code to protect the contractual right of a master netting 
agreement participant to enforce any rights of termination, 
liquidation, acceleration, offset or netting under a master 
netting agreement. Such rights include rights arising (i) from 
the rules of a securities exchange or clearing organization, 
(ii) under common law, law merchant or (iii) by reason of 
normal business practice. This is con-

sistent with the current treatment of rights under swap 
agreements under section 560 of the Bankruptcy Code.
    For the purposes of Bankruptcy Code sections 555, 556, 559, 
560 and 561, it is intended that the normal business practice 
in the event of a default of a party based on bankruptcy or 
insolvency is to terminate, liquidate or accelerate securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements and master netting agreements with 
the bankruptcy or insolvent party. The protection of netting 
and offset rights in sections 560 and 561 is in addition to the 
protections afforded in section 362(b)(6), (b)(7) and (b)(17). 
For example, cross-product netting will be protected from the 
automatic stay under section 561 even in the absence of a 
master netting agreement.
    Sections 561(b) (2) and (3) limit the exercise of 
contractual rights to net or to offset obligations where one 
leg of the obligations sought to be netted relates to commodity 
contracts. Under subsection (b)(2), netting or offset is not 
permitted if the obligations are not mutual. This means, for 
example, that proprietary obligations cannot be netted or 
offset against obligations held for, or on behalf of, some 
other party. Even if the obligations are mutual, under 
subsection (b)(3) netting or offset is not permitted in a 
commodity broker bankruptcy if the party seeking to net or to 
offset has no positive net equity in the commodity account at 
the debtor. Subsections (b)(2) and (b)(3) limit the depletion 
of assets available for distribution to customers of commodity 
brokers. This is consistent with the principle of subchapter IV 
of chapter 7 of the Bankruptcy Code, which gives priority to 
customer claims in the bankruptcy of a commodity broker.
    Under title X of H.R. 833, the termination, liquidation or 
acceleration rights of a master netting agreement participant 
are subject to limitations contained in other provisions of the 
Bankruptcy Code relating to securities contracts and repurchase 
agreements. In particular, if a securities contract or 
repurchase agreement is documented under a master netting 
agreement, a party's termination, liquidation and acceleration 
rights would be subject to the provisions of the Bankruptcy 
Code relating to orders authorized under the provisions of SIPA 
or any statute administered by the SEC. In addition, the 
netting rights of a party to a master netting agreement would 
be subject to any contractual terms between the parties 
limiting or waiving netting or set off rights. Similarly, a 
waiver by a bank or a counterparty of netting or set off rights 
in connection with QFCs would be enforceable under the FDIA.
    Subsection (l) clarifies that, with respect to municipal 
bankruptcies, all the provisions of the Bankruptcy Code 
relating to securities contracts, commodity contracts, forward 
contracts, repurchase agreements, swap agreements and master 
netting agreements (which by their terms are intended to apply 
in all cases under the Bankruptcy Code) apply to a chapter 9 
case.
    Subsection (m) clarifies that the provisions of the 
Bankruptcy Code related to securities contracts, commodity 
contracts, forward contracts, repurchase agreements, swap 
agreements and master netting agreements apply in a section 304 
proceeding ancillary to a foreign insolvency proceeding.
    Subsections (n) and (o) amend those provisions in the 
Bankruptcy Code concerning the liquidation of commodity brokers 
183 and stockbrokers.184 These provisions 
of the Bankruptcy Code are designed to protect customers and 
customer property of an insolvent stockbroker or commodity 
broker. Subsections (n) and (o) clarify the rights of parties 
to commodity contracts, securities contracts, forward 
contracts, swap agreements, repurchase agreements and master 
netting agreements with an insolvent commodity broker or 
stockbroker. They ensure that noncustomers will not defeat the 
priority scheme of subchapter III or IV by gaining access to 
assets held in segregated customer accounts. The amendment also 
clarifies that the exercise of termination and netting rights 
will not otherwise affect customer property or distributions by 
the trustee of the insolvent commodity broker or stockbroker 
after the exercise of such rights.
---------------------------------------------------------------------------
    \183\ Subchapter IV of chapter 7 of the Bankruptcy Code and 
regulations of the CFTC detail specific rules for the liquidation of 
commodity brokers.
    \184\ Subchapter III of chapter 7 of the Bankruptcy Code details 
specific rules for the liquidation of stockbrokers.
---------------------------------------------------------------------------
    Subsection (p) amends section 553 of the Bankruptcy Code to 
clarify that the acquisition by a creditor of set off rights in 
connection with swap agreements, repurchase agreements, 
securities contracts, forward contracts, commodity contracts 
and master netting agreements may not be avoided as a 
preference. This subsection also adds setoff provisions of the 
kinds described in sections 555, 556, 559, 560, and 561 of the 
Bankruptcy Code to the types of setoffs excepted from section 
553(b).
    Subsection (q) makes a series of conforming amendments to 
sections 362(b)(6), 546(e), 548(d)(2)(B), 555, and 556 to 
include references to ``financial participant''.
    Subsection (r) makes technical and conforming amendments to 
the Bankruptcy Code's table of sections, as amended by title X.

Section 1008. Recordkeeping requirements

    Section 1008 amends section 11(e)(8) of the Federal Deposit 
Insurance Act to explicitly authorize the FDIC, in consultation 
with appropriate Federal banking agencies, to prescribe 
regulations on recordkeeping with respect to QFCs. Adequate 
recordkeeping for such transactions is essential to effective 
risk management and to the reduction of systemic risk permitted 
by the orderly resolution of depository institutions utilizing 
QFCs.

Section 1009. Exemptions from contemporaneous execution requirement

    Section 1009 amends FDIA section 13(e)(2) to provide that 
an agreement for the collateralization of governmental 
deposits, bankruptcy estate funds, Federal Reserve Bank or 
Federal Home Loan Bank extensions of credit or one or more QFCs 
shall not be deemed invalid solely because such agreement was 
not entered into contemporaneously with the acquisition of the 
collateral or because of pledges, delivery or substitution of 
the collateral made in accordance with such agreement. The 
amendment codifies portions of policy statements issued by the 
FDIC regarding the application of section 13(e), which codifies 
the ``D'Oench Duhme'' doctrine.
    With respect to QFCs, this codification recognizes that 
QFCs often are subject to collateral and other security 
arrangements that may require posting and return of collateral 
on an ongoing basis based on the mark-to-market values of the 
collateralized transactions. The codification of only portions 
of the existing FDIC policy statements on these and related 
issues should not give rise to any negative implication 
regarding the continued validity of these policy statements.

Section 1010. Damage measure

    Section 11 adds a new section 562 to the Bankruptcy Code to 
provide that damages under any swap agreement, securities 
contract, forward contract, commodity contract, repurchase 
agreement or master netting agreement will be calculated as of 
the earlier of (i) the date of rejection of such agreement by a 
trustee or (ii) the date of liquidation, termination or 
acceleration of such contract or agreement. New section 562 
provides important legal certainty and makes the Bankruptcy 
Code consistent with the current provisions related to the 
timing of the calculation of damages under QFCs in the FDIA.
    Section 1010 also clarifies the treatment of damage claims 
arising from rejection.

Section 1011. SIPC stay

    Section 1011 amends the Securities Investment Protection 
Act (SIPA) to provide that an order or decree issued pursuant 
to SIPA shall not operate as a stay of any right of 
liquidation, termination, acceleration, offset or netting under 
one or more securities contracts, commodity contracts, forward 
contracts, repurchase agreements, swap agreements or matter 
netting agreements (as defined in the Bankruptcy Code and 
including rights of foreclosure on collateral), except that 
such order or decree may stay any right to foreclose on 
securities (but not cash) collateral pledged by the debtor or 
sold by the debtor under a repurchase agreement. A creditor 
stayed in exercising rights against securities collateral would 
be entitled to post-insolvency interest to the extent of the 
collateral.

Section 1012. Asset-backed securitizations

    Section 1012 amends section 541 of the Bankruptcy Code to 
provide that certain assets transferred to an eligible entity 
in connection with an asset-backed securitization generally 
will not be included within the bankruptcy estate. This 
provision recognizes that a valid transfer of such assets to 
the eligible entity, which is defined as an issuer or an entity 
engaged exclusively in such securitization transactions, 
generally eliminates the debtor's legal or equitable interests 
in those assets. Accordingly, subject to the avoidance powers 
in section 548(a), the transfer will be treated as a sale of 
those assets not subject to avoidance. A significant exception 
to this provision is that if the trustee avoids the transfer 
from the debtor under section 548(a), then those assets will be 
included within the bankruptcy estate.

Section 1013. Federal Reserve collateral requirements

    Section 16 of the Federal Reserve Act (FRA) specifies the 
types of assets the Federal Reserve may use to back the 
currency. These assets include U.S. Treasury and agency 
securities that the Federal Reserve holds in its portfolio and, 
among other things, discount window loans extended under the 
provisions of section 13 of the FRA. Over the years, sections 
were added to the FRA that permit lending under provisions 
other than section 13 and against a broader range of collateral 
than allowed under that section.
    This amendment broadens the range of discount window loans 
eligible to back currency to include not only those extended 
under section 13 but also those extended under section 10A of 
the FRA relating to emergency advances to groups of member 
banks, section 10B relating to emergency advances to individual 
member banks, and section 13A relating to the discount of 
agricultural paper.

Section 1014. Effective date; application of amendments

    Subsection (a) provides that the amendments under this 
title take effect on the date of H.R. 833's enactment. 
Subsection (b) provides that the amendments made by this title 
shall not apply with respect to cases commenced, or to 
conservator/receiver appointments made, before the date of 
enactment.

                    Title XI. Technical Corrections

Section 1101. Definitions

    Section 1101 amends the definitions contained in section 
101 of title 11 of the United States Code. Paragraphs (1), (2), 
(4), (7), and (8) of section 1101 make technical changes to 
section 101 to convert each definition into a sentence (thereby 
facilitating future amendments to the separate paragraphs) and 
to redesignate the definitions in correct and completely 
numerical sequence. Paragraph (3) of section 1101 makes the 
necessary conforming amendment to cross references to the newly 
redesignated definitions and simplifies these references to 
avoid future reference errors.
    Paragraph (5) of section 1101 concerns single asset real 
estate debtors. A single asset real estate chapter 11 case 
presents special concerns. As the name implies, the principal 
asset in this type of case consists of some form of real 
estate, such as undeveloped land. Typically, the form of 
ownership of a single asset real estate debtor is a corporation 
or limited partnership. For tax planning purposes, the limited 
partnership is formed to acquire the underlying asset. The 
largest creditor in a single asset real estate case is usually 
the secured lender who advanced the funds to the debtor to 
acquire the real property. Often, a single asset real estate 
debtor resorts to filing for bankruptcy relief for the sole 
purpose of staying an impending foreclosure proceeding or sale 
commenced by the secured lender. Foreclosure actions are filed 
when the debtor lacks sufficient cash flow to service the debt 
and maintain the property. Taxing authorities may also have 
liens against the property.
    Based on the nature of its principal asset, a single asset 
real estate debtor often has few, if any, unsecured creditors. 
If unsecured creditors exist, they may have only nominal claims 
against the single asset real estate debtor. Depending on the 
nature and ownership of any business operating on the debtor's 
real property, the debtor may have few, if any, employees. 
Accordingly, there may be little interest on behalf of 
unsecured creditors in a single asset real estate case to serve 
on a creditors' committee.
    In 1994, the Bankruptcy Code was amended to accord special 
treatment for a single asset real estate debtor. It defined 
this type of debtor as a bankruptcy estate comprised of a 
single piece of real property or project, other than 
residential real property with fewer than four residential 
units. The property or project must generate substantially all 
of the debtor's gross income. A debtor that conducts 
substantial business on the property beyond that relating to 
its operation is excluded from this definition. In addition, 
the definition fixed a monetary cap. To qualify as a single 
asset real estate debtor, the debtor could not have 
noncontingent, liquidated secured debts in excess of $4 
million.185
---------------------------------------------------------------------------
    \185\ See 11 U.S.C. Sec. 101(51B).
---------------------------------------------------------------------------
    Subparagraph (5)(A) amends the definition of ``single asset 
real estate'' to exclude family farmers from this definition. 
Paragraph (5)(B) amends section 101(51B) (renumbered section 
101(57)) of the Bankruptcy Code to eliminate the $4 million 
debt limitation on single asset real estate. The present $4 
million cap prevents the use of the expedited relief procedure 
in many commercial property reorganizations, and effectively 
provides an opportunity for a number of debtors to abusively 
file for bankruptcy in order to obtain the protection of the 
automatic stay against their creditors. As a result of this 
amendment, creditors in more cases will be able to obtain the 
expedited relief from the automatic stay which is made 
available under section 362(d)(3) of the Bankruptcy Code.
    Paragraph (6) of section 1101, together with section 1118 
respond to a 1997 Ninth Circuit case,186 in which 
two purchase money lenders (without knowledge that the debtor 
had recently filed an undisclosed chapter 11 case that was 
later converted to chapter 7), funded the debtor's acquisition 
of an apartment complex and recorded their purchase-money deed 
of trust immediately following recordation of the deed to the 
debtors. Specifically, it amends the definition of ``transfer'' 
to include the ``creation of a lien.'' This amendment gives 
expression to a widely held understanding since the enactment 
of the Bankruptcy Reform Act of 1978,187 that is, a 
transfer includes the creation of a lien.
---------------------------------------------------------------------------
    \186\ In re McConville, 110 F.3d 47 (9th Cir. 1997). The bankruptcy 
trustee sought to avoid the lien created by the lenders' deed of trust 
by asserting that the deed was an unauthorized, postpetition transfer 
under section 549(a) of the Bankruptcy Code. The lenders claimed that 
the voluntary transfer to them was a transfer of real property to good 
faith purchasers for value, which was thereby excepted it, under 
section 549(c) of the Bankruptcy Code, from avoidance. The bankruptcy 
court held that the postpetition recordation of the lenders' deed of 
trust was without authorization under the Bankruptcy Code or by the 
court and was therefore avoidable under section 549(a), and that the 
lenders did not quality under the section 549(c) exception as good 
faith purchasers of real property for value. The District Court 
subsequently affirmed the bankruptcy court's ruling granting the 
trustee the authority to avoid the lenders' lien. In re McConville, 
D.C. No. CV 94 03308 FMS (N.D. Cal. 1994). On appeal, the lower court's 
decision in McConville was initially affirmed. The Ninth Circuit, 
however, subsequently issued an amended opinion, also affirming the 
lower court, and finally issued an opinion withdrawing its prior 
opinion and deciding the case on other grounds. It held that by 
obtaining secured credit from the lenders, after filing but before the 
appointment of a trustee, the debtors violated their fiduciary 
responsibility to their creditors.
    \187\ Pub. L. 95 598, 92 Stat. 2549 (1978).
---------------------------------------------------------------------------

Section 1102. Adjustment of dollar amounts

    Section 1102 corrects an omission in section 104(b) of 
title11 of the United States Code, as added by Public Law 103-
394, by including references to section 522(f)(3) so that the 
triennial adjustment required by section 104(b) extends to the 
figure representing an aggregate value of certain implements, 
professional books, tools of the trade, farmanimals, and crops 
which the debtor may exempt from the property of the estate and thereby 
protect from creditors' liens. Section 522(f)(3) now sets the total 
permissible value of such property at $5,000.

Section 1103. Extension of time

    Section 1103 of the bill makes a technical amendment to 
correct a reference error described in amendment notes 
contained in the United States Code. As specified in the 
amendment note relating to subsection (c)(2) of section 108 of 
title 11 of the United States Code, the amendment made by 
section 257(b)(2)(B) of Public Law 99-554 could not be executed 
as stated.

Section 1104. Technical amendments

    Section 1104 makes technical amendments to sections 
109(b)(2) (to strike an statutory cross reference), 541(b)(2) 
(to add ``or'' to the end of this provision), and 522(b)(1) (to 
replace ``product'' with ``products'').

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

    Section 1105 makes a technical correction to change from 
the singular possessive to the plural possessive the reference 
to the fees payable to attorneys.

Section 1106. Limitation on compensation of professional persons

    Section 328(a) of the Bankruptcy Code provides that a 
trustee or a creditors' and equity security holders' committee 
may, with court approval, obtain the services of a professional 
person on any reasonable terms and conditions of employment, 
including on a retainer, on an hourly basis, or on a contingent 
fee basis. Section 1106 amends section 328(a) to include 
compensation ``on a fixed or percentage fee basis'' in addition 
to the other specified forms of reimbursement.

Section 1107. Special tax provisions

    Section 1107 makes a technical correction in section 
346(g)(1)(C) of title 11 of the United States Code to delete 
language referring to a repealed section of the Internal 
Revenue Code of 1986. Additional information regarding the 
repealed section is indicated in the appropriate footnote, and 
contained in the notes under the heading ``References in 
Text,'' found in the United States Code.

Section 1108. Effect of conversion

    Section 1108 makes a technical correction in section 
348(f)(2) of title 11 of the United States Code to clarify that 
the first reference to property, like the subsequent reference 
to property, is a reference to property of the estate.

Section 1109. Amendment to table of sections

    Section 1109 of the bill makes a technical amendment to 
conform the wording of an item in the table of sections to the 
wording of the section heading represented by that item.

Section 1110. Allowance of administrative expenses

    Section 1110 amends section 503(b)(4) of the Bankruptcy 
Code to limit the types of compensable professional services 
rendered by an attorney or accountant that can qualify as 
administrative expenses in a bankruptcy case. Expenses for 
attorneys or accountants incurred by individual members of 
creditors' and equity security holders' committee would not be 
recoverable, but expenses incurred for such professional 
services by the committees themselves would be.

Section 1111. Priorities

    Section 1111 of the bill makes technical amendments to 
section 507(a) of title 11 of the United States Code. The 
amendment made by section 1111(1) corrects an error in the 
punctuation at the end of section 507(a)(3). The amendment made 
by section 1111(2) corrects an omission in paragraph (7) of 
section 507(a) and conforms this paragraph with section 
507(a)'s other paragraphs that provide priority only to 
unsecured claims.

Section 1112. Exemptions

    This section makes grammatical and clarifying amendments to 
section 522(f)(1)(A) and a conforming amendment to section 
522(g)(2) of the Bankruptcy Code.

Section 1113. Exceptions to discharge

    Section 1113 of the bill amends section 523 of the 
Bankruptcy Code, relating to the discharge of debts, to correct 
the inadvertent omission of a cross-reference to paragraph (15) 
in paragraph (3)(A), to correct a technical error in the 
placement of paragraph (15), which was added to section 523 by 
section 304(e)(1) of the Bankruptcy Reform Act of 1994, and to 
require that the debt must be owed to a spouse, former spouse, 
or child of the debtor. The effect of this amendment is to 
fulfill Congress's original intention to exclude from discharge 
certain family obligations if the debtor has the ability to pay 
them and the benefit of a discharge to the debtor does not 
outweigh the detriment to the spouse, former spouse, or child.
    This section also amends section 523(a)(9), which makes 
nondischargeable any debt resulting from death or personal 
injury arising from the debtor's unlawful operation of a motor 
vehicle while intoxicated, to add ``watercraft, or aircraft'' 
after ``motor vehicle.'' Neither additional term should be 
defined or included as a ``motor vehicle'' in section 523(a)(9) 
and each is intended to comprise unpowered as well as motor-
powered craft. Congress previously made the policy judgment 
that the equities of persons injured by drunk drivers outweigh 
the responsible debtor's interest in a fresh start, and here 
clarifies that the policy applies not only on land but also on 
the water and in the air. Viewed from a practical standpoint, 
this provision closes a loophole that gives intoxicated 
watercraft and aircraft operators preferred treatment over 
intoxicated motor vehicle drivers and denies victims of alcohol 
and drug related boat and plane accidents the same rights 
accorded to automobile accident victims under current law.
    Finally, this section amends section 523(a)(17), added by 
the Omnibus Consolidated Rescissions and Appropriations Act of 
1996,188 to narrow its application in accordance 
with its original intent. Paragraph (17), enacted in the 
context of prison litigation reform, excepts from discharge the 
filing fees or related costs or expenses assessed by a court in 
a civil case or appeal. Because of a drafting error, however, 
this section might be construed to apply to filing fees, costs 
or expenses incurred by any debtor, not solely by those who are 
prisoners. This amendment eliminates the ambiguity and makes 
other conforming changes.
---------------------------------------------------------------------------
    \188\ Pub. L. No. 104-134, sec. 804(b).
---------------------------------------------------------------------------

Section 1114. Effect of discharge

    Section 1114 of the bill makes technical amendments to 
correct errors in section 524(a)(3) of title 11 of the United 
States Code, caused by section 257(o)(2) of Public Law 99-554 
and section 501(d)(14)(A) of Public Law 103-394.189
---------------------------------------------------------------------------
    \189\ For a description of these errors, see the appropriate 
footnote and amendment notes in the United States Code.
---------------------------------------------------------------------------

Section 1115. Protection against discriminatory treatment

    Section 1115 of the bill amends section 525(c) of the 
Bankruptcy Code to make a technical amendment to conform a 
reference to its antecedent reference. The omission of 
``student'' before ``grant'' in the second place it appears 
insection 525(c) made possible the interpretation that a broader 
limitation on lender discretion was intended, so that no loan could be 
denied because of a prior bankruptcy if the lending institution was in 
the business of making student loans. Section 1115 is intended to make 
clear that lenders involved in making government guaranteed or insured 
student loans are not barred by this Bankruptcy Code provision from 
denying other types of loans based on an applicant's bankruptcy 
history; only student loans and grants, therefore, cannot be denied 
under section 525(c) because of a prior bankruptcy.

Section 1116. Property of the estate

    Production payments are royalties tied to the production of 
a certain volume or value of oil or gas, determined without 
regard to production costs. They typically would be paid by an 
oil or gas operator to the owner of the underlying property on 
which the oil or gas is found. Under section 541(b)(4)(B)(ii) 
of the Bankruptcy Code, added by the Bankruptcy Reform Act of 
1994, production payments are generally excluded from the 
debtor's estate, provided they could be included only by virtue 
of section 542 of the Bankruptcy Code, which relates generally 
to the obligation of those holding property which belongs in 
the estate to turn it over to the trustee. Section 1116 adds to 
this proviso a reference to section 365 of the Bankruptcy Code, 
which authorizes the trustee to assume or reject an executory 
contract or unexpired lease. It thereby clarifies the original 
Congressional intent to generally exclude production payments 
from the debtor's estate.

Section 1117. Preferences

    Section 547 of the Bankruptcy Code authorizes trustees to 
avoid preferential payments made to creditors by a debtor 
within 90 days of filing, whether the creditor is an insider or 
an outsider. Because of the concern that corporate insiders 
(such as officers and directors) who are creditors of their own 
corporation have an unfair advantage over outside creditors, 
section 547 also authorizes trustees to avoid preferential 
payments made to insider creditors between 90 days and one year 
before filing. Several recent cases, including 
DePrizio,190 allowed the trustee to ``reach-back'' 
and avoid a transfer to a noninsider creditor which fell within 
the 90-day to one year time frame if an insider benefitted from 
the transfer in some way. This had the effect of discouraging 
lenders from obtaining loan guarantees, lest transfers to the 
lender be vulnerable to recapture by reason of the debtor's 
insider relationship with the loan guarantor.
---------------------------------------------------------------------------
    \190\ In re V.N. DePrizio Constr. Co., 874 F.2d 1186 (7th Cir. 
1989); see, e.g., Ray v. City Bank & Trust Co. (In re C&L Cartage Co.), 
899 F.2d 1490 (6th Cir. 1990); Manufacturers Hanover Leasing Cor. v. 
Lowrey (In re Robinson Bros. Drilling), 892 F.2d 850 (10th Cir. 1989).
---------------------------------------------------------------------------
    Section 202 of the Bankruptcy Reform Act of 1994 addressed 
the DePrizio problem by inserting a new section 550(c) into the 
Bankruptcy Code to prevent avoidance or recovery from a 
noninsider creditor during the 90-day to one year period even 
though the transfer to the noninsider benefitted an insider 
creditor. The 1994 amendments, however, failed to make a 
corresponding amendment to section 547, which deals with the 
avoidance of preferential transfers. As a result, a trustee 
could still utilize section 547 to avoid a preferential lien 
given to a noninsider bank, more than 90 days but less than one 
year before bankruptcy, if the transfer benefitted an insider 
guarantor of the debtor's debt.
    Accordingly, section 1117 makes a perfecting amendment to 
section 547 to provide that if the trustee avoids a transfer 
given by the debtor to a noninsider for the benefit of an 
insider creditor between 90 days and one year before filing, 
that avoidance is valid only with respect to the insider 
creditor. Thus both the previous amendment to section 550 and 
the perfecting amendment to section 547 protect the noninsider 
from the avoiding powers of the trustee exercised with respect 
to transfers made during the 90-day to one year pre-filing 
period.

Section 1118. Postpetition transactions

    Section 1118 amends section 549(c) to clarify its 
application to an interest in real property. This amendment 
should be construed in conjunction with section 1101 of the 
bill.

Section 1119. Disposition of property of the estate

    Section 1119 of the bill amends section 726(b) of title 11 
of the United States Code to strike an erroneous reference to a 
nonexistent section.191
---------------------------------------------------------------------------
    \191\ For a description of the error, see the appropriate footnote 
and amendment notes in the United States Code.
---------------------------------------------------------------------------

Section 1120. General provisions

    Section 1120 of the bill amends section 901(a) of title 11 
of the United States Code to correct an omission in a list of 
sections applicable to cases under chapter 9 of title 11.

Section 1121. Appointment of elected trustee

    This section refines existing law by clarifying the 
procedure for giving effect to the election of a private 
trustee in a chapter 11 reorganization case. Section 702(b) of 
the Bankruptcy Code permits creditors at the meeting of 
creditors to elect one person to serve as trustee in the case, 
provided certain conditions are met. Section 1104(b) of the 
Bankruptcy Code relates to the convening of the meeting of 
creditors for this purpose and the conduct of the election. 
Section 1121 of the bill renumbers section 1104(b) as section 
1104(b)(1) and adds a new subsection 1104(b)(2) requiring the 
United States trustee to file a report certifying the election 
when an eligible, disinterested trustee is elected under 
paragraph (1). The effect of such filing would be to consider 
such elected trustee as selected and appointed for purposes of 
section 1104 and to terminate the service of any trustee 
appointed under subsection (d), which provides for the 
appointment of a trustee or examiner by the United States 
trustee, subject to court approval, if the court orders such an 
appointment or in the event of a trustee or examiner's death, 
resignation, removal or failure to qualify.

Sections 1122 and 1123. Abandonment of railroad line; contents of plan

    Sections 1122 and 1123 of the bill amend sections 
1170(e)(1) and 1172(c)(1) of title 11 of the United States Code 
to reflect the facts that section 11347 of title 49 of the 
United States Code was repealed by section 102(a) of Public Law 
104-88 and that provisions comparable to section 11347 appear 
in section 11326(a) of title 49 of the United States Code.

Section 1124. Discharge under chapter 12

    Section 29 of the bill amends section 1228 of the 
Bankruptcy Code, dealing with discharge under chapter 12, to 
correct erroneous references.

Section 1125. Bankruptcy cases and proceedings

    Section 1125 of the bill amends section 1334(d) of title 28 
of the United States Code to correct erroneous 
references.192
---------------------------------------------------------------------------
    \192\ For a description of the errors, see the appropriate footnote 
and amendment notes in the United States Code.
---------------------------------------------------------------------------

Section 1126. Knowing disregard of bankruptcy law or rule

    This section amends section 156(a) of title 18 of the 
United States Code, which defined ``bankruptcy petition 
preparer'' and ``document for filing,'' by making stylistic 
changes and correcting a reference to title 11 of the United 
States Code.

Section 1127. Transfers made by nonprofit charitable corporations.

    Section 1127 amends section 363(d) of the Bankruptcy Code 
to restrict the right of a trustee to use, sell, or lease 
property by a nonprofit corporation or trust. First, the use, 
sell or lease must be in accordance with applicable 
nonbankruptcy law and to the extent it is not inconsistent with 
any relief granted under certain specified provisions of 
section 362 of the Bankruptcy Code concerning the applicability 
of the automatic stay. Second, section 1127 imposes similar 
restrictions with regard to chapter 11's plan confirmation 
requirements. Third, it amends section 541 of the Bankruptcy 
Code to provide that any property of a bankruptcy estate where 
the debtor is a nonprofit corporation (as described in certain 
provisions of the Internal Revenue Code) may not be transferred 
to an entity that is not a corporation, but only under the same 
conditions that would apply if the debtor was not in 
bankruptcy.
    The amendments made by this section apply to cases pending 
on the date of H.R. 833's enactment. An limited exception 
pertains with confirmation of a chapter 11 plan.

Section 1128. Prohibition on certain actions for failure to incur 
        finance charges

    Section 1128 amends section 127 of the Truth in Lending Act 
to prohibit a creditor to terminate an open-end consumer credit 
plan prior to its expiration date solely because the consumer 
has not incurred finance charges on the account. This 
restriction does not prevent a creditor from terminating an 
account for inactivity for three or more consecutive months.

Section 1129. Protection of valid purchase money security interests

    Section 1129 of the bill extends the applicable perfection 
period for a security interest in property of the debtor in 
section 547(c)(3)(B) of the Bankruptcy Code from 20 to 30 days.

Section 1130. Trustees

    Section 1130(a) sets up a series of procedural protections 
for chapter 7 and chapter 13 trustees (appointed respectively 
under section 586(a)(1) and (b)) concerning decisions relating 
to their appointment and future case assignments. It allows a 
trustee to obtain judicial review of final agency decisions by 
commencing an action in the United States district court after 
such trustee exhausts all available administrative remedies. It 
provides that the agency's decision shall be affirmed by the 
district court unless it is unreasonable and without cause.
    Section 1130(b) requires a chapter 13 to obtain judicial 
review of certain final agency action relating to expenditures 
by such chapter 13 trustee. The decision of the agency shall be 
affirmed by the district court if is unreasonable and without 
cause based on the administrative record before the agency.

         XII. General Effective Date: Application of Amendments

Section 1201. Effective date; application of amendments

    Section 1201 provides that the bill shall take effect 180 
days after the date of its enactment. Except as otherwise 
provided in the bill, the amendments made by H.R. 833 shall not 
apply to cases commenced under the Bankruptcy Code before the 
bill's effective date.

                              Agency Views

                             Department of Justice,
                             Office of Legislative Affairs,
                                    Washington, DC, April 19, 1999.
Hon. Henry J. Hyde,
Chairman, Committee on the Judiciary,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: We understand that the Judiciary 
Committee will mark up H.R. 833, the Bankruptcy Reform Act of 
1999, during the week of April 19, 1999. This letter 
supplements and incorporates by reference the views of the 
Justice Department on H.R. 833 set forth in our letter of March 
24, 1999, to the Chairman of the Subcommittee on Commercial and 
Administrative Law. A copy of that letter is enclosed for your 
convenience. We would be pleased to meet with you to discuss 
our concerns in more detail.

Section 102. Dismissal or conversion

    The Department continues to oppose this provision for the 
reasons stated in our earlier letter, but notes certain changes 
in the wording of proposed section 707(b)(2)(A)(ii) which cause 
additional concerns. Specifically, the new reference to ``the 
debtor's applicable monthly expenses for the categories 
specifically listed as Other Necessary Expenses issued by the 
Internal Revenue Service'' appears to limit what the debtor can 
claim to certain categories and no others. This limitation is 
too restrictive.
    In addition, a new statement has been added that 
``[n]otwithstanding the foregoing, the debtor's monthly 
expenses shall not include any payments for debts.'' The 
purpose of this statement is unclear. This provision would, for 
example, appear to preclude a debtor from factoring in any 
payments on nondischargeable debt. We recommend that this 
sentence be deleted.

Section 117. Trustee liability

    Section 117 of H.R. 833 is new, and was incorporated as 
part of the Amendment in Nature of a Substitute approved by the 
Subcommittee. This section establishes a uniform standard of 
trustee personal liability. We strongly oppose Section 117 as 
currently drafted, because it could seriously undermine the 
ability of innocent victims of a trustee's negligent conduct to 
obtain redress. It also contradicts the requirements of 28 
U.S.C. Sec. 959 (``trustees and receivers suable'') for 
trustees and receivers conducting business operations.
    Subsection (a) would amend section 322 of the Bankruptcy 
Code (title 11, U.S.C.) to provide that a trustee is not liable 
personally or on such trustee's bond except to the extent that 
the trustee acted with gross negligence. This standard is 
designed to insulate a trustee from any liability arising from 
the trustee's negligence and could leave victims, whether 
creditors or innocent third parties, without recourse. Although 
a trustee's bond is conditioned upon a trustee's ``faithful 
performance,'' 11 U.S.C. Sec. 322(a), this provision could 
permit the surety on the bond to avoid payment on a negligence 
claim, because the principal on the claim, the trustee, would 
not be personally liable.
    The risk of harm to innocent third parties is especially 
great when a trustee operates a business. Currently, 28 U.S.C. 
Sec. 959 requires all trustees engaged in business to comply 
with the requirements of the laws of the state in which the 
property is situated. Granting immunity for acts of negligence 
eviscerates the requirements of 959, and could create a safe 
haven from having to comply with applicable law in carrying on 
a business. The consequences of this change would be 
particularly severe in cases where trustees operate a hazardous 
enterprise such as a chemical weapons business or waste 
recycling business. If trustees elect to seek short-term 
profits for estate creditors through operation of an insolvent 
and hazardous business prior to liquidation, it is critical 
that innocent parties that may bear any costs of such profit-
making activity be protected.
    Trustees may currently protect themselves from negligence 
claims by purchasing insurance. Yet because the insurance 
protects the trustee personally asopposed to the estate, 
reimbursement of the premiums from estate funds has traditionally been 
disallowed. This provision would eliminate the trustee's incentive to 
carry any insurance.
    To protect both the estate and innocent third parties, the 
Department would not object, in lieu of this provision, to 
amendments requiring trustees to obtain adequate insurance and 
permitting them to obtain reimbursement of their premiums as an 
``actual, necessary expense'' of the estates, See 11 U.S.C. 
Sec. 330(a)(1)(B). If this provision remains, however, we 
strongly recommend that any immunity provided by Section 117(a) 
be made inapplicable to a trustee ``that is carrying on 
business,'' in order to conform to the requirements of 28 
U.S.C. Sec. 959. Moreover, nothing in this provision should 
compromise a court's ability to consider the trustee's 
negligent acts in awarding compensation to the trustee, or in 
considering whether the trustee should be removed from the case 
under 11 U.S.C. Sec. 324. This is particularly important since 
section 209 of the bill, which we oppose, would create an 
entitlement for the trustee to recover maximum compensation.
    Subsection (b) would amend section 323 the Bankruptcy Code 
to further immunize trustees from the consequences of their 
acts by stating that a trustee may not be sued, either 
personally or in a representative capacity, ``for acts taken in 
furtherance of the trustee's duties or authority in a case in 
which the debtor is subsequently determined to be ineligible 
for relief.'' This provision could be interpreted to insulate a 
trustee from acts of gross negligence based on the mere 
fortuity that a bankruptcy case is later dismissed. We also 
oppose this provision because it fails to protect innocent 
third parties as discussed above.
    Subsection (b) would also amend the Bankruptcy Code to 
immunize a trustee from liability ``for the dissemination of 
statistics and other information regarding a case or cases, 
unless the trustee has actual knowledge that the information is 
false.'' Congress has recognized the need for data as well as 
the establishment of adequate safeguards. Sections 701-703 of 
this bill evidence a congressional mandate for uniform data 
collection standards, including final reports in chapter 7, 11 
and 13 cases. Acting pursuant to this mandate, the United 
States Trustees and the bankruptcy clerks will be developing 
and compiling uniform standards and statistical information. 
Since the data maintained by the trustees will be collected by 
the United States Trustees and clerks for purposes of meeting 
these requirements, this amendment appears unnecessary and may 
be redundant of other provisions.
    Nevertheless, we would not oppose this provision if it were 
amended to address the following concerns:
          No dissemination should violate protected privacy 
        interests of an individual.
          The trustee should not be permitted to disseminate 
        statistics for the personal benefit or gain of the 
        trustee or of any organization in which the trustee is 
        a member.
          The trustee should not be permitted to discriminate 
        in the way statistics or information are disseminated.
          Nothing in this provision should abrogate the 
        trustee's fiduciary duty under 11 U.S.C. Sec. 704 to 
        provide information to parties in interest in a case 
        or, upon request, to furnish statistics and information 
        to the United States trustee or clerk of court.
    Finally, subsection (b) further amends 11 U.S.C. Sec. 323 
to provide that a trustee ``may not be sued in a personal 
capacity without leave of the bankruptcy court in which the 
case is pending.'' We oppose this provision as written, because 
it is inconsistent with section 959 of title 28, United States 
Code, which specifically provides that leave of court is not 
required for actions against trustees for acts arising from 
their operation of a business. Victims should not be forced to 
conduct litigation in forums that are distant from where the 
trustee has chosen to conduct business in a negligent, grossly 
negligent or intentionally wrongful manner.
    With regard to non-operating cases, this provision appears 
to codify what is commonly known as the ``Barton doctrine.'' 
Under that doctrine, a trustee who does not operate a business 
cannot be sued in a forum other than where the underlying 
bankruptcy case is pending, absent leave of court. See DeLorean 
Motor Co. v. Weitzman, 991 F.2d 1236 (6th Cir. 1993). If this 
provision is intended to insulate the trustee from personal 
liability actions, we oppose it for the reasons noted above, 
but if it is intended solely as a venue issue, we would not 
oppose codification of the ``Barton doctrine'' provided it 
applies only to non-operating cases and is inserted as an 
amendment to section 1409 of title 28, United States Code, 
instead of the Bankruptcy Code.

Section 132. Amendment to section 1325 of title 11, United States Code

    Section 132 modifies what is commonly called the 
``disposable income'' objection to confirmation of a chapter 13 
plan. Under current law, a trustee or unsecured creditor may 
object to confirmation of a plan unless the plan provides that 
all of the debtor's disposable income for a three-year period 
is applied to payments under the plan. We oppose section 132 
because it seriously weakens the effectiveness of chapter 13.
    This section would require the use of the ``means test'' 
found in section 102 of the bill to determine a debtor's 
disposable income, instead of a personalized review of a 
debtor's necessary expenses. We oppose the application of the 
means test in chapter 13 for the same reasons that we oppose 
the means test in section 102. The rigid application of 
formulaic expenses could significantly reduce the ability of a 
debtor to successfully complete a chapter 13 plan because the 
plan is not based upon a debtor's actual expenses. We believe 
that the current ``disposable income'' test as applied by the 
courts is effective in protecting both the debtor and 
creditors.
    In addition, section 132 eliminates payments received by 
the debtor for child support and other related payments from 
the determination of current monthly income. This could lead to 
double counting, insofar as income attributable to support is 
not recognized but support-related expenses are still deducted. 
Under the present disposable income test, such income and 
associated expenses are taken into account by the courts.

Section 126. Residency requirement for State exemptions

    Section 126 specifies that, if a debtor has not been 
domiciled in a state for the entire 730-day period prior to 
filing, the debtor can claim exemptions under the laws of the 
state where the debtor was domiciled in the 180-day period 
prior to the 730-day period. We support the effort to address 
this problem, but have serious concerns about whether this 
provision will be effective. Much of this will depend on how 
states limit their exemptions or permit individuals to claim 
exemptions. Without a full understanding of how state exemption 
laws are applied, unintended gaps will still arise under this 
proposal as debtors attempt to claim exemptions under the laws 
of another state in which they no longer reside or have 
property. It is unlikely, for example, that a Missouri debtor 
could claim the Texas homestead for the debtor's new Missouri 
residence--two years after the debtor has moved himself and his 
property from Texas--thus leaving the debtor with no homestead 
exemption to claim.

Section 150. Monetary limitation on certain exempt property

    Section 150 would limit the amount of the exemption a 
debtor can claim in homestead property to $250,000. Presently, 
a few states allow a debtor to claim an unlimited exemption in 
homestead property, which has led to highly visible cases of 
abuse by debtors who are clearly able to repay their debts but 
instead avoid repayment by using the unlimited exemptions in 
these states. The Department strongly supports the move to cap 
exemptions but urges the Committee to consider a lower ceiling 
such as $100,000.

Section 402 and 407. Small business chapter 11 cases

    The Department commented in its earlier letter that the 
definition of a small business debtor set out in section 402 of 
the bill could lead to unnecessary litigation over whether a 
debtor is subject to the small business provisions that are 
being proposed. The delay resulting from such litigation could 
jeopardize a small business's ability to reorganize and defeat 
the purpose of these provisions--which is to provide a fair but 
expeditious way to shepherd small business cases through the 
system. We appreciate the change in section 402 to resolve the 
definition problem and support it.
    The substitute bill, however, appears to have moved the 
language in section 402 that we objected to earlier and 
inserted it in section 407 as an amendment to 11 U.S.C. 
Sec. 1121(e). As presently drafted, a small business debtor is 
required to file a plan within 90 days unless the court makes a 
determination within the 90 days that the creditors committee 
``is sufficiently active and representative to provide 
effective oversight of the debtor.'' While we appreciate the 
intent to provide the debtor with more time to file a plan in 
certain circumstances, this provision seems to compromise the 
point of having a 90-day deadline. It will require extra 
hearings during a particularly crucial period when the debtor 
should not be distracted by collateral issues from working on 
the reorganization. We would be pleased to work with the 
Committee on appropriate changes.
    We look forward to working with the Committee as it 
considers these and other issues raised by H.R. 833. The Office 
of the Management and Budget advises that there is no objection 
to the submission of this letter from the standpoint of the 
Administration's program.
            Sincerely,
                                           Dennis K. Burke,
                                 Acting Assistant Attorney General.
                                ------                                

                        U.S. Department of Justice,
                             Office of Legislative Affairs,
                                    Washington, DC, March 24, 1999.
Hon. George W. Gekas
Chairman, Subcommittee on Commercial and Administrative Law, Committee 
        on the Judiciary, House of Representatives, Washington, DC.
    Dear Mr. Chairman: We understand that the House Judiciary 
Subcommittee on Commercial and Administrative Law is scheduled 
to mark up H.R. 833, the Bankruptcy Reform Act of 1999, on 
March 24, 1999. This letter provides the position of the 
Administration on consumer bankruptcy reform, and outlines the 
Justice Department's views on H.R. 833 as a whole. While we 
understand that this letter comes too late for your 
consideration before the markup of H.R. 833 by the 
Subcommittee, we hope you will take our comments into 
consideration prior to the markup by the full Committee. We 
would be pleased to meet with you to discuss these issues in 
more detail.

General Administration Perspectives

    The President supports responsible bankruptcy reform that 
is balanced, would reduce abuses of the bankruptcy system, and 
would require debtors and creditors alike to act responsibly. 
The President remains hopeful that bipartisan consultation and 
compromise will result in legislation that he can 
enthusiastically sign this year.
    Last year the Administration expressed its strong 
opposition to the House-passed version of H.R. 3150. We 
encouraged passage of the Senate bill ``as an important step 
toward balanced bankruptcy reform,'' but noted that the 
Administration would support its enactment ``only if the 
essential reforms incorporated by the Senate managers' 
amendment [were] preserved and strengthened and the unbalanced 
and arbitrary elements of the current House bill [were] 
omitted.'' Although we thought that the Senate bill could be 
further improved, we believed that the extraordinary bipartisan 
support for the Senate bill was an endorsement of balance and 
moderation.
    During this year's debate, the Administration will continue 
to encourage Congress to find an appropriate balance. Among the 
issues that must be addressed are:
    Access to Chapter 7: Any ``means test'' imposed should deny 
access to Chapter 7 only to those who genuinely have the 
capacity to repay a portion of their debts successfully under a 
Chapter 13 repayment plan. Thus, debtors affected by a means 
test must be given a meaningful opportunity to have their 
specific circumstances considered by bankruptcy courts with 
discretion to determine whether they genuinely have the 
capacity to repay a portion of their debts. In addition, the 
time periods and thresholds used in any means test should be 
set to ensure that only those with a strong likelihood of 
success are affected.
    Nondischargeable Debts: It is generally inappropriate to 
make post-bankruptcy credit card debt a new category of 
nondischargeable debt. The Bankruptcy Code makes debts 
nondischargeable only where there is an overriding public 
purpose, such as in the cases of educational loans, tax 
obligations, or debts incurred by fraud. We remain skeptical 
that the current protections against fraud and debt run-up 
prior to bankruptcy are ineffective and that the additional 
debts made nondischargeable by this bill meet the standard of 
an overrding public purpose. If categories of nondischargeable 
debt are to be created, they should be narrowly tailored and 
limited to situations where the debtor is clearly abusing the 
system, such as when the debtor: (1) incurred the debt to pay 
nondischargeable debt with an intent to avoid the debt in 
bankruptcy; or (2) incurred the debt on the eve of bankruptcy 
for goods and services that are not reasonably acquired to 
support the debtor's household.
    Coercive Creditor Practices: Particularly if we are to 
provide new opportunities for creditors to challenge debtors' 
use of the bankruptcy system under the 707(b) abuse test, it is 
imperative that we adequately limit prevalent abusive creditor 
practices such as coercive reaffirmations and violations of the 
automatic stay. While last year's Senate bill initially took 
laudable steps in this direction, the Conference Report rolled 
back existing consumer protections by denying consumers an 
effective means for remedying the harm from such practices and 
eliminating the current authorization for penalties for 
intentional violations of debtor rights.
    Consumer Information and Protection: The challenge posed by 
the unprecedented level of bankruptcy filings requires us to 
ask greater responsibility of debtors and creditors both.Credit 
card companies must give consumers more and better information so that 
they can understand and better manage their debts.
    Homestead Exemptions: At the same time that we are creating 
a system that will deny certain moderate-income Americans 
access to the traditional ``fresh start,'' we should also close 
the loopholes that allow the wealthy to shield hundreds of 
thousands of dollars of wealth from their creditors.

Justice Department Comments

                Title I: Consumer Bankruptcy Provisions

                   SUBTITLE A: NEEDS BASED BANKRUPTCY

Section 102. Dismissal or conversion

    Section 102 of H.R. 833 amends section 707(b) of the 
Bankruptcy Code (the ``Code'). Under this amendment, a chapter 
7 case filed by an individual with primarily consumer debts may 
be dismissed for abuse upon the motion of any party in 
interest, with certain limitations. Abuse is presumed when the 
debtor is able to repay at least 25 percent of non-priority 
unsecured debts or $5000 over 60 months, applying IRS expense 
guidelines. The debtor may rebut the presumption of abuse by 
demonstrating extraordinary circumstances that require 
additional expenses or an adjustment of current monthly income. 
In deciding whether a case is abusive, the court must also 
consider whether the case was filed in bad faith or whether the 
``totality of the circumstances'' demonstrates abuse.
    The Department supports strengthening the provisions of 
section 707 of the Code to ensure that debtors with an ability 
to repay their debts do not obtain a chapter 7 discharge. 
However, the proposed amendments raise a number of concerns, 
and for these reasons, we oppose section 102.
    First, we are concerned that the ``thresholds'' are too 
low, and will have the effect of denying some debtors Chapter 7 
relief who in fact have no significant ability to repay their 
debts. In addition, we believe that these thresholds 
unnecessarily saddle the bankruptcy system with extra costs, 
such as reviewing the income and expenses of low income debtors 
who are not able to repay their debts. We believe that changes 
should be made to minimize the costs to the bankruptcy system. 
And, as a technical matter, this section does not make clear 
whether the ability-to-repay standards apply only to an 
individual debtor, or also to joint debtors.
    Second, the use of the Internal Revenue Service (IRS) 
Standards for allowable expenses is inappropriate because those 
standards were not intended for these purposes. The IRS 
standards were meant to provide guidelines for determining 
appropriate expenses. Last year during its consideration of the 
Internal Revenue Service Restructuring and Reform Act of 1998, 
Pub. L. 105-206, Congress criticized the inflexible application 
of those guidelines and directed the IRS to also consider the 
taxpayer's facts and circumstances. The Joint Committee on 
Taxation explained the attitude of Congress regarding the 
guidelines in the following terms:

          The IRS is * * * required to consider the facts and 
        circumstances of a particular taxpayer's case in 
        determining whether the national and local schedules 
        are adequate for that particular taxpayer. If the facts 
        indicate that use of scheduled allowances would be 
        inadequate under the circumstances, the taxpayer is not 
        limited by the national or local allowances.

See General Explanation of Tax Legislation Enacted in 1998 at 
107 (1998) (emphasis added).
    Bankruptcy courts should be given as much discretion in 
applying the IRS guidelines. In particular, the ``extraordinary 
circumstances'' standard in section 102 of H.R. 833 is much 
stricter than the standard of ``inadequate under the 
circumstances'' which the IRS now applies for collecting tax 
debt, which is a higher public priority than debt that can be 
discharged in bankruptcy.
    Third, the multiple hurdles for rebutting the presumption 
of abuse--``only'' if the debtor can demonstrate 
``extraordinary circumstances'' that make additional expenses 
or adjustments of income ``necessary'' and reasonable--are 
conflicting and so strict as to effectively preclude the debtor 
from proving the existence of reasonable expenses that are not 
included within the IRS standards. We believe that the words 
``only,'' ``extraordinary'' and ``necessary'' should be deleted 
from proposed section 707(b)(2)(B). The debtor still would be 
required to prove to the court that additional expenses are 
both warranted and reasonable.
    Fourth, the procedures set forth in Section 102 would 
impose a substantial burden on the courts and the trustees. As 
a general matter, chapter 7 cases flow through the bankruptcy 
system fairly quickly. Any delays that are built in (including 
the trustees'' statement, the extension of time to file 
paperwork, etc.) will slow that process accordingly. More 
specifically,section 102(b)(2) of the H.R. 833 would amend 11 
U.S.C. 704 to expand the duties of a chapter 7 trustee to require the 
trustee to file a statement with the court 10 days before the meeting 
required under section 341 of the Code as to whether the debtor's case 
should be presumed to be an abuse under the means-test formulation. The 
court must then notice the statement to all creditors within 5 days. If 
the debtor makes more than the highest national median family income 
for a family of equal or lesser size, the trustee must file a motion to 
dismiss within 30 days or file a statement explaining why a motion 
would not be appropriate.
    Since the section 341 meeting occurs within 20-40 days of 
filing, Fed. R. Bankr. P. 2003(a), the trustee's statement must 
be filed within 10 to 30 days after filing depending on when 
the 341 meeting is held. This means the trustee must make the 
determination before she even questions the debtor at the 341 
meeting or before the documents are even filed. This is 
impractical, and is at odds with Section 604 of the bill, which 
appears to give debtors a 45-day grace period to file the 
requisite documents (under current law, 11 U.S.C. 707(a)(3) 
debtors have only 15 days to file the documents required by 11 
U.S.C. 521(1)). It is not clear how the trustee can perform 
this assessment with any degree of due diligence in the time 
required. These problems threaten to significantly clog the 
formal bankruptcy processes. We stand ready to work with the 
Committee to craft proposals that minimize the costs to the 
bankruptcy system.
    Fifth, we do not think it appropriate for Section 102 to 
impose a higher duty on debtor's counsel than that set forth in 
Rule 9011. We believe that the standards in Rule 9011 are 
appropriate and we are concerned that the formulation set forth 
in Section 102 adds unnecessary complexity and confusion to the 
Bankruptcy Code.
    Sixth, we do not believe it is appropriate to remove the 
risk of sanctions from all creditors who bring unjustified Rule 
707(b) motions just because those creditors' claims may be less 
than $1000. If the goal is to encourage small business 
creditors to bring appropriate Rule 707(b) motions, then the 
legislation should be drafted more narrowly to address those 
entities, while excluding large creditors with many small 
claims. Otherwise the bill will serve to protect large 
creditors with sub-$1000 claims who, due to their size and 
efficiencies of scale, do not merit this protection and who 
could use such protection to coerce debtors to reaffirm debts.
    Seventh, section 102 also amends section 704 to require the 
trustee to file a statement with the court 10 days before the 
meeting of creditors, stating whether the debtor's case should 
be presumed abusive based upon ability to repay, and file a 
motion to dismiss within 30 days of filing the statement. It is 
impractical to require the trustee to file such a statement 
before the meeting of creditors, especially when section 604 of 
this bill gives debtors up to 45 days to complete their 
schedules, and liberal amendments to schedules are permitted. 
The necessity of such a statement is also doubtful insofar as 
section 102 requires the debtor to file a statement containing 
the necessary ability to repay calculations.

Section 103. Notice of alternatives

    Section 103 of H.R. 833 would, in part, amend section 342 
of the Code to ensure that consumer debtors receive information 
about debt counseling services and their options before filing 
bankruptcy. The form of the notice would be prescribed by the 
United States Trustee for the district and would contain a 
brief description of the bankruptcy chapters, the benefits and 
costs of each chapter and services available from a credit 
counseling service approved by the United States Trustee for 
that district. We support the concept of consumer education 
that underlies section 103.

Section 104. Debtor financial management test program

    Section 104 of H.R. 833 would require the Executive Office 
for United States Trustees, in consultation with experts, to 
develop a financial management training curriculum for debtor 
education in three pilot districts for a one year period. The 
materials would also be made available to individual debtors on 
request. The courts in the pilot districts would be authorized 
to make attendance at the debtor education program a condition 
of discharge. The Director of the Executive Office would also 
be required to evaluate the effectiveness of the pilots and 
existing debtor education programs and to submit a report of 
his findings to Congress.
    Provided that adequate resources are appropriated for the 
test program, the Department supports this as the best way to 
refine effective debtor education programs before they are 
extended nationwide. However, H.R. 833 creates confusion as to 
whether debtor education is to be a test or a permanent 
program. Section 302(b) and (c) of H.R. 833 condition the 
debtor's discharge upon completion of ``an instructional course 
concerning personal financial management described in section 
111.'' This language suggests a permanent program. Moreover, 
section 111 does not address such courses. We believe these 
provisions may have been carried over inadvertently from an 
earlier draft, and suggest they be deleted.

              SUBTITLE B: CONSUMER BANKRUPTCY PROTECTIONS

Sections 105 to 108. Disclosures (Debt relief agencies)

    Sections 105 to 108 of H.R. 833 deal with debt relief 
agencies. Section 105 defines covered debt relief agencies. 
Section 106 would require such agencies to provide the person 
they are assisting in filing bankruptcy with written notice of 
the requirements that all bankruptcy schedules must be 
accurate, that the information is subject to audit, and that 
the failure to provide accurate information may result in 
dismissal of the bankruptcy case, sanctions or criminal 
prosecution. Debt relief agencies would be required to provide 
a separate notice advising the assisted person that the debt 
relief agency is required, inter alia, to enter a written 
contract. Finally, debt relief agencies would be required to 
inform assisted individuals on matters such as ``how to 
determine what property is exempt and how to value exempt 
property at replacement value.''
    The Department opposes section 106 as currently drafted, 
because it would undercut the consumer protections currently 
contained in section 110 of the Code and state law. These 
provisions impose penalties on persons who negligently or 
fraudulently prepare bankruptcy petitions. Because debt relief 
agencies would be defined to include petition-preparers and 
other non-attorneys, the advice required to be given by a 
counseling agency could constitute the unauthorized practice of 
law. To avoid this problem, section 106 of H.R. 833 should be 
amended to exclude non-attorneys from the provisions of new 
section 526(c), and to add to the form notice outlined in 
section 526(b) a statement that the debt relief counseling 
agency employee cannot provide legal advice if he or she is not 
an attorney.
    Section 107 of H.R. 833 would provide the assisted person 
certain substantive rights when using a debt relief agency, 
including the right to a written contract that fully discloses 
all services and all charges. We do not oppose this concept, 
but believe that the standard of liability in the provisions 
should be changed. Section 107(b)(2) provides that a debt 
relief agency shall not ``make any statement * * * which is 
untrue and misleading or which upon the exercise of reasonable 
care, should be known by the debt relief agency to be 
untruthful or misleading.'' (emphasis added). The underlined 
disjunctive ``or'' would impose strict liability upon a debt 
relief agency by imposing liability if the statement is untrue 
and misleading, even if the agency had no reason to know of the 
untruthful or misleading nature of the statement. The 
Department suggests replacing the underlined ``or'' with 
``and'' to establish a more appropriate standard of liability.
    Finally, section 108 of H.R. 833 would provide penalties 
and other remedies on debt relief agencies for failing to 
comply with the requirements of section 106 and 107, or for 
providing bankruptcy assistance in a case which is dismissed or 
converted for a failure to file bankruptcy papers. Section 108 
should be clarified to allow a debtor, as well as the trustee, 
to bring an action for a violation, and to clarify that the 
remedies are in addition to any remedies provided in section 
110 of the Code.

Section 110. Discouraging abus[ive] reaffirmation practices

    Section 110 addresses a problem of great significance: 
unscrupulous creditor practices designed to coerce debtors into 
reaffirming debts, particularly unsecured debts, even when 
doing so clearly is not in the best interests of the debtor. 
Currently, section 524(c) of the Code imposes a number of 
limitations on reaffirmation agreements, but the extant 
evidence suggests that abusive reaffirmation practices 
continue. The National Bankruptcy Review Commission recommended 
even stricter rules regarding reaffirmation of secured debt, 
and the complete elimination of reaffirmations of unsecured 
debt.
    Section 110 attempts to address this problem by requiring 
that creditors who seek reaffirmation of wholly unsecured 
consumer debt provide a disclosure that the debtor is entitled 
to a hearing. The debtor also can waive his right to a hearing 
if represented by counsel.
    We believe that a far more effective approach would (1) 
require disclosure of the component amounts of any debt to be 
reaffirmed; (2) require court review for reaffirmations of 
relatively small amounts where the creditor claims a purchase 
money security interest; (3) prohibit the addition of costs and 
attorneys fees on at least these smaller claims. We would be 
happy to work with the Committee to develop stronger, more 
effective rules to discourage abusive reaffirmation practices.

Section 111. Promoting alternative dispute resolution

    Section 111 would create an incentive for the parties to 
use alternative dispute resolution prior to the filing of a 
petition. We wholeheartedly support efforts to encourage the 
use of alternative dispute resolution in this context, but 
believe Section 111 is too restrictive because it applies only 
in limited circumstances. Under this section, alternative 
dispute resolution would be encouraged by imposing a penalty in 
cases where a creditor unreasonably refused to negotiate an 
alternative repayment schedule proposed by an approved credit 
counseling agency. The penalty applies only if the debtor's 
offer was made at least 60 days prior to the filing of the 
petition; and the offer provided a specified percentage payment 
(60% over aspecified time). A more effective approach would be 
to encourage parties to use any appropriate neutral, and give them 
leeway to determine when it is appropriate to settle and for what 
amount. We would be happy to work with the Committee to draft a more 
effective rule.

Sections 116 to 117. Effect of discharge; automatic stay

    Section 116 addresses several issues. First, it states that 
the willful failure of a creditor to credit payments received 
under a confirmed plan shall constitute a violation of a 
discharge injunction under subsection 524(a)(2) of the Code. We 
support this provision but suggest two modifications. First, 
the court should be given discretionary, rather than mandatory, 
authority to grant sanctions, so as to allow the court to 
consider situations where the creditor had a good faith basis 
to believe the debt was not discharged. Second, we suggest the 
provision be amended to require the debtor first to exhaust 
efforts to obtain administrative relief where applicable.
    Next, section 116 bars debtors who are injured by the 
failure of a creditor to comply with the law regarding 
reaffirmation agreements or the crediting of plan payments from 
bringing a class action suit. In addition, the provision would 
limit recovery to actual damages or $1000, whichever is 
greater, plus costs and attorneys' fees. Recent litigation has 
demonstrated that these kinds of violations do in fact occur, 
at times, on a class-wide basis in circumstances where 
individual damages may be too small to encourage a debtor to 
bring a claim. Moreover, we believe that treble damages would 
be a more effective incentive to debtors to bring these claims. 
Accordingly, we strongly oppose this provision.
    Section 117 bars class actions for violations of the 
automatic stay, and limits debtor recovery to actual damages 
and reasonable costs, including attorneys fees. Once again, we 
strongly oppose the limitation on class actions, and support a 
treble damages provision as a more effective incentive to 
obtain compliance with the provisions of the automatic stay 
rules.

Section 119. Discouraging bad faith repeat filings

    In cases of refiling within a year, section 119 would 
provide a 30-day limit on the application of the automatic stay 
of section 362 of the Code. This section would not apply if, 
prior to termination and upon request of a party-in-interest, 
the court provides notice and a hearing to affected parties 
regarding the potential extension of the stay. Serial filings 
are a serious problem in many jurisdictions and, accordingly, 
we endorse the adoption of firm measures to address this issue. 
Repeat filings--whether to obtain multiple discharges or to 
hold creditors at bay temporarily--should not be encouraged or 
abided. This provision would provide a welcome limitation to 
abuse of the automatic stay provision of the Code by serial 
filers who have no hope or intention of ever being granted a 
discharge in bankruptcy.

Section 123. Giving secured creditors fair treatment in chapter 13

    Section 123 would amend section 1325(a)(5)(B)(i) of the 
Bankruptcy Code to protect the lien of a secured creditor from 
release by a chapter 13 plan if the debtor fails to complete 
the plan. This provision would resolve an issue on which the 
bankruptcy courts are split. The issue arises when the debtor 
confirms a chapter 13 plan that reduces a creditor's lien to 
the current value of the collateral (so-called ``lien 
stripping'') and then, after completing the payments due on the 
secured portion of the claim, but before the plan is completed, 
the debtor seeks to discharge the lien. Some courts hold that 
the collateral does not vest in the debtor until the entire 
plan is completed. See, e.g., In re Pruitt, 203 B.R. 134 
(Bankr. N.D. Ind. 1996); In re Schieirl, 186 B.R. 498 (Bankr. 
D. Minn. 1995). Other courts have held that, upon payment of 
the secured portion of the creditor's claim, the collateral is 
released. See, e.g., In re Lee, 156 B.R. 628 (Bankr. D. Minn.), 
aff'd, 162 B.R. 217 (D. Minn. 1993); In re Nicewonger, 192 B.R. 
886 (Bankr. N.D. Ohio 1996).
    We support the limitations on lien discharge contained in 
section 123. A key advantage that chapter 13 offers debtors 
over chapter 7 is that a larger universe of property is subject 
to lien ``strip down.'' Furthermore, in a chapter 13 plan, the 
debtor can redeem collateral with payment over time from future 
income. These advantages are often the debtor's chief reason 
for undertaking a chapter 13 plan. But because debtors may 
allocate their plan payments preferentially to pay secured 
indebtedness sooner than unsecured debt, the result can be a 
disincentive for debtors to finish their plans after paying 
enough to redeem the collateral. Debtors should not be 
permitted to obtain the benefits of chapter 13 without bearing 
its burdens.

Section 124. Restraining abusive purchases on secured credit

    Section 124 amends Section 506 of the Code in individual 
cases by barring the stripping of liens for personal property 
acquired by the debtor within 5 years of filing the bankruptcy 
petition. Currently, the debtor's power to strip liens to the 
value of the collateral in plans under chapters 11, 12 and 13 
is not limited by the time lapsed since purchase.
    Expanding the ``look back'' to 5 years changes its 
character, and creates a significant limitation on the 
attractiveness of reorganizations for debtors, especially under 
chapter 13. A key advantage of chapter 13 for debtors is the 
expanded ability it affords to retain property subject to 
liens. Not only can debtors reduce the payments down to the 
value of the collateral, but they can also pay the liens off 
over time from the plan payments. Many courts allow debtors to 
``front load'' the payments for their secured debt; in such 
cases, debtors who retire their secured debts under their plans 
may have no incentive to finish their plans, and may default 
without making substantial payments to their unsecured 
creditors. (The latter result is addressed by section 123, 
which precludes a strip down where the debtor fails to complete 
the plan; we support this provision.) This provision therefore 
may reduce substantially the number of debtors who voluntarily 
file chapter 13. This change benefits lenders who take personal 
property, such as cars, as collateral. The lack of strip down 
means that debtors must devote a greater percentage of their 
limited assets to secured creditors.
    Although this modification may generally benefit the 
federal government, we believe a more balanced approach would 
be to return to the 180 day look back that was considered in 
the last year's legislative proposals.

Section 126. Exemptions

     Section 126 would amend section 522(b)(2)(A) of the Code 
to permit the use of state exemptions only if the debtor has 
been domiciled in the respective state for at least two years 
before filing. As written, this amendment could deny a debtor 
who has not resided in a state for at least two years, but is 
otherwise a resident of that state, the use of any state's 
exemption because many states prohibit the use of federal 
exemption law under so- called ``opt out'' laws. To prevent 
this situation from resulting in the debtor being unable to 
claim any homestead, the opt-out language of section 522 should 
also be modified. Alternatively, this provision could be 
amended to permit the use of a state's exemption law where the 
debtor's domicile has been located for the last two years, or 
for a longer portion of the last two years than in any other 
place.
    Moreover, we urge that the homestead exemption be limited 
uniformly to $100,000 for the reasons set forth in the General 
Administration Perspectives section of this letter.

Section 129. Discharge under chapter 13

     Section 129 governs the scope of discharge in Chapter 13 
cases. Section 129 would limit the dischargeability of certain 
kinds of debt under section 523 of the code. We support this 
limitation. However, section 129 omits section 523(a)(3)(A) of 
the Code from its list of non-dischargeable debt, while it 
includes section 523(a)(3)(B). We see no basis for this 
bifurcation and suggest that entire section 523(a)(3) be 
included. Both subsections deal with a debtor's failure to 
schedule known debts. Subsection A deals with the unnotified 
creditor's ability to file a proof of claim. Subsection B deals 
with the unnotified creditor's ability to object to discharge 
on various grounds. As a matter of due process, the claims of 
such creditors who had no opportunity to participate in the 
bankruptcy should not be discharged.

Section 135. Limitations on luxury goods

     Section 135 would amend Section 523(a)(2)(C) of the Code 
to change the non-dischargeability rules for certain so-called 
luxury goods. First, it defines ``luxury goods or services'' so 
as to exclude those ``reasonably necessary for the support or 
maintenance of the debtor or a dependent of the debtor.'' We 
prefer the formulation ``reasonably required.'' Moreover, by 
including the word ``necessary'' the burden inappropriately 
shifts to the debtor to demonstrate that he or she ``needed'' 
the items expended. Second, it would establish a cap on 
dischargeable luxury goods or services of $250, or cash 
advances of $250, incurred within 90 days of filing the 
petition. We oppose the limitation. This would be a substantial 
change from the current law, which sets forth limits of $1075 
during the preceding 60 day period. Moreover, it is important 
to bear in mind that cash advances are not always obtained for 
frivolous expenses; debtors sometimes use cash advances to buy 
absolute necessities such as groceries.

Sections 141 to 147. Domestic support obligation

    Sections 141 defines domestic support obligations, and 
Section 142 establishes domestic support obligation as the 
first priority. We generally support this recognition of the 
critical societal importance of ensuring that domestic support 
obligations are not unduly reduced as a result of a debtor's 
bankruptcy. Without payments from domestic support obligations, 
the recipients of those payments may become destitute; it is 
therefore appropriate to give them a high priority. However, if 
an appropriate mechanism for funding the administrative costs 
of bankruptcy is not provided, too many debtors will go 
unrepresented. We would like to work with the Committee 
toensure that there are no unintended consequences of this priority for 
domestic support obligations.
     Sections 143 to 147 establish other special rules in the 
domestic support obligation context. Sections 143 and 144 
establish special rules regarding confirmation and discharge, 
and exceptions to the automatic stay, in cases involving 
domestic support obligations. Section 145 makes certain 
domestic support obligations non-dischargeable. We support 
these provisions for the reasons stated above.

Section 149. Nondischargeable debts

     Section 149 amends Section 523(a) of the Code in two ways. 
First, it would make non-dischargeable any debt that was 
incurred to pay an otherwise non-dischargeable debt with the 
intent to discharge the newly acquired debt. We support this 
change.
    Second, Section 149 would also make non-dischargeable all 
debts incurred to pay non-dischargeable debts, without regard 
to intent, if incurred within 90 days of the petition. 
Proponents of this provision argue that one can presume that 
the debtor had the intent to avoid the debt in bankruptcy if 
they paid the nondischargeable debt with a dischargeable debt 
within 90 days of bankruptcy. Unfortunately, that is not a fair 
assumption. In the final months before filing a bankruptcy 
petition, a debtor may be struggling to retain a house or a car 
or feed a family. Accordingly, he or she may put debts on their 
credit card in a last attempt to meet their obligations. A 
review of the debtor's intent (for example, by looking at 
whether the debtor had yet consulted with bankruptcy counsel or 
whether the debtor had previously filed for bankruptcy and 
therefore was familiar with the rules) could uncover whether 
the payment in fact was abusive or not. By failing to weigh the 
intent of the debtor, this rule is overbroad and we strongly 
oppose its inclusion.

                Title II: Discouraging Bankruptcy Abuse

Section 201. Reenactment of Chapter 12

     Section 201 reenacts Chapter 12 of the Code, pertaining to 
family farmers. We support this provision.

Section 202. Meetings of creditors and equity security holders

     Section 202 would amend section 341 of the Code to allow a 
court to direct the United States Trustee to dispense with the 
meeting of creditors in a case with a so-called ``pre-packaged 
plan'', i.e., a reorganization plan worked out with creditors 
in advance of the filing of a Chapter 11 petition. We oppose 
this provision, which would significantly hinder the ability of 
creditors and the United States Trustee to examine a debtor's 
affairs under oath. Dispensing with the meeting could also 
increase the possibility of fraud and collusion by a debtor and 
its major creditors. We suggest this provision be deleted.

Section 203. Protection of retirement savings in bankruptcy

     Section 203 exempts from the bankruptcy estate a qualified 
retirement fund, pursuant to certain standards set forth in 
this section. The effect of the amendments would be to enhance 
debtors'' ability to prevent their interests in retirement 
accounts and funds, including Individual Retirement Accounts, 
from being used to satisfy their debts. The Administration has 
made encouraging adequate retirement savings a singular 
priority. We recognize that a fresh start is not meaningful if 
it requires the debtor to accept an impoverished retirement. 
However, a debtor should not be able to shield abundant 
resources from creditors, including federal, state and local 
governments, in the form of retirement savings. We look forward 
to working with the Committee to find the appropriate balance 
of these considerations.

Section 205. Executory contracts and unexpired leases

     This section requires a debtor to assume an unexpired 
lease of non-residential real property within 180 days after 
filing the petition or the lease is deemed rejected. We support 
this provision.

Section 206. Creditor and equity security holders committees

     Section 206 would amend section 1102 of the Code to allow 
a court to order changes in the membership of creditor and 
equity security holder committees. We strongly oppose this 
provision. Under section 1102 of the Code, United States 
Trustees are responsible for creating committees and appointing 
their members, while courts are called upon to resolve 
controversies arising from the committees. Section 206 would 
upset this balance and improperly involve the court in the 
administration of cases. This could create an appearance of 
favoritism if a court were called upon to resolve a controversy 
involving a committee it had constituted. The proposal could 
also result in increased cost and delay because early 
litigation over committee membership would inevitably decrease 
the ability of committees to participate at the early, critical 
stages of cases.
     Nevertheless, the Department recognizes the desirability 
of revising section 1102 to ensure that effective and 
representative committees are appointed. Accordingly, we would 
suggest that this section be amended to require that any 
request to create oralter the membership of a committee be 
first directed to the United States Trustee and to permit the court, 
upon a request of a party in interest after an adverse decision by the 
United States Trustee, to make the requisite findings and order the 
United States Trustee to alter a committee. Such an amendment should 
also reaffirm the United States Trustee's authority to alter a 
committee. We would be happy to work with the Committee to draft 
language to accomplish this objective.

Section 209. Amendment to section 330(a)

     Section 209 would provide that in determining the amount 
of reasonable compensation to be awarded to a trustee, the 
court shall treat such compensation as a commission based on 
the results achieved. We oppose this provision, which would 
create a singular incentive that could lead to abuses, or the 
perception of abuses, on the part of the trustee. We prefer the 
current multifactor analysis set forth in section 330(a)(3) of 
the Code.

Section 211. Preferences

     Section 211 would amend section 547(c) of the Code, which 
deals with preferential transfers of property to creditors 
after the filing of a bankruptcy petition. Section 207 would 
eliminate the ability of a trustee to avoid such a transfer in 
a case filed by a debtor whose debts are not primarily consumer 
debts, where all the property that constitutes or is affected 
by the transfer is worth less than $5,000.
     We oppose this provision. Although this provision is 
apparently designed to protect the interests of smaller 
creditors, this section, without appropriate supervision, could 
lead to abuse and manipulation by debtors wishing to pay 
preferred creditors. For example, nothing in the provision 
would prohibit a debtor from breaking a larger payment into 
several smaller ones that each total less than $5,000. If such 
preferential payments are not avoidable, the result could be a 
substantial diminution of the property available to pay 
priority claims.

Section 215 (listed in table of contents as section 216). Defaults 
        based on nonmonetary obligations

     Section 215 amends Section 365 of the Bankruptcy Code to 
allow the debtor to reinstate a lease of real property under 
which the debtor is in default if the default is not curable by 
paying money. In addition, the debtor is allowed the same power 
for an executory contract with the additional requirement that 
the court find that the ``equities'' excuse the debtor's usual 
obligation to cure. We oppose this provision for the reasons 
outlined below, and suggest that it be deleted.
     Currently, Section 365 of the Code allows a debtor to 
resume performance of (or ``assume'') an executory contract or 
an unexpired lease, notwithstanding a default that would 
normally cost the debtor that right. To do so, the debtor must 
cure the default, compensate for the monetary loss, and assure 
adequately its future performance. Waiving the debtor's 
obligation to cure if the default is not curable by money 
ignores that many defaults going to the essence of the 
agreement are not curable by money. The non-debtor party should 
not be forced to perform where deprived of the full benefit of 
the bargain.
     If section 215 is intended to address the problem that 
minor contractual breaches could otherwise be an obstacle to 
the debtor's power to assume, then this fear is misplaced. The 
common law has long distinguished between defaults that are 
minor (entitling only damages) and major (voiding the 
agreement). This proposal replaces, in the case of executory 
contracts, this familiar concept with the wholly novel notion 
of ``equities.'' This gives no guidance to the judge or parties 
as to what factors should be weighed, and will therefore 
generate confusion and litigation.

           Title III: General Business Bankruptcy Provisions

Section 302. Miscellaneous improvements

     Section 302 bars any debtor from filing a petition unless 
they have sought the assistance of credit counseling during the 
90-day period prior to the filing of the petition. This 
provision does not apply in certain circumstances, such as 
filings due to exigent circumstances. Section 302 also requires 
debtors to attend educational courses prior to discharge in 
Chapter 7 and 13 cases. Section 302 requires the clerk of the 
court to maintain a list of credit counseling services and 
educational courses that have been approved by the U.S. 
Trustee.
     We support the concept of credit counseling but question 
whether the utility of making it mandatory in chapter 13 where 
individuals will already be seeking to repay their creditors 
through a debt repayment plan. We also have concern about the 
requirement for United States Trustees to approve credit 
counseling agencies because it is a large, unstructured and 
unregulated segment of the financial services industry. The 
list of approved agencies will serve as a Federal guide for 
would-be debtors, and we expect it will attract applicants of 
varying degrees of character and quality. It is important that 
the United States Trustees have sufficient tools and discretion 
to address the problems that will undoubtedly emerge. With 
oneexception discussed below, the provision appears adequate, but 
sufficient resources must also be made available. We might also 
suggest, as an alternative, that a pilot program be created first in 
several districts to test the usefulness of credit counseling and its 
impact on filings.
     One issue appears to have been overlooked and should be 
addressed. There is no automatic dismissal to enforce this 
provision if a debtor fails to file a certificate from a 
counselor pre- or post-petition. Assuming the petition gets 
filed without a certificate, a party would then have to move to 
dismiss the case under 707(a), 1112(b), 1208(c), or 1307(c) 
based on the debtor's ineligibility.
     Section 302(b)-(c) provides that a chapter 7 and a chapter 
13 discharge are conditioned upon the debtor's completion of a 
post-filing instructional course. As noted above in comments to 
section 104, H.R. 833 appears to contain provisions for a pilot 
program, but this provision seems to assume a permanent 
program. There is a need to clarify this provision. A pilot 
program is preferable.

Section 303. Extensions

     Section 303 of H.R. 833 would amend section 302(d)(3) of 
the Bankruptcy Judges, United States Trustees, and Family 
Farmer Bankruptcy Act of 1986 to eliminate the deadline for 
including the judicial districts in the States of Alabama and 
North Carolina within the United States Trustee system. The 
Department strongly opposes the amendment because it would 
retain two separate systems of bankruptcy administration within 
the country and may be vulnerable to Constitutional attack 
under the Uniformity Clause.
     When Congress made the United States Trustee Program 
(USTP) a nationwide program in 1986, the date the program was 
to commence varied in different judicial districts. Six federal 
judicial districts in the States of North Carolina and Alabama 
remain outside the program, and the date for the inclusion of 
these districts has been postponed until October 1, 2002--
sixteen years after the United States Trustee Program's 
nationwide expansion. Pub. L. No. 101-650, 317(a), (c), 104 
Stat. 5115, 5116 (1992). In these six districts, ``Bankruptcy 
Administrators'' and court clerks employed by the judicial 
branch perform many of the functions that are performed by 
United States Trustees in USTP districts.
     This arrangement may not comply with Article I's mandate 
to ``establish * * * uniform Laws on the subject of 
Bankruptcies throughout the United States.'' U.S. Const. Art 
I., Sec. 8., cl. 4. Supreme Court precedent on what 
``uniformity'' means in this context is ambiguous. The leading 
case on the issue is Hanover National Bank v. Moyses, 186 U.S. 
181 (1902), where the court rejected a challenge to the 
Bankruptcy Act of 1898, which recognized state exemptions 
instead of establishing a system of uniform federal exemptions. 
The opinion suggests that Congress can account for differences 
in state law in the bankruptcy laws without violating the 
requirement of uniformity. More recently, in Railway Labor 
Executives' Ass'n v. Gibbons, 455 U.S. 457 (1982), the Supreme 
Court struck down, as violative of Article I's uniformity 
requirement, a statute requiring employees of the bankrupt Rock 
Island and Pacific Railroad Co. estate to receive certain 
benefits if not rehired by other carriers. According to the 
Court, ``to survive scrutiny under the Bankruptcy Clause, a law 
must at least apply uniformly to a defined class of 
creditors.'' Gibbons, 455 U.S. at 473.
     Given the lack of clarity on Article I's uniformity 
requirement and the doubts raised about the justification for 
maintaining both the USTP and Bankruptcy Administrator 
programs, additional challenges to the constitutionality of 
this dual system seem likely. See, e.g., St. Angelo v. Victoria 
Farms, Inc. 38 F.3d 1525, 1532 (1994); Joelson v. United 
States, 179 B.R. 857, 864 (N.D. Ohio 1995). In any event, 
maintaining a special system of bankruptcy administration for 
just six of the nation's 94 judicial districts is imprudent. No 
articulated policy justified maintaining the Bankruptcy 
Administrator program, and its continued existence not only 
threatens to inspire additional constitutional challenge, but 
is also contrary to the fair, effective and uniform 
administration of the bankruptcy laws.
    Finally, we note that section 303 is not referenced in the 
table of contents set out in section 1 of H.R. 833.

             Title IV: Small Business Bankruptcy Provisions

Sections 401 and 403. Flexible rules for disclosure statement and plan; 
        standard form disclosure statements and plans

    Section 401 would add a new section 1125(f) to the Code to 
allow the court to relax the plan confirmation procedures in 
small business bankruptcies. Specifically, for a small business 
case, the court would be empowered to: (i) waive the disclosure 
statement; (ii) use a form disclosure statement; (iii) allow 
plan solicitation based on a ``conditionally approved'' 
disclosure statement; or (iv) combine the confirmation and 
disclosure statement hearing. Section 403 would require the 
Judicial Conference to adopt ``standard form'' disclosure 
statements and plans of reorganization that balance the need 
for ``reasonably complete information'' with ``economy and 
simplicity.''
     These provisions would remove procedural barriers to early 
confirmation and, to the extent they encourage quicker 
confirmations, are advantageous to debtors and creditors alike. 
Care will be need-

ed lest the execution of these provisions lead to confirmations 
without adequate disclosure to creditors and other affected 
parties. We believe, however, that this risk is manageable. 
Accordingly, we support this provision.

Section 402. Definition of small business debtor

     Section 402(a) defines the terms ``small business debtor'' 
and ``small business case.'' The definition of small business 
case is apparently missing some words, but it appears that the 
definition excepts cases where a creditors' committee is formed 
and the court determines that it is ``sufficiently active and 
representative to provide effective oversight of the debtor.'' 
This apparent exception defeats the purpose of the small 
business provisions to minimize the time a case remains in 
bankruptcy because it could lead to litigation over the 
exception. See section 407. The exception should be eliminated 
so that there is certainty at the commencement of the case 
whether it involves a small business or debtor.
     Section 402(b), concerning penalties for violation of the 
discharge injunction, is unrelated to small business cases and 
is identical to section 116. It should be eliminated as 
duplicative.

Section 404. Uniform national reporting requirements

     Section 404 would add a new section 308 to the Code 
requiring a small business debtor to file periodic reports 
explaining: (i) its profitability; (ii) projected income and 
expenses; (iii) how prior projections compare with actuality; 
(iv) compliance with bankruptcy requirements; (v) whether taxes 
returns are timely filed; (vi) what taxes and other 
administrative claims are in default and when remedied; and 
(vii) ``other matters'' needed in the creditors' and the 
public's interest.
     We support these disclosure requirements and the need for 
consistent financial reporting standards. By helping to 
identify faltering cases, financial reports prevent undue delay 
in the administration of chapter 11 cases. We further urge 
extending this section to all chapter 11 debtors, not just 
small business debtors.

Section 405. Uniform reporting rules and forms

    Section 405 would require the Judicial Conference of the 
United States to propose for adoption amended Federal Rules of 
Bankruptcy Procedure and Official Bankruptcy Forms to be used 
by small business debtors to comply with the provisions added 
by Section 404 of the bill. We support this provision, with one 
exception: it should be amended to indicate that the Attorney 
General will promulgate the report forms. This is consistent 
with section 702 under which the Attorney General is to propose 
these forms and to collect data based on the information 
reported. It is essential that these two functions be merged 
under the same authority.

Section 408. Plan confirmation deadline

     Section 408 of H.R. 833 requires that small business 
chapter 11 cases be confirmed within 150 days of filing. This 
time period may be enlarged only if the debtor demonstrates by 
a preponderance of the evidence that it is more likely than not 
that the court will confirm a plan within a reasonable time.
    The Department encourages the prompt disposition of cases, 
but the 150-days cutoff may be too short. Currently only 4% of 
chapter 11 confirmations occur within 150 days of filing. 
Although substantial improvements in processing times have 
occurred during the last decade, the majority of confirmations 
still occur more than one year after filing. Additionally, over 
60% of dismissals and conversions to chapter 7 occur more than 
150 days after filing. Although section 408 would allow 
enlargement of this time period, our statistics show that only 
about 30% of chapter 11 cases result in confirmation. 
Furthermore, based solely on when a case is filed, there is no 
age at which a chapter 11 cases has a 50% or better chance of 
being confirmed. Thus, while we support the purpose of this 
provision, we do not think it is necessary.

Section 410. Duties of the United States Trustee

     Section 410 would amend 28 U.S.C. Sec. 586 to expand the 
United States Trustee's oversight of small business debtors. It 
would oblige the United States Trustee to interview the debtor 
before the first meeting of creditors, visit the debtor's 
premises, monitor the debtor's actions and, where grounds are 
found to do so, move to convert the case to a Chapter 7 or to 
dismiss the case altogether.
     We support this provision, which would clarify and codify 
the United States Trustee's obligation to move hopeless cases 
out of chapter 11. This section reflects the current practice 
of the United States Trustees, except for the duty to visit the 
debtor's premises. We estimate that site visits would cost an 
additional $10 million over 5 years.

Section 411. Scheduling conferences

    Section 411 would amend section 105(d) of the Code to 
require the courts to hold status conferences ``as necessary.'' 
This provision would apply to all chapter 11 cases. In 
addition, it would allow the courts to vary from the Code and 
the Bankruptcy Rules if ``necessary to further the expeditious 
and economical resolution of the case.'' To the extent it 
empowers the court to override requirements of the Code and 
Bankruptcy Rules, or to intrude into areas currently entrusted 
to the United States Trustee, it goes too far. While bankruptcy 
procedures should be somewhat flexible, we believe that it is 
important that bankruptcy judges not be permitted to vary, 
essentially at will, from statutory and rule requirements, 
potentially depriving creditors and other parties in interest 
of key procedural protections. We believe that the standard 
incorporated in section 411 does not adequately preserve these 
procedural protections, and we therefore oppose the provision.

Section 412. Serial filer provisions

    Section 412 would amend section 362 of the Bankruptcy Code 
to disable the automatic stay for a small business filing 
where: (i) the debtor is already in bankruptcy; (ii) had a case 
dismissed or a plan confirmed within two years prior to filing; 
or (iii) acquired the assets of a debtor in a proceeding 
covered by (i) or (ii), unless the debtor shows that its filing 
resulted from causes unforeseeable during the prior case and 
that a non-liquidating plan may be confirmed within a 
reasonable time.
    Serial filings are a serious problem in many jurisdictions 
and we endorse the adoption of firm measures to address this 
issue. Repeat filings--whether to obtain multiple discharges or 
to hold creditors at bay temporarily--should not be permitted. 
Accordingly, we support section 412 of the bill. However, we 
believe that applying this restriction only to small business 
debtors is too limited and that this provision instead should 
apply to all debtors in chapter 11.

Section 413. Expanded grounds for dismissal or conversion and 
        appointment of trustee

    Section 413 would amend section 1112 of the Code to require 
the conversion to chapter 7 or dismissal of any chapter 11 case 
where ``cause'' is shown. This requirement would not apply if 
the debtor could show that a plan may be confirmed within a 
reasonable time and, where the ``cause'' is a default, that the 
default is justified and will be cured promptly. ``Cause'' 
would be defined to include a variety of situations, including 
gross mismanagement; misuse of cash collateral; a violation of 
a court order; default of a filing or reporting requirement; 
the nonpayment of taxes or nonfiling of a return; and not 
filing timely a disclosure statement or plan or confirming a 
plan.
    We support this provision. It is one of several in the bill 
designed to move cases that cannot be confirmed out of chapter 
11. Defining ``cause'' using more objective standards would 
foster uniformity and enhance efficiency. Shifting the burden 
to the debtor to justify defaults and prove satisfactory 
progress when cause is shown appropriately conditions the 
debtor's enjoyment of the benefits of bankruptcy on responsible 
actions.

Section 415. Payment of interest

    Section 415 would amend section 362(d)(3) of the Bankruptcy 
Code to limit the automatic stay in a single asset real estate 
(SARE) case, where the debtor fails to file a plan or commence 
interest payments within 90 days of filing, to: (i) allow the 
payment to commence 30 days after the court determines that the 
debtor is a SARE; (ii) allow the debtor to make the interests 
payments from post-petition rents of the SARE; and (iii) 
specify the non-default contract rate as the interest rate.
    We oppose this change. Under current section 362(d)(3) of 
the Code, creditors of a SARE debtor may have the automatic 
stay lifted if the debtor has not filed a ``feasible'' 
reorganization plan within 90 days of filing or has not 
commenced monthly payments to secured creditors. Giving the 
debtor 30 days to comply after the court rules that the debtor 
is subject to section 362(d)(3) is unwise. The exception to the 
automatic stay in section 362(d)(3) takes its force from the 90 
days time limit. That force is substantially diminished by 
relaxing that limit for debtors who claim, or who can find a 
pretext for claiming, that it does not apply. It is also 
unnecessary; the court currently can extend the 90 days for 
``cause.''
    Giving the debtor the ``sole discretion'' to override 
section 363(c)(2) and make interest payments out of post-
petition rents is also ill-advised. First, the amendment does 
not require that the creditor receiving the rents be the same 
as the creditor whose rights are voided. Second, even if the 
creditor receiving the rents is being paid its own collateral, 
the amendment serves to limit that creditor's rights. 
Currently, this section works largely as a predicate to allow 
the secured creditor and the debtor to negotiate a consensual 
payment schedule. Giving the debtor the discretion to override 
the secured creditor's interests stands the purpose of the 
section on its head.
     Finally, allowing the debtor to pay at the contract rate 
is inconsistent with paying a ``stripped down'' value in the 
case of an undersecured creditor. If the payment's principal is 
afunction of market value, the interest rate should be 
calculated the same way. We oppose this change as well.

              Title VI: Streamlining the Bankruptcy System

Section 601. Creditor representation at first meeting of creditors

    Section 601 would amend section 341 of the Code to allow 
non-attorney consumer creditor representatives to attend and 
participate in chapter 7 and chapter 13 creditors' meetings 
notwithstanding federal, state or local non-bankruptcy law to 
the contrary. The Department supports this provision because it 
promotes the participation of creditors in the bankruptcy 
process. We strongly encourage further amendment to delete the 
phrase ``holding a consumer debt'' from the section to ensure 
the ability of all creditors, including non-lawyer 
representatives of governmental creditors, to participate in 
creditor meetings.

Section 602. Audit procedures

    Section 602 would amend 28 U.S.C. Sec. 586 to require the 
Attorney General to establish procedures for auditing of a 
debtor's petition, schedules, statement of financial affairs 
and other similar information in all consumer chapter 7 and 13 
cases. At least one out of every 250 of the consumer cases in 
each judicial district would be randomly chosen for audit, in 
addition to those cases where the debtor's income and expenses 
exceed the mean variance in the judicial district.
    The Department supports the concept of debtor audits. The 
bankruptcy system is dependent upon the full and voluntary 
disclosure by debtors of accurate information regarding their 
assets, liabilities and financial affairs. A systematic program 
of random audits would serve to deter those who might otherwise 
be tempted to conceal assets and information from their 
creditors. We also believe assigning this responsibility to the 
Department makes sense given the central role of United States 
Trustees in ensuring the integrity of the bankruptcy system.
    The Department, however, opposes section 602 in its current 
form because of its feasibility and cost. The proposal requires 
independent Certified Public Accountants (CPAs) to conduct 
``audits'' in accordance with ``generally accepted auditing 
standards,'' a term of art within the accounting profession. It 
is questionable whether an audit conducted by an independent 
CPA and in accordance with these principles is feasible or 
desirable in most consumer cases given that a debtor's 
financial records are often nonexistent or in disarray.
    Assuming that the practical problems associated with 
conducting an audit can be resolved, the provision as drafted 
would be costly. The Department has estimated that implementing 
the audit program contemplated by this section could cost from 
$18.6 million to more than $59 million over five years. This 
cost is in large part a function of the number audited and the 
use of independent CPAs. The cost of the audits could easily 
consume a significant portion of the total sum appropriated to 
fund the entire United States Trustee program in Fiscal Year 
1998. Moreover, the bill provides no funding mechanism to cover 
these costs.
    The use of an audit report is left similarly vague. Copies 
of the audit reports are to be filed with the Court, but it is 
uncertain if this would be merely for the purpose of providing 
a public repository for the report accessible to all parties in 
interest, or if it is intended that the Court would, sua 
sponte, initiate action based on the auditors'' findings.
    We recommend that the following changes be made to Section 
602:
          Require the Attorney General to establish a system to 
        audit consumer debtor cases on either a random or 
        targeted basis, but without a minimal prescribed 
        percentage;
          Eliminate the mandatory use of independent CPAs and 
        generally accepted auditing standards;
          Eliminate the requirement of filing the audit reports 
        with the court;
          Provide a civil sanction to ensure debtor's 
        compliance with the audit and defer a section 727 
        discharge until the U.S. Trustee reports a satisfactory 
        audit instead of placing the burden on the U.S. Trustee 
        to file a complaint to bar the debtor's discharge in 
        the case of noncompliance; and
          Provide a source to fund the audits other than 
        assessments upon the affected debtors.
    Given the size of the audit program and its cost, the 
Department also urges the committee to consider a pilot program 
for audits that would allow the costs and benefits of various 
approaches to be considered. In addition, consideration should 
be given to limiting random audits to chapter 7 debtors.

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

    Section 603 would amend the notice provisions of section 
342 of the Bankruptcy Code to require, in an individual 
bankruptcy case, that notices to creditors include any account 
number and be sent to the address that a creditor has 
specified. It also would require that a matrix of addresses 
prescribed by creditors for notices in a district be 
established. Further, unless actual notice is sent to the 
specified addresses and received by a responsible person or 
department at the creditor, notice would be ineffective, the 
creditor could not be sanctioned for violating the automatic 
stay and turnover of property could not be enforced.
    While this section has some technical difficulties, we 
strongly support the intent of this section to ensure that 
debtors know how to give effective notice and that the 
creditors, in fact, receive such notice. Indeed, we urge that 
this provision for fair notice apply to all bankruptcy 
chapters--there is no reason to limit this provision only to 
chapter 7 and 13. We would be happy to work with the Committee 
to correct any technical problems.

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

    Section 604 provides that in voluntary cases under chapters 
7 or 13, a case shall automatically be dismissed if the debtor 
fails to file all required information within 45 after filing 
the petition. The Department does not oppose this provision, so 
long as dismissal is without prejudice, and we suggest an 
appropriate clarification.

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

    Section 605 of H.R. 833, inter alia, would give a chapter 
13 debtor up to 90 days after the order for relief to file a 
chapter 13 plan. Under current law, a debtor must file a plan 
within 15 days from entry of the order of relief. Fed. R. 
Bankr. P. 3015(b). The Department opposes this enlargement of 
time as contrary to the principles of expeditious case 
administration. Due to other provisions in H.R. 833 requiring 
the debtor to file certain information and documents with the 
petition, both the chapter 13 debtor and debtor's counsel 
should be well prepared to propose a plan within the current 
15-day window.

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

    Section 608 of H.R. 833 would amend section 1930(a)(6) of 
title 28, United States Code, to exempt all debtors whose 
quarterly disbursements are less than $300,000 from paying 
post- confirmation quarterly fees. The Department opposes this 
provision because it would eliminate one of the most effective 
tools to encourage the prompt administration and closing of 
chapter 11 cases. This section would also result in a revenue 
loss to the United States Trustee Program of at least $9 
million annually and would require a new source of funding to 
replace that loss, since the Program is a fully fee funded 
agency.

Section 609. Prompt relief from stay in individual cases

    Section 609 provides that, in any individual case under 
chapters 7, 11 or 13, the automatic stay shall terminate 60 
days after requested by a party unless the court makes a final 
decision, the parties agree to an extension, or the court finds 
good cause supporting an extension. We support this provision.

Section 610. Stopping abusive conversions from chapter 13

    Section 610 would amend section 348(f)(1) of the Code to 
reverse the bifurcation of a secured creditor's claim into 
secured and unsecured portions accomplished through a chapter 
13 plan, if the case is converted to chapter 7. This provision 
thus would limit the debtor's ability to release the lien in a 
chapter 7 case under section 722 of the Code.
    For the same reasons that we support section 123, we also 
support this change. This provision addresses a different 
aspect of the same problem dealt with in section 123 above. 
Both provisions concern a debtor who confirms a chapter 13 plan 
that reduces a creditor's lien to the value of the collateral. 
Unlike section 123, however, section 610 deals with the 
situation where, after paying part of the secured portion of 
the claim, the debtor converts his unfinished 13 plan into 
chapter 7 liquidation. In the chapter 7 case, the debtor then 
redeems the collateral by tendering the balance due on the 
``stripped down'' lien after taking credit for the payments 
made under the chapter 13 plan. Unless this option is barred, 
debtors will have an incentive to take the benefits conferred 
by chapter 13, and then convert to a chapter 7 without 
finishing their chapter 13 plans.

                       Title VII: Bankruptcy Data

Section 702. Uniform rules for the collection of bankruptcy data

    Section 702 requires the Attorney General to issue rules 
prescribing uniform reporting forms for final and periodic 
reports. The Department supports this provision, but notes two 
problems. Section 702 conflicts with section 405, which 
requires the Judicial Conference to create an official form for 
periodic reports in small business chapter 11 cases. Section 
405 should be amended to reflect the role of the Attorney 
General in promulgating the form of these reports. We also 
question the provision in this section requiring the Attorney 
General to maintain final reports in one or more central 
locations. Currently, all final reports are filed with the 
courts, and section 702 provides for electronic access through 
the Internet. We would be happy to work with the committee to 
recommend appropriate changes to these provisions.

                 Title VIII: Bankruptcy Tax Provisions

Section 801. Treatment of certain liens

    Section 801 deals with subordination of tax liens under 
section 724(b) of the Code, and is identical to section 2 of S. 
1149, the Investment in Education Act, a bill passed by the 
Senate on October 30, 1997. Under the proposed changes, ad 
valorem property taxes would generally be protected from 
subordination. Reversing current law, expenses of a failed 
chapter 11 proceeding would not be given preferential treatment 
over tax liens, with a limited exception. Exhaustion of 
unencumbered assets would be required before tax liens could be 
subordinated, and expenses of preserving or disposing of 
secured property must be recovered from the property (reducing 
the expenses to which a tax lien would be subordinated).
    We support this provision. The public fisc should not be 
required to subsidize failed chapter 11 cases by having tax 
liens subordinated in order to pay administrative expenses of 
insolvent reorganization proceedings. Moreover, in chapter 7 
cases, other unencumbered assets should be used to satisfy 
administrative expenses and any expenses properly allocable to 
secured claims should be recovered from the property.

Section 802. Effective notice to government

    Section 802 would amend section 342 of the Code to improve 
notice to the entities most frequently participating in the 
bankruptcy process--governmental units. It would require 
identification of the agency through which the debtor is 
indebted; disclosure of identifying information concerning the 
claim (such as taxpayer identification numbers and real estate 
parcel designations); and creation of a matrix of addresses of 
governmental units. In addition, it would give incentives to 
debtors to use the designated addresses.
    We support these provisions. They are in accord with 
Recommendation 4.2.1 of the National Bankruptcy Review 
Commission, which urged redress of the current deficiencies in 
notifying governmental units. This provision would ensure 
reasonable identification of both the affected government 
agency and the debtor obligated on the debt. It would also 
create a mechanism for giving debtors accurate addresses to 
which notices should be sent. Finally, it would promote 
compliance with the mechanism by providing exceptions to bar 
dates and discharge-ability when a debtor fails to comply with 
the prescribed mechanism. We suggest, however, that the 
reference point in subsection (c) be corrected from notice of 
the bankruptcy ``case'' to notice of ``the matter or proceeding 
in respect to which the notice was provided.''

Section 803. Notice of request for a determination of taxes

    Section 803 would amend section 505(b) of the Code to 
provide that a request for prompt audit of a tax return should 
be sent to the office designated by the taxing authority. Thus, 
for example, a notice sent to the Secretary of the Treasury in 
Washington, rather than to the Special Procedures unit of the 
IRS District Director where the bankruptcy is pending, would 
not suffice. We support this proposal.

Section 804. Rate of interest on tax claims

    Section 804 would enact as Section 511 of the Code a new 
provision relating to the interest rate on, or determining the 
present value of, a tax claim. Under current law, the court 
must generally determine the ``market rate'' under such 
circumstances. Section 511 would provide that if the holder of 
an unsecured prepetition tax claim is entitled to interest on 
such claim, the minimum rate of interest will be the Federal 
short-term rate rounded to the nearest full percent, determined 
under section 1274(d) of the Internal Revenue Code for the 
calendar month in which the plan is confirmed, plus three 
percentage points. The section 6621(a)(2) rate is also based on 
the Federal short-term rate, plus three percentage points, but 
is fixed on a quarterly basis at the rate for the first month 
of a quarter rather than redetermined monthly. In the case of 
secured tax claims and administrative tax claims, the 
applicable nonbankruptcy rate would apply with respect to 
federal taxes, i.e., the section 6621(a)(2) rate.
    We would prefer that the legislation simply fix the 
interest rate for all deferred tax payments at the applicable 
nonbankruptcy interest rate. On the other hand, the rate for 
unsecured taxes under section 804 of H.R. 833 is merely a 
minimum rate and does not preclude a taxing authority from 
insisting on a higher rate. Thus, we would not oppose this 
provision.

Section 805. Tolling of priority of tax claims time periods

    Section 805 would suspend the time periods under the Code 
pertaining to the priority and discharge of tax claims during 
the pendency of a prior bankruptcy for the period in which the 
government was prohibited from collecting the claim, plus six 
months. We support this proposal, but suggest several 
modifications, outlined below. The filing of successive 
bankruptcies should not disadvantage governmental units by 
reducing their opportunity to collect a tax, and should not 
result in a more expansive discharge of tax claims for debtors. 
Adding six months to the suspension period mirrors section 
6503(h) of the Internal Revenue Code (26 U.S.C.), and is 
appropriate given the disruption to collection efforts caused 
by the filing of a bankruptcy petition. The additional time is 
needed to get collection efforts back on track.
    As noted above, we would suggest several modifications to 
this provision. First, the time periods applicable to 
employment and excise taxes should be suspended during the 
pendency of a prior bankruptcy case. Second, this section 
should be modified to suspend time periods in which collection 
was stayed under the terms of a confirmed plan under chapters 
11, 12 or 13, plus six months. Third, the Internal Revenue 
Service Restructuring and Reform Act of 1998 gave taxpayers new 
rights to appeal collection actions that, when invoked, have 
the effect of staying collection. Thus, the time periods should 
also be suspended while the IRS is prohibited from collecting 
as a result of an appeal of a collection action taken under 
applicable nonbankruptcy law.

Section 807. Chapter 13 discharge of fraudulent and other taxes

    Section 807 would generally conform the discharge of tax 
claims in chapter 13 cases to the discharge of such claims 
available in chapter 7 cases. We support this provision. Under 
current law, priority tax claims for which a proof of claim is 
filed must be paid in full pursuant to the plan, and if a proof 
of claim is not filed, such taxes may be discharged. Taxes 
attributable to fraud or unfiled returns can be discharged upon 
completion of all payments under the plan, but many 
jurisdictions permit plans providing for ``zero payment'' of 
taxes, or plans distributing payments covering only small 
percentages of such claims. Permitting taxes attributable to 
fraud, or for which returns have never been filed, to be 
discharged on the basis of a tax evader's commitment to make 
payments to his or her creditors for three or five years makes 
bankruptcy a tax haven. In our view, a debtor should be 
entitled to the same discharge in chapters 7 and 13, as 
proposed in section 507. Taxes attributable to fraud should not 
be discharged in a chapter 13 proceeding, and chapter 13 plans 
should not be confirmed unless prepetition tax returns are 
filed.

Section 808. Chapter 11 discharge of fraudulent taxes

    Section 808 would deny a discharge to a chapter 11 
corporate debtor for taxes that arose because of fraudulent tax 
returns or an attempt to evade taxes. We support this proposal. 
Corporations that engage in tax fraud or otherwise attempt to 
evade taxes should not be entitled to a discharge vis-a-vis 
those taxes.

Section 809. Stay of tax proceedings

    Section 809 would limit the automatic stay applicable to 
Tax Court proceedings to proceedings regarding a tax liability 
for a tax period ending before the order for relief, and would 
clarify that the automatic stay does not apply to an appeal of 
a decision determining a tax liability of the debtor. We 
support these proposals. No purpose is served in staying the 
commencement or continuation of a Tax Court proceeding for 
taxes incurred postpetition. Moreover, a court of appeals case 
regarding the liability of a taxpayer for a tax should be 
allowed to continue to a decision.

Section 810. periodic payment of taxes in chapter 11 cases

    Section 810 would amend section 1129(a)(9)(c) of the Code 
to provide that deferred payments of tax claims under a chapter 
11 plan must be made in installments with the result that 
balloon payments would be proscribed. In lieu of the current 
five-year payment period measured from the date of assessment, 
such payments would end on the earlier of five years after the 
petition date or on the last date on which payments are to be 
made to unsecured creditors under the plan. In addition, 
secured tax claims would be treated as priority claims for 
deferred tax purposes, where such claims would have had 
priority absent their secured status. We support this 
provision.

Section 811. The avoidance of statutory tax liens prohibited

    Section 811 would resolve litigation over the interaction 
of section 545(2) of the Code, and the protection accorded 
certain purchasers of property under 26 U.S.C. Sec. 6323 even 
after a notice of tax lien has been filed. We support the 
proposal. Thepurpose of the special treatment for such 
purchasers is to facilitate the flow of these goods in commerce. 
Debtors would receive a windfall if section 545(2) of the Code applied 
to tax liens.

Section 814. Income tax returns prepared by tax authorities

    Section 814 would confirm the exception from discharge for 
taxes relating to unfiled tax returns when substitute tax 
returns are prepared by taxing authorities. For tax purposes, a 
tax return prepared by the IRS is not considered a tax return, 
unless it is signed by the taxpayer. The proposal would confirm 
that a substitute return prepared by the IRS is not a return 
for discharge purposes, unless it is signed by the taxpayer. 
This section further provides, however, that a written 
stipulation to a judgment entered in a nonbankruptcy court 
would be treated in the same manner and have the same effect as 
a signed tax return. We are uneasy at the prospect of having 
different definitions of ``tax returns'' for Internal Revenue 
Code and Bankruptcy Code purposes. Furthermore, stipulation to 
a judgment represents a level of cooperation much different in 
degree and kind than the signing under penalty of perjury of a 
return prepared by a taxing authority. Thus, we do not support 
the provision equating a stipulated judgment with a signed 
return. It would also be helpful to clarify that the term 
``equivalent report or notice'' applies only to the extent that 
state or local tax law provides for the filing of an equivalent 
report or notice, and has no application for federal income tax 
reporting purposes.

Section 815. The discharge of the estate's liability for unpaid taxes

    Section 815 would absolve the debtor's estate of liability 
for administrative taxes after a request for a prompt audit is 
made in accordance with section 505(b) of the Code. Several 
courts have held that while a trustee, the debtor, and a 
successor to the debtor are discharged from liability for 
administrative period taxes after a prompt audit request is 
made, the estate remains liable for any taxes uncovered by a 
taxing authority in a subsequent audit. We oppose the proposal 
to extinguish the liability of the estate. Section 505(b) 
already protects the trustee, the debtor and the debtor's 
successors from liability, and extinguishing the liability of 
the estate for taxes that it should have reported on its return 
will result in an unjust windfall for other creditors.

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

    Section 816 would require chapter 13 debtors to file tax 
returns due for three years prior to the petition date. Tax 
authorities are placed at a severe disadvantage in preparing 
and filing timely proofs of claim when a chapter 13 debtor has 
ignored his or her tax return filing obligations. Outside of 
bankruptcy, the IRS will typically ask a delinquent debtor to 
file tax returns for the prior six tax years. We submit that 
the Code should similarly require the filing of delinquent tax 
returns for six years rather than for three years, and we 
therefore urge that this provision be modified accordingly.

Section 818. Setoff of tax refunds

    Section 818 would create an exception to the automatic stay 
allowing taxing authorities to set off prepetition tax refunds 
against prepetition tax claims. We support this proposal.
    Even when consumer bankruptcy filings were a mere 300,000 
cases a year, the cost to the government of filing lift stay 
motions for relief from the automatic stay in order to effect a 
setoff of tax refunds would have been significant. With 
consumer filings now surpassing 1.3 million cases a year, the 
cost of filing such lift stay motions would be prohibitive. 
Given the number of cases in which refund offset arises, the 
solution is to permit taxing authorities to use the 
administrative processes that apply outside of bankruptcy 
rather than dealing with the issue on a case-by-case basis 
using a litigation model.
    In addition to the comments outlined above, the Department 
urges addition of a new provision in this title: Tax Year that 
Straddles the Petition Date. H.R. 833 should be amended to 
include an additional tax-related proposal to clarify the 
bankruptcy treatment of a tax year that straddles the petition 
date. The position of the Government is that an income tax is 
incurred on the last day of the tax year inasmuch as a 
taxpayer's liability for tax cannot be calculated until all 
income has been accrued or collected, and all deductions have 
been accrued or paid. Moreover, until the debtor reports its 
income tax liability, a taxing authority is not in any position 
to prepare and file a proof of claim. Nonetheless, several 
courts have held that a tax year straddling the petition date 
should be treated as partially a prepetition year and partially 
a postpetition year. In re O'Neill Shoe Co., 64 F.3d 1146 (8th 
Cir. 1995); In re Pacific-Atlantic Trading Co., 64 F.3d 1292 
(9th Cir. 1995); and In re Hillsborough Holding Corp., 115 F.3d 
1391 (11th Cir. 1997). Under these decisions, the prepetition 
portion of the year is treated as a priority tax, while the 
balance is treated as an administrative tax. These decisions 
create the opportunity for considerable mischief, particularly 
if the time for filing a proof of claim will run prior to the 
due date of the return in question. Furthermore, to the extent 
that straddle years are treated as prepetition tax years, 
debtors can stretch out the payment period for the related tax 
liability for fiveyears under chapter 11, instead of paying the 
tax in full in cash on the effective date of the plan.
    We submit that the Code should be amended to clarify that 
an income tax liability is incurred on the last day of the tax 
year for purposes of determining whether a tax is entitled to 
administrative expense or priority treatment. Clarification is 
needed because bankruptcy petitions are rarely filed 
immediately after the last day of the tax year, so that this 
issue can potentially arise in virtually any case.

            Title IX: Ancillary and Other Cross-Border Cases

Section 901. Amendment to add chapter 15 to title 11

    Section 901 adds a new chapter to the Code to be codified 
as Chapter 15. This chapter would address insolvencies which 
cut across international borders. We generally support these 
provisions, with the following exceptions.
    Proposed section 1507 allows the court to provide the 
representative of a foreign insolvency ``additional 
assistance'' based upon standards that are vague and 
duplicative of section 304 of the Code. This approach is 
inconsistent with the purpose of the cross-border chapter; 
namely, to create new and better treatment for international 
bankruptcies.
    We also oppose proposed sections 1519 and 1521 to the 
extent they grant the court open-ended authority to enjoin 
anything needed to protect assets and creditors. As written, 
the sections are overbroad.

                    Title XI: Technical Corrections

Section 1130. Trustees

    Section 1130 of H.R. 833 would amend section 586 of title 
28, United States Code, to establish procedures for judicial 
review of decisions by a United States Trustee to either 
terminate or suspend from a panel of trustees or as a standing 
trustee, and decisions to deny an expense request by standing 
trustees.
    As an initial matter, the Department supports clarifying 
and improving the judicial review already available trustees 
who are aggrieved by the actions of the United States Trustee 
Program. Historically, a decision to terminate or suspend a 
trustee from the panel of trustees was not subject to judicial 
review. E.g., Joelson v. United States, 86 F.3d 1413 (6th Cir. 
1996). In response to concerns about a lack of judicial review, 
the Department promulgated an administrative rule giving 
private trustees the ability to seek judicial review under the 
Administrative Procedure Act (``APA''), 5 U.S.C. Sec. 552 et 
seq. of any action by the Department to suspend or remove a 
trustee from future case assignments. 28 C.F.R. Sec. 58.6. The 
Department believes that standing trustee budget disputes are 
already subject to judicial review under the APA. In addition, 
the United States Trustee Program has implemented procedures 
for mediating standing trustee budget disputes.
    Notwithstanding its position that review is available under 
the APA, the Department engaged in negotiations with the 
affected parties and Congressional staff and after much effort, 
a compromise was reached. Unfortunately, due to what appears to 
be a typographical error, Section 1130 does not reflect the 
compromise. Section 1130(b) sets forth the standard of review 
for standing trustee expense requests. This standard, unlike 
the proposed standard for review of trustee termination and 
suspension, is whether the decision is ``unreasonable or 
without cause.'' The standard of review should be revised to 
``unreasonable and without cause'' in keeping with the 
compromise. Provided that this correction is made, the 
Department will strongly support section 1130.
    Finally, as noted in our comments above, many of the 
provisions set forth in this bill would impose substantial 
burdens on the United States Trustee Program. Currently, the 
Trustees program is fully self-funded through fees. However, to 
implement the requirements of this bill, the Trustees would be 
required to expend tens of millions of dollars that will 
diminish their ability to fulfill their other responsibilities, 
and this, in turn, will diminish the efficiency of the 
bankruptcy system. We therefore request that a special 
appropriation be authorized for each provision that imposes a 
new burden on the United States Trustee Program.
    We look forward to working with the Committee as it 
considers these and other issues raised by H.R. 833. The Office 
of Management and Budget advises that it has no objection to 
the submission of this letter from the standpoint of the 
Administration's program.
            Sincerely,
                                           Dennis K. Burke,
                                 Acting Assistant Attorney General.

         Changes in Existing Law Made by the Bill, as Reported

  In compliance with clause 3(e) of rule XIII of the Rules of 
the House of Representatives, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                      TITLE 11, UNITED STATES CODE

                          TITLE 11--BANKRUPTCY

Chap.                                                               Sec.

      General Provisions.............................................101
     * * * * * * *
      Ancillary and Other Cross-Border Cases........................1501

                     CHAPTER 1--GENERAL PROVISIONS

Sec.
101.  Definitions.
     * * * * * * *
111.  Credit counseling services; financial management instructional 
          courses.

Sec. 101. Definitions

  [In this title--] In this title:
          (1) The term ``accountant'' means accountant 
        authorized under applicable law to practice public 
        accounting, and includes professional accounting 
        association, corporation, or partnership, if so 
        authorized[;].
          (2) The term ``affiliate'' means--
                  (A) entity that directly or indirectly owns, 
                controls, or holds with power to vote, 20 
                percent or more of the outstanding voting 
                securities of the debtor, other than an entity 
                that holds such securities--
                          (i) in a fiduciary or agency capacity 
                        without sole discretionary power to 
                        vote such securities; or
                          (ii) solely to secure a debt, if such 
                        entity has not in fact exercised such 
                        power to vote;
                  (B) corporation 20 percent or more of whose 
                outstanding voting securities are directly or 
                indirectly owned, controlled, or held with 
                power to vote, by the debtor, or by an entity 
                that directly or indirectly owns, controls, or 
                holds with power to vote, 20 percent or more of 
                the outstanding voting securities of the 
                debtor, other than an entity that holds such 
                securities--
                          (i) in a fiduciary or agency capacity 
                        without sole discretionary power to 
                        vote such securities; or
                          (ii) solely to secure a debt, if such 
                        entity has not in fact exercised such 
                        power to vote;
                  (C) person whose business is operated under a 
                lease or operating agreement by a debtor, or 
                person substantially all of whose property is 
                operated under an operating agreement with the 
                debtor; or
                  (D) entity that operates the business or 
                substantially all of the property of the debtor 
                under a lease or operating agreement[;].
          (3) The term ``assisted person'' means any person 
        whose debts consist primarily of consumer debts and 
        whose non-exempt assets are less than $150,000.
          (4) The term ``attorney'' means attorney, 
        professional law association, corporation, or 
        partnership, authorized under applicable law to 
        practice law[;].
          (5) The term ``bankruptcy assistance'' means any 
        goods or services sold or otherwise provided to an 
        assisted person with the express or implied purpose of 
        providing information, advice, counsel, document 
        preparation or filing, or attendance at a creditors' 
        meeting or appearing in a proceeding on behalf of 
        another or providing legal representation with respect 
        to a proceeding under this title.
          [(5)] (6) The term ``claim'' means--
                  (A) right to payment, whether or not such 
                right is reduced to judgment, liquidated, 
                unliquidated, fixed, contingent, matured, 
                unmatured, disputed, undisputed, legal, 
                equitable, secured, or unsecured; or
                  (B) right to an equitable remedy for breach 
                of performance if such breach gives rise to a 
                right to payment, whether or not such right to 
                an equitable remedy is reduced to judgment, 
                fixed, contingent, matured, unmatured, 
                disputed, undisputed, secured, or unsecured[;].
          [(6)] (7) The term ``commodity broker'' means futures 
        commission merchant, foreign futures commission 
        merchant, clearing organization, leverage transaction 
        merchant, or commodity options dealer, as defined in 
        section 761 of this title, with respect to which there 
        is a customer, as defined in section 761 of this 
        title[;].
          [(7)] (8) The term ``community claim'' means claim 
        that arose before the commencement of the case 
        concerning the debtor for which property of the kind 
        specified in section 541(a)(2) of this title is liable, 
        whether or not there is any such property at the time 
        of the commencement of the case[;].
          [(8)] (9) The term ``consumer debt'' means debt 
        incurred by an individual primarily for a personal, 
        family, or household purpose[;].
          [(9)] (10) The term ``corporation''--
                  (A) includes--
                          (i) association having a power or 
                        privilege that a private corporation, 
                        but not an individual or a partnership, 
                        possesses;
                          (ii) partnership association 
                        organized under a law that makes only 
                        the capital subscribed responsible for 
                        the debts of such association;
                          (iii) joint-stock company;
                          (iv) unincorporated company or 
                        association; or
                          (v) business trust; but
                  (B) does not include limited partnership[;].
          [(10)] (11) The term ``creditor'' means--
                  (A) entity that has a claim against the 
                debtor that arose at the time of or before the 
                order for relief concerning the debtor;
                  (B) entity that has a claim against the 
                estate of a kind specified in section 348(d), 
                502(f), 502(g), 502(h) or 502(i) of this title; 
                or
                  (C) entity that has a community claim[;].
          (12) The term ``current monthly income'' means the 
        average monthly income from all sources derived which 
        the debtor, or in a joint case, the debtor and the 
        debtor's spouse, receive without regard to whether it 
        is taxable income, in the 180 days preceding the date 
        of determination, and includes any amount paid by 
        anyone other than the debtor or, in a joint case, the 
        debtor and the debtor's spouse, on a regular basis to 
        the household expenses of the debtor or the debtor's 
        dependents and, in a joint case, the debtor's spouse if 
        not otherwise a dependent, but excludes payments to 
        victims of war crimes or crimes against humanity;
          [(11)] (13) The term ``custodian'' means--
                  (A) receiver or trustee of any of the 
                property of the debtor, appointed in a case or 
                proceeding not under this title;
                  (B) assignee under a general assignment for 
                the benefit of the debtor's creditors; or
                  (C) trustee, receiver, or agent under 
                applicable law, or under a contract, that is 
                appointed or authorized to take charge of 
                property of the debtor for the purpose of 
                enforcing a lien against such property, or for 
                the purpose of general administration of such 
                property for the benefit of the debtor's 
                creditors[;].
          [(12)] (14) The term ``debt'' means liability on a 
        claim[;].
          [(12A) ``debt for child support'' means a debt of a 
        kind specified in section 523(a)(5) of this title for 
        maintenance or support of a child of the debtor;]
          (15) The term ``debt relief agency'' means any person 
        who provides any bankruptcy assistance to an assisted 
        person in return for the payment of money or other 
        valuable consideration, or who is a bankruptcy petition 
        preparer pursuant to section 110 of this title, but 
        does not include any person that is any of the 
        following or an officer, director, employee or agent 
        thereof--
                  (A) any nonprofit organization which is 
                exempt from taxation under section 501(c)(3) of 
                the Internal Revenue Code of 1986;
                  (B) any creditor of the person to the extent 
                the creditor is assisting the person to 
                restructure any debt owed by the person to the 
                creditor; or
                  (C) any depository institution (as defined in 
                section 3 of the Federal Deposit Insurance Act) 
                or any Federal credit union or State credit 
                union (as those terms are defined in section 
                101 of the Federal Credit Union Act), or any 
                affiliate or subsidiary of such a depository 
                institution or credit union.
          [(13)] (16) The term ``debtor'' means person or 
        municipality concerning which a case under this title 
        has been commenced[;].
          [(13A)] (17) The term ``debtor's principal 
        residence'' means a residential structure including 
        incidental property when the structure contains 1 to 4 
        units, whether or not that structure is attached to 
        real property, and includes, without limitation, an 
        individual condominium or cooperative unit or mobile or 
        manufactured home or trailer.
          [(14) ``disinterested person'' means person that--
                  [(A) is not a creditor, an equity security 
                holder, or an insider;
                  [(B) is not and was not an investment banker 
                for any outstanding security of the debtor;
                  [(C) has not been, within three years before 
                the date of the filing of the petition, an 
                investment banker for a security of the debtor, 
                or an attorney for such an investment banker in 
                connection with the offer, sale, or issuance of 
                a security of the debtor;
                  [(D) is not and was not, within two years 
                before the date of the filing of the petition, 
                a director, officer, or employee of the debtor 
                or of an investment banker specified in 
                subparagraph (B) or (C) of this paragraph; and
                  [(E) does not have an interest materially 
                adverse to the interest of the estate or of any 
                class of creditors or equity security holders, 
                by reason of any direct or indirect 
                relationship to, connection with, or interest 
                in, the debtor or an investment banker 
                specified in subparagraph (B) or (C) of this 
                paragraph, or for any other reason;]
          [(14)] (18) The term ``disinterested person'' means a 
        person that--
                  (A) is not a creditor, an equity security 
                holder, or an insider;
                  (B) is not and was not, within 2 years before 
                the date of the filing of the petition, a 
                director, officer, or employee of the debtor; 
                and
                  (C) does not have an interest materially 
                adverse to the interest of the estate or of any 
                class of creditors or equity security holders, 
                by reason of any direct or indirect 
                relationship to, connection with, or interest 
                in, the debtor, or for any other reason.
          [(14A)] (19) The term ``domestic support obligation'' 
        means a debt that accrues before or after the entry of 
        an order for relief under this title that is--
                  (A) owed to or recoverable by--
                          (i) a spouse, former spouse, or child 
                        of the debtor or that child's legal 
                        guardian; or
                          (ii) a governmental unit;
                  (B) in the nature of alimony, maintenance, or 
                support (including assistance provided by a 
                governmental unit) of such spouse, former 
                spouse, or child, without regard to whether 
                such debt is expressly so designated;
                  (C) established or subject to establishment 
                before or after entry of an order for relief 
                under this title, by reason of applicable 
                provisions of--
                          (i) a separation agreement, divorce 
                        decree, or property settlement 
                        agreement;
                          (ii) an order of a court of record; 
                        or
                          (iii) a determination made in 
                        accordance with applicable 
                        nonbankruptcy law by a governmental 
                        unit; and
                  (D) not assigned to a nongovernmental entity, 
                unless that obligation is assigned voluntarily 
                by the spouse, former spouse, child, or parent 
                solely for the purpose of collecting the debt.
          [(15)] (20) The term ``entity'' includes person, 
        estate, trust, governmental unit, and United States 
        trustee[;].
          [(16)] (21) The term ``equity security'' means--
                  (A) share in a corporation, whether or not 
                transferable or denominated ``stock'', or 
                similar security;
                  (B) interest of a limited partner in a 
                limited partnership; or
                  (C) warrant or right, other than a right to 
                convert, to purchase, sell, or subscribe to a 
                share, security, or interest of a kind 
                specified in subparagraph (A) or (B) of this 
                paragraph[;].
          [(17)] (22) The term ``equity security holder'' means 
        holder of an equity security of the debtor[;].
          [(17A) ``estimated administrative expenses and 
        reasonable attorneys' fees'' means 10 percent of 
        projected payments under a chapter 13 plan;]
          [(18)] (23) The term ``family farmer'' means--
                  (A) individual or individual and spouse 
                engaged in a farming operation whose aggregate 
                debts do not exceed $1,500,000 and not less 
                than 80 percent of whose aggregate 
                noncontingent, liquidated debts (excluding a 
                debt for the principal residence of such 
                individual or such individual and spouse unless 
                such debt arises out of a farming operation), 
                on the date the case is filed, arise out of a 
                farming operation owned or operated by such 
                individual or such individual and spouse, and 
                such individual or such individual and spouse 
                receive from such farming operation more than 
                50 percent of such individual's or such 
                individual and spouse's gross income for the 
                taxable year preceding the taxable year in 
                which the case concerning such individual or 
                such individual and spouse was filed; or
                  (B) corporation or partnership in which more 
                than 50 percent of the outstanding stock or 
                equity is held by one family, or by one family 
                and the relatives of the members of such 
                family, and such family or such relatives 
                conduct the farming operation, and
                          (i) more than 80 percent of the value 
                        of its assets consists of assets 
                        related to the farming operation;
                          (ii) its aggregate debts do not 
                        exceed $1,500,000 and not less than 80 
                        percent of its aggregate noncontingent, 
                        liquidated debts (excluding a debt for 
                        one dwelling which is owned by such 
                        corporation or partnership and which a 
                        shareholder or partner maintains as a 
                        principal residence, unless such debt 
                        arises out of a farming operation), on 
                        the date the case is filed, arise out 
                        of the farming operation owned or 
                        operated by such corporation or such 
                        partnership; and
                          (iii) if such corporation issues 
                        stock, such stock is not publicly 
                        traded[;].
          [(19)] (24) The term ``family farmer with regular 
        annual income'' means family farmer whose annual income 
        is sufficiently stable and regular to enable such 
        family farmer to make payments under a plan under 
        chapter 12 of this title[;].
          [(20)] (25) The term ``farmer'' means (except when 
        such term appears in the term ``family farmer'') person 
        that received more than 80 percent of such person's 
        gross income during the taxable year of such person 
        immediately preceding the taxable year of such person 
        during which the case under this title concerning such 
        person was commenced from a farming operation owned or 
        operated by such person[;].
          [(21)] (26) The term ``farming operation'' includes 
        farming, tillage of the soil, dairy farming, ranching, 
        production or raising of crops, poultry, or livestock, 
        and production of poultry or livestock products in an 
        unmanufactured state[;].
          [(21A)] (27) The term ``farmout agreement'' means a 
        written agreement in which--
                  (A) the owner of a right to drill, produce, 
                or operate liquid or gaseous hydrocarbons on 
                property agrees or has agreed to transfer or 
                assign all or a part of such right to another 
                entity; and
                  (B) such other entity (either directly or 
                through its agents or its assigns), as 
                consideration, agrees to perform drilling, 
                reworking, recompleting, testing, or similar or 
                related operations, to develop or produce 
                liquid or gaseous hydrocarbons on the 
                property[;].
          [(21B)] (28) The term ``Federal depository 
        institutions regulatory agency'' means--
                  (A) with respect to an insured depository 
                institution (as defined in section 3(c)(2) of 
                the Federal Deposit Insurance Act) for which no 
                conservator or receiver has been appointed, the 
                appropriate Federal banking agency (as defined 
                in section 3(q) of such Act);
                  (B) with respect to an insured credit union 
                (including an insured credit union for which 
                the National Credit Union Administration has 
                been appointed conservator or liquidating 
                agent), the National Credit Union 
                Administration;
                  (C) with respect to any insured depository 
                institution for which the Resolution Trust 
                Corporation has been appointed conservator or 
                receiver, the Resolution Trust Corporation; and
                  (D) with respect to any insured depository 
                institution for which the Federal Deposit 
                Insurance Corporation has been appointed 
                conservator or receiver, the Federal Deposit 
                Insurance Corporation[;].
          [(22) ``financial institution'' means a person that 
        is a commercial or savings bank, industrial savings 
        bank, savings and loan association, or trust company 
        and, when any such person is acting as agent or 
        custodian for a customer in connection with a 
        securities contract, as defined in section 741 of this 
        title, such customer]
          (29) The term ``financial institution'' means--
                  (A) a Federal reserve bank, or an entity 
                (domestic or foreign) that is a commercial or 
                savings bank, industrial savings bank, savings 
                and loan association, trust company, or 
                receiver or conservator for such entity and, 
                when any such Federal reserve bank, receiver, 
                conservator or entity is acting as agent or 
                custodian for a customer in connection with a 
                securities contract, as defined in section 741 
                of this title, such customer; or
                  (B) in connection with a securities contract, 
                as defined in section 741 of this title, an 
                investment company registered under the 
                Investment Company Act of 1940.
          (30) The term ``financial participant'' means an 
        entity that, at the time it enters into a securities 
        contract, commodity contract or forward contract, or at 
        the time of the filing of the petition, has 1 or more 
        agreements or transactions that is described in section 
        561(a)(2) with the debtor or any other entity (other 
        than an affiliate) of a total gross dollar value of at 
        least $1,000,000,000 in notional or actual principal 
        amount outstanding on any day during the previous 15-
        month period, or has gross mark-to-market positions of 
        at least $100,000,000 (aggregated across 
        counterparties) in 1 or more such agreement or 
        transaction with the debtor or any other entity (other 
        than an affiliate) on any day during the previous 15-
        month period.
          [(23) ``foreign proceeding'' means proceeding, 
        whether judicial or administrative and whether or not 
        under bankruptcy law, in a foreign country in which the 
        debtor's domicile, residence, principal place of 
        business, or principal assets were located at the 
        commencement of such proceeding, for the purpose of 
        liquidating an estate, adjusting debts by composition, 
        extension, or discharge, or effecting a reorganization;
          [(24) ``foreign representative'' means duly selected 
        trustee, administrator, or other representative of an 
        estate in a foreign proceeding;]
          (31) The term ``foreign proceeding'' means a 
        collective judicial or administrative proceeding in a 
        foreign country, including an interim proceeding, under 
        a law relating to insolvency or adjustment of debt in 
        which proceeding the assets and affairs of the debtor 
        are subject to control or supervision by a foreign 
        court, for the purpose of reorganization or 
        liquidation;
          (32) The term ``foreign representative'' means a 
        person or body, including a person or body appointed on 
        an interim basis, authorized in a foreign proceeding to 
        administer the reorganization or the liquidation of the 
        debtor's assets or affairs or to act as a 
        representative of the foreign proceeding.
          [(25)] (33) The term ``forward contract'' [means a 
        contract] means--
                  (A) a contract (other than a commodity 
                contract) for the purchase, sale, or transfer 
                of a commodity, as defined in section 761(8) of 
                this title, or any similar good, article, 
                service, right, or interest which is presently 
                or in the future becomes the subject of dealing 
                in the forward contract trade, or product or 
                byproduct thereof, with a maturity date more 
                than two days after the date the contract is 
                entered into, including, but not limited to, a 
                repurchase transaction, reverse repurchase 
                transaction, consignment, lease, swap, hedge 
                transaction, deposit, loan, option, allocated 
                transaction, unallocated transaction[, or any 
                combination thereof or option thereon;], or any 
                other similar agreement;
                  (B) any combination of agreements or 
                transactions referred to in subparagraphs (A) 
                and (C);
                  (C) any option to enter into an agreement or 
                transaction referred to in subparagraph (A) or 
                (B);
                  (D) a master agreement that provides for an 
                agreement or transaction referred to in 
                subparagraph (A), (B), or (C), together with 
                all supplements to any such master agreement, 
                without regard to whether such master agreement 
                provides for an agreement or transaction that 
                is not a forward contract under this paragraph, 
                except that such master agreement shall be 
                considered to be a forward contract under this 
                paragraph only with respect to each agreement 
                or transaction under such master agreement that 
                is referred to in subparagraph (A), (B) or (C); 
                or
                  (E) a security agreement or arrangement, or 
                other credit enhancement related to any 
                agreement or transaction referred to in 
                subparagraph (A), (B), (C), or (D), but not to 
                exceed the actual value of such contract, 
                option, agreement, or transaction on the date 
                of the filing of the petition.
          [(26) ``forward contract merchant'' means a person 
        whose business consists in whole or in part of entering 
        into forward contracts as or with merchants in a 
        commodity, as defined in section 761(8) of this title, 
        or any similar good, article, service, right, or 
        interest which is presently or in the future becomes 
        the subject of dealing in the forward contract trade;]
          (34) The term ``forward contract merchant'' means a 
        Federal reserve bank, or an entity whose business 
        consists in whole or in part of entering into forward 
        contracts as or with merchants or in a commodity, as 
        defined or in section 761 of this title, or any similar 
        good, article, service, right, or interest which is 
        presently or in the future becomes the subject of 
        dealing or in the forward contract trade.
          [(27)] (35) The term ``governmental unit'' means 
        United States; State; Commonwealth; District; 
        Territory; municipality; foreign state; department, 
        agency, or instrumentality of the United States (but 
        not a United States trustee while serving as a trustee 
        in a case under this title), a State, a Commonwealth, a 
        District, a Territory, a municipality, or a foreign 
        state; or other foreign or domestic government[;].
          (36) The term ``household goods'' includes tangible 
        personal property normally found in or around a 
        residence, but does not include motorized vehicles used 
        for transportation purposes.
          (37) The term ``incidental property'' means property 
        incidental to such residence including, without 
        limitation, property commonly conveyed with a principal 
        residence where the real estate is located, window 
        treatments, carpets, appliances and equipment located 
        in the residence, and easements, appurtenances, 
        fixtures, rents, royalties, mineral rights, oil and gas 
        rights, escrow funds and insurance proceeds.
          [(28)] (38) The term ``indenture'' means mortgage, 
        deed of trust, or indenture, under which there is 
        outstanding a security, other than a voting-trust 
        certificate, constituting a claim against the debtor, a 
        claim secured by a lien on any of the debtor's 
        property, or an equity security of the debtor[;].
          [(29)] (39) The term ``indenture trustee'' means 
        trustee under an indenture[;].
          [(30)] (40) The term ``individual with regular 
        income'' means individual whose income is sufficiently 
        stable and regular to enable such individual to make 
        payments under a plan under chapter 13 of this title, 
        other than a stockbroker or a commodity broker[;].
          [(31)] (41) The term ``insider'' includes--
                  (A) if the debtor is an individual--
                          (i) relative of the debtor or of a 
                        general partner of the debtor;
                          (ii) partnership in which the debtor 
                        is a general partner;
                          (iii) general partner of the debtor; 
                        or
                          (iv) corporation of which the debtor 
                        is a director, officer, or person in 
                        control;
                  (B) if the debtor is a corporation--
                          (i) director of the debtor;
                          (ii) officer of the debtor;
                          (iii) person in control of the 
                        debtor;
                          (iv) partnership in which the debtor 
                        is a general partner;
                          (v) general partner of the debtor; or
                          (vi) relative of a general partner, 
                        director, officer, or person in control 
                        of the debtor;
                  (C) if the debtor is a partnership--
                          (i) general partner in the debtor;
                          (ii) relative of a general partner 
                        in, general partner of, or person in 
                        control of the debtor;
                          (iii) partnership in which the debtor 
                        is a general partner;
                          (iv) general partner of the debtor; 
                        or
                          (v) person in control of the debtor;
                  (D) if the debtor is a municipality, elected 
                official of the debtor or relative of an 
                elected official of the debtor;
                  (E) affiliate, or insider of an affiliate as 
                if such affiliate were the debtor; and
                  (F) managing agent of the debtor[;].
          [(32)] (42) The term ``insolvent'' means--
                  (A) with reference to an entity other than a 
                partnership and a municipality, financial 
                condition such that the sum of such entity's 
                debts is greater than all of such entity's 
                property, at a fair valuation, exclusive of--
                          (i) property transferred, concealed, 
                        or removed with intent to hinder, 
                        delay, or defraud such entity's 
                        creditors; and
                          (ii) property that may be exempted 
                        from property of the estate under 
                        section 522 of this title;
                  (B) with reference to a partnership, 
                financial condition such that the sum of such 
                partnership's debts is greater than the 
                aggregate of, at a fair valuation--
                          (i) all of such partnership's 
                        property, exclusive of property of the 
                        kind specified in subparagraph (A)(i) 
                        of this paragraph; and
                          (ii) the sum of the excess of the 
                        value of each general partner's 
                        nonpartnership property, exclusive of 
                        property of the kind specified in 
                        subparagraph (A) of this paragraph, 
                        over such partner's nonpartnership 
                        debts; and
                  (C) with reference to a municipality, 
                financial condition such that the municipality 
                is--
                          (i) generally not paying its debts as 
                        they become due unless such debts are 
                        the subject of a bona fide dispute; or
                          (ii) unable to pay its debts as they 
                        become due[;].
          [(33)] (43) The term ``institution-affiliated 
        party''--
                  (A) with respect to an insured depository 
                institution (as defined in section 3(c)(2) of 
                the Federal Deposit Insurance Act), has the 
                meaning given it in section 3(u) of the Federal 
                Deposit Insurance Act; and
                  (B) with respect to an insured credit union, 
                has the meaning given it in section 206(r) of 
                the Federal Credit Union Act[;].
          [(34)] (44) The term ``insured credit union'' has the 
        meaning given it in section 101(7) of the Federal 
        Credit Union Act[;].
          [(35)] (45) The term ``insured depository 
        institution''--
                  (A) has the meaning given it in section 
                3(c)(2) of the Federal Deposit Insurance Act; 
                and
                  (B) includes an insured credit union (except 
                in the case of [paragraphs (21B) and (33)(A)] 
                paragraphs (23) and (35) of this 
                subsection)[;].
          [(35A)] (46) The term ``intellectual property'' 
        means--
                  (A) trade secret;
                  (B) invention, process, design, or plant 
                protected under title 35;
                  (C) patent application;
                  (D) plant variety;
                  (E) work of authorship protected under title 
                17; or
                  (F) mask work protected under chapter 9 of 
                title 17;
        to the extent protected by applicable nonbankruptcy 
        law[; and].
          [(36)] (47) The term ``judicial lien'' means lien 
        obtained by judgment, levy, sequestration, or other 
        legal or equitable process or proceeding[;].
          [(37)] (48) The term ``lien'' means charge against or 
        interest in property to secure payment of a debt or 
        performance of an obligation[;].
          [(38)] (49) The term ``margin payment'' means, for 
        purposes of the forward contract provisions of this 
        title, payment or deposit of cash, a security or other 
        property, that is commonly known in the forward 
        contract trade as original margin, initial margin, 
        maintenance margin, or variation margin, including 
        mark-to-market payments, or variation payments[; and].
          (50) The term ``master netting agreement'' means an 
        agreement providing for the exercise of rights, 
        including rights of netting, setoff, liquidation, 
        termination, acceleration, or closeout, under or in 
        connection with 1 or more contracts that are described 
        in any 1 or more of paragraphs (1) through (5) of 
        section 561(a), or any security agreement or 
        arrangement or other credit enhancement related to 1 or 
        more of the foregoing. If a master netting agreement 
        contains provisions relating to agreements or 
        transactions that are not contracts described in 
        paragraphs (1) through (5) of section 561(a), the 
        master netting agreement shall be deemed to be a master 
        netting agreement only with respect to those agreements 
        or transactions that are described in any 1 or more of 
        the paragraphs (1) through (5) of section 561(a).
          (51) The term ``master netting agreement 
        participant'' means an entity that, at any time before 
        the filing of the petition, is a party to an 
        outstanding master netting agreement with the debtor.
          [(39)] (52) The term ``mask work'' has the meaning 
        given it in section 901(a)(2) of title 17.
          [(40)] (53) The term ``municipality'' means political 
        subdivision or public agency or instrumentality of a 
        State[;].
          [(41)] (54) The term ``person'' includes individual, 
        partnership, and corporation, but does not include 
        governmental unit, except that a governmental unit 
        that--
                  (A) acquires an asset from a person--
                          (i) as a result of the operation of a 
                        loan guarantee agreement; or
                          (ii) as receiver or liquidating agent 
                        of a person;
                  (B) is a guarantor of a pension benefit 
                payable by or on behalf of the debtor or an 
                affiliate of the debtor; or
                  (C) is the legal or beneficial owner of an 
                asset of--
                          (i) an employee pension benefit plan 
                        that is a governmental plan, as defined 
                        in section 414(d) of the Internal 
                        Revenue Code of 1986; or
                          (ii) an eligible deferred 
                        compensation plan, as defined in 
                        section 457(b) of the Internal Revenue 
                        Code of 1986;
        shall be considered, for purposes of section 1102 of 
        this title, to be a person with respect to such asset 
        or such benefit[;].
          [(42)] (55) The term ``petition'' means petition 
        filed under section 301, 302, 303, or 304 of this 
        title, as the case may be, commencing a case under this 
        title[;].
          [(42A)] (56) The term ``production payment'' means a 
        term overriding royalty satisfiable in cash or in 
        kind--
                  (A) contingent on the production of a liquid 
                or gaseous hydrocarbon from particular real 
                property; and
                  (B) from a specified volume, or a specified 
                value, from the liquid or gaseous hydrocarbon 
                produced from such property, and determined 
                without regard to production costs[;].
          [(43)] (57) The term ``purchaser'' means transferee 
        of a voluntary transfer, and includes immediate or 
        mediate transferee of such a transferee[;].
          [(44)] (58) The term ``railroad'' means common 
        carrier by railroad engaged in the transportation of 
        individuals or property or owner of trackage facilities 
        leased by such a common carrier[;].
          [(45)] (59) The term ``relative'' means individual 
        related by affinity or consanguinity within the third 
        degree as determined by the common law, or individual 
        in a step or adoptive relationship within such third 
        degree[;].
          [(46)] (60) The term ``repo participant'' means an 
        entity that, [on any day during the period beginning 90 
        days before the date of] at any time before the filing 
        of the petition, has an outstanding repurchase 
        agreement with the debtor[;].
          [(47) ``repurchase agreement'' (which definition also 
        applies to a reverse repurchase agreement) means an 
        agreement, including related terms, which provides for 
        the transfer of certificates of deposit, eligible 
        bankers' acceptances, or securities that are direct 
        obligations of, or that are fully guaranteed as to 
        principal and interest by, the United States or any 
        agency of the United States against the transfer of 
        funds by the transferee of such certificates of 
        deposit, eligible bankers' acceptances, or securities 
        with a simultaneous agreement by such transferee to 
        transfer to the transferor thereof certificates of 
        deposit, eligible bankers' acceptances, or securities 
        as described above, at a date certain not later than 
        one year after such transfers or on demand, against the 
        transfer of funds;]
          (61) The term ``repurchase agreement'' (which 
        definition also applies to a reverse repurchase 
        agreement)--
                  (A) means--
                          (i) an agreement, including related 
                        terms, which provides for the transfer 
                        of 1 or more certificates of deposit, 
                        mortgage-related securities (as defined 
                        in the Securities Exchange Act of 
                        1934), mortgage loans, interests in 
                        mortgage-related securities or mortgage 
                        loans, eligible bankers' acceptances, 
                        qualified foreign government 
                        securities; or securities that are 
                        direct obligations of, or that are 
                        fully guaranteed by, the United States 
                        or any agency of the United States 
                        against the transfer of funds by the 
                        transferee of such certificates of 
                        deposit, eligible bankers' acceptances, 
                        securities, loans, or interests; with a 
                        simultaneous agreement by such 
                        transferee to transfer to the 
                        transferor thereof certificates of 
                        deposit,eligible bankers' acceptance, 
securities, loans, or interests of the kind described above, at a date 
certain not later than 1 year after such transfer or on demand, against 
the transfer of funds;
                          (ii) any combination of agreements or 
                        transactions referred to in clauses (i) 
                        and (iii);
                          (iii) an option to enter into an 
                        agreement or transaction referred to in 
                        clause (i) or (ii);
                          (iv) a master agreement that provides 
                        for an agreement or transaction 
                        referred to in clause (i), (ii), or 
                        (iii), together with all supplements to 
                        any such master agreement, without 
                        regard to whether such master agreement 
                        provides for an agreement or 
                        transaction that is not a repurchase 
                        agreement under this paragraph, except 
                        that such master agreement shall be 
                        considered to be a repurchase agreement 
                        under this paragraph only with respect 
                        to each agreement or transaction under 
                        the master agreement that is referred 
                        to in clause (i), (ii), or (iii); or
                          (v) a security agreement or 
                        arrangement or other credit enhancement 
                        related to any agreement or transaction 
                        referred to in clause (i), (ii), (iii), 
                        or (iv), but not to exceed the actual 
                        value of such contract on the date of 
                        the filing of the petition; and
                  (B) does not include a repurchase obligation 
                under a participation in a commercial mortgage 
                loan;
        and, for purposes of this paragraph, the term 
        ``qualified foreign government security'' means a 
        security that is a direct obligation of, or that is 
        fully guaranteed by, the central government of a member 
        of the Organization for Economic Cooperation and 
        Development.
          [(48)] (62) The term ``securities clearing agency'' 
        means person that is registered as a clearing agency 
        under section 17A of the Securities Exchange Act of 
        1934 or exempt from such registration under such 
        section pursuant to an order of the Securities and 
        Exchange Commission or whose business is confined to 
        the performance of functions of a clearing agency with 
        respect to exempted securities, as defined in section 
        3(a)(12) of such Act for the purposes of such section 
        17A[;].
          (63) The term ``securities self regulatory 
        organization'' means either a securities association 
        registered with the Securities and Exchange Commission 
        pursuant to section 15A of the Securities Exchange Act 
        of 1934 or a national securities exchange registered 
        with the Securities and Exchange Commission pursuant to 
        section 6 of the Securities Exchange Act of 1934.
          [(49)] (64) The term ``security''--
                  (A) includes--
                          (i) note;
                          (ii) stock;
                          (iii) treasury stock;
                          (iv) bond;
                          (v) debenture;
                          (vi) collateral trust certificate;
                          (vii) pre-organization certificate or 
                        subscription;
                          (viii) transferable share;
                          (ix) voting-trust certificate;
                          (x) certificate of deposit;
                          (xi) certificate of deposit for 
                        security;
                          (xii) investment contract or 
                        certificate of interest or 
                        participation in a profit-sharing 
                        agreement or in an oil, gas, or mineral 
                        royalty or lease, if such contract or 
                        interest is required to be the subject 
                        of a registration statement filed with 
                        the Securities and Exchange Commission 
                        under the provisions of the Securities 
                        Act of 1933, or is exempt under section 
                        3(b) of such Act from the requirement 
                        to file such a statement;
                          (xiii) interest of a limited partner 
                        in a limited partnership;
                          (xiv) other claim or interest 
                        commonly known as ``security''; and
                          (xv) certificate of interest or 
                        participation in, temporary or interim 
                        certificate for, receipt for, or 
                        warrant or right to subscribe to or 
                        purchase or sell, a security; but
                  (B) does not include--
                          (i) currency, check, draft, bill of 
                        exchange, or bank letter of credit;
                          (ii) leverage transaction, as defined 
                        in section 761 of this title;
                          (iii) commodity futures contract or 
                        forward contract;
                          (iv) option, warrant, or right to 
                        subscribe to or purchase or sell a 
                        commodity futures contract;
                          (v) option to purchase or sell a 
                        commodity;
                          (vi) contract or certificate of a 
                        kind specified in subparagraph (A)(xii) 
                        of this paragraph that is not required 
                        to be the subject of a registration 
                        statement filed with the Securities and 
                        Exchange Commission and is not exempt 
                        under section 3(b) of the Securities 
                        Act of 1933 from the requirement to 
                        file such a statement; or
                          (vii) debt or evidence of 
                        indebtedness for goods sold and 
                        delivered or services rendered[;].
          [(50)] (65) The term ``security agreement'' means 
        agreement that creates or provides for a security 
        interest[;].
          [(51)] (66) The term ``security interest'' means lien 
        created by an agreement[;].
          [(51A)] (67) The term ``settlement payment'' means, 
        for purposes of the forward contract provisions of this 
        title, a preliminary settlement payment, a partial 
        settlement payment, an interim settlement payment, a 
        settlement payment on account, a final settlement 
        payment, a net settlement payment, or any other similar 
        payment commonly used in the forward contract trade[;].
          [(51B)] (68) The term ``single asset real estate'' 
        means real property constituting a single property or 
        project, other than residential real property with 
        fewer than 4 residential units,which generates 
substantially all of the gross income of a debtor who is not a family 
farmer and on which no substantial business is being conducted by a 
debtor other than the business of operating the real property and 
activities incidental [thereto having aggregate noncontingent, 
liquidated secured debts in an amount no more than $4,000,000;].
          [(51C) ``small business'' means a person engaged in 
        commercial or business activities (but does not include 
        a person whose primary activity is the business of 
        owning or operating real property and activities 
        incidental thereto) whose aggregate noncontingent 
        liquidated secured and unsecured debts as of the date 
        of the petition do not exceed $2,000,000;]
          (69) The term ``small business'' case means a case 
        filed under chapter 11 of this title in which the 
        debtor is a small business debtor.
          (70) The term ``small business debtor'' means a 
        person (including affiliates of such person that are 
        also debtors under this title) that has aggregate 
        noncontingent, liquidated secured and unsecured debts 
        as of the date of the petition or the order for relief 
        in an amount not more than $4,000,000 (excluding debts 
        owed to 1 or more affiliates or insiders), except that 
        if a group of affiliated debtors has aggregate 
        noncontingent liquidated secured and unsecured debts 
        greater than $4,000,000 (excluding debt owed to 1 or 
        more affiliates or insiders), then no member of such 
        group is a small business debtor.
          [(52)] (71) The term ``State'' includes the District 
        of Columbia and Puerto Rico, except for the purpose of 
        defining who may be a debtor under chapter 9 of this 
        title[;].
          [(53)] (72) The term ``statutory lien'' means lien 
        arising solely by force of a statute on specified 
        circumstances or conditions, or lien of distress for 
        rent, whether or not statutory, but does not include 
        security interest or judicial lien, whether or not such 
        interest or lien is provided by or is dependent on a 
        statute and whether or not such interest or lien is 
        made fully effective by statute[;].
          [(53A)] (73) The term ``stockbroker'' means person--
                  (A) with respect to which there is a 
                customer, as defined in section 741 of this 
                title; and
                  (B) that is engaged in the business of 
                effecting transactions in securities--
                          (i) for the account of others; or
                          (ii) with members of the general 
                        public, from or for such person's own 
                        account[;].
          [(53B) ``swap agreement'' means--
                  [(A) an agreement (including terms and 
                conditions incorporated by reference therein) 
                which is a rate swap agreement, basis swap, 
                forward rate agreement, commodity swap, 
                interest rate option, forward foreign exchange 
                agreement, spot foreign exchange agreement, 
                rate cap agreement, rate floor agreement, rate 
                collar agreement, currency swap agreement, 
                cross-currency rate swap agreement, currency 
                option, any other similar agreement (including 
                any option to enter into any of the foregoing);
                  [(B) any combination of the foregoing; or
                  [(C) a master agreement for any of the 
                foregoing together with all supplements[;].
          (74) The term ``swap agreement''
                  (A) means--
                          (i) any agreement, including the 
                        terms and conditions incorporated by 
                        reference in such agreement, which is 
                        an interest rate swap, option, future, 
                        or forward agreement, including a rate 
                        floor, rate cap, rate collar, cross-
                        currency rate swap, and basis swap; a 
                        spot, same day-tomorrow, tomorrow-next, 
                        forward, or other foreign exchange or 
                        precious metals agreement; a currency 
                        swap, option, future, or forward 
                        agreement; an equity index or an equity 
                        swap, option, future, or forward 
                        agreement; a debt index or a debt swap, 
                        option, future, or forward agreement; a 
                        credit spread or a credit swap, option, 
                        future, or forward agreement; or a 
                        commodity index or a commodity swap, 
                        option, future, or forward agreement;
                          (ii) any agreement or transaction 
                        similar to any other agreement or 
                        transaction referred to in this 
                        paragraph that--
                                  (I) is presently, or in the 
                                future becomes, regularly 
                                entered into in the swap market 
                                (including terms and conditions 
                                incorporated by reference 
                                therein); and
                                  (II) is a forward, swap, 
                                future, or option on 1 or more 
                                rates, currencies commodities, 
                                equity securities, or other 
                                equity instruments, debt 
                                securities or other debt 
                                instruments, or on an economic 
                                index or measure of economic 
                                risk or value;
                          (iii) any combination of agreements 
                        or transactions referred to in this 
                        paragraph;
                          (iv) any option to enter into an 
                        agreement or transaction referred to in 
                        this paragraph;
                          (v) a master agreement that provides 
                        for an agreement or transaction 
                        referred to in clause (i), (ii), (iii), 
                        or (iv), together with all supplements 
                        to any such master agreement, and 
                        without regard to whether the master 
                        agreement contains an agreement or 
                        transaction that is not a swap 
                        agreement under this paragraph, except 
                        that the master agreement shall be 
                        considered to be a swap agreement under 
                        this paragraph only with respect to 
                        each agreement or transaction under the 
                        master agreement that is referred to in 
                        clause (i), (ii), (iii), or (iv); or
                  (B) any security agreement or arrangement or 
                other credit enhancement related to any 
                agreements or transactions referred to in 
                subparagraph (A); and
                  (C) is applicable for purposes of this title 
                only and shall not be construed or applied so 
                as to challenge or affect the characterization, 
                definition, or treatment of any swap agreement 
                under any other statute, regulation, or rule, 
                including the Securities Act of 1933, the 
                Securities Exchange Act of 1934, the Public 
                Utility Holding Company Act of1935, the Trust 
Indenture Act of 1939, the Investment Company Act of 1940, the 
Investment Advisers Act of 1940, the Securities Investor Protection Act 
of 1970, the Commodity Exchange Act, and the regulations prescribed by 
the Securities and Exchange Commission or the Commodity Futures Trading 
Commission.
          [(53C)] (75) The term ``swap participant'' means an 
        entity that, at any time before the filing of the 
        petition, has an outstanding swap agreement with the 
        debtor[;].
          [(56A)] (76) The term ``term overriding royalty'' 
        means an interest in liquid or gaseous hydrocarbons in 
        place or to be produced from particular real property 
        that entitles the owner thereof to a share of 
        production, or the value thereof, for a term limited by 
        time, quantity, or value realized[;].
          [(53D)] (77) The term ``timeshare plan'' means and 
        shall include that interest purchased in any 
        arrangement, plan, scheme, or similar device, but not 
        including exchange programs, whether by membership, 
        agreement, tenancy in common, sale, lease, deed, rental 
        agreement, license, right to use agreement, or by any 
        other means, whereby a purchaser, in exchange for 
        consideration, receives a right to use accommodations, 
        facilities, or recreational sites, whether improved or 
        unimproved, for a specific period of time less than a 
        full year during any given year, but not necessarily 
        for consecutive years, and which extends for a period 
        of more than three years. A ``timeshare interest'' is 
        that interest purchased in a timeshare plan which 
        grants the purchaser the right to use and occupy 
        accommodations, facilities, or recreational sites, 
        whether improved or unimproved, pursuant to a timeshare 
        plan[;].
          [(54) ``transfer'' means every mode, direct or 
        indirect, absolute or conditional, voluntary or 
        involuntary, of disposing of or parting with property 
        or with an interest in property, including retention of 
        title as a security interest and foreclosure of the 
        debtor's equity of redemption;]
          [(54)] (78) The term ``transfer'' means--
                  (A) the creation of a lien;
                  (B) the retention of title as a security 
                interest;
                  (C) the foreclosure of a debtor's equity of 
                redemption; or
                  (D) each mode, direct or indirect, absolute 
                or conditional, voluntary or involuntary, of 
                disposing of or parting with--
                          (i) property; or
                          (ii) an interest in property.
          [(55)] (79) The term ``United States'', when used in 
        a geographical sense, includes all locations where the 
        judicial jurisdiction of the United States extends, 
        including territories and possessions of the United 
        States[;].

           *       *       *       *       *       *       *

Sec. 103. Applicability of chapters

  (a) Except as provided in section 1161 of this title, 
chapters 1, 3, and 5 of this title apply in a case under 
chapter 7, 11, 12, or 13 of this title, and this chapter, 
sections 307, 304, 555 through 557, 559, and 560 apply in a 
case under chapter 15.

           *       *       *       *       *       *       *

  (j) Chapter 15 applies only in a case under such chapter, 
except that--
          (1) sections 1505, 1513, and 1514 apply in all cases 
        under this title; and
          (2) section 1509 applies whether or not a case under 
        this title is pending.

Sec. 104. Adjustment of dollar amounts

  (a)  * * *
  (b)(1) On April 1, 1998, and at each 3-year interval ending 
on April 1 thereafter, each dollar amount in effect under 
sections 101(3), 109(e), 303(b), 507(a), 522(d), 522(f)(3), 
707(b)(5), and 523(a)(2)(C) immediately before such April 1 
shall be adjusted--
          (A)  * * *

           *       *       *       *       *       *       *

  (2) Not later than March 1, 1998, and at each 3-year interval 
ending on March 1 thereafter, the Judicial Conference of the 
United States shall publish in the Federal Register the dollar 
amounts that will become effective on such April 1 under 
sections 109(e), 303(b), 507(a), 522(d), 522(f)(3), 707(b)(5), 
and 523(a)(2)(C) of this title.

           *       *       *       *       *       *       *

Sec. 105. Power of court

  (a)  * * *

           *       *       *       *       *       *       *

  (d) The court, on its own motion or on the request of a party 
in interest[, may]--
          [(1) hold a status conference regarding any case or 
        proceeding under this title after notice to the parties 
        in interest; and]
          (1) shall hold such status conferences as are 
        necessary to further the expeditious and economical 
        resolution of the case; and
          (2) [unless inconsistent with another provision of 
        this title or with applicable Federal Rules of 
        Bankruptcy Procedure] may, issue an order at any such 
        conference prescribing such limitations and conditions 
        as the court deems appropriate to ensure that the case 
        is handled expeditiously and economically, including an 
        order that--
                  (A)  * * *

           *       *       *       *       *       *       *

Sec. 109. Who may be a debtor

  (a)  * * *
  (b) A person may be a debtor under chapter 7 of this title 
only if such person is not--
          (1)  * * *
          (2) a domestic insurance company, bank, savings bank, 
        cooperative bank, savings and loan association, 
        building and loan association, homestead association, a 
        small business investment company licensed by the Small 
        Business Administration under [subsection (c) or (d) 
        of] section 301 of the Small Business Investment Act of 
        1958, credit union, or industrial bank or similar 
        institution which is an insured bank as defined in 
        section 3(h) of the Federal Deposit Insurance Act; or

           *       *       *       *       *       *       *

  (h)(1) Subject to paragraphs (2) and (3) and notwithstanding 
any other provision of this section, an individual may not be a 
debtor under this title unless that individual has, during the 
90-day period preceding the date of filing of the petition of 
that individual, received credit counseling, including, at a 
minimum, participation in an individual or group briefing that 
outlined the opportunities for available credit counseling and 
assisted that individual in performing an initial budget 
analysis, through a credit counseling program (offered through 
an approved credit counseling service described in section 
111(a)).
  (2)(A) Paragraph (1) shall not apply with respect to a debtor 
who resides in a district for which the United States trustee 
or bankruptcy administrator of the bankruptcy court of that 
district determines that the approved credit counseling 
services for that district are not reasonably able to provide 
adequate services to the additional individuals who would 
otherwise seek credit counseling from those programs by reason 
of the requirements of paragraph (1).
  (B) Each United States trustee or bankruptcy administrator 
that makes a determination described in subparagraph (A) shall 
review that determination not later than one year after the 
date of that determination, and not less frequently than every 
year thereafter.
  (3)(A) Subject to subparagraph (B), the requirements of 
paragraph (1) shall not apply with respect to a debtor who 
submits to the court a certification that--
          (i) describes exigent circumstances that merit a 
        waiver of the requirements of paragraph (1);
          (ii) states that the debtor requested credit 
        counseling services from an approved credit counseling 
        service, but was unable to obtain the services referred 
        to in paragraph (1) during the 5-day period beginning 
        on the date on which the debtor made that request or 
        that the exigent circumstances require filing before 
        such 5-day period expires; and
          (iii) is satisfactory to the court.
  (B) With respect to a debtor, an exemption under subparagraph 
(A) shall cease to apply to that debtor on the date on which 
the debtor meets the requirements of paragraph (1), but in no 
case may the exemption apply to that debtor after the date that 
is 30 days after the debtor files a petition.

           *       *       *       *       *       *       *

Sec. 110. Penalty for persons who negligently or fraudulently prepare 
                    bankruptcy petitions

  (a)  * * *

           *       *       *       *       *       *       *

  (j)(1)  * * *

           *       *       *       *       *       *       *

  (3) The court shall award to a debtor, trustee, or creditor 
that brings a successful action under this subsection 
reasonable [attorney's] attorneys' fees and costs of the 
action, to be paid by the bankruptcy petition preparer.

           *       *       *       *       *       *       *

Sec. 111. Credit counseling services; financial management 
                    instructional courses

  The clerk of each district shall maintain a list of credit 
counseling services that provide 1 or more programs described 
in section 109(h) and a list of instructional courses 
concerning personal financial management that have been 
approved by--
          (1) the United States trustee; or
          (2) the bankruptcy administrator for the district.

           *       *       *       *       *       *       *

                     CHAPTER 3--CASE ADMINISTRATION

                  SUBCHAPTER I--COMMENCEMENT OF A CASE

Sec.
301.  Voluntary cases.
     * * * * * * *
308.  Debtor reporting requirements.

           *       *       *       *       *       *       *

                  SUBCHAPTER I--COMMENCEMENT OF A CASE

Sec. 301. Voluntary cases

  (a) A voluntary case under a chapter of this title is 
commenced by the filing with the bankruptcy court of a petition 
under such chapter by an entity that may be a debtor under such 
chapter. [The commencement of a voluntary case under a chapter 
of this title constitutes an order for relief under such 
chapter.]
  (b) The commencement of a voluntary case under a chapter of 
this title constitutes an order for relief under such chapter.

           *       *       *       *       *       *       *

[Sec. 304. Cases ancillary to foreign proceedings

  [(a) A case ancillary to a foreign proceeding is commenced by 
the filing with the bankruptcy court of a petition under this 
section by a foreign representative.
  [(b) Subject to the provisions of subsection (c) of this 
section, if a party in interest does not timely controvert the 
petition, or after trial, the court may--
          [(1) enjoin the commencement or continuation of--
                  [(A) any action against--
                          [(i) a debtor with respect to 
                        property involved in such foreign 
                        proceeding; or
                          [(ii) such property; or
                  [(B) the enforcement of any judgment against 
                the debtor with respect to such property, or 
                any act or the commencement or continuation of 
                any judicial proceeding to create or enforce a 
                lien against the property of such estate;
          [(2) order turnover of the property of such estate, 
        or the proceeds of such property, to such foreign 
        representative; or
          [(3) order other appropriate relief.
  [(c) In determining whether to grant relief under subsection 
(b) of this section, the court shall be guided by what will 
best assure an economical and expeditious administration of 
such estate, consistent with--
          [(1) just treatment of all holders of claims against 
        or interests in such estate;
          [(2) protection of claim holders in the United States 
        against prejudice and inconvenience in the processing 
        of claims in such foreign proceeding;
          [(3) prevention of preferential or fraudulent 
        dispositions of property of such estate;
          [(4) distribution of proceeds of such estate 
        substantially in accordance with the order prescribed 
        by this title;
          [(5) comity; and
          [(6) if appropriate, the provision of an opportunity 
        for a fresh start for the individual that such foreign 
        proceeding concerns.]

Sec. 304. Cases ancillary to foreign proceedings

  (a) For purposes of this section--
          (1) the term ``domestic insurance company'' means a 
        domestic insurance company, as such term is used in 
        section 109(b)(2);
          (2) the term ``foreign insurance company'' means a 
        foreign insurance company, as such term is used in 
        section 109(b)(3);
          (3) the term ``United States claimant'' means a 
        beneficiary of any deposit referred to in subsection 
        (b) or any multibeneficiary trust referred to in 
        subsection (b);
          (4) the term ``United States creditor'' means, with 
        respect to a foreign insurance company--
                  (A) a United States claimant; or
                  (B) any business entity that operates in the 
                United States and that is a creditor; and
          (5) the term ``United States policyholder'' means a 
        holder of an insurance policy issued in the United 
        States.
  (b) The court may not grant relief under chapter 15 of this 
title with respect to any deposit, escrow, trust fund, or other 
security required or permitted under any applicable State 
insurance law or regulation for the benefit of claim holders in 
the United States.
  (c) Any provisions of this title relating to securities 
contracts, commodity contracts, forward contracts, repurchase 
agreements, swap agreements, or master netting agreements shall 
apply in acase ancillary to a foreign proceeding under this 
section or any other section of this title, so that enforcement of 
contractual provisions of such contracts and agreements in accordance 
with their terms will not be stayed or otherwise limited by operation 
of any provision of this title or by order of a court in any case under 
this title, and to limit avoidance powers to the same extent as in a 
proceeding under chapter 7 or 11 of this title (such enforcement not to 
be limited based on the presence or absence of assets of the debtor in 
the United States).

           *       *       *       *       *       *       *

Sec. 305. Abstention

  (a) The court, after notice and a hearing, may dismiss a case 
under this title, or may suspend all proceedings in a case 
under this title, at any time if--
          [(2)(A) there is pending a foreign proceeding; and
          [(B) the factors specified in section 304(c) of this 
        title warrant such dismissal or suspension.]
          (2)(A) a petition under section 1515 of this title 
        for recognition of a foreign proceeding has been 
        granted; and
          (B) the purposes of chapter 15 of this title would be 
        best served by such dismissal or suspension.

           *       *       *       *       *       *       *

Sec. 308. Debtor reporting requirements

  A small business debtor shall file periodic financial and 
other reports containing information including--
          (1) the debtor's profitability, that is, 
        approximately how much money the debtor has been 
        earning or losing during current and recent fiscal 
        periods;
          (2) reasonable approximations of the debtor's 
        projected cash receipts and cash disbursements over a 
        reasonable period;
          (3) comparisons of actual cash receipts and 
        disbursements with projections in prior reports; and
          (4) whether the debtor is--
                  (A) in compliance in all material respects 
                with postpetition requirements imposed by this 
                title and the Federal Rules of Bankruptcy 
                Procedure; and
                  (B) timely filing tax returns and paying 
                taxes and other administrative claims when due, 
                and, if not, what the failures are and how, at 
                what cost, and when the debtor intends to 
                remedy such failures; and
          (5) such other matters as are in the best interests 
        of the debtor and creditors, and in the public interest 
        in fair and efficient procedures under chapter 11 of 
        this title.

           *       *       *       *       *       *       *

SUBCHAPTER II--OFFICERS

           *       *       *       *       *       *       *

Sec. 322. Qualification of trustee

  (a) Except as provided in subsection (b)(1), a person 
selected under section 701, 702, 703, 1104, 1163, 1202, or 1302 
of this title to serve as trustee in a case under this title 
qualifies if before five days after such selection, and before 
beginning official duties, such person has filed with the court 
a bond in favor of the United States conditioned on the 
faithful performance of such official duties. The trustee in a 
case under this title is not liable personally or on such 
trustee's bond for acts taken within the scope of the trustee's 
duties or authority as delineated by other sections of this 
title or by order of the court, except to the extent that the 
trustee acted with gross negligence. Gross negligence shall be 
defined as reckless indifference or deliberate disregard of the 
trustee's fiduciary duty.

           *       *       *       *       *       *       *

  (c) A trustee is not liable personally or on such trustee's 
bond in favor of the United States for any penalty or 
forfeiture incurred by the debtor for any acts within the scope 
of the trustee's authority defined in subsection (a).

           *       *       *       *       *       *       *

Sec. 323. Role and capacity of trustee

  (a) The trustee in a case under this title is the 
representative of the estate.
  (b) The trustee in a case under this title has capacity to 
sue and be sued in the trustee's official capacity as 
representative of the estate.
  (c) The trustee in a case under this title may not be sued, 
either personally, in a representative capacity, or against the 
trustee's bond in favor of the United States--
          (1) for acts taken in furtherance of the trustee's 
        duties or authority in a case in which the debtor is 
        subsequently determined to be ineligible for relief 
        under the chapter in which the trustee was appointed; 
        or
          (2) for the dissemination of statistics and other 
        information regarding a case or cases, unless the 
        trustee has actual knowledge that the information is 
        false.
  (d) The trustee in a case under this title may not be sued in 
a personal capacity without leave of the bankruptcy court in 
which the case is pending.

           *       *       *       *       *       *       *

Sec. 328. Limitation on compensation of professional persons

  (a) The trustee, or a committee appointed under section 1102 
of this title, with the court's approval, may employ or 
authorize the employment of a professional person under section 
327 or 1103 of this title, as the case may be, on any 
reasonable terms and conditions of employment, including on a 
retainer, on an hourly basis, on a fixed or percentage fee 
basis, or on a contingent fee basis. Notwithstanding such terms 
and conditions, the court may allow compensation different from 
the compensation provided under such terms and conditions after 
the conclusion of such employment, if such terms and conditions 
prove to have been improvident in lightof developments not 
capable of being anticipated at the time of the fixing of such terms 
and conditions.

           *       *       *       *       *       *       *

Sec. 330. Compensation of officers

  (a)(1)  * * *

           *       *       *       *       *       *       *

  (3)(A) In determining the amount of reasonable compensation 
to be awarded to an examiner, chapter 11 trustee, or 
professional person, the court shall consider the nature, the 
extent, and the value of such services, taking into account all 
relevant factors, including--
          [(A)] (i) the time spent on such services;
          [(B)] (ii) the rates charged for such services;
          [(C)] (iii) whether the services were necessary to 
        the administration of, or beneficial at the time at 
        which the service was rendered toward the completion 
        of, a case under this title;
          [(D)] (iv) whether the services were performed within 
        a reasonable amount of time commensurate with the 
        complexity, importance, and nature of the problem, 
        issue, or task addressed; and
          [(E)] (v) whether the compensation is reasonable 
        based on the customary compensation charged by 
        comparably skilled practitioners in cases other than 
        cases under this title.
          (B) In determining the amount of reasonable 
        compensation to be awarded a trustee, the court shall 
        treat such compensation as a commission based on the 
        results achieved.

           *       *       *       *       *       *       *

                     SUBCHAPTER III--ADMINISTRATION

Sec. 341. Meetings of creditors and equity security holders

  (a)  * * *

           *       *       *       *       *       *       *

  (c) The court may not preside at, and may not attend, any 
meeting under this section including any final meeting of 
creditors. Notwithstanding any local court rule, provision of a 
State constitution, any other Federal or State law that is not 
a bankruptcy law, or other requirement that representation at 
the meeting of creditors under subsection (a) be by an 
attorney, a creditor holding a consumer debt or any 
representative of the creditor (which may include an entity or 
an employee of an entity and may be a representative for more 
than one creditor) shall be permitted to appear at and 
participate in the meeting of creditors and activities related 
thereto in a case under chapter 7 or 13, either alone or in 
conjunction with an attorney for the creditor. Nothing in this 
subsection shall be construed to require any creditor to be 
represented by an attorney at any meeting of creditors.

           *       *       *       *       *       *       *

  (e) Notwithstanding subsections (a) and (b), the court, on 
the request of a party in interest and after notice and a 
hearing, for cause may order that the United States trustee not 
convene a meeting of creditors or equity security holders if 
the debtor has filed a plan as to which the debtor solicited 
acceptances prior to the commencement of the case.

           *       *       *       *       *       *       *

Sec. 342. Notice

  (a)  * * *
  [(b) Prior to the commencement of a case under this title by 
an individual whose debts are primarily consumer debts, the 
clerk shall give written notice to such individual that 
indicates each chapter of this title under which such 
individual may proceed.]
  (b) Before the commencement of a case under this title by an 
individual whose debts are primarily consumer debts, the clerk 
shall give to such individual written notice containing--
          (1) a brief description of--
                  (A) chapters 7, 11, 12, and 13 and the 
                general purpose, benefits, and costs of 
                proceeding under each of those chapters; and
                  (B) the types of services available from 
                credit counseling agencies; and
          (2) statements specifying that--
                  (A) a person who knowingly and fraudulently 
                conceals assets or makes a false oath or 
                statement under penalty of perjury in 
                connection with a bankruptcy case shall be 
                subject to fine, imprisonment, or both; and
                  (B) all information supplied by a debtor in 
                connection with a bankruptcy case is subject to 
                examination by the Attorney General.
  (c) If notice is required to be given by the debtor to a 
creditor under this title, any rule, any applicable law, or any 
order of the court, such notice shall contain the name, 
address, and taxpayer identification number of the debtor[, but 
the failure of such notice to contain such information shall 
not invalidate the legal effect of such notice]. If the credit 
agreement between the debtor and the creditor or the last 
communication before the filing of the petition in a voluntary 
case from the creditor to a debtor who is an individual states 
an account number of the debtor which is the current account 
number of the debtor with respect to any debt held by the 
creditor against the debtor, the debtor shall include such 
account number in any notice to the creditor required to be 
given under this title. If the creditor has specified to the 
debtor an address at which the creditor wishes to receive 
correspondence regarding the debtor's account, any notice to 
the creditor required to be given by the debtor under this 
title shall be given at such address. For the purposes of this 
section, `notice' shall include, but shall not be limited to, 
any correspondence from the debtor to the creditor after the 
commencement of the case, any statement of the debtor's 
intention under section 521(a)(2) of this title, notice of the 
commencement of any proceeding in the case to which the 
creditor is a party, and any notice of the hearing under 
section 1324 of this title.
  (d) At any time, a creditor in a case of an individual debtor 
under chapter 7 or 13 may file with the court and serve on the 
debtor a notice of the address to be used to notify the 
creditor in thatcase. After 5 days following receipt of such 
notice, any notice the court or the debtor is required to give the 
creditor shall be given at that address.
  (e) An entity may file with the court a notice stating its 
address for notice in cases under chapters 7 and 13. After 30 
days following the filing of such notice, any notice in any 
case filed under chapter 7 or 13 given by the court shall be to 
that address unless specific notice is given under subsection 
(d) with respect to a particular case.
  (f) Notice given to a creditor other than as provided in this 
section shall not be effective notice until it has been brought 
to the attention of the creditor. If the creditor has 
designated a person or department to be responsible for 
receiving notices concerning bankruptcy cases and has 
established reasonable procedures so that bankruptcy notices 
received by the creditor will be delivered to such department 
or person, notice will not be brought to the attention of the 
creditor until received by such person or department. No 
sanction under section 362(h) of this title or any other 
sanction which a court may impose on account of violations of 
the stay under section 362(a) of this title or failure to 
comply with section 542 or 543 of this title may be imposed on 
any action of the creditor unless the action takes place after 
the creditor has received notice of the commencement of the 
case effective under this section.
  (g) If a debtor lists a governmental unit as a creditor in a 
list or schedule, any notice required to be given by the debtor 
under this title, any rule, any applicable law, or any order of 
the court, shall identify the department, agency, or 
instrumentality through which the debtor is indebted. The 
debtor shall identify (with information such as a taxpayer 
identification number, loan, account or contract number, or 
real estate parcel number, where applicable), and describe the 
underlying basis for the governmental unit's claim. If the 
debtor's liability to a governmental unit arises from a debt or 
obligation owed or incurred by another individual, entity, or 
organization, or under a different name, the debtor shall 
identify such individual, entity, organization, or name.
  (h) The clerk shall keep and update quarterly, in the form 
and manner as the Director of the Administrative Office of the 
United States Courts prescribes, and make available to debtors, 
a register in which a governmental unit may designate a safe 
harbor mailing address for service of notice in cases pending 
in the district. A governmental unit may file a statement with 
the clerk designating a safe harbor address to which notices 
are to be sent, unless such governmental unit files a notice of 
change of address.
  (i) A notice that does not comply with subsections (d) and 
(e) shall not be effective unless the debtor demonstrates, by 
clear and convincing evidence, that timely notice was given in 
a manner reasonably calculated to satisfy the requirements of 
this section was given, and that--
          (1) either the notice was timely sent to the safe 
        harbor address provided in the register maintained by 
        the clerk of the district in which the case was pending 
        for such purposes; or
          (2) no safe harbor address was provided in such list 
        for the governmental unit and that an officer of the 
        governmental unit who is responsible for the matter or 
        claim had actual knowledge of the case in sufficient 
        time to act.

           *       *       *       *       *       *       *

Sec. 346. Special tax provisions

  (a)  * * *

           *       *       *       *       *       *       *

  (g)(1) Neither gain nor loss shall be recognized on a 
transfer--
          (A)  * * *

           *       *       *       *       *       *       *

          (C) in a case under chapter 11 or 12 of this title 
        concerning a corporation, of property from the estate 
        to a corporation that is an affiliate participating in 
        a joint plan with the debtor, or that is a successor to 
        the debtor under the plan[, except that gain or loss 
        may be recognized to the same extent that such transfer 
        results in the recognition of gain or loss under 
        section 371 of the Internal Revenue Code of 1986].

           *       *       *       *       *       *       *

Sec. 348. Effect of conversion

  (a)  * * *

           *       *       *       *       *       *       *

  (f)(1) Except as provided in paragraph (2), when a case under 
chapter 13 of this title is converted to a case under another 
chapter under this title--
          (A) property of the estate in the converted case 
        shall consist of property of the estate, as of the date 
        of filing of the petition, that remains in the 
        possession of or is under the control of the debtor on 
        the date of conversion; [and]
          (B) valuations of property and of allowed secured 
        claims in the chapter 13 case shall apply [in the 
        converted case, with allowed secured claims] only in a 
        case converted to chapter 11 or 12 but not in a case 
        converted to chapter 7, with allowed secured claims in 
        cases under chapters 11 and 12 reduced to the extent 
        that they have been paid in accordance with the chapter 
        13 plan[.]; and
          (C) with respect to cases converted from chapter 13--
                  (i) the claim of any creditor holding 
                security as of the date of the petition shall 
                continue to be secured by that security unless 
                the full amount of such claim determined under 
                applicable nonbankruptcy law has been paid in 
                full as of the date of conversion, 
                notwithstanding any valuation or determination 
                of the amount of an allowed secured claim made 
                for the purposes of the chapter 13 proceeding; 
                and
                  (ii) unless a prebankruptcy default has been 
                fully cured pursuant to the plan at the time of 
                conversion, in any proceeding under this title 
                or otherwise, the default shall have the effect 
                given under applicable nonbankruptcy law.
  (2) If the debtor converts a case under chapter 13 of this 
title to a case under another chapter under this title in bad 
faith, theproperty of the estate in the converted case shall 
consist of the property of the estate as of the date of conversion.

           *       *       *       *       *       *       *

SUBCHAPTER IV--ADMINISTRATIVE POWERS

           *       *       *       *       *       *       *

Sec. 362. Automatic stay

  (a) Except as provided in subsection (b) of this section, a 
petition filed under section 301, 302, or 303 of this title, or 
an application filed under section 5(a)(3) of the Securities 
Investor Protection Act of 1970, operates as a stay, applicable 
to all entities, of--
          (1)  * * *

           *       *       *       *       *       *       *

          (8) the commencement or continuation of a proceeding 
        before the United States Tax Court concerning the 
        debtor[.], in respect of a tax liability for a taxable 
        period ending before the order for relief.
  (b) The filing of a petition under section 301, 302, or 303 
of this title, or of an application under section 5(a)(3) of 
the Securities Investor Protection Act of 1970, does not 
operate as a stay--
          (1)  * * *
          (2) under subsection (a) of this section--
                  (A) of the commencement or continuation of an 
                action or proceeding for--
                          (i) the establishment of paternity; 
                        or
                          (ii) the establishment or 
                        modification of an order for alimony, 
                        maintenance, or support; [or]
                  (B) of the collection of alimony, 
                maintenance, or support from property that is 
                not property of the estate;
                  (C) under subsection (a) of--
                          (i) the withholding of income for 
                        payment of a domestic support 
                        obligation pursuant to a judicial or 
                        administrative order or statute for 
                        such obligation that first becomes 
                        payable after the date on which the 
                        petition is filed; or
                          (ii) the withholding of income for 
                        payment of a domestic support 
                        obligation owed directly to the spouse, 
                        former spouse or child of the debtor or 
                        the parent of such child, pursuant to a 
                        judicial or administrative order or 
                        statute for such obligation that 
                        becomes payable before the date on 
                        which the petition is filed unless the 
                        court finds, after notice and hearing, 
                        that such withholding would render the 
                        plan infeasible;
                  (D) the commencement or continuation of a 
                proceeding concerning a child custody or 
                visitation;
                  (E) the commencement or continuation of a 
                proceeding alleging domestic violence; or
                  (F) the commencement or continuation of a 
                proceeding seeking a dissolution of marriage, 
                except to the extent the proceeding concerns 
                property of the estate;

           *       *       *       *       *       *       *

          (6) under subsection (a) of this section, of the 
        setoff by a commodity broker, forward contract 
        merchant, stockbroker, [financial institutions,] 
        financial institution, financial participant or 
        securities clearing agency of any mutual debt and claim 
        under or in connection with commodity contracts, as 
        defined in section 761 of this title, forward 
        contracts, or securities contracts, as defined in 
        section 741 of this title, that constitutes the setoff 
        of a claim against the debtor for a margin payment, as 
        defined in section 101, 741, or 761 of this title, or 
        settlement payment, as defined in section 101 or 741 of 
        this title, arising out of commodity contracts, forward 
        contracts, or securities contracts against cash, 
        securities, or other property held by, pledged to, and 
        under the control of, or due from such commodity 
        broker, forward contract merchant, stockbroker, 
        [financial institutions,] financial institution, 
        financial participant or securities clearing agency to 
        margin, guarantee, secure, or settle commodity 
        contracts, forward contracts, or securities contracts;
          (7) under subsection (a) of this section, of the 
        setoff by a repo participant, of any mutual debt and 
        claim under or in connection with repurchase agreements 
        that constitutes the setoff of a claim against the 
        debtor for a margin payment, as defined in section 741 
        or 761 of this title, or settlement payment, as defined 
        in section 741 of this title, arising out of repurchase 
        agreements against cash, securities, or other property 
        held by, pledged to, and under the control of, or due 
        from such repo participant to margin, guarantee, secure 
        or settle repurchase agreements;

           *       *       *       *       *       *       *

          (9) under subsection (a), of--
                  (A) an audit by a governmental unit to 
                determine tax liability;
                  (B) the issuance to the debtor by a 
                governmental unit of a notice of tax 
                deficiency;
                  (C) a demand for tax returns; [or]
                  (D) the making of an assessment for any tax 
                and issuance of a notice and demand for payment 
                of such an assessment (but any tax lien that 
                would otherwise attach to property of the 
                estate by reason of such an assessment shall 
                not take effect unless such tax is a debt of 
                the debtor that will not be discharged in the 
                case and such property or its proceeds are 
                transferred out of the estate to, or otherwise 
                revested in, the debtor)[.]; or
                  (E) the appeal of a decision by a court or 
                administrative tribunal which determines a tax 
                liability of the debtor without regard to 
                whether such determination was made prepetition 
                or postpetition.
          [(17) under subsection (a) of this section, of the 
        setoff by a swap participant, of any mutual debt and 
        claim under or in connection with any swap agreement 
        that constitutes the setoff of a claim against the 
        debtor for any payment due from the debtor under or in 
        connection with any swap agreement against any payment 
        due to the debtor from the swap participant under or in 
        connection with any swap agreement oragainst cash, 
securities, or other property of the debtor held by or due from such 
swap participant to guarantee, secure or settle any swap agreement; or]
          (17) under subsection (a), of the setoff by a swap 
        participant of a mutual debt and claim under or in 
        connection with 1 or more swap agreements that 
        constitutes the setoff of a claim against the debtor 
        for any payment or other transfer of property due from 
        the debtor under or in connection with any swap 
        agreement against any payment due to the debtor from 
        the swap participant under or in connection with any 
        swap agreement or against cash, securities, or other 
        property held by, pledged to, and under the control of, 
        or due from such swap participant to margin guarantee, 
        secure, or settle a swap agreement;
          (18) under subsection (a) of the creation or 
        perfection of a statutory lien for an ad valorem 
        property tax imposed by the District of Columbia, or a 
        political subdivision of a State, if such tax comes due 
        after the filing of the petition[.];
          (19) under subsection (a), of any act to enforce any 
        lien against or security interest in real property 
        following the entry of an order under section 362(d)(4) 
        of this title as to that property in any prior 
        bankruptcy case for a period of 2 years after entry of 
        such an order. The debtor in a subsequent case, 
        however, may move the court for relief from such order 
        based upon changed circumstances or for other good 
        cause shown (consistent with the standards for good 
        faith in subsection (c)), after notice and a hearing;
          (20) under subsection (a), of any act to enforce any 
        lien against or security interest in real property--
                  (A) if the debtor is ineligible under section 
                109(g) of this title to be a debtor in a 
                bankruptcy case; or
                  (B) if the bankruptcy case was filed in 
                violation of a bankruptcy court order in a 
                prior bankruptcy case prohibiting the debtor 
                from being a debtor in another bankruptcy case;
          (21) under subsection (a), of the commencement or 
        continuation of an investigation or action by a 
        securities self regulatory organization to enforce such 
        organization's regulatory power; of the enforcement of 
        an order or decision, other than for monetary 
        sanctions, obtained in an action by the securities self 
        regulatory organization to enforce such organization's 
        regulatory power; or of any act taken by the securities 
        self regulatory organization to delist, delete, or 
        refuse to permit quotation of any stock that does not 
        meet applicable regulatory requirements;
          (22) under subsection (a) of any transfer that is not 
        avoidable under section 544 of this title and that is 
        not avoidable under section 549 of this title;
          (23) under subsection (a)(3), of the continuation of 
        any eviction, unlawful detainer action, or similar 
        proceeding by a lessor against a debtor involving 
        residential real property in which the debtor resides 
        as a tenant under a rental agreement and the debtor has 
        not paid rent to the lessor pursuant to the terms of 
        the lease agreement or applicable State law after the 
        commencement and during the course of the case;
          (24) under subsection (a)(3), of the commencement or 
        continuation of any eviction, unlawful detainer action, 
        or similar proceeding by a lessor against a debtor 
        involving residential real property in which the debtor 
        resides as a tenant under a rental agreement that has 
        terminated pursuant to the lease agreement or 
        applicable State law;
          (25) under subsection (a)(3), of any eviction, 
        unlawful detainer action, or similar proceeding, if the 
        debtor has previously filed within the last year and 
        failed to pay post-petition rent during the course of 
        that case;
          (26) under subsection (a)(3), of eviction actions 
        based on endangerment to property or person or the use 
        of illegal drugs;
          (27) under subsection (a) with respect to the 
        withholding of income pursuant to an order as specified 
        in section 466(b) of the Social Security Act (42 U.S.C. 
        666(b));
          (28) under subsection (a) with respect to--
                  (A) the withholding, suspension, or 
                restriction of drivers' licenses, professional 
                and occupational licenses, and recreational 
                licenses pursuant to State law, as specified in 
                section 466(a)(16) of the Social Security Act 
                (42 U.S.C. 666(a)(16)) or with respect to the 
                reporting of overdue support owed by an absent 
                parent to any consumer reporting agency as 
                specified in section 466(a)(7) of the Social 
                Security Act (42 U.S.C. 666(a)(7));
                  (B) the interception of tax refunds, as 
                specified in sections 464 and 466(a)(3) of the 
                Social Security Act (42 U.S.C. 664 and 
                666(a)(3)); or
                  (C) the enforcement of medical obligations as 
                specified under title IV of the Social Security 
                Act (42 U.S.C. 601 et seq.);
          (29) under subsection (a), of withholding of income 
        from a debtor's wages and collection of amounts 
        withheld, pursuant to the debtor's agreement 
        authorizing that withholding and collection for the 
        benefit of a pension, profit-sharing, stock bonus, or 
        other plan established under section 401, 403, 408, 
        408A, 414, 457, or 501(a) of the Internal Revenue Code 
        of 1986 that is sponsored by the employer of the 
        debtor, or an affiliate, successor, or predecessor of 
        such employer--
                  (A) to the extent that the amounts withheld 
                and collected are used solely for payments 
                relating to a loan from a plan that satisfies 
                the requirements of section 408(b)(1) of the 
                Employee Retirement Income Security Act of 1974 
                or is subject to section 72(p) of the Internal 
                Revenue Code of 1986; or
                  (B) in the case of a loan from a thrift 
                savings plan described in subchapter III of 
                title 5, that satisfies the requirements of 
                section 8433(g) of such title;
          (30) under subsection (a), until a prepetition 
        default is cured fully in a case under chapter 13 of 
        this title by actual payment of all arrears as required 
        by the plan, of the postponement, continuation or other 
        similar delay of a prepetition foreclosure proceeding 
        or sale in accordance with applicable nonbankruptcy 
        law, but nothing herein shall imply that 
suchpostponement, continuation or other similar delay is a violation of 
the stay under subsection (a);
          (31) under subsection (a) of the setoff of an income 
        tax refund, by a governmental unit, in respect of a 
        taxable period which ended before the order for relief 
        against an income tax liability for a taxable period 
        which also ended before the order for relief, unless--
                  (A) prior to such setoff, an action to 
                determine the amount or legality of such tax 
                liability under section 505(a) was commenced; 
                or
                  (B) where the setoff of an income tax refund 
                is not permitted because of a pending action to 
                determine the amount or legality of a tax 
                liability, the governmental unit may hold the 
                refund pending the resolution of the action; or
          (32) under subsection (a), of the setoff by a master 
        netting agreement participant of a mutual debt and 
        claim under or in connection with 1 or more master 
        netting agreements or any contract or agreement subject 
        to such agreements that constitutes the setoff of a 
        claim against the debtor for any payment or other 
        transfer of property due from the debtor under or in 
        connection with such agreements or any contract or 
        agreement subject to such agreements against any 
        payment due to the debtor from such master netting 
        agreement participant under or in connection with such 
        agreements or any contract or agreement subject to such 
        agreements or against cash, securities, or other 
        property held by, pledged or and under the control of, 
        or due from such master netting agreement participant 
        to margin, guarantee, secure, or settle such agreements 
        or any contract or agreement subject to such 
        agreements, to the extent such participant is eligible 
        to exercise such offset rights under paragraph (6), 
        (7), or (17) for each individual contract covered by 
        the master netting agreement in issue.
The provisions of paragraphs (12) and (13) of this subsection 
shall apply with respect to any such petition filed on or 
before December 31, 1989. Paragraph (29) does not apply to any 
amount owed to a plan referred to in that paragraph that is 
incurred under a loan made during the 1-year period preceding 
the filing of a petition. Nothing in paragraph (29) may be 
construed to provide that any loan made under a governmental 
plan under section 414(d), or a contract or account under 
section 403(b), of the Internal Revenue Code of 1986 
constitutes a claim or a debt under this title.
  (c) Except as provided in subsections (d), [(e), and (f)] 
(e), (f), and (h) of this section--
          (1) the stay of an act against property of the estate 
        under subsection (a) of this section continues until 
        such property is no longer property of the estate; 
        [and]
          (2) the stay of any other act under subsection (a) of 
        this section continues until the earliest of--
                  (A) the time the case is closed;
                  (B) the time the case is dismissed; or
                  (C) if the case is a case under chapter 7 of 
                this title concerning an individual or a case 
                under chapter 9, 11, 12, or 13 of this title, 
                the time a discharge is granted or denied[.];
          (3) If a single or joint case is filed by or against 
        an individual debtor under chapter 7, 11, or 13 (other 
        than a case refiled under a chapter other than chapter 
        7 after dismisssal under section 707(b) of this title), 
        and if a single or joint case of the debtor was pending 
        within the previous 1-year period but was dismissed, 
        the stay under subsection (a) with respect to any 
        action taken with respect to a debt or property 
        securing such debt or with respect to any lease will 
        terminate with respect to the debtor on the 30th day 
        after the filing of the later case. Upon motion by a 
        party in interest for continuation of the automatic 
        stay and upon notice and a hearing, the court may 
        extend the stay in particular cases as to any or all 
        creditors (subject to such conditions or limitations as 
        the court may then impose) after notice and a hearing 
        completed before the expiration of the 30-day period 
        only if the party in interest demonstrates that the 
        filing of the later case is in good faith as to the 
        creditors to be stayed. A case is presumptively filed 
        not in good faith (but such presumption may be rebutted 
        by clear and convincing evidence to the contrary)--
                  (A) as to all creditors if--
                          (i) more than 1 previous case under 
                        any of chapters 7, 11, or 13 in which 
                        the individual was a debtor was pending 
                        within such 1-year period;
                          (ii) a previous case under any of 
                        chapters 7, 11, or 13 in which the 
                        individual was a debtor was dismissed 
                        within such 1-year period, after the 
                        debtor failed to file or amend the 
                        petition or other documents as required 
                        by this title or the court without 
                        substantial excuse (but mere 
                        inadvertence or negligence shall not be 
                        substantial excuse unless the dismissal 
                        was caused by the negligence of the 
                        debtor's attorney), failed to provide 
                        adequate protection as ordered by the 
                        court, or failed to perform the terms 
                        of a plan confirmed by the court; or
                          (iii) there has not been a 
                        substantial change in the financial or 
                        personal affairs of the debtor since 
                        the dismissal of the next most previous 
                        case under any of chapter 7, 11, or 13 
                        of this title, or there is not any 
                        other reason to conclude that the later 
                        case will be concluded, if a case under 
                        chapter 7 of this title, with a 
                        discharge, and if a chapter 11 or 13 
                        case, a confirmed plan which will be 
                        fully performed;
                  (B) as to any creditor that commenced an 
                action under subsection (d) in a previous case 
                in which the individual was a debtor if, as of 
                the date of dismissal of such case, that action 
                was still pending or had been resolved by 
                terminating, conditioning, or limiting the stay 
                as to actions of such creditor.
          (4) If a single or joint case is filed by or against 
        an individual debtor under this title (other than a 
        case refiled under a chapter other than chapter 7 after 
        a dismissal under section 707(b) of this title), and if 
        2 or more single or joint cases of the debtor were 
        pending within the previous year but were dismissed, 
        the stay under subsection (a) will not go into effect 
        upon the filing of the later case. On request of a 
        party in interest, thecourt shall promptly enter an 
order confirming that no stay is in effect. If a party in interest 
requests within 30 days of the filing of the later case, the court may 
order the stay to take effect in the case as to any or all creditors 
(subject to such conditions or limitations as the court may impose), 
after notice and hearing, only if the party in interest demonstrates 
that the filing of the later case is in good faith as to the creditors 
to be stayed. A stay imposed pursuant to the preceding sentence will be 
effective on the date of entry of the order allowing the stay to go 
into effect. A case is presumptively not filed in good faith (but such 
presumption may be rebutted by clear and convincing evidence to the 
contrary)--
                  (A) as to all creditors if--
                          (i) 2 or more previous cases under 
                        this title in which the individual was 
                        a debtor were pending within the 1-year 
                        period;
                          (ii) a previous case under this title 
                        in which the individual was a debtor 
                        was dismissed within the time period 
                        stated in this paragraph after the 
                        debtor failed to file or amend the 
                        petition or other documents as required 
                        by this title or the court without 
                        substantial excuse (but mere 
                        inadvertence or negligence shall not be 
                        substantial excuse unless the dismissal 
                        was caused by the negligence of the 
                        debtor's attorney), failed to provide 
                        adequate protection as ordered by the 
                        court, or failed to perform the terms 
                        of a plan confirmed by the court; or
                          (iii) there has not been a 
                        substantial change in the financial or 
                        personal affairs of the debtor since 
                        the dismissal of the next most previous 
                        case under this title, or there is not 
                        any other reason to conclude that the 
                        later case will be concluded, if a case 
                        under chapter 7, with a discharge, and 
                        if a case under chapter 11 or 13, with 
                        a confirmed plan that will be fully 
                        performed; or
                  (B) as to any creditor that commenced an 
                action under subsection (d) in a previous case 
                in which the individual was a debtor if, as of 
                the date of dismissal of such case, such action 
                was still pending or had been resolved by 
                terminating, conditioning, or limiting the stay 
                as to action of such creditor.
  (d) On request of a party in interest and after notice and a 
hearing, the court shall grant relief from the stay provided 
under subsection (a) of this section, such as by terminating, 
annulling, modifying, or conditioning such stay--
          (1)  * * *
          (2) with respect to a stay of an act against property 
        under subsection (a) of this section, if--
                  (A) the debtor does not have an equity in 
                such property; and
                  (B) such property is not necessary to an 
                effective reorganization; [or]
          (3) with respect to a stay of an act against single 
        asset real estate under subsection (a), by a creditor 
        whose claim is secured by an interest in such real 
        estate, unless, not later than the date that is 90 days 
        after the entry of the order for relief (or such later 
        date as the court may determine for cause by order 
        entered within that 90-day period) or 30 days after the 
        court determines that the debtor is subject to this 
        paragraph, whichever is later--
                  (A) the debtor has filed a plan of 
                reorganization that has a reasonable 
                possibility of being confirmed within a 
                reasonable time; or
                  [(B) the debtor has commenced monthly 
                payments to each creditor whose claim is 
                secured by such real estate (other than a claim 
                secured by a judgment lien or by an unmatured 
                statutory lien), which payments are in an 
                amount equal to interest at a current fair 
                market rate on the value of the creditor's 
                interest in the real estate.]
                  (B) the debtor has commenced monthly payments 
                (which payments may, in the debtor's sole 
                discretion, notwithstanding section 363(c)(2) 
                of this title, be made from rents or other 
                income generated before or after the 
                commencement of the case by or from the 
                property) to each creditor whose claim is 
                secured by such real estate (other than a claim 
                secured by a judgment lien or by an unmatured 
                statutory lien), which payments are in an 
                amount equal to interest at the then-applicable 
                nondefault contract rate of interest on the 
                value of the creditor's interest in the real 
                estate; or
          (4) with respect to a stay of an act against real 
        property under subsection (a), by a creditor whose 
        claim is secured by an interest in such real estate, if 
        the court finds that the filing of the bankruptcy 
        petition was part of a scheme to delay, hinder, and 
        defraud creditors that involved either--
                  (A) transfer of all or part ownership of, or 
                other interest in, the real property without 
                the consent of the secured creditor or court 
                approval; or
                  (B) multiple bankruptcy filings affecting the 
                real property.
        If recorded in compliance with applicable State laws 
        governing notices of interests or liens in real 
        property, an order entered pursuant to this subsection 
        shall be binding in any other case under this title 
        purporting to affect the real property filed not later 
        than 2 years after that recording, except that a debtor 
        in a subsequent case may move for relief from such 
        order based upon changed circumstances or for good 
        cause shown, after notice and a hearing. Any Federal, 
        State, or local governmental unit which accepts notices 
        of interests or liens in real property shall accept any 
        certified copy of an order described in this subsection 
        for indexing and recording.
  (e)(1) Thirty days after a request under subsection (d) of 
this section for relief from the stay of any act against 
property of the estate under subsection (a) of this section, 
such stay is terminated with respect to the party in interest 
making such request, unless the court, after notice and a 
hearing, orders such stay continued in effect pending the 
conclusion of, or as a result of, a final hearing and 
determination under subsection (d) of this section. A hearing 
under this subsection may be a preliminary hearing, or may be 
consolidated with the final hearing under subsection (d) of 
thissection. The court shall order such stay continued in 
effect pending the conclusion of the final hearing under subsection (d) 
of this section if there is a reasonable likelihood that the party 
opposing relief from such stay will prevail at the conclusion of such 
final hearing. If the hearing under this subsection is a preliminary 
hearing, then such final hearing shall be concluded not later than 
thirty days after the conclusion of such preliminary hearing, unless 
the 30-day period is extended with the consent of the parties in 
interest or for a specific time which the court finds is required by 
compelling circumstances.
  (2) Notwithstanding paragraph (1), in the case of an 
individual filing under chapter 7, 11, or 13, the stay under 
subsection (a) shall terminate on the date that is 60 days 
after a request is made by a party in interest under subsection 
(d), unless--
          (A) a final decision is rendered by the court during 
        the 60-day period beginning on the date of the request; 
        or
          (B) that 60-day period is extended--
                  (i) by agreement of all parties in interest; 
                or
                  (ii) by the court for such specific period of 
                time as the court finds is required by for good 
                cause as described in findings made by the 
                court.

           *       *       *       *       *       *       *

  (h) In an individual case pursuant to chapter 7, 11, or 13 
the stay provided by subsection (a) is terminated with respect 
to personal property of the estate or of the debtor securing in 
whole or in part a claim, or subject to an unexpired lease, and 
such personal property shall no longer be property of the 
estate if the debtor fails within the applicable time set by 
section 521(a)(2) of this title--
          (1) to file timely any statement of intention 
        required under section 521(a)(2) of this title with 
        respect to that property or to indicate therein that 
        the debtor will either surrender the property or retain 
        it and, if retaining it, either redeem the property 
        pursuant to section 722 of this title, reaffirm the 
        debt it secures pursuant to section 524(c) of this 
        title, or assume the unexpired lease pursuant to 
        section 365(p) of this title if the trustee does not do 
        so, as applicable; or
          (2) to take timely the action specified in that 
        statement of intention, as it may be amended before 
        expiration of the period for taking action, unless the 
        statement of intention specifies reaffirmation and the 
        creditor refuses to reaffirm on the original contract 
        terms;
unless the court determines on the motion of the trustee filed 
before the expiration of the applicable time set by section 
521(a)(2), and after notice and a hearing, that such property 
is of consequential value or benefit to the estate, orders 
appropriate adequate protection of the creditor's interest, and 
orders the debtor to deliver any collateral in the debtor's 
possession to the trustee. If the court does not so determine 
an order, the stay shall terminate upon the conclusion of the 
proceeding on the motion.
  [(h) An] (i)(1) Except as provided in paragraph (2), an 
individual injured by any willful violation of a stay provided 
by this section shall recover actual damages, including costs 
and attorneys' fees, and, in appropriate circumstances, may 
recover punitive damages.
  (2) If such violation is based on an action taken by an 
entity in the good-faith belief that subsection (h) applies to 
the debtor, then recovery under paragraph (1) against such 
entity shall be limited to actual damages.
  (j) If one case commenced under chapter 7, 11, or 13 of this 
title is dismissed due to the creation of a debt repayment plan 
administered by a credit counseling agency approved pursuant to 
section 111 of this title, then for purposes of section 
362(c)(3) of this title the subsequent case commenced under any 
such chapter shall not be presumed to be filed not in good 
faith.
  (k)(1) Except as provided in paragraph (2) of this 
subsection, the provisions of subsection (a) of this section 
shall not apply in a case in which the debtor--
          (A) is a debtor in a case under this title pending at 
        the time the petition is filed;
          (B) was a debtor in a case under this title which was 
        dismissed for any reason by an order that became final 
        in the 2-year period ending on the date of the order 
        for relief entered with respect to the petition;
          (C) was a debtor in a case under this title in which 
        a chapter 11, 12, or 13 plan was confirmed in the 2-
        year period ending on the date of the order for relief 
        entered with respect to the petition; or
          (D) is an entity that has succeeded to substantially 
        all of the assets or business of a debtor described in 
        subparagraph (A), (B), or (C).
  (2) This subsection shall not apply--
          (A) to a case initiated by an involuntary petition 
        filed by a creditor that is not an insider or affiliate 
        of the debtor; or
          (B) after such time as the debtor, after notice and a 
        hearing, demonstrates by a preponderance of the 
        evidence, that the filing of such petition resulted 
        from circumstances beyond the control of the debtor and 
        not foreseeable at the time the earlier case was filed; 
        and that it is more likely than not that the court will 
        confirm a plan, other than a liquidating plan, within a 
        reasonable time.
  (l) The exercise of rights not subject to the stay arising 
under subsection (a) pursuant to paragraph (6), (7), or (17), 
or (19) of subsection (b) shall not be stayed by any order of a 
court or administrative agency in any proceeding under this 
title.

Sec. 363. Use, sale, or lease of property

  (a)  * * *

           *       *       *       *       *       *       *

  (d) The trustee may use, sell, or lease property under 
subsection (b) or (c) of this section [only to the extent not 
inconsistent with any relief granted under section 362(c), 
362(d), 362(e), or 362(f) of this title.] only--
          (1) in accordance with applicable nonbankruptcy law 
        that governs the transfer of property by a corporation 
        or trust that is not a moneyed, business, or commercial 
        corporation or trust; and
          (2) to the extent not inconsistent with any relief 
        granted under subsection (c), (d), (e), or (f) of 
        section 362 of this title.

           *       *       *       *       *       *       *

Sec. 365. Executory contracts and unexpired leases

  (a)  * * *
  (b)(1) If there has been a default in an executory contract 
or unexpired lease of the debtor, the trustee may not assume 
such contract or lease unless, at the time of assumption of 
such contract or lease, the trustee--
          (A) cures, or provides adequate assurance that the 
        trustee will promptly cure, such default[;] other than 
        a default that is a breach of a provision relating to--
                  (i) the satisfaction of any provision (other 
                than a penalty rate or penalty provision) 
                relating to a default arising from any failure 
                to perform nonmonetary obligations under an 
                unexpired lease of real property (excluding 
                executory contracts that transfer a right or 
                interest under a filed or issued patent, 
                copyright, trademark, trade dress, or trade 
                secret), if it is impossible for the trustee to 
                cure such default by performing nonmonetary 
                acts at and after the time of assumption; or
                  (ii) the satisfaction of any provision (other 
                than a penalty rate or penalty provision) 
                relating to a default arising from any failure 
                to perform nonmonetary obligations under an 
                executory contract, if it is impossible for the 
                trustee to cure such default by performing 
                nonmonetary acts at and after the time of 
                assumption and if the court determines, based 
                on the equities of the case, that this 
                subparagraph should not apply with respect to 
                such default;

           *       *       *       *       *       *       *

  (2) Paragraph (1) of this subsection does not apply to a 
default that is a breach of a provision relating to--
          (A)  * * *

           *       *       *       *       *       *       *

          [(D) the satisfaction of any penalty rate or 
        provision relating to a default arising from any 
        failure by the debtor to perform nonmonetary 
        obligations under the executory contract or unexpired 
        lease.]
          (D) the satisfaction of any penalty rate or penalty 
        provision relating to a default arising from a failure 
        to perform nonmonetary obligations under an executory 
        contract (excluding executory contracts that transfer a 
        right or interest under a filed or issued patent, 
        copyright, trademark, trade dress, or trade secret) or 
        under an unexpired lease of real or personal property.

           *       *       *       *       *       *       *

  [(c) The trustee may not assume or assign any executory 
contract or unexpired lease of the debtor, whether or not such 
contract or lease prohibits or restricts assignment of rights 
or delegation of duties, if--
          [(1)(A) applicable law excuses a party, other than 
        the debtor, to such contract or lease from accepting 
        performance from or rendering performance to an entity 
        other than the debtor or the debtor in possession, 
        whether or not such contract or lease prohibits or 
        restricts assignment of rights or delegation of duties; 
        and
          [(B) such party does not consent to such assumption 
        or assignment; or
          [(2) such contract is a contract to make a loan, or 
        extend other debt financing or financial 
        accommodations, to or for the benefit of the debtor, or 
        to issue a security of the debtor;
          [(3) such lease is of nonresidential real property 
        and has been terminated under applicable nonbankruptcy 
        law prior to the order for relief; or
          [(4) such lease is of nonresidential real property 
        under which the debtor is the lessee of an aircraft 
        terminal or aircraft gate at an airport at which the 
        debtor is the lessee under one or more additional 
        nonresidential leases of an aircraft terminal or 
        aircraft gate and the trustee, in connection with such 
        assumption or assignment, does not assume all such 
        leases or does not assume and assign all of such leases 
        to the same person, except that the trustee may assume 
        or assign less than all of such leases with the airport 
        operator's written consent.]
  (c)(1) The trustee may not assume or assign an executory 
contract or unexpired lease of the debtor, whether or not the 
contract or lease prohibits or restricts assignment of rights 
or delegation of duties, if--
          (A)(i) applicable law excuses a party to the contract 
        or lease from accepting performance from or rendering 
        performance to an assignee of the contract or lease, 
        whether or not the contract or lease prohibits or 
        restricts assignment of rights or delegation of duties; 
        and
          (ii) the party does not consent to the assumption or 
        assignment; or
          (B) the contract is a contract to make a loan, or 
        extend other debt financing or financial 
        accommodations, to or for the benefit of the debtor, or 
        to issue a security of the debtor.
  (2) Notwithstanding paragraph (1)(A) and applicable 
nonbankruptcy law, in a case under chapter 11 of this title, a 
trustee in a case in which a debtor is a corporation, or a 
debtor in possession, may assume an executory contract or 
unexpired lease of the debtor, whether or not the contract or 
lease prohibits or restricts assignment of rights or delegation 
of duties.
  (3) The trustee may not assume or assign an unexpired lease 
of the debtor of nonresidential real property, whether or not 
the contract or lease prohibits or restricts assignment of 
rights or delegation of duties, if the lease has been 
terminated under applicable nonbankruptcy law before the order 
for relief.
  (d)(1) * * *

           *       *       *       *       *       *       *

  [(4) Notwithstanding paragraphs (1) and (2), in a case under 
any chapter of this title, if the trustee does not assume or 
reject an unexpired lease of nonresidential real property under 
which the debtor is the lessee within 60 days after the date of 
the order for relief, or within such additional time as the 
court, for cause, within such 60-day period, fixes, then such 
lease is deemed rejected, andthe trustee shall immediately 
surrender such nonresidential real property to the lessor.]
  (4)(A) Subject to subparagraph (B), in any case under any 
chapter of this title, an unexpired lease of nonresidential 
real property under which the debtor is the lessee shall be 
deemed rejected, and the trustee shall immediately surrender 
such property to the lessor, if the trustee does not assume or 
reject the unexpired lease by the earlier of--
          (i) the date that is 180 days after the date of the 
        order for relief; or
          (ii) the date of the entry of an order confirming a 
        plan.
  (B)(i) The court may extend the period determined under 
subparagraph (A) for 120 days upon motion of the trustee or the 
lessor for cause.
  (ii) If the court grants an extension under clause (i), the 
court may grant a subsequent extension only upon prior written 
consent of the lessor.
  [(5) Notwithstanding paragraphs (1) and (4) of this 
subsection, in a case under any chapter of this title, if the 
trustee does not assume or reject an unexpired lease of 
nonresidential real property under which the debtor is an 
affected air carrier that is the lessee of an aircraft terminal 
or aircraft gate before the occurrence of a termination event, 
then (unless the court orders the trustee to assume such 
unexpired leases within 5 days after the termination event), at 
the option of the airport operator, such lease is deemed 
rejected 5 days after the occurrence of a termination event and 
the trustee shall immediately surrender possession of the 
premises to the airport operator; except that the lease shall 
not be deemed to be rejected unless the airport operator first 
waives the right to damages related to the rejection. In the 
event that the lease is deemed to be rejected under this 
paragraph, the airport operator shall provide the affected air 
carrier adequate opportunity after the surrender of the 
premises to remove the fixtures and equipment installed by the 
affected air carrier.
  [(6) For the purpose of paragraph (5) of this subsection and 
paragraph (f)(1) of this section, the occurrence of a 
termination event means, with respect to a debtor which is an 
affected air carrier that is the lessee of an aircraft terminal 
or aircraft gate--
          [(A) the entry under section 301 or 302 of this title 
        of an order for relief under chapter 7 of this title;
          [(B) the conversion of a case under any chapter of 
        this title to a case under chapter 7 of this title; or
          [(C) the granting of relief from the stay provided 
        under section 362(a) of this title with respect to 
        aircraft, aircraft engines, propellers, appliances, or 
        spare parts, as defined in section 40102(a) of title 
        49, except for property of the debtor found by the 
        court not to be necessary to an effective 
        reorganization.
  [(7) Any order entered by the court pursuant to paragraph (4) 
extending the period within which the trustee of an affected 
air carrier must assume or reject an unexpired lease of 
nonresidential real property shall be without prejudice to--
          [(A) the right of the trustee to seek further 
        extensions within such additional time period granted 
        by the court pursuant to paragraph (4); and
          [(B) the right of any lessor or any other party in 
        interest to request, at any time, a shortening or 
        termination of the period within which the trustee must 
        assume or reject an unexpired lease of nonresidential 
        real property.
  [(8) The burden of proof for establishing cause for an 
extension by an affected air carrier under paragraph (4) or the 
maintenance of a previously granted extension under paragraph 
(7)(A) and (B) shall at all times remain with the trustee.
  [(9) For purposes of determining cause under paragraph (7) 
with respect to an unexpired lease of nonresidential real 
property between the debtor that is an affected air carrier and 
an airport operator under which such debtor is the lessee of an 
airport terminal or an airport gate, the court shall consider, 
among other relevant factors, whether substantial harm will 
result to the airport operator or airline passengers as a 
result of the extension or the maintenance of a previously 
granted extension. In making the determination of substantial 
harm, the court shall consider, among other relevant factors, 
the level of actual use of the terminals or gates which are the 
subject of the lease, the public interest in actual use of such 
terminals or gates, the existence of competing demands for the 
use of such terminals or gates, the effect of the court's 
extension or termination of the period of time to assume or 
reject the lease on such debtor's ability to successfully 
reorganize under chapter 11 of this title, and whether the 
trustee of the affected air carrier is capable of continuing to 
comply with its obligations under section 365(d)(3) of this 
title.]
  [(10)] (5) The trustee shall timely perform all of the 
obligations of the debtor, except those specified in section 
365(b)(2), first arising from or after 60 days after the order 
for relief in a case under chapter 11 of this title under an 
unexpired lease of personal property (other than personal 
property leased to an individual primarily for personal, 
family, or household purposes), until such lease is assumed or 
rejected notwithstanding section 503(b)(1) of this title, 
unless the court, after notice and a hearing and based on the 
equities of the case, orders otherwise with respect to the 
obligations or timely performance thereof. This subsection 
shall not be deemed to affect the trustee's obligations under 
the provisions of subsection (b) or (f). Acceptance of any such 
performance does not constitute waiver or relinquishment of the 
lessor's rights under such lease or under this title.
  [(e)(1) Notwithstanding a provision in an executory contract 
or unexpired lease, or in applicable law, an executory contract 
or unexpired lease of the debtor may not be terminated or 
modified, and any right or obligation under such contract or 
lease may not be terminated or modified, at any time after the 
commencement of the case solely because of a provision in such 
contract or lease that is conditioned on--
          [(A) the insolvency or financial condition of the 
        debtor at any time before the closing of the case;
          [(B) the commencement of a case under this title; or
          [(C) the appointment of or taking possession by a 
        trustee in a case under this title or a custodian 
        before such commencement.]
  (e)(1) Notwithstanding a provision in an executory contract 
or unexpired lease, or in applicable law, an executory contract 
or unexpired lease of the debtor may not be terminated or 
modified, and any right or obligation under such contract or 
lease may not be terminated or modified, at any time after the 
commencement of the case solely because of a provision in such 
contract or lease that is conditioned on--
          (A) the insolvency or financial condition of the 
        debtor at any time before the closing of the case;
          (B) the commencement of a case under this title; or
          (C) the appointment of or taking possession by a 
        trustee in a case under this title or a custodian 
        before such commencement.

           *       *       *       *       *       *       *

           *       *       *       *       *       *       *

  (f)(1) Except as provided in subsection (c) of this section, 
notwithstanding a provision in an executory contract or 
unexpired lease of the debtor, or in applicable law, that 
prohibits, restricts, or conditions the assignment of such 
contract or lease, the trustee may assign such contract or 
lease under paragraph (2) of this subsection[; except that the 
trustee may not assign an unexpired lease of nonresidential 
real property under which the debtor is an affected air carrier 
that is the lessee of an aircraft terminal or aircraft gate if 
there has occurred a termination event].

           *       *       *       *       *       *       *

  (p)(1) If a lease of personal property is rejected or not 
timely assumed by the trustee under subsection (d), the leased 
property is no longer property of the estate and the stay under 
section 362(a) of this title is automatically terminated.
  (2) In the case of an individual under chapter 7, the debtor 
may notify the creditor in writing that the debtor desires to 
assume the lease. Upon being so notified, the creditor may, at 
its option, notify the debtor that it is willing to have the 
lease assumed by the debtor and may, at its option, condition 
such assumption on cure of any outstanding default on terms set 
by the contract. If within 30 days of the notice from the 
creditor the debtor notifies the lessor in writing that the 
lease is assumed, the liability under the lease will be assumed 
by the debtor and not by the estate. The stay under section 362 
of this title and the injunction under section 524(a) of this 
title shall not be violated by notification of the debtor and 
negotiation of cure under this subsection. Nothing in this 
paragraph shall require a debtor to assume a lease, or a 
creditor to permit assumption.
  (3) In a case under chapter 11 of this title in which the 
debtor is an individual and in a case under chapter 13 of this 
title, if the debtor is the lessee with respect to personal 
property and the lease is not assumed in the plan confirmed by 
the court, the lease is deemed rejected as of the conclusion of 
the hearing on confirmation. If the lease is rejected, the stay 
under section 362 of this title and any stay under section 1301 
is automatically terminated with respect to the property 
subject to the lease.

           *       *       *       *       *       *       *

            CHAPTER 5--CREDITORS, THE DEBTOR, AND THE ESTATE

                   SUBCHAPTER I--CREDITORS AND CLAIMS

Sec.
501.  Filing of proofs of claims or interests.
     * * * * * * *
511.  Rate of interest on tax claims.

               SUBCHAPTER II--DEBTOR'S DUTIES AND BENEFITS

521.  Debtor's duties.
     * * * * * * *
526.  Debt relief agency enforcement.

                       SUBCHAPTER III--THE ESTATE

541.  Property of the estate.
     * * * * * * *
[555.  Contractual right to liquidate a securities contract.]
[556.  Contractual right to liquidate a commodity contract or forward 
          contract.]
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.
     * * * * * * *
[559.  Contractual right to liquidate a repurchase agreement.]
[560.  Contractual right to terminate a swap agreement.]
559.  Contractual right to liquidate, terminate, or accelerate a 
          repurchase agreement.
560.  Contractual right to liquidate, terminate, or accelerate a swap 
          agreement.
561.  Contractual right to terminate, liquidate, accelerate, or offset 
          under a master netting agreement and across contracts.
562. Damage measure in connection with swap agreements, securities 
          contracts, forward contracts, commodity contracts, repurchase 
          agreements, or master netting agreements.

SUBCHAPTER I--CREDITORS AND CLAIMS

           *       *       *       *       *       *       *

Sec. 502. Allowance of claims or interests

  (a)  * * *
  (b) Except as provided in subsections (e)(2), (f), (g), (h) 
and (i) of this section, if such objection to a claim is made, 
the court, after notice and a hearing, shall determine the 
amount of such claim in lawful currency of the United States as 
of the date of the filing of the petition, and shall allow such 
claim in such amount, except to the extent that--
          (1)  * * *

           *       *       *       *       *       *       *

          (9) proof of such claim is not timely filed, except 
        to the extent tardily filed as permitted under 
        paragraph (1), (2), or (3) of section 726(a) of this 
        title or under the Federal Rules of Bankruptcy 
        Procedure, except that a claim of a governmental unit 
        shall be timely filed if it is filed before 180 days 
        after the date of the order for relief or such later 
        time as the Federal Rules of Bankruptcy Procedure may 
        provide[.], and except that in a case under chapter 13 
        of this title, a claim of a governmental unit for a tax 
        in respect of a return filed under section1308 of this 
title shall be timely if it is filed on or before 60 days after such 
return or returns were filed as required.

           *       *       *       *       *       *       *

  (g)(1) A claim arising from the rejection, under section 365 
of this title or under a plan under chapter 9, 11, 12, or 13 of 
this title, of an executory contract or unexpired lease of the 
debtor that has not been assumed shall be determined, and shall 
be allowed under subsection (a), (b), or (c) of this section or 
disallowed under subsection (d) or (e) of this section, the 
same as if such claim had arisen before the date of the filing 
of the petition.
  (2) A claim for damages calculated in accordance with section 
561 of this title shall be allowed under subsection (a), (b), 
or (c), or disallowed under subsection (d) or (e), as if such 
claim had arisen before the date of the filing of the petition.

           *       *       *       *       *       *       *

  (k)(1) The court, on the motion of the debtor and after a 
hearing, may reduce a claim filed under this section based 
wholly on unsecured consumer debts by not more than 20 percent, 
if the debtor can prove by clear and convincing evidence that 
the claim was filed by a creditor who unreasonably refused to 
negotiate a reasonable alternative repayment schedule proposed 
by an approved credit counseling agency acting on behalf of the 
debtor, and if--
          (A) such offer was made within the period beginning 
        60 days before the filing of the petition;
          (B) such offer provided for payment of at least 60 
        percent of the amount of the debt over a period not to 
        exceed the repayment period of the loan, or a 
        reasonable extension thereof; and
          (C) no part of the debt under the alternative 
        repayment schedule is nondischargeable, is entitled to 
        priority under section 507 of this title, or would be 
        paid a greater percentage in a chapter 13 proceeding 
        than offered by the debtor.
  (2) The debtor shall have the burden of proving that the 
proposed alternative repayment schedule was made in the 60-day 
period specified in subparagraph (A) and that the creditor 
unreasonably refused to consider the debtor's proposal.

           *       *       *       *       *       *       *

Sec. 503. Allowance of administrative expenses

  (a)  * * *
  (b) After notice and a hearing, there shall be allowed 
administrative expenses, other than claims allowed under 
section 502(f) of this title, including--
          (1)[(A) the actual, necessary costs and expenses of 
        preserving the estate, including wages, salaries, or 
        commissions for services rendered after the 
        commencement of the case;] (A) the actual, necessary 
        costs and expenses of preserving the estate, including 
        wages, salaries, or commissions for services rendered 
        after the commencement of the case, and wages and 
        benefits attributable to any period of time after 
        commencement of the case as a result of the debtor's 
        violation of Federal law, without regard to when the 
        original unlawful act occurred or to whether any 
        services were rendered;
          (B) any tax--
                  (i) incurred by the estate, whether secured 
                or unsecured, including property taxes for 
                which liability is in rem only, in personam or 
                both, except a tax of a kind specified in 
                section 507(a)(8) of this title; or

           *       *       *       *       *       *       *

          (5) reasonable compensation for services rendered by 
        an indenture trustee in making a substantial 
        contribution in a case under chapter 9 or 11 of this 
        title, based on the time, the nature, the extent, and 
        the value of such services, and the cost of comparable 
        services other than in a case under this title; [and]
          (6) the fees and mileage payable under chapter 119 of 
        title 28[.]; and
          (7) with respect to a nonresidential real property 
        lease previously assumed under section 365, and 
        subsequently rejected, a sum equal to all monetary 
        obligations due, excluding those arising from or 
        relating to a failure to operate or penalty provisions, 
        for the period of one year following the later of the 
        rejection date or date of actual turnover of the 
        premises, without reduction or setoff for any reason 
        whatsoever except for sums actually received or to be 
        received from a nondebtor; and the claim for remaining 
        sums due for the balance of the term of the lease shall 
        be a claim under section 502(b)(6).

           *       *       *       *       *       *       *

          (D) notwithstanding the requirements of subsection 
        (a) of this section, a governmental unit shall not be 
        required to file a request for the payment of a claim 
        described in subparagraph (B) or (C);

           *       *       *       *       *       *       *

          (4) reasonable compensation for professional services 
        rendered by an attorney or an accountant of an entity 
        whose expense is allowable under subparagraph (A), (B), 
        (C), (D), or (E) of paragraph (3) of this subsection, 
        based on the time, the nature, the extent, and the 
        value of such services, and the cost of comparable 
        services other than in a case under this title, and 
        reimbursement for actual, necessary expenses incurred 
        by such attorney or accountant;

           *       *       *       *       *       *       *

Sec. 504. Sharing of compensation

  (a)  * * *

           *       *       *       *       *       *       *

  (c) This section shall not apply with respect to sharing, or 
agreeing to share, compensation with a bona fide public service 
attorney referral program that operates in accordance with non-
Federal law regulating attorney referral services and with 
rules of professional responsibility applicable to attorney 
acceptance of referrals.

Sec. 505. Determination of tax liability

  (a)(1)  * * *
  (2) The court may not so determine--
          (A) the amount or legality of a tax, fine, penalty, 
        or addition to tax if such amount or legality was 
        contested before and adjudicated by a judicial or 
        administrative tribunal of competent jurisdiction 
        before the commencement of the case under this title; 
        [or]
          (B) any right of the estate to a tax refund, before 
        the earlier of--
                  (i) 120 days after the trustee properly 
                requests such refund from the governmental unit 
                from which such refund is claimed; or
                  (ii) a determination by such governmental 
                unit of such request[.]; or
          (C) the amount or legality of any amount arising in 
        connection with an ad valorem tax on real or personal 
        property of the estate, if the applicable period for 
        contesting or redetermining that amount under any law 
        (other than a bankruptcy law) has expired.
  (b) A trustee may request a determination of any unpaid 
liability of the estate for any tax incurred during the 
administration of the case by submitting a tax return for such 
tax and a request for such a determination to the governmental 
unit charged with responsibility for collection or 
determination of such tax. [Unless] If the request is made 
substantially in the manner designated by the governmental unit 
and unless such return is fraudulent, or contains a material 
misrepresentation, the estate, the trustee, the debtor, and any 
successor to the debtor are discharged from any liability for 
such tax--
          (1)  * * *

           *       *       *       *       *       *       *

Sec. 506. Determination of secured status

  (a) An allowed claim of a creditor secured by a lien on 
property in which the estate has an interest, or that is 
subject to setoff under section 553 of this title, is a secured 
claim to the extent of the value of such creditor's interest in 
the estate's interest in such property, or to the extent of the 
amount subject to setoff, as the case may be, and is an 
unsecured claim to the extent that the value of such creditor's 
interest or the amount so subject to setoff is less than the 
amount of such allowed claim. Such value shall be determined in 
light of the purpose of the valuation and of the proposed 
disposition or use of such property, and in conjunction with 
any hearing on such disposition or use or on a plan affecting 
such creditor's interest. In the case of an individual debtor 
under chapters 7 and 13, such value with respect to personal 
property securing an allowed claim shall be determined based on 
the replacement value of such property as of the date of filing 
the petition without deduction for costs of sale or marketing. 
With respect to property acquired for personal, family, or 
household purpose, replacement value shall mean the price a 
retail merchant would charge for property of that kind 
considering the age and condition of the property at the time 
value is determined.
  (b) To the extent that an allowed secured claim is secured by 
property the value of which, after any recovery under 
subsection (c) of this section, is greater than the amount of 
such claim, there shall be allowed to the holder of such claim, 
interest on such claim, and any reasonable fees, costs, or 
charges provided for under the agreement or State statute under 
which such claim arose.
  (c) The trustee may recover from property securing an allowed 
secured claim the reasonable, necessary costs and expenses of 
preserving, or disposing of, such property to the extent of any 
benefit to the holder of such claim, including the payment of 
all ad valorem property taxes in respect of the property.

           *       *       *       *       *       *       *

  (e) In an individual case under chapter 7, 11, 12, or 13--
          (1) subsection (a) shall not apply to an allowed 
        claim to the extent attributable in whole or in part to 
        the purchase price of personal property acquired by the 
        debtor within 5 years of the filing of the petition, 
        except for the purpose of applying paragraph (3) of 
        this subsection;
          (2) if such allowed claim attributable to the 
        purchase price is secured only by the personal property 
        so acquired, the value of the personal property and the 
        amount of the allowed secured claim shall be the sum of 
        the unpaid principal balance of the purchase price and 
        accrued and unpaid interest and charges at the contract 
        rate;
          (3) if such allowed claim attributable to the 
        purchase price is secured by the personal property so 
        acquired and other property, the value of the security 
        may be determined under subsection (a), but the value 
        of the security and the amount of the allowed secured 
        claim shall be not less than the unpaid principal 
        balance of the purchase price of the personal property 
        acquired and unpaid interest and charges at the 
        contract rate; and
          (4) in any subsequent case under this title that is 
        filed by or against the debtor in the 2-year period 
        beginning on the date the petition is filed in the 
        original case, the value of the personal property and 
        the amount of the allowed secured claim shall be deemed 
        to be not less than the amount provided under 
        paragraphs (2) and (3) less any payments actually 
        received.

Sec. 507. Priorities

  (a) The following expenses and claims have priority in the 
following order:
          (1) First, allowed claims for domestic support 
        obligations to be paid in the following order on the 
        condition that funds received under this paragraph by a 
        governmental unit in a case under this title be 
        applied:
                  (A) Claims that, as of the date of entry of 
                the order for relief, are owed directly to a 
                spouse, former spouse, or child of the debtor, 
                or the parent of such child, without regard to 
                whether the claim is filed by the spouse, 
                former spouse,child, or parent, or is filed by 
a governmental unit on behalf of that person.
                  (B) Claims that, as of the date of entry of 
                the order for relief, are assigned by a spouse, 
                former spouse, child of the debtor, or the 
                parent of that child to a governmental unit or 
                are owed directly to a governmental unit under 
                applicable nonbankruptcy law.
          [(1)] (2) [First] Second, administrative expenses 
        allowed under section 503(b) of this title, and any 
        fees and charges assessed against the estate under 
        chapter 123 of title 28.
          [(2)] (3) [Second] Third, unsecured claims allowed 
        under section 502(f) of this title.
          [(3)] (4) [Third] Fourth, allowed unsecured claims, 
        but only to the extent of $4,000 for each individual or 
        corporation, as the case may be, earned within 90 days 
        before the date of the filing of the petition or the 
        date of the cessation of the debtor's business, 
        whichever occurs first, for--
                  (A) wages, salaries, or commissions, 
                including vacation, severance, and sick leave 
                pay earned by an individual; or
                  (B) sales commissions earned by an individual 
                or by a corporation with only 1 employee, 
                acting as an independent contractor in the sale 
                of goods or services for the debtor in the 
                ordinary course of the debtor's business if, 
                and only if, during the 12 months preceding 
                that date, at least 75 percent of the amount 
                that the individual or corporation earned by 
                acting as an independent contractor in the sale 
                of goods or services was earned from the 
                debtor[;].
          [(4)] (5) [Fourth] Fifth, allowed unsecured claims 
        for contributions to an employee benefit plan--
                  (A) arising from services rendered within 180 
                days before the date of the filing of the 
                petition or the date of the cessation of the 
                debtor's business, whichever occurs first; but 
                only
                  (B) for each such plan, to the extent of--
                          (i) the number of employees covered 
                        by each such plan multiplied by $4,000; 
                        less
                          (ii) the aggregate amount paid to 
                        such employees under paragraph (3) of 
                        this subsection, plus the aggregate 
                        amount paid by the estate on behalf of 
                        such employees to any other employee 
                        benefit plan.
          [(5)] (6) [Fifth] Sixth, allowed unsecured claims of 
        persons--
                  (A) engaged in the production or raising of 
                grain, as defined in section 557(b) of this 
                title, against a debtor who owns or operates a 
                grain storage facility, as defined in section 
                557(b) of this title, for grain or the proceeds 
                of grain, or
                  (B) engaged as a United States fisherman 
                against a debtor who has acquired fish or fish 
                produce from a fisherman through a sale or 
                conversion, and who is engaged in operating a 
                fish produce storage or processing facility--
        but only to the extent of $4,000 for each such 
        individual.
          [(6)] (7) [Sixth] Seventh, allowed unsecured claims 
        of individuals, to the extent of $1,800 for each such 
        individual, arising from the deposit, before the 
        commencement of the case, of money in connection with 
        the purchase, lease, or rental of property, or the 
        purchase of services, for the personal, family, or 
        household use of such individuals, that were not 
        delivered or provided.
          [(7) Seventh, allowed claims for debts to a spouse, 
        former spouse, or child of the debtor, for alimony to, 
        maintenance for, or support of such spouse or child, in 
        connection with a separation agreement, divorce decree 
        or other order of a court of record, determination made 
        in accordance with State or territorial law by a 
        governmental unit, or property settlement agreement, 
        but not to the extent that such debt--
                  [(A) is assigned to another entity, 
                voluntarily, by operation of law, or otherwise; 
                or
                  [(B) includes a liability designated as 
                alimony, maintenance, or support, unless such 
                liability is actually in the nature of alimony, 
                maintenance or support.]
          (8) Eighth, allowed unsecured claims of governmental 
        units, only to the extent that such claims are for--
                  (A) a tax on or measured by income or gross 
                receipts--
                          (i) for a taxable year ending on or 
                        before the date of the filing of the 
                        petition for which a return, if 
                        required, is last due, including 
                        extensions, after three years before 
                        the date of the filing of the petition, 
                        plus any time, plus 6 months, during 
                        which the stay of proceedings was in 
                        effect in a prior case under this 
                        title;
                          [(ii) assessed within 240 days, plus 
                        any time plus 30 days during which an 
                        offer in compromise with respect to 
                        such tax that was made within 240 days 
                        after such assessment was pending, 
                        before the date of the filing of the 
                        petition; or]
                          (ii) assessed within 240 days before 
                        the date of the filing of the petition, 
                        exclusive of--
                                  (I) any time plus 30 days 
                                during which an offer in 
                                compromise with respect of such 
                                tax, was pending or in effect 
                                during such 240-day period;
                                  (II) any time plus 30 days 
                                during which an installment 
                                agreement with respect of such 
                                tax was pending or in effect 
                                during such 240-day period, up 
                                to 1 year; and
                                  (III) any time plus 6 months 
                                during which a stay of 
                                proceedings against collections 
                                was in effect in a prior case 
                                under this title during such 
                                240-day period.

           *       *       *       *       *       *       *

                  (B) a property tax [assessed] incurred before 
                the commencement of the case and last payable 
                without penalty after one year before the date 
                of the filing of the petition;

           *       *       *       *       *       *       *

          (10) Tenth, allowed claims for death or personal 
        injuries resulting from the operation of a motor 
        vehicle or vessel if such operation was unlawful 
        because the debtor was intoxicated from using alcohol, 
        a drug or another substance.

           *       *       *       *       *       *       *

Sec. 508. Effect of distribution other than under this title

  [(a) If a creditor receives, in a foreign proceeding, payment 
of, or a transfer of property on account of, a claim that is 
allowed under this title, such creditor may not receive any 
payment under this title on account of such claim until each of 
the other holders of claims on account of which such holders 
are entitled to share equally with such creditor under this 
title has received payment under this title equal in value to 
the consideration received by such creditor in such foreign 
proceeding.
  [(b)] If a creditor of a partnership debtor receives, from a 
general partner that is not a debtor in a case under chapter 7 
of this title, payment of, or a transfer of property on account 
of, a claim that is allowed under this title and that is not 
secured by a lien on property of such partner, such creditor 
may not receive any payment under this title on account of such 
claim until each of the other holders of claims on account of 
which such holders are entitled to share equally with such 
creditor under this title has received payment under this title 
equal in value to the consideration received by such creditor 
from such general partner.

           *       *       *       *       *       *       *

Sec. 511. Rate of interest on tax claims

  If any provision of this title requires the payment of 
interest on a tax claim or requires the payment of interest to 
enable a creditor to receive the present value of the allowed 
amount of a tax claim, the rate of interest shall be as 
follows:
          (1) In the case of ad valorem tax claims, whether 
        secured or unsecured, other unsecured tax claims where 
        interest is required to be paid under section 726(a)(5) 
        of this title, secured tax claims, and administrative 
        tax claims paid under section 503(b)(1) of this title, 
        the rate shall be determined under applicable 
        nonbankruptcy law.
          (2) In the case of all other tax claims, the minimum 
        rate of interest shall be the Federal short-term rate 
        rounded to the nearest full percent, determined under 
        section 1274(d) of the Internal Revenue Code of 1986, 
        plus 3 percentage points.
                  (A) In the case of claims for Federal income 
                taxes, such rate shall be subject to any 
                adjustment that may be required under section 
                6621(d) of the Internal Revenue Code of 1986.
                  (B) In the case of taxes paid under a 
                confirmed plan or reorganization, such rate 
                shall be determined as of the calendar month in 
                which the plan is confirmed.

              SUBCHAPTER II--DEBTOR'S DUTIES AND BENEFITS

Sec. 521. Debtor's duties

  (a) The debtor shall--
          [(1) file a list of creditors, and unless the court 
        orders otherwise, a schedule of assets and liabilities, 
        a schedule of current income and current expenditures, 
        and a statement of the debtor's financial affairs;]
          (1) file--
                  (A) a list of creditors; and
                  (B) unless the court orders otherwise--
                          (i) a schedule of assets and 
                        liabilities;
                          (ii) a schedule of current monthly 
                        income and current expenditures 
                        prepared in accordance with section 
                        707(b)(2);
                          (iii) a statement of the debtor's 
                        financial affairs and, if applicable, a 
                        certificate--
                                  (I) of an attorney whose name 
                                is on the petition as the 
                                attorney for the debtor or any 
                                bankruptcy petition preparer 
                                signing the petition pursuant 
                                to section 110(b)(1) of this 
                                title indicating that such 
                                attorney or bankruptcy petition 
                                preparer delivered to the 
                                debtor any notice required by 
                                section 342(b) of this title; 
                                or
                                  (II) if no attorney for the 
                                debtor is indicated and no 
                                bankruptcy petition preparer 
                                signed the petition, of the 
                                debtor that such notice was 
                                obtained and read by the 
                                debtor;
                          (iv) copies of any Federal tax 
                        returns, including any schedules or 
                        attachments, filed by the debtor for 
                        the 3-year period preceding the order 
                        for relief;
                          (v) copies of all payment advices or 
                        other evidence of payment, if any, 
                        received by the debtor from any 
                        employer of the debtor in the period 60 
                        days prior to the filing of the 
                        petition; and
                          (vi) a statement disclosing any 
                        reasonably anticipated increase in 
                        income or expenditures over the 12-
                        month period following the date of 
                        filing;
          (2) if an individual debtor's schedule of assets and 
        liabilities includes [consumer] debts which are secured 
        by property of the estate--
                  (A)  * * *
                  (B) within [forty-five days after the filing 
                of a notice of intent under this section] 30 
                days after the first date set for the meeting 
                of creditors under section 341(a) of this 
                title, or within such additional time as the 
                court, for cause, within such [forty-five day] 
                30-day period fixes, the debtor shall perform 
                his intention with respect to such property, as 
                specified by subparagraph (A) of this 
                paragraph; and
                  (C) nothing in subparagraphs (A) and (B) of 
                this paragraph shall alter the debtor's or the 
                trustee's rights with regard to such property 
                under this title except as provided in section 
                362(h) of this title;
          (3) if a trustee is serving in the case or an auditor 
        appointed pursuant to section 586 of title 28, United 
        States Code, cooperate with the trustee as necessary to 
        enable the trustee to perform the trustee's duties 
        under this title;
          (4) if a trustee is serving in the case or an auditor 
        appointed pursuant to section 586 of title 28, United 
        States Code, surrender to the trustee all property of 
        the estate and any recorded information, including 
        books, documents, records, and papers, relating to 
        property of the estate, whether or not immunity is 
        granted under section 344 of this title[, and];
          (5) appear at the hearing required under section 
        524(d) of this title[.]; and
          (6) in an individual case under chapter 7 of this 
        title, not retain possession of personal property as to 
        which a creditor has an allowed claim for the purchase 
        price secured in whole or in part by an interest in 
        that personal property unless, in the case of an 
        individual debtor, the debtor takes 1 of the following 
        actions within 45 days after the first meeting of 
        creditors under section 341(a)--
                  (A) enters into an agreement with the 
                creditor pursuant to section 524(c) of this 
                title with respect to the claim secured by such 
                property; or
                  (B) redeems such property from the security 
                interest pursuant to section 722 of this title.
        If the debtor fails to so act within the 45-day period, 
        the stay under section 362(a) of this title is 
        terminated with respect to the personal property of the 
        estate or of the debtor which is affected, such 
        property shall no longer be property of the estate, and 
        the creditor may take whatever action as to such 
        property as is permitted by applicable nonbankruptcy 
        law, unless the court determines on the motion of the 
        trustee brought before the expiration of such 45-day 
        period, and after notice and a hearing, that such 
        property is of consequential value or benefit to the 
        estate, orders appropriate adequate protection of the 
        creditor's interest, and orders the debtor to deliver 
        any collateral in the debtor's possession to the 
        trustee.
  (b)(1) Notwithstanding section 707(a) of this title, and 
subject to paragraph (2), if an individual debtor in a 
voluntary case under chapter 7 or 13 fails to file all of the 
information required under subsection (a)(1) within 45 days 
after the filing of the petition commencing the case, the case 
shall be automatically dismissed effective on the 46th day 
after the filing of the petition.
  (2) With respect to a case described in paragraph (1), any 
party in interest may request the court to enter an order 
dismissing the case. The court shall, if so requested, enter an 
order of dismissal not later than 5 days after such request.
  (3) Upon request of the debtor made within 45 days after the 
filing of the petition commencing a case described in paragraph 
(1), the court may allow the debtor an additional period not to 
exceed 45 days to file the information required under 
subsection (a)(1) if the court finds justification for 
extending the period for the filing.
  (c) If the debtor fails timely to take the action specified 
in subsection (a)(6) of this section, or in paragraphs (1) and 
(2) of section 362(h) of this title, with respect to property 
which a lessor or bailor owns and has leased, rented, or bailed 
to the debtor or as to which a creditor holds a security 
interest not otherwise voidable under section 522(f), 544, 545, 
547, 548, or 549 of this title, nothing in this title shall 
prevent or limit the operation of a provision in the underlying 
lease or agreement which has the effect of placing the debtor 
in default under such lease or agreement by reason of the 
occurrence, pendency, or existence of a proceeding under this 
title or the insolvency of the debtor. Nothing in this 
subsection shall be deemed to justify limiting such a provision 
in any other circumstance.
  (d) In addition to the requirements under subsection (a), an 
individual debtor shall file with the court--
          (1) a certificate from the credit counseling service 
        that provided the debtor services under section 109(h); 
        and
          (2) a copy of the debt repayment plan, if any, 
        developed under section 109(h) through the credit 
        counseling service referred to in paragraph (1).
  (e)(1) At any time, a creditor, in the case of an individual 
under chapter 7 or 13, may file with the court notice that the 
creditor requests the petition, schedules, and a statement of 
affairs filed by the debtor in the case and the court shall 
make those documents available to the creditor who requests 
those documents at a reasonable cost within 5 business days 
after such request.
  (2) At any time, a creditor in a case under chapter 13 may 
file with the court notice that the creditor requests the plan 
filed by the debtor in the case, and the court shall make such 
plan available to the creditor who requests such plan at a 
reasonable cost and not later than 5 days after such request.
  (f) An individual debtor in a case under chapter 7 or 13 
shall file with the court--
          (1) at the time filed with the taxing authority, all 
        tax returns, including any schedules or attachments, 
        with respect to the period from the commencement of the 
        case until such time as the case is closed;
          (2) at the time filed with the taxing authority, all 
        tax returns, including any schedules or attachments, 
        that were not filed with the taxing authority when the 
        schedules under subsection (a)(1) were filed with 
        respect to the period that is 3 years before the order 
        for relief;
          (3) any amendments to any of the tax returns, 
        including schedules or attachments, described in 
        paragraph (1) or (2); and
          (4) in a case under chapter 13, a statement subject 
        to the penalties of perjury by the debtor of the 
        debtor's current monthly income and expenditures in the 
        preceding tax year and current monthly income less 
        expenditures for the month preceding the statement 
        prepared in accordance with section 707(b)(2) that 
        shows how the amounts are calculated--
                  (A) beginning on the date that is the later 
                of 90 days after the close of the debtor's tax 
                year or 1 year after the order for relief, 
                unless a plan has been confirmed; and
                  (B) thereafter, on or before the date that is 
                45 days before each anniversary of the 
                confirmation of the plan until the case is 
                closed.
  (g)(1) A statement referred to in subsection (f)(4) shall 
disclose--
          (A) the amount and sources of income of the debtor;
          (B) the identity of any persons responsible with the 
        debtor for the support of any dependents of the debtor; 
        and
          (C) the identity of any persons who contributed, and 
        the amount contributed, to the household in which the 
        debtor resides.
  (2) The tax returns, amendments, and statement of income and 
expenditures described in paragraph (1) shall be available to 
the United States trustee, any bankruptcy administrator, any 
trustee, and any party in interest for inspection and copying, 
subject to the requirements of subsection (h).
  (h)(1) Not later than 30 days after the date of enactment of 
the Consumer Bankruptcy Reform Act of 1999, the Director of the 
Administrative Office of the United States Courts shall 
establish procedures for safeguarding the confidentiality of 
any tax information required to be provided under this section.
  (2) The procedures under paragraph (1) shall include 
reasonable restrictions on creditor access to tax information 
that is required to be provided under this section to verify 
creditor identity and to restrict use of the information except 
with respect to the case.
  (3) Not later than 1 year after the date of enactment of the 
Consumer Bankruptcy Reform Act of 1999, the Director of the 
Administrative Office of the United States Courts shall 
prepare, and submit to Congress a report that--
          (A) assesses the effectiveness of the procedures 
        under paragraph (1) to provide timely and sufficient 
        information to creditors concerning the case; and
          (B) if appropriate, includes proposed legislation--
                  (i) to further protect the confidentiality of 
                tax information or to make it better available 
                to creditors; and
                  (ii) to provide penalties for the improper 
                use by any person of the tax information 
                required to be provided under this section.
  (i) If requested by the United States trustee or a trustee 
serving in the case, the debtor provide a document that 
establishes the identity of the debtor, including a driver's 
license, passport, or other document that contains a photograph 
of the debtor and such other personal identifying information 
relating to the debtor that establishes the identity of the 
debtor.

Sec. 522. Exemptions

  (a)  * * *
  (b)(1) Notwithstanding section 541 of this title, an 
individual debtor may exempt from property of the estate the 
property listed in either paragraph [(1)] (2) or, in the 
alternative, paragraph [(2)] (3) of this subsection. In joint 
cases filed under section 302 of this title and individual 
cases filed under section 301 or 303 of this title by or 
against debtors who are husband and wife, and whose estates are 
ordered to be jointly administered under Rule 1015(b) of the 
Federal Rules of Bankruptcy Procedure, one debtor may not elect 
to exempt property listed in paragraph [(1)] (2) and the other 
debtor elect to exempt property listed in paragraph [(2)] (3) 
of this subsection. If the parties cannot agree on the 
alternative to be elected, they shall be deemed to elect 
paragraph [(1)] (2), where such election is permitted under the 
law of the jurisdiction where the case is filed. [Such property 
is--
          [(1) property that is specified under subsection (d) 
        of this section, unless the State law that is 
        applicable to the debtor under paragraph (2)(A) of this 
        subsection specifically does not so authorize; or, in 
        the alternative,]
  (2) Property listed in this paragraph is property that is 
specified under subsection (d), unless the State law that is 
applicable to the debtor under paragraph (3)(A) specifically 
does not so authorize.
  [(2)(A)] (3) Property listed in this paragraph is--
          (A) subject to subsections (o) and (p), any property 
        that is exempt under Federal law, other than subsection 
        (d) of this section, or State or local law that is 
        applicable on the date of the filing of the petition at 
        the place in which the debtor's domicile has been 
        located for the [180] 730 days immediately preceding 
        the date of the filing of the petition[, or for a 
        longer portion of such 180-day period than in any other 
        place] or if the debtor's domicile has not been located 
        at a single State for such 730-day period, the place in 
        which the debtor's domicile was located for 180 days 
        immediately preceding the 730-day period or for a 
        longer portion of such 180-day period than in any other 
        place; [and]
          (B) any interest in property in which the debtor had, 
        immediately before the commencement of the case, an 
        interest as a tenant by the entirety or joint tenant to 
        the extent that such interest as a tenant by the 
        entirety or joint tenant is exempt from process under 
        applicable nonbankruptcy law[.];
          (C) except as provided in paragraph (n), funds placed 
        in an education individual retirement account (as 
        defined in section 530(b)(1) of the Internal Revenue 
        Code of 1986) not less than 365 days before the date of 
        entry of the order of relief but only to the extent 
        such funds--
                  (i) are not pledged or promised to any entity 
                in connection with any extension of credit; and
                  (ii) are not excess contributions (as 
                described in section 4973(e) of the Internal 
                Revenue Code of 1986); and
          (D) retirement funds to the extent that those funds 
        are in a fund or account that is exempt from taxation 
        under section 401, 403, 408, 408A, 414, 457, or 501(a) 
        of the Internal Revenue Code of 1986.
  (4) For purposes of paragraph (3)(D) and subsection (d)(12), 
the following shall apply:
          (A) If the retirement funds are in a retirement fund 
        that has received a favorable determination pursuant to 
        section 7805 of the Internal Revenue Code of 1986, and 
        that determination is in effect as of the date of the 
        commencement of the case under section 301, 302, or 303 
        of this title, those funds shall be presumed to be 
        exempt from the estate.
          (B) If the retirement funds are in a retirement fund 
        that has not received a favorable determination 
        pursuant to such section 7805, those funds are exempt 
        from the estate if the debtor demonstrates that--
                  (i) no prior determination to the contrary 
                has been made by a court or the Internal 
                Revenue Service; and
                  (ii) the retirement fund is in substantial 
                compliance with the applicable requirements of 
                the Internal Revenue Code of 1986.
          (C) A direct transfer of retirement funds from 1 fund 
        or account that is exempt from taxation under section 
        401, 403, 408, 408A, 414, 457, or 501(a) of the 
        Internal Revenue Code of 1986, pursuant to section 
        401(a)(31) of the Internal Revenue Code of 1986, or 
        otherwise, shall not cease to qualify for exemption 
        under paragraph (3)(D) or subsection (d)(12) by reason 
        of that direct transfer.
          (D)(i) Any distribution that qualifies as an eligible 
        rollover distribution within the meaning of section 
        402(c) of the Internal Revenue Code of 1986 or that is 
        described in clause (ii) shall not cease to qualify for 
        exemption under paragraph (3)(D) or subsection (d)(12) 
        by reason of that distribution.
          (ii) A distribution described in this clause is an 
        amount that--
                  (I) has been distributed from a fund or 
                account that is exempt from taxation under 
                section 401, 403, 408, 408A, 414, 457, or 
                501(a) of the Internal Revenue Code of 1986; 
                and
                  (II) to the extent allowed by law, is 
                deposited in such a fund or account not later 
                than 60 days after the distribution of that 
                amount.
  (c) Unless the case is dismissed, property exempted under 
this section is not liable during or after the case for any 
debt of the debtor that arose, or that is determined under 
section 502 of this title as if such debt had arisen, before 
the commencement of the case, except--
          [(1) a debt of a kind specified in section 523(a)(1) 
        or 523(a)(5) of this title;]
          (1) a debt of a kind specified in paragraph (1) or 
        (5) of section 523(a) (in which case, notwithstanding 
        any provision of applicable nonbankruptcy law to the 
        contrary, such property shall be liable for a debt of a 
        kind specified in section 523(a)(5);

           *       *       *       *       *       *       *

  (d) The following property may be exempted under subsection 
[(b)(1)] (b)(2) of this section:
          (1)  * * *

           *       *       *       *       *       *       *

          (12) Retirement funds to the extent that those funds 
        are in a fund or account that is exempt from taxation 
        under section 401, 403, 408, 408A, 414, 457, or 501(a) 
        of the Internal Revenue Code of 1986.

           *       *       *       *       *       *       *

  (f)(1) Notwithstanding any waiver of exemptions but subject 
to paragraph (3), the debtor may avoid the fixing of a lien on 
an interest of the debtor in property to the extent that such 
lien impairs an exemption to which the debtor would have been 
entitled under subsection (b) of this section, if such lien 
is--
          (A) a judicial lien, other than a judicial lien that 
        secures a debt[--
                  [(i) to a spouse, former spouse, or child of 
                the debtor, for alimony to, maintenance for, or 
                support of such spouse or child, in connection 
                with a separation agreement, divorce decree or 
                other order of a court of record, determination 
                made in accordance with State or territorial 
                law by a governmental unit, or property 
                settlement agreement; and
                  [(ii) to the extent that such debt--
                          [(I) is not assigned to another 
                        entity, voluntarily, by operation of 
                        law, or otherwise; and
                          [(II) includes a liability designated 
                        as alimony, maintenance, or support, 
                        unless such liability is actually in 
                        the nature of alimony, maintenance or 
                        support.; or] of a kind that is 
                        specified in section 523(a)(5); or
          (B)(i) a nonpossessory, nonpurchase-money security 
        interest in any--
                  [(i)] (I) household furnishings, household 
                goods, wearing apparel, appliances, books, 
                animals, crops, musical instruments, or jewelry 
                that are held primarily for the personal, 
                family, or household use of the debtor or a 
                dependent of the debtor;
                  [(ii)] (II) implements, professional books, 
                or tools, of the trade of the debtor or the 
                trade of a dependent of the debtor; or
                  [(iii)] (III) professionally prescribed 
                health aids for the debtor or a dependent of 
                the debtor.
          (ii) ``household goods'' shall mean for the purposes 
        of this subparagraph (B) clothing; furniture; 
        appliances; one radio; one television; one VCR; linens; 
        china; crockery; kitchenware; educational materials and 
        educational equipment primarily for the use of minor 
        dependent children of the debtor, but only one personal 
        computer and only if used primarily for the education 
        or entertainment of such minor children; medical 
        equipment and supplies; furniture exclusively for the 
        use of minor children, elderly or disabled dependents 
        of the debtor; and personal effects (including wedding 
        rings and the toys and hobby equipment of minor 
        dependent children) of the debtor and his or her 
        dependents: Provided, That the following are not 
        included within the scope of the term ``household 
        goods'':
                  (I) works of art (unless by or of the debtor 
                or his or her dependents);
                  (II) electronic entertainment equipment 
                (except one television, one radio, and one VCR 
                and any electronic entertainment equipment 
                which is a toy or hobby equipment of minor 
                dependent children which had an original 
                purchase price of $100 or less);
                  (III) items acquired as antiques;
                  (IV) jewelry (except wedding rings); and
                  (V) a computer (except as otherwise provided 
                for in this section), motor vehicle (including 
                a tractor or lawn tractor), boat, or a 
                motorized recreational device, conveyance, 
                vehicle, watercraft, or aircraft.

           *       *       *       *       *       *       *

  (g) Notwithstanding sections 550 and 551 of this title, the 
debtor may exempt under subsection (b) of this section property 
that the trustee recovers under section 510(c)(2), 542, 543, 
550, 551, or 553 of this title, to the extent that the debtor 
could have exempted such property under subsection (b) of this 
section if such property had not been transferred, if--
          (1)  * * *
          (2) the debtor could have avoided such transfer under 
        subsection [(f)(2)] (f)(1)(B) of this section.

           *       *       *       *       *       *       *

  (n) For purposes of subsection (b)(3)(C), funds placed in an 
education individual retirement account shall not be exempt 
under this subsection--
          (1) unless the designated beneficiary of such account 
        was a dependent child of the debtor for the taxable 
        year for which the funds were placed in such account; 
        and
          (2) to the extent such funds exceed--
                  (A) $50,000 in the aggregate in all such 
                accounts having the same designated 
                beneficiary; or
                  (B) $100,000 in the aggregate in all such 
                accounts attributable to all such dependent 
                children of the debtor.
  (o) For purposes of subsection (b)(3)(A) and notwithstanding 
subsection (a), the value of an interest in--
          (1) real or personal property that the debtor or a 
        dependent of the debtor uses as a residence;
          (2) a cooperative that owns property that the debtor 
        or a dependent of the debtor uses as a residence; or
          (3) a burial plot for the debtor or a dependent of 
        the debtor;
shall be reduced to the extent such value is attributable to 
any portion of any property that the debtor disposed of in the 
730-day period ending of the date of the filing of the 
petition, with the intent to hinder, delay, or defraud a 
creditor and that the debtor could not exempt, or that portion 
that the debtor could not exempt, under subsection (b) if on 
such date the debtor had held the property so disposed of.
  (p)(1) Except as provided in paragraphs (2) and (3), as a 
result of electing under subsection (b)(3)(A) to exempt 
property under State or local law, a debtor may not exempt any 
interest that exceeds $250,000 in value, in the aggregate, in--
          (A) real or personal property that the debtor or a 
        dependent of the debtor uses as a residence;
          (B) a cooperative that owns property that the debtor 
        or a dependent of the debtor uses as a residence; or
          (C) a burial plot for the debtor or a dependent of 
        the debtor.
  (2) The limitation under paragraph (1) shall not apply to an 
exemption claimed under subsection (b)(3)(A) by a family farmer 
for the principal residence of that farmer.
  (3) Paragraph (1) shall not apply to debtors if applicable 
State law expressly provides by a statute enacted after the 
effective date of this paragraph that such paragraph shall not 
apply to debtors.

Sec. 523. Exceptions to discharge

  (a) A discharge under section 727, 1141, 1228(a), 1228(b), or 
1328(b) of this title does not discharge an individual debtor 
from any debt--
          (1) for a tax or a customs duty--
                  (A)  * * *
                  (B) with respect to which a return, or 
                equivalent report or notice, if required--
                          (i) was not filed or given; [or]
                          (ii) was filed or given after the 
                        date on which such return, report, or 
                        notice was last due, under applicable 
                        law or under any extension, and after 
                        two years before the date of the filing 
                        of the petition; or
                          (iii) for purposes of this 
                        subsection, a return--
                                  (I) must satisfy the 
                                requirements of applicable 
                                nonbankruptcy law, and includes 
                                a return prepared pursuant to 
                                section 6020(a) of the Internal 
                                Revenue Code of 1986, or 
                                similar State or local law, or 
                                a written stipulation to a 
                                judgment entered by a 
                                nonbankruptcy tribunal, but 
                                does not include a return made 
                                pursuant to section 6020(b) of 
                                the Internal Revenue Code of 
                                1986, or similar State or local 
                                law; and
                                  (II) must have been filed in 
                                a manner permitted by 
                                applicable nonbankruptcy law; 
                                or

           *       *       *       *       *       *       *

          (2) for money, property, services, or an extension, 
        renewal, or refinancing of credit, to the extent 
        obtained by--
                  (A)  * * *

           *       *       *       *       *       *       *

                  [(C) for purposes of subparagraph (A) of this 
                paragraph, consumer debts owed to a single 
                creditor and aggregating more than $1,000 for 
                ``luxury goods or services'' incurred by an 
                individual debtor on or within 60 days before 
                the order for relief under this title, or cash 
                advances aggregating more than $1,000 that are 
                extensions of consumer credit under an open end 
                credit plan obtained by an individual debtor on 
                or within 60 days before the order for relief 
                under this title, are presumed to be 
                nondischargeable; ``luxury goods or services'' 
                do not include goods or services reasonably 
                acquired for the support or maintenance of the 
                debtor or a dependent of the debtor; an 
                extension of consumer credit under an open end 
                credit plan is to be defined for purposes of 
                this subparagraph as it is defined in the 
                Consumer Credit Protection Act;]
                  (C)(i) for purposes of subparagraph (A), 
                consumer debts owed to a single creditor and 
                aggregating more than $250 for ``luxury goods 
                or services'' incurred by an individual debtor 
                on or within90 days before the order for relief 
under this title, or cash advances aggregating more than $250 that are 
extensions of consumer credit under an open end credit plan obtained by 
an individual debtor on or within 90 days before the order for relief 
under this title, are presumed to be nondischargeable; and
                  (ii) for purposes of this subparagraph--
                          (I) the term ``luxury goods or 
                        services'' does not include goods or 
                        services reasonably necessary for the 
                        support or maintenance of the debtor or 
                        a dependent of the debtor; and
                          (II) the term ``an extension of 
                        consumer credit under an open end 
                        credit plan'' has the same meaning such 
                        term has for purposes of the Consumer 
                        Credit Protection Act;
          (3) neither listed nor scheduled under section 521(1) 
        of this title, with the name, if known to the debtor, 
        of the creditor to whom such debt is owed, in time to 
        permit--
                  (A) if such debt is not of a kind specified 
                in paragraph (2), (4), [or (6)] (6), or (15) of 
                this subsection, timely filing of a proof of 
                claim, unless such creditor had notice or 
                actual knowledge of the case in time for such 
                timely filing; or
                  (B) if such debt is of a kind specified in 
                paragraph (2), (4), [or (6)] (6), or (15) of 
                this subsection, timely filing of a proof of 
                claim and timely request for a determination of 
                dischargeability of such debt under one of such 
                paragraphs, unless such creditor had notice or 
                actual knowledge of the case in time for such 
                timely filing and request;

           *       *       *       *       *       *       *

          [(5) to a spouse, former spouse, or child of the 
        debtor, for alimony to, maintenance for, or support of 
        such spouse or child, in connection with a separation 
        agreement, divorce decree or other order of a court of 
        record, determination made in accordance with State or 
        territorial law by a governmental unit, or property 
        settlement agreement, but not to the extent that--
                  [(A) such debt is assigned to another entity, 
                voluntarily, by operation of law, or otherwise 
                (other than debts assigned pursuant to section 
                408(a)(3) of the Social Security Act, or any 
                such debt which has been assigned to the 
                Federal Government or to a State or any 
                political subdivision of such State); or
                  [(B) such debt includes a liability 
                designated as alimony, maintenance, or support, 
                unless such liability is actually in the nature 
                of alimony, maintenance, or support;]
          (5) for a domestic support obligation;

           *       *       *       *       *       *       *

          (9) for death or personal injury caused by the 
        debtor's no, operation of a motor vehicle, watercraft, 
        or aircraft if such operation was unlawful because the 
        debtor was intoxicated from using alcohol, a drug, or 
        another substance;

           *       *       *       *       *       *       *

          (14A) incurred to pay a debt that is nondischargeable 
        by reason of section 727, 1141, 1228(a), 1228(b), or 
        1328(c), or any other provision of this subsection, if 
        the debtor incurred the debt to pay such a 
        nondischargeable debt with the intent to discharge in 
        bankruptcy the newly-created debt, except that all 
        debts incurred to pay nondischargeable debts, without 
        regard to intent, are nondischargeable if incurred 
        within 90 days of the filing of the petition;
          (15) to a spouse, former spouse, or child of the 
        debtor and not of the kind described in paragraph (5) 
        that is incurred by the debtor in the course of a 
        divorce or separation or in connection with a 
        separation agreement, divorce decree or other order of 
        a court of record, or a determination made in 
        accordance with State or territorial law by a 
        governmental unit [unless--
                  [(A) the debtor does not have the ability to 
                pay such debt from income or property of the 
                debtor not reasonably necessary to be expended 
                for the maintenance or support of the debtor or 
                a dependent of the debtor and, if the debtor is 
                engaged in a business, for the payment of 
                expenditures necessary for the continuation, 
                preservation, and operation of such business; 
                or
                  [(B) discharging such debt would result in a 
                benefit to the debtor that outweighs the 
                detrimental consequences to a spouse, former 
                spouse, or child of the debtor];
          (16) for a fee or assessment that becomes due and 
        payable after the order for relief to a membership 
        association with respect to the debtor's interest in a 
        [dwelling] unit that has condominium [ownership or] 
        ownership, in a share of a cooperative [housing] 
        corporation, [but only if such fee or assessment is 
        payable for a period during which--
                  [(A) the debtor physically occupied a 
                dwelling unit in the condominium or cooperative 
                project; or
                  [(B) the debtor rented the dwelling unit to a 
                tenant and received payments from the tenant 
                for such period,] or a lot in a homeowners 
                association, for as long as the debtor or the 
                trustee has a legal, equitable, or possessory 
                ownership interest in such unit, such 
                corporation, or such lot, and until such time 
                as the debtor or trustee has surrendered any 
                legal, equitable or possessory interest in such 
                unit, such corporation, or such lot,
        but nothing in this paragraph shall except from 
        discharge the debt of a debtor for a membership 
        association fee or assessment for a period arising 
        before entry of the order for relief in a pending or 
        subsequent bankruptcy case;
          (17) for a fee imposed by [a] any court for the 
        filing of a case, motion, complaint, or appeal, or for 
        other costs and expenses assessed with respect to such 
        filing, regardless of an assertion of poverty by the 
        debtor under [section 1915(b) or (f)] subsection (b) or 
        (f)(2) of section 1915 of title 28 (or a similar non-
        Federal law), or the debtor's status as a prisoner, as 
        defined in section 1915(h) of title 28 (or a similar 
        non-Federal law); [or]
          (18) owed under State law to a State or municipality 
        that is--
                  (A) in the nature of support, and
                  (B) enforceable under part D of title IV of 
                the Social Security Act (42 U.S.C. 601 et 
                seq.)[.]; or
          (19) owed to a pension, profit-sharing, stock bonus, 
        or other plan established under section 401, 403, 408, 
        408A, 414, 457, or 501(c) of the Internal Revenue Code 
        of 1986, pursuant to--
                  (A) a loan permitted under section 408(b)(1) 
                of the Employee Retirement Income Security Act 
                of 1974) or subject to section 72(p) of the 
                Internal Revenue Code of 1986; or
                  (B) a loan from the thrift savings plan 
                described in subchapter III of title 5, that 
                satisfies the requirements of section 8433(g) 
                of such title.
Paragraph (19) does not apply to any amount owed to a plan 
referred to in that paragraph that is incurred under a loan 
made during the 1-year period preceding the filing of a 
petition. Nothing in paragraph (19) may be construed to provide 
that any loan made under a governmental plan under section 
414(d), or a contract or account under section 403(b), of the 
Internal Revenue Code of 1986 constitutes a claim or a debt 
under this title.

           *       *       *       *       *       *       *

  (c)(1) Except as provided in subsection (a)(3)(B) of this 
section, the debtor shall be discharged from a debt of a kind 
specified in paragraph (2), (4), [(6), or (15)] or (6) of 
subsection (a) of this section, unless, on request of the 
creditor to whom such debt is owed, and after notice and a 
hearing, the court determines such debt to be excepted from 
discharge under paragraph (2), (4), [(6), or (15)] or (6), as 
the case may be, of subsection (a) of this section.

           *       *       *       *       *       *       *

  (e) Any institution-affiliated party of [a] an insured 
depository institution shall be considered to be acting in a 
fiduciary capacity with respect to the purposes of subsection 
(a)(4) or (11).

Sec. 524. Effect of discharge

  (a) A discharge in a case under this title--
          (1)  * * *

           *       *       *       *       *       *       *

          (3) operates as an injunction against the 
        commencement or continuation of an action, the 
        employment of process, or an act, to collect or recover 
        from, or offset against, property of the debtor of the 
        kind specified in section 541(a)(2) of this title that 
        is acquired after the commencement of the case, on 
        account of any allowable community claim, except a 
        community claim that is excepted from discharge under 
        [section 523, 1228(a)(1), or 1328(a)(1) of this title, 
        or that] section 523, 1228(a)(1), or 1328(a)(1) of this 
        title, or that would be so excepted, determined in 
        accordance with the provisions of sections 523(c) and 
        523(d) of this title, in a case concerning the debtor's 
        spouse commenced on the date of the filing of the 
        petition in the case concerning the debtor, whether or 
        not discharge of the debt based on such community claim 
        is waived.

           *       *       *       *       *       *       *

  (c) An agreement between a holder of a claim and the debtor, 
the consideration for which, in whole or in part, is based on a 
debt that is dischargeable in a case under this title is 
enforceable only to any extent enforceable under applicable 
nonbankruptcy law, whether or not discharge of such debt is 
waived, only if--
          (1)  * * *
          (2)(A) such agreement contains a clear and 
        conspicuous statement which advises the debtor that the 
        agreement may be rescinded at any time prior to 
        discharge or within sixty days after such agreement is 
        filed with the court, whichever occurs later, by giving 
        notice of rescission to the holder of such claim; [and]
          (B) such agreement contains a clear and conspicuous 
        statement which advises the debtor that such agreement 
        is not required under this title, under nonbankruptcy 
        law, or under any agreement not in accordance with the 
        provisions of this subsection; and
          (C) if the consideration for such agreement is based 
        on a wholly unsecured consumer debt (except for debts 
        owed to creditors defined in section 461(b)(1)(A)(iv) 
        of title 12, United States Code), such agreement 
        contains a clear and conspicuous statement which 
        advises the debtor--
                  (i) that the debtor is entitled to a hearing 
                before the court at which the debtor shall 
                appear in person and at which the court will 
                decide whether the agreement is an undue 
                hardship, not in the debtor's best interest, 
                and not the result of a threat by the creditor 
                to take any action that cannot be legally taken 
                or that is not intended to be taken; and
                  (ii) that if the debtor is represented by 
                counsel, the debtor may waive the debtor's 
                right to such a hearing by signing a statement 
                waiving the hearing, stating that the debtor is 
                represented by counsel, and identifying such 
                counsel;

           *       *       *       *       *       *       *

          (6)(A) in a case concerning an individual who was not 
        represented by an attorney during the course of 
        negotiating an agreement under this subsection, the 
        court approves such agreement as--
                  (i) not imposing an undue hardship on the 
                debtor or a dependent of the debtor; [and]
                  (ii) in the best interest of the debtor[.]; 
                and
                  (iii) not entered into by the debtor as the 
                result of a threat by the creditor to take any 
                action that cannot be legally taken or that is 
                not intended to be taken.
  (d) In a case concerning an individual, when the court has 
determined whether to grant or not to grant a discharge under 
section 727, 1141, 1228, or 1328 of this title, the court may 
hold a hearing at which the debtor shall appear in person. At 
any such hearing, the court shall inform the debtor that a 
discharge has been granted or the reason why a discharge has 
not been granted. If a discharge has been granted and if the 
debtor desires to make an agreement of the kind specified in 
subsection (c) [of this section], and was not represented by an 
attorney during the course of negotiating such agreement or if 
the consideration for such agreement is based on a wholly 
unsecured consumer debt (except for debts owed to creditors 
defined in section 461(b)(1)(A)(iv) of title 12,
United States Code) and the debtor has not waived the debtor's 
right to a hearing on the agreement in accordance with 
subsection (c)(2)(C) of this section, then the court shall hold 
a hearing at which the debtor shall appear in person and at 
such hearing the court shall--
          (1)  * * *

           *       *       *       *       *       *       *

  (i) The willful failure of a creditor to credit payments 
received under a plan confirmed under this title (including a 
plan of reorganization confirmed under chapter 11 of this 
title) in the manner required by the plan (including crediting 
the amounts required under the plan) shall constitute a 
violation of any injunction under subsection (a)(2) which has 
arisen at the time of the failure.
  (j)(1) An individual who is injured by the willful failure of 
a creditor to comply with the requirements for a reaffirmation 
agreement under subsections (c) and (d), or by any willful 
violation of the injunction under subsection (a)(2), shall be 
entitled to recover--
          (A) the greater of--
                  (i) the amount of actual damages; or
                  (ii) $1,000; and
          (B) costs and attorneys' fees.
  (2) An action to recover for a violation specified in 
paragraph (1) may not be brought as a class action.

Sec. 525. Protection against discriminatory treatment

  (a)  * * *

           *       *       *       *       *       *       *

  (c)(1) A governmental unit that operates a student grant or 
loan program and a person engaged in a business that includes 
the making of loans guaranteed or insured under a student loan 
program may not deny a student grant, loan, loan guarantee, or 
loan insurance to a person that is or has been a debtor under 
this title or a bankrupt or debtor under the Bankruptcy Act, or 
another person with whom the debtor or bankrupt has been 
associated, because the debtor or bankrupt is or has been a 
debtor under this title or a bankrupt or debtor under the 
Bankruptcy Act, has been insolvent before the commencement of a 
case under this title or during the pendency of the case but 
before the debtor is granted or denied a discharge, or has not 
paid a debt that is dischargeable in the case under this title 
or that was discharged under the Bankruptcy Act.
  (2) In this section, ``student loan program'' means [the 
program operated under part B, D, or E of] any program operated 
under title IV of the Higher Education Act of 1965 or a similar 
program operated under State or local law.

Sec. 526. Debt relief agency enforcement

  (a) A debt relief agency shall not--
          (1) fail to perform any service which the debt relief 
        agency has told the assisted person or prospective 
        assisted person the agency would provide that person in 
        connection with the preparation for or activities 
        during a proceeding under this title;
          (2) make any statement, or counsel or advise any 
        assisted person to make any statement in any document 
        filed in a proceeding under this title, which is untrue 
        and misleading or which upon the exercise of reasonable 
        care, should be known by the debt relief agency to be 
        untrue or misleading;
          (3) misrepresent to any assisted person or 
        prospective assisted person, directly or indirectly, 
        affirmatively or by material omission, what services 
        the debt relief agency can reasonably expect to provide 
        that person, or the benefits an assisted person may 
        obtain or the difficulties the person may experience if 
        the person seeks relief in a proceeding pursuant to 
        this title; or
          (4) advise an assisted person or prospective assisted 
        person to incur more debt in contemplation of that 
        person filing a proceeding under this title or in order 
        to pay an attorney or bankruptcy petition preparer fee 
        or charge for services performed as part of preparing 
        for or representing a debtor in a proceeding under this 
        title.''.
  (b) Assisted Person Waivers Invalid.--Any waiver by any 
assisted person of any protection or right provided by or under 
this section shall not be enforceable against the debtor by any 
Federal or State court or any other person, but may be enforced 
against a debt relief agency.
  (c) Noncompliance.--
          (1) Any contract between a debt relief agency and an 
        assisted person for bankruptcy assistance which does 
        not comply with the material requirements of this 
        section shall be treated as void and may not be 
        enforced by any Federal or State court or by any other 
        person.
          (2) Any debt relief agency shall be liable to an 
        assisted person in the amount of any fees or charges in 
        connection with providing bankruptcy assistance to such 
        person which the debt relief agency has received, for 
        actual damages, and for reasonable attorneys' fees and 
        costs if the debt relief agency is found, after notice 
        and hearing, to have--
                  (A) intentionally or negligently failed to 
                comply with any provision of this section with 
                respect to a bankruptcy case or related 
                proceeding of the assisted person;
                  (B) provided bankruptcy assistance to an 
                assisted person in a case or related proceeding 
                which is dismissed or converted because of the 
                debt relief agency's intentional or negligent 
                failure to file bankruptcy papers, including 
                papers specified in section 521 of this title; 
                or
                  (C) intentionally or negligently disregarded 
                the material requirements of this title or the 
                Federal Rules of Bankruptcy Procedure 
                applicable to such debt relief agency.
          (3) In addition to such other remedies as are 
        provided under State law, whenever the chief law 
        enforcement officer of a State, or an official or 
        agency designated by a State, has reason to believe 
        that any person has violated or is violating this 
        section, the State--
                  (A) may bring an action to enjoin such 
                violation;
                  (B) may bring an action on behalf of its 
                residents to recover the actual damages of 
                assisted persons arising fromsuch violation, 
including any liability under paragraph (2); and
                  (C) in the case of any successful action 
                under subparagraph (A) or (B), shall be awarded 
                the costs of the action and reasonable attorney 
                fees as determined by the court.
          (4) The United States District Court for any district 
        located in the State shall have concurrent jurisdiction 
        of any action under subparagraph (A) or (B) of 
        paragraph (3).
          (5) Notwithstanding any other provision of Federal 
        law and in addition to any other remedy provided under 
        Federal or State law, if the court, on its own motion 
        or on the motion of the United States trustee or the 
        debtor, finds that a person intentionally violated this 
        section, or engaged in a clear and consistent pattern 
        or practice of violating this section, the court may--
                  (A) enjoin the violation of such section; or
                  (B) impose an appropriate civil penalty 
                against such person.
  (c) Relation to State Law.--This section shall not annul, 
alter, affect or exempt any person subject to those sections 
from complying with any law of any State except to the extent 
that such law is inconsistent with those sections, and then 
only to the extent of the inconsistency.

                       SUBCHAPTER III--THE ESTATE

Sec. 541. Property of the estate

  (a)  * * *
  (b) Property of the estate does not include--
          (1)  * * *

           *       *       *       *       *       *       *

          (4) any interest of the debtor in liquid or gaseous 
        hydrocarbons to the extent that--
                  (A)(i) the debtor has transferred or has 
                agreed to transfer such interest pursuant to a 
                farmout agreement or any written agreement 
                directly related to a farmout agreement; and
                  (ii) but for the operation of this paragraph, 
                the estate could include the interest referred 
                to in clause (i) only by virtue of section 365 
                or 544(a)(3) of this title; or
                  (B)(i) the debtor has transferred such 
                interest pursuant to a written conveyance of a 
                production payment to an entity that does not 
                participate in the operation of the property 
                from which such production payment is 
                transferred; and
                  (ii) but for the operation of this paragraph, 
                the estate could include the interest referred 
                to in clause (i) only by virtue of section 365 
                or 542 of this title; [or]
          (5) any eligible asset (or proceeds thereof), to the 
        extent that such eligible asset was transferred by the 
        debtor, before the date of commencement of the case, to 
        an eligible entity in connection with an asset-backed 
        securitization, except to the extent such asset (or 
        proceeds or value thereof) may be recovered by the 
        trustee under section 550 by virtue of avoidance under 
        section 548(a);
          [(5)] (6) any interest in cash or cash equivalents 
        that constitute proceeds of a sale by the debtor of a 
        money order that is made--
                  (A) * * *

           *       *       *       *       *       *       *

        unless the money order issuer had not taken action, 
        prior to the filing of the petition, to require 
        compliance with the prohibition[.]; or
          (7) any amount or interest in property to the extent 
        that an employer has withheld amounts from the wages of 
        employees for contribution to an employee benefit plan 
        subject to title I of the Employee Retirement Income 
        Security Act of 1974, or to the extent that the 
        employer has received amounts as a result of payments 
        by participants or beneficiaries to an employer for 
        contribution to an employee benefit plan subject to 
        title I of the Employee Retirement Income Security Act 
        of 1974.
  (e) For purposes of this section, the following definitions 
shall apply:
          (1) the term ``asset-backed securitization'' means a 
        transaction in which eligible assets transferred to an 
        eligible entity are used as the source of payment on 
        securities, the most senior of which are rated 
        investment grade by 1 or more nationally recognized 
        securities rating organizations, issued by an issuer;
          (2) the term ``eligible asset'' means--
                  (A) financial assets (including interests 
                therein and proceeds thereof), either fixed or 
                revolving, including residential and commercial 
                mortgage loans, consumer receivables, trade 
                receivables, and lease receivables, that, by 
                their terms, convert into cash within a finite 
                time period, plus any residual interest in 
                property subject to receivables included in 
                such financial assets plus any rights or other 
                assets designed to assure the servicing or 
                timely distribution of proceeds to security 
                holders;
                  (B) cash; and
                  (C) securities.
          (3) the term ``eligible entity'' means--
                  (A) an issuer; or
                  (B) a trust, corporation, partnership, or 
                other entity engaged exclusively in the 
                business of acquiring and transferring eligible 
                assets directly or indirectly to an issuer and 
                taking actions ancillary thereto;
          (4) the term ``issuer'' means a trust, corporation, 
        partnership, or other entity engaged exclusively in the 
        business of acquiring and holding eligible assets, 
        issuing securities backed by eligible assets, and 
        taking actions ancillary thereto; and
          (5) the term ``transferred'' means the debtor, 
        pursuant to a written agreement, represented and 
        warranted that eligible assets were sold, contributed, 
        or otherwise conveyed with the intention of removing 
        them from the estate of the debtor pursuant to 
        subsection (b)(5), irrespective, without limitation 
        of--
                  (A) whether the debtor directly or indirectly 
                obtained or held an interest in the issuer or 
                in any securities issued by the issuer;
                  (B) whether the debtor had an obligation to 
                repurchase or to service or supervise the 
                servicing of all or any portion of such 
                eligible assets; or
                  (C) the characterization of such sale, 
                contribution, or other conveyance for tax, 
                accounting, regulatory reporting, or other 
                purposes.
  (f) Notwithstanding any other provision of this title, 
property that is held by a debtor that is a corporation 
described in section 501(c)(3) of the Internal Revenue Code of 
1986 and exempt from tax under section 501(a) of such Code may 
be transferred to an entity that is not such a corporation, but 
only under the same conditions as would apply if the debtor had 
not filed a case under this title.

           *       *       *       *       *       *       *

Sec. 545. Statutory liens

  The trustee may avoid the fixing of a statutory lien on 
property of the debtor to the extent that such lien--
          (1)  * * *
          (2) is not perfected or enforceable at the time of 
        the commencement of the case against a bona fide 
        purchaser that purchases such property at the time of 
        the commencement of the case, whether or not such a 
        purchaser exists[;], except where such purchaser is a 
        purchaser described in section 6323 of the Internal 
        Revenue Code of 1986 or similar provision of State or 
        local law;

           *       *       *       *       *       *       *

Sec. 546. Limitations on avoiding powers

  (a)  * * *

           *       *       *       *       *       *       *

  (c) Except as provided in subsection (d) of this section, the 
rights and powers of a trustee under sections 544(a), 545, 547, 
and 549 of this title are subject to any statutory or common-
law right of a seller of goods that has sold goods to the 
debtor, in the ordinary course of such seller's business, to 
reclaim such goods if the debtor has received such goods while 
insolvent, but--
          (1) such a seller may not reclaim any such goods 
        unless such seller demands in writing reclamation of 
        such goods--
                  (A)  * * *
                  (B) if such 10-day period expires after the 
                commencement of the case, before [20] 45 days 
                after receipt of such goods by the debtor; and

           *       *       *       *       *       *       *

  (e) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 
548(b) of this title, the trustee may not avoid a transfer that 
is a margin payment, as defined in section 101, 741, or 761 of 
this title, or settlement payment, as defined in section 101 or 
741 of this title, made by or to a commodity broker, forward 
contract merchant, stockbroker, financial institution, 
financial participant, or securities clearing agency, that is 
made before the commencement of the case, except under section 
548(a)(1)(A) of this title.

           *       *       *       *       *       *       *

  (g) Notwithstanding sections 544, 545, 547, 548(a)(1)(B) and 
548(b) of this title, the trustee may not avoid a transfer 
[under a swap agreement,] made by or to a swap participant, [in 
connection with a swap agreement] under or in connection with 
any swap agreement and that is made before the commencement of 
the case, except under section 548(a)(1)(A) of this title.
  [(g) Notwithstanding the rights and powers of a trustee under 
sections 544(a), 545, 547, 549, and 553, if the court 
determines on a motion by the trustee made not later than 120 
days after the date of the order for relief in a case under 
chapter 11 of this title and after notice and a hearing, that a 
return is in the best interests of the estate, the debtor, with 
the consent of a creditor, may return goods shipped to the 
debtor by the creditor before the commencement of the case, and 
the creditor may offset the purchase price of such goods 
against any claim of the creditor against the debtor that arose 
before the commencement of the case.]
  (h) Notwithstanding sections 544, 545, 547, 548(a)(2)(B), and 
548(b) of this title, the trustee may not avoid a transfer made 
by or to a master netting agreement participant under or in 
connection with any master netting agreement or any individual 
contract covered thereby that is made before the commencement 
of the case, except under section 548(a)(1)(A) of this title, 
and except to the extent the trustee could otherwise avoid such 
a transfer made under an individual contract covered by such 
master netting agreement.
  (i) Notwithstanding section 545 (2) and (3) of this title, 
the trustee may not avoid a warehouseman's lien for storage, 
transportation or other costs incidental to the storage and 
handling of goods, as provided by section 7-209 of the Uniform 
Commercial Code.
  (j) Notwithstanding the rights and powers of a trustee under 
sections 544(a), 545, 547, 549, and 553 of this title, if the 
court determines on a motion by the trustee made not later than 
120 days after the date of the order for relief in a case under 
chapter 11 of this title and after notice and hearing, that a 
return is in the best interests of the estate, the debtor, with 
the consent of the creditor, and subject to the prior rights, 
if any, of third parties in such goods, may return goods 
shipped to the debtor by the creditor before the commencement 
of the case, and the creditor may offset the purchase price of 
such goods against any claim of the creditor against the debtor 
that arose before the commencement of the case.

Sec. 547. Preferences

  (a)  * * *
  (b) Except as provided in [subsection (c)] subsections (c) 
and (i) of this section, the trustee may avoid any transfer of 
an interest of the debtor in property--
          (1)  * * *

           *       *       *       *       *       *       *

  (c) The trustee may not avoid under this section a transfer--
          (1)  * * *
          [(2) to the extent that such transfer was--
                  [(A) in payment of a debt incurred by the 
                debtor in the ordinary course of business or 
                financial affairs of the debtor and the 
                transferee;
                  [(B) made in the ordinary course of business 
                or financial affairs of the debtor and the 
                transferee; and
                  [(C) made according to ordinary business 
                terms;]
          (2) to the extent that such transfer was in payment 
        of a debt incurred by the debtor in the ordinary course 
        of business or financial affairs of the debtor and the 
        transferee, and such transfer was--
                  (A) made in the ordinary course of business 
                or financial affairs of the debtor and the 
                transferee; or
                  (B) made according to ordinary business 
                terms;
          (3) that creates a security interest in property 
        acquired by the debtor--
                  (A)  * * *
                  (B) that is perfected on or before [20] 30 
                days after the debtor receives possession of 
                such property;

           *       *       *       *       *       *       *

          (8) if, in a case filed by an individual debtor whose 
        debts are primarily consumer debts, the aggregate value 
        of all property that constitutes or is affected by such 
        transfer is less than $600[.]; or
          (9) if, in a case filed by a debtor whose debts are 
        not primarily consumer debts, the aggregate value of 
        all property that constitutes or is affected by such 
        transfer is less than $5,000.

           *       *       *       *       *       *       *

  (e)(1)  * * *
  (2) For the purposes of this section, except as provided in 
paragraph (3) of this subsection, a transfer is made--
          (A) at the time such transfer takes effect between 
        the transferor and the transferee, if such transfer is 
        perfected at, or within [10] 30 days after, such time, 
        except as provided in subsection (c)(3)(B);
          (B) at the time such transfer is perfected, if such 
        transfer is perfected after such [10] 30 days; or
          (C) immediately before the date of the filing of the 
        petition, if such transfer is not perfected at the 
        later of--
                  (i)  * * *
                  (ii) [10] 30 days after such transfer takes 
                effect between the transferor and the 
                transferee.

           *       *       *       *       *       *       *

  (h) The trustee may not avoid a transfer if such transfer was 
made as a part of an alternative repayment plan between the 
debtor and any creditor of the debtor created by an approved 
credit counseling agency.
  (i) If the trustee avoids under subsection (b) a transfer 
made between 90 days and 1 year before the date of the filing 
of the petition, by the debtor to an entity that is not an 
insider for the benefit of a creditor that is an insider, such 
transfer may be avoided under this section only with respect to 
the creditor that is an insider.

           *       *       *       *       *       *       *

Sec. 548. Fraudulent transfers and obligations

  (a)  * * *

           *       *       *       *       *       *       *

  (d)(1)  * * *
  (2) In this section--
          (A)  * * *
          (B) a commodity broker, forward contract merchant, 
        stockbroker, financial institution, financial 
        participant, or securities clearing agency that 
        receives a margin payment, as defined in section 101, 
        741, or 761 of this title, or settlement payment, as 
        defined in section 101 or 741 of this title, takes for 
        value to the extent of such payment;
          (C) a repo participant that receives a margin 
        payment, as defined in section 741 or 761 of this 
        title, or settlement payment, as defined in section 741 
        of this title, in connection with a repurchase 
        agreement, takes for value to the extent of such 
        payment; [and]
          (D) a swap participant that receives a transfer in 
        connection with a swap agreement takes for value to the 
        extent of such transfer[.]; and
          (E) a master netting agreement participant that 
        receives a transfer in connection with a master netting 
        agreement or any individual contract covered thereby 
        takes for value to the extent of such transfer, except, 
        with respect to a transfer under any individual 
        contract covered thereby, to the extent such master 
        netting agreement participant otherwise did not take 
        (or is otherwise not deemed to have taken) such 
        transfer for value.

Sec. 549. Postpetition transactions

  (a)  * * *

           *       *       *       *       *       *       *

  (c) The trustee may not avoid under subsection (a) of this 
section a transfer of an interest in real property to a good 
faith purchaser without knowledge of the commencement of the 
case and for present fair equivalent value unless a copy or 
notice of the petition was filed, where a transfer of such real 
property may be recorded to perfect such transfer, before such 
transfer is so perfected that a bona fide purchaser of such 
real property, against whom applicable law permits such 
transfer to be perfected, could not acquire an interest that is 
superior to [the interest] such interest of such good faith 
purchaser. A good faith purchaser without knowledge of the 
commencement of the case and for less than present fair 
equivalent value has a lien on the property transferred to the 
extent of any present value given, unless a copy or notice of 
the petition was so filed before such transfer was so 
perfected.

           *       *       *       *       *       *       *

Sec. 552. Postpetition effect of security interest

  (a)  * * *
  (b)(1) Except as provided in sections 363, 506(c), 522, 544, 
545, 547, and 548 of this title, if the debtor and an entity 
entered into a security agreement before the commencement of 
the case and ifthe security interest created by such security 
agreement extends to property of the debtor acquired before the 
commencement of the case and to proceeds, [product] products, 
offspring, or profits of such property, then such security interest 
extends to such proceeds, [product] products, offspring, or profits 
acquired by the estate after the commencement of the case to the extent 
provided by such security agreement and by applicable nonbankruptcy 
law, except to any extent that the court, after notice and a hearing 
and based on the equities of the case, orders otherwise.

           *       *       *       *       *       *       *

Sec. 553. Setoff

  (a) Except as otherwise provided in this section and in 
sections 362 and 363 of this title, this title does not affect 
any right of a creditor to offset a mutual debt owing by such 
creditor to the debtor that arose before the commencement of 
the case under this title against a claim of such creditor 
against the debtor that arose before the commencement of the 
case, except to the extent that--
          (1)  * * *

           *       *       *       *       *       *       *

          (3) the debt owed to the debtor by such creditor was 
        incurred by such creditor--
                  (A)  * * *

           *       *       *       *       *       *       *

                  (C) for the purpose of obtaining a right of 
                setoff against the debtor (except for a setoff 
                of a kind described in section 362(b)(6), 
                362(b)(7), 362(b)(17), 362(b)(19), 555, 556, 
                559, 560 or 561 of this title).
  (b)(1) Except with respect to a setoff of a kind described in 
section 362(b)(6), 362(b)(7), [362(b)(14)] 362(b)(17), 
362(b)(19), 555, 556, 559, 560, 561, 365(h), 546(h), or 
365(i)(2) of this title, if a creditor offsets a mutual debt 
owing to the debtor against a claim against the debtor on or 
within 90 days before the date of the filing of the petition, 
then the trustee may recover from such creditor the amount so 
offset to the extent that any insufficiency on the date of such 
setoff is less than the insufficiency on the later of--
          (A)  * * *

           *       *       *       *       *       *       *

[Sec. 555. Contractual right to liquidate a securities contract]

Sec. 555. Contractual right to liquidate, terminate, or accelerate a 
                    securities contract

  The exercise of a contractual right of a stockbroker, 
financial institution, financial participant, or securities 
clearing agency to cause the liquidation, termination, or 
acceleration of a securities contract, as defined in section 
741 of this title, because of a condition of the kind specified 
in section 365(e)(1) of this title shall not be stayed, 
avoided, or otherwise limited by operation of any provision of 
this title or by order of a court or administrative agency in 
any proceeding under this title unless such order is authorized 
under the provisions of the Securities Investor Protection Act 
of 1970 or any statute administered by the Securities and 
Exchange Commission. As used in this section, the term 
``contractual right'' includes a right set forth in a rule or 
bylaw of a national securities exchange, a national securities 
association, or a securities clearing agency, a right set forth 
in a bylaw of a clearing organization or contract market or in 
a resolution of the governing board thereof, and a right, 
whether or not in writing, arising under common law, under law 
merchant, or by reason of normal business practice.

[Sec. 556. Contractual right to liquidate a commodities contract or 
                    forward contract]

Sec. 556. Contractual right to liquidate, terminate, or accelerate a 
                    commodities contract or forward contract

  The contractual right of a commodity broker, financial 
participant or forward contract merchant to cause the 
liquidation, termination, or acceleration of a commodity 
contract, as defined in section 761 of this title, or forward 
contract because of a condition of the kind specified in 
section 365(e)(1) of this title, and the right to a variation 
or maintenance margin payment received from a trustee with 
respect to open commodity contracts or forward contracts, shall 
not be stayed, avoided, or otherwise limited by operation of 
any provision of this title or by the order of a court in any 
proceeding under this title. As used in this section, the term 
``contractual right'' includes a right set forth in a rule or 
bylaw of a clearing organization or contract market or in a 
resolution of the governing board thereof and a right, whether 
or not evidenced in writing, arising under common law, under 
law merchant or by reason of normal business practice.

           *       *       *       *       *       *       *

[Sec. 559. Contractual right to liquidate a repurchase agreement]

Sec. 559. Contractual right to liquidate, terminate, or accelerate a 
                    repurchase agreement

  The exercise of a contractual right of a repo participant to 
cause the liquidation, termination, or acceleration of a 
repurchase agreement because of a condition of the kind 
specified in section 365(e)(1) of this title shall not be 
stayed, avoided, or otherwise limited by operation of any 
provision of this title or by order of a court or 
administrative agency in any proceeding under this title, 
unless, where the debtor is a stockbroker or securities 
clearing agency, such order is authorized under the provisions 
of the Securities Investor Protection Act of 1970 or any 
statute administered by the Securities and Exchange Commission. 
In the event that a repo participant liquidates one or more 
repurchase agreements with a debtor and under the terms of one 
or more such agreements has agreed to deliver assets subject to 
repurchase agreements to the debtor, any excess of the market 
prices received on liquidation of such assets (or if any such 
assets are not disposed of on the date of liquidation of such 
repurchase agreements, at the prices available at the time of 
liquidation of such repurchase agreements from a generally 
recognized source or the most recent closing bid quotationfrom 
such a source) over the sum of the stated repurchase prices and all 
expenses in connection with the liquidation of such repurchase 
agreements shall be deemed property of the estate, subject to the 
available rights of setoff. As used in this section, the term 
``contractual right'' includes a right set forth in a rule or bylaw, 
applicable to each party to the repurchase agreement, of a national 
securities exchange, a national securities association, or a securities 
clearing agency, and a right, whether or not evidenced in writing, 
arising under common law, under law merchant or by reason of normal 
business practice.

[Sec. 560. Contractual right to terminate a swap agreement]

Sec. 560. Contractual right to liquidate, terminate, or accelerate a 
                    swap agreement

  The exercise of any contractual right of any swap participant 
to cause the [termination of a swap agreement] liquidation, 
termination, or acceleration of 1 or more swap agreements 
because of a condition of the kind specified in section 
365(e)(1) of this title or to offset or net out any termination 
values or payment amounts arising under or [in connection with 
any swap agreement] in connection with the termination, 
liquidation, or acceleration of 1 or more swap agreements shall 
not be stayed, avoided, or otherwise limited by operation of 
any provision of this title or by order of a court or 
administrative agency in any proceeding under this title. As 
used in this section, the term ``contractual right'' includes a 
right, whether or not evidenced in writing, arising under 
common law, under law merchant, or by reason of normal business 
practice.

Sec. 561. Contractual right to terminate, liquidate, accelerate, or 
                    offset under a master netting agreement and across 
                    contracts

  (a) In General.--Subject to subsection (b), the exercise of 
any contractual right, because of a condition of the kind 
specified in section 365(e)(1), to cause the termination, 
liquidation, or acceleration of or to offset or net termination 
values, payment amounts or other transfer obligations arising 
under or in connection with 1 or more (or the termination, 
liquidation, or acceleration of 1 or more)--
          (1) securities contracts, as defined in section 
        741(7);
          (2) commodity contracts, as defined in section 
        761(4);
          (3) forward contracts;
          (4) repurchase agreements;
          (5) swap agreements; or
          (6) master netting agreements,
shall not be stayed, avoided, or otherwise limited by operation 
of any provision of this title or by any order of a court or 
administrative agency in any proceeding under this title.
  (b) Exception.--
          (1) A party may exercise a contractual right 
        described in subsection (a) to terminate, liquidate, or 
        accelerate only to the extent that such party could 
        exercise such a right under section 555, 556, 559, or 
        560 for each individual contract covered by the master 
        netting agreement in issue.
          (2) If a debtor is a commodity broker subject to 
        subchapter IV of chapter 7 of this title--
                  (A) a party may not net or offset an 
                obligation to the debtor arising under, or in 
                connection with, a commodity contract against 
                any claim arising under, or in connection with, 
                other instruments, contracts, or agreements 
                listed in subsection (a) except to the extent 
                the party has positive net equity in the 
                commodity accounts at the debtor, as calculated 
                under subchapter IV; and
                  (B) another commodity broker may not net or 
                offset an obligation to the debtor arising 
                under, or in connection with, a commodity 
                contract entered into or held on behalf of a 
                customer of the debtor against any claim 
                arising under, or in connection with, other 
                instruments, contracts, or agreements listed in 
                subsection (a).
  (c) Definition.--As used in this section, the term 
``contractual right'' includes a right set forth in a rule or 
bylaw of a national securities exchange, a national securities 
association, or a securities clearing agency, a right set forth 
in a bylaw of a clearing organization or contract market or in 
a resolution of the governing board thereof, and a right, 
whether or not evidenced in writing, arising under common law, 
under law merchant, or by reason of normal business practice.

Sec. 562. Damage measure in connection with swap agreements, securities 
                    contracts, forward contracts, commodity contracts, 
                    repurchase agreements, or master netting agreements

  If the trustee rejects a swap agreement, securities contract 
as defined in section 741 of this title, forward contract, 
commodity contract (as defined in section 761 of this title) 
repurchase agreement, or master netting agreement pursuant to 
section 365(a) of this title, or if a forward contract 
merchant, stockbroker, financial institution, securities 
clearing agency, repo participant, financial participant, 
master netting agreement participant, or swap participant 
liquidates, terminates, or accelerates such contract or 
agreement, damages shall be measured as of the earlier of--
          (1) the date of such rejection; or
          (2) the date of such liquidation, termination, or 
        acceleration.

                         CHAPTER 7--LIQUIDATION

                SUBCHAPTER I--OFFICERS AND ADMINISTRATION

Sec.
701.  Interim trustee.
     * * * * * * *
[707.  Dismissal.]
707.  Dismissal of a case or conversion to a case under chapter 13.
     * * * * * * *

                 SUBCHAPTER III--STOCKBROKER LIQUIDATION

     * * * * * * *
753.  Stockbroker liquidation and forward contract merchants, commodity 
          brokers, stockbrokers, financial institutions, securities 
          clearing agencies, swap participants, repo participants, and 
          master netting agreement participants.

               SUBCHAPTER IV--COMMODITY BROKER LIQUIDATION

761.  Definitions for this subchapter.
     * * * * * * *
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.

           *       *       *       *       *       *       *

Sec. 704. Duties of trustee

  (a) The trustee shall--
          (1) * * *

           *       *       *       *       *       *       *

          (8) if the business of the debtor is authorized to be 
        operated, file with the court, with the United States 
        trustee, and with any governmental unit charged with 
        responsibility for collection or determination of any 
        tax arising out of such operation, periodic reports and 
        summaries of the operation of such business, including 
        a statement of receipts and disbursements, and such 
        other information as the United States trustee or the 
        court requires; [and]
          (9) make a final report and file a final account of 
        the administration of the estate with the court and 
        with the United States trustee[.];
          (10)(A) With respect to an individual debtor, the 
        trustee shall review all materials filed by the debtor, 
        consider all information presented at the first meeting 
        of creditors, and within 10 days after the first 
        meeting of creditors file with the court a statement as 
        to whether the debtor's case should be presumed to be 
        an abuse under section 707(b) of this title. The court 
        shall provide a copy of such statement to all creditors 
        within 5 days after such statement is filed. If, based 
        on the filing of such statement with the court, the 
        trustee determines that the debtor's case should be 
        presumed to be an abuse under section 707(b) of this 
        title and if the current monthly income of the debtor 
        and the debtor's spouse combined, as of the date of the 
        order for relief, when multiplied by 12, is not less 
        than the highest national median family income reported 
        for a family of equal or lesser size, or in the case of 
        a household of 1 person, the national median household 
        income for 1 earner, then the trustee shall within 30 
        days of the filing of such statement, either--
                  (i) file a motion to dismiss or convert under 
                section 707(b) of this title; or
                  (ii) file a statement setting forth the 
                reasons the trustee or bankruptcy administrator 
                does not believe that such a motion would be 
                appropriate.
          (B) Notwithstanding subparagraph (A), for purposes of 
        this paragraph the national family income for a family 
        of more than 4 individuals shall be the national median 
        family income lastreported by the Bureau of the Census 
for a family of 4 individuals plus $583 for each additional member of 
the family; and
          (11) if, with respect to an individual debtor, there 
        is a claim for support of a child of the debtor or a 
        custodial parent of such child entitled to receive 
        priority under section 507(a)(1) of this title, provide 
        the applicable notification specified in subsection 
        (b).
  (b)(1) In any case described in subsection (a)(11), the 
trustee shall--
          (A)(i) notify in writing the holder of the claim of 
        the right of such holder to use the services of a State 
        child support enforcement agency established under 
        sections 464 and 466 of the Social Security Act for the 
        State in which the holder resides; and
          (ii) include in the notice under this paragraph the 
        address and telephone number of the child support 
        enforcement agency; and
          (B)(i) notify in writing the State child support 
        agency of the State in which the holder of the claim 
        resides of the claim;
          (ii) include in the notice under this paragraph the 
        name, address, and telephone number of the holder of 
        the claim; and
          (iii) at such time as the debtor is granted a 
        discharge under section 727 of this title, notify the 
        holder of such claim and the State child support agency 
        of the State in which such holder resides of--
                  (I) the granting of the discharge;
                  (II) the last recent known address of the 
                debtor; and
                  (III) with respect to the debtor's case, the 
                name of each creditor that holds a claim that 
                is not discharged under paragraph (2), (4), or 
                (14A) of section 523(a) of this title or that 
                was reaffirmed by the debtor under section 
                524(c) of this title.
  (2)(A) If, after receiving a notice under paragraph 
(1)(B)(iii), a holder of a claim or a State child support 
agency is unable to locate the debtor that is the subject of 
the notice, such holder or such agency may request from a 
creditor described in paragraph (1)(B)(iii)(III) the last known 
address of the debtor.
  (B) Notwithstanding any other provision of law, a creditor 
that makes a disclosure of a last known address of a debtor in 
connection with a request made under subparagraph (A) shall not 
be liable to the debtor or any other person by reason of making 
such disclosure.

           *       *       *       *       *       *       *

Sec. 706. Conversion

  (a) * * *

           *       *       *       *       *       *       *

  (c) The court may not convert a case under this chapter to a 
case under chapter 12 or 13 of this title unless the debtor 
requests or consents to such conversion.

           *       *       *       *       *       *       *

[Sec. 707. Dismissal]

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

  (a) * * *
  (b)(1) After notice and a hearing, the court, on its own 
motion or on a motion by the United States trustee, [but not at 
the request or suggestion of] the trustee, or any party in 
interest, may dismiss a case filed by an individual debtor 
under this chapter whose debts are primarily consumer debts, 
or, with the debtor's consent, convert such a case to a case 
under chapter 13 of this title, if it finds that the granting 
of relief would be a [substantial] abuse of the provisions of 
this chapter. [There shall be a presumption in favor of 
granting the relief requested by the debtor. In making a 
determination whether to dismiss a case under this section, the 
court may not take into consideration whether a debtor has 
made, or continues to make, charitable contributions (that meet 
the definition of ``charitable contribution'' under section 
548(d)(3)) to any qualified religious or charitable entity or 
organization (as that term is defined in section 548(d)(4)).]
  (2)(A)(i) In considering under paragraph (1) whether the 
granting of relief would be an abuse of the provisions of this 
chapter, the court shall presume abuse exists if the debtor's 
current monthly income less estimated administrative expenses 
and reasonable attorneys' fees, and amounts set forth in 
clauses (ii) for monthly expenses (which shall include, if 
applicable, the continuation of actual expenses of a dependent 
child under the age of 18 for tuition, books, and required fees 
at a private elementary or secondary school, not exceeding 
$10,000 per year, which amount shall be adjusted pursuant to 
section 104(b)), (iii) for monthly payments on account of 
secured debts, and (iv) for monthly unsecured priority debt 
payments, and multiplied by 60 months is not less than $6,000.
  (ii) The debtor's monthly expenses shall be the debtor's 
applicable monthly expense amounts specified under the National 
Standards and Local Standards, and the debtor's applicable 
monthly expenses for the categories specifically listed as 
Other Necessary Expenses issued by the Internal Revenue Service 
for the area in which the debtor resides, as in effect on the 
date of the entry of the order for relief, for the debtor, the 
dependents of the debtor, and the spouse of the debtor in a 
joint case, if the spouse is not otherwise a dependent. In 
addition, if it is demonstrated that it is reasonable and 
necessary, the debtor may also subtract an allowance of up to 
5% of the food and clothing categories as specified by the 
National Standards issued by the Internal Revenue Service. 
Notwithstanding any other provision of this clause, the 
debtor's monthly expenses shall not include any payments for 
debts.
  (iii) The debtor's average monthly payments on account of 
secured debts shall be calculated as the total of all amounts 
scheduled as contractually due to secured creditors in each 
month of the 60 months following the date of the petition, and 
dividing that total by 60 months.
  (iv) The debtor's monthly unsecured priority debt payments 
(including payments for priority child support and alimony 
claims)shall be calculated as the total amount of unsecured 
debts entitled to priority, and dividing the total by 60 months.
  (v) For the purposes of this subsection, a family or 
household shall consist of the debtor, the debtor's spouse, and 
the debtor's dependents, but not a legally separated spouse 
unless the spouse files a joint case with the debtor.
  (B) In any proceeding brought under this subsection, the 
presumption of abuse may be rebutted only by demonstrating 
extraordinary circumstances that require additional expenses or 
adjustment of current monthly income. In order to establish 
extraordinary circumstances, the debtor must itemize each 
additional expense or adjustment of income and provide 
documentation for such expenses or adjustment of income and a 
detailed explanation of the extraordinary circumstances which 
make such expenses or adjustment of income necessary and 
reasonable. The debtor shall attest under oath to the accuracy 
of any information provided to demonstrate that additional 
expenses or adjustment to income are required. The presumption 
of abuse may be rebutted only if such additional expenses or 
adjustments to income cause the debtor's current monthly income 
less estimated administrative expenses and reasonable 
attorneys' fees, and the amounts set forth in clauses (ii), 
(iii), and (iv) of subparagraph (A) when multiplied by 60 to be 
less than $6,000.
  (C) As part of the schedule of current income and 
expenditures required under section 521 of this title, the 
debtor shall include a statement of the debtor's current 
monthly income, and the calculations which determine whether a 
presumption arises under subparagraph (A)(i), showing how each 
amount is calculated. The bankruptcy rules promulgated under 
section 2075 of title 28, United States Code, shall prescribe a 
form for such statement and may provide general rules on its 
content.
  (D) No judge, United States trustee, panel trustee, 
bankruptcy administrator or other party in interest shall bring 
a motion under this paragraph if the debtor and the debtor's 
spouse combined, as of the date of the order for relief, have 
current monthly total income equal to or less than the regional 
median household monthly income calculated on a semiannual 
basis for a household of equal size. However, for a household 
of more than 4 individuals, the median income shall be that of 
a household of 4 individuals plus $583 for each additional 
member of that household.
  (3) In considering under paragraph (1) whether the granting 
of relief would be an abuse of the provisions of this chapter 
in a case in which the presumption in paragraph (2)(A)(i) does 
not apply or has been rebutted, the court shall consider--
          (A) whether the debtor filed the petition in bad 
        faith; or
          (B) the totality of the circumstances (including 
        whether the debtor seeks to reject a personal services 
        contract and the financial need for such rejection as 
        sought by the debtor) of the debtor's financial 
        situation demonstrates abuse.
  (4)(A) If a panel trustee appointed under section 586(a)(1) 
of title 28 or bankruptcy administrator brings a motion for 
dismissal or conversion under this subsection and the court 
grants that motion and finds that the action of the counsel for 
the debtor in filing under this chapter violated Rule 9011, the 
court shall assess damages which may include ordering:
          (i) the counsel for the debtor to reimburse the 
        trustee for all reasonable costs in prosecuting the 
        motion, including reasonable attorneys' fees.
          (ii) the assessment of an appropriate civil penalty 
        against the counsel for the debtor; and
          (iii) the payment of the civil penalty to the panel 
        trustee, bankruptcy administrator or the United States 
        trustee.
  (B) In the case of a petition filed under sections 301, 302, 
or 303 of this title and supporting lists, schedules and 
documents filed under section 521(a)(1) of this title, the 
signature of an attorney on the petition shall constitute a 
certificate that the attorney has--
          (i) performed a reasonable investigation into the 
        circumstances that gave rise to the petition; and
          (ii) determined that the petition, lists, schedules, 
        and documents--
                  (I) are well grounded in fact; and
                  (II) are warranted by existing law or a good 
                faith argument for the extension, modification, 
                or reversal of existing law and do not 
                constitute an abuse under paragraph (1) of this 
                subsection.
  (5) The court may award a debtor all reasonable costs in 
contesting a motion filed by a party in interest (not including 
a trustee or the United States trustee) under this subsection 
(including reasonable attorneys' fees) if--
          (A) the court does not grant the motion; and
          (B) the court finds that--
                  (i) the position of the party that brought 
                the motion was not substantially justified; or
                  (ii) the party brought the motion solely for 
                the purpose of coercing a debtor into waiving a 
                right guaranteed to the debtor under this 
                title.
  (6) However, only the court, the United States trustee, or 
the trustee may file a motion to dismiss or convert a case 
under this subsection if the current monthly income of the 
debtor and the debtor's spouse combined, as of the date of the 
order for relief, when multiplied by 12, is less than the 
highest national median family income last reported by the 
Bureau of the Census for a family of equal or lesser size, or 
in the case of a household of 1 person, the national median 
household income for 1 earner. Notwithstanding the foregoing, 
the national median family income for a family of more than 4 
individuals shall be the national median family income last 
reported by the Bureau of the Census for a family of 4 
individuals plus $583 for each additional member of the family.
  (7) In making a determination whether to dismiss a case under 
this section, the court may not take into consideration whether 
a debtor has made, or continues to make, charitable 
contributions (that meet the definition of `charitable 
contribution' under section 548(d)(3)) to any qualified 
religious or charitable entity or organization (as that term is 
defined in section 548(d)(4)).
  (8) Not later than 3 years after the date of enactment of the 
Bankruptcy Reform Act of 1999, the Director of the Executive 
Office for United States Trustees shall submit a report, to the 
Committee on the Judiciary of the House of Representatives and 
the Committee on the Judiciary of the Senate, containing its 
findings regarding theutilization of the Internal Revenue 
Service standards for determining the current monthly expenses under 
section 707(b)(1)(A)(ii) of title 11, United States Code, of debtors 
and the impact that the application of such standards has had on 
debtors and on the bankruptcy courts. Such report may include 
recommendations for amendments to such title, consistent with the 
Director's findings.

 SUBCHAPTER II--COLLECTION, LIQUIDATION, AND DISTRIBUTION OF THE ESTATE

Sec. 722. Redemption

  An individual debtor may, whether or not the debtor has 
waived the right to redeem under this section, redeem tangible 
personal property intended primarily for personal, family, or 
household use, from a lien securing a dischargeable consumer 
debt, if such property is exempted under section 522 of this 
title or has been abandoned under section 554 of this title, by 
paying the holder of such lien the amount of the allowed 
secured claim of such holder that is secured by such lien in 
full at the time of redemption.

           *       *       *       *       *       *       *

Sec. 724. Treatment of certain liens

  (a) The trustee may avoid a lien that secures a claim of a 
kind specified in section 726(a)(4) of this title.
  (b) Property in which the estate has an interest and that is 
subject to a lien that is not avoidable under this title (other 
than to the extent that there is a properly perfected 
unavoidable tax lien arising in connection with an ad valorem 
tax on real or personal property of the estate) and that 
secures an allowed claim for a tax, or proceeds of such 
property, shall be distributed--
          (1) first, to any holder of an allowed claim secured 
        by a lien on such property that is not avoidable under 
        this title and that is senior to such tax lien;
          (2) second, to any holder of a claim of a kind 
        specified in section 507(a)(1) (except that such 
        expenses, other than claims for wages, salaries, or 
        commissions which arise after the filing of a petition, 
        shall be limited to expenses incurred under chapter 7 
        of this title and shall not include expenses incurred 
        under chapter 11 of this title), 507(a)(2), 507(a)(3), 
        507(a)(4), 507(a)(5), 507(a)(6), or 507(a)(7) of this 
        title, to the extent of the amount of such allowed tax 
        claim that is secured by such tax lien;

           *       *       *       *       *       *       *

  (e) Before subordinating a tax lien on real or personal 
property of the estate, the trustee shall--
          (1) exhaust the unencumbered assets of the estate; 
        and
          (2) in a manner consistent with section 506(c) of 
        this title, recover from property securing an allowed 
        secured claim the reasonable, necessary costs and 
        expenses of preserving or disposing of that property.
  (f) Notwithstanding the exclusion of ad valorem tax liens set 
forth in this section and subject to the requirements of 
subsection (e)--
          (1) claims for wages, salaries, and commissions that 
        are entitled to priority under section 507(a)(3) of 
        this title; or
          (2) claims for contributions to an employee benefit 
        plan entitled to priority under section 507(a)(4) of 
        this title,
may be paid from property of the estate which secures a tax 
lien, or the proceeds of such property.

           *       *       *       *       *       *       *

Sec. 726. Distribution of property of the estate

  (a) Except as provided in section 510 of this title, property 
of the estate shall be distributed--
          (1) first, in payment of claims of the kind specified 
        in, and in the order specified in, section 507 of this 
        title, proof of which is timely filed under section 501 
        of this title or tardily filed [before the date on 
        which the trustee commences distribution under this 
        section] on or before the earlier of 10 days after the 
        mailing to creditors of the summary of the trustee's 
        final report or the date on which the trustee commences 
        final distribution under this section;

           *       *       *       *       *       *       *

  (b) Payment on claims of a kind specified in paragraph (1), 
(2), (3), (4), (5), (6), (7), or (8) of section 507(a) of this 
title, or in paragraph (2), (3), (4), or (5) of subsection (a) 
of this section, shall be made pro rata among claims of the 
kind specified in each such particular paragraph, except that 
in a case that has been converted to this chapter under section 
[1009,] 1112, 1208, or 1307 of this title, a claim allowed 
under section 503(b) of this title incurred under this chapter 
after such conversion has priority over a claim allowed under 
section 503(b) of this title incurred under any other chapter 
of this title or under this chapter before such conversion and 
over any expenses of a custodian superseded under section 543 
of this title.

           *       *       *       *       *       *       *

Sec. 727. Discharge

  (a) The court shall grant the debtor a discharge, unless--
          (1) * * *

           *       *       *       *       *       *       *

          (8) the debtor has been granted a discharge under 
        this section, under section 1141 of this title, or 
        under section 14, 371, or 476 of the Bankruptcy Act, in 
        a case commenced within [six] 8 years before the date 
        of the filing of the petition;
          (9) the debtor has been granted a discharge under 
        section 1228 or 1328 of this title, or under section 
        660 or 661 of the Bankruptcy Act, in a case commenced 
        within six years before the date of the filing of the 
        petition, unless payments under the plan in such case 
        totaled at least--
                  (A) 100 percent of the allowed unsecured 
                claims in such case; or
                  (B)(i) 70 percent of such claims; and
                  (ii) the plan was proposed by the debtor in 
                good faith, and was the debtor's best effort; 
                [or]
          (10) the court approves a written waiver of discharge 
        executed by the debtor after the order for relief under 
        this chapter[.]; or
          (11) after the filing of the petition, the debtor 
        failed to complete an instructional course concerning 
        personal financial management described in section 111 
        unless the debtor resides in a district for which the 
        United States trustee or bankruptcy administrator of 
        the bankruptcy court of that district determines that 
        the approved instructional courses are not adequate to 
        provide service to the additional individuals who would 
        be required to compete the instructional course by 
        reason of the requirements of this section. Each United 
        States trustee or bankruptcy administrator that makes 
        such a determination shall review that determination 
        not later than 1 year after the date of that 
        determination, and not less frequently than every year 
        thereafter.

           *       *       *       *       *       *       *

  (d) On request of the trustee, a creditor, or the United 
States trustee, and after notice and a hearing, the court shall 
revoke a discharge granted under subsection (a) of this section 
if--
          (1) * * *
          (2) the debtor acquired property that is property of 
        the estate, or became entitled to acquire property that 
        would be property of the estate, and knowingly and 
        fraudulently failed to report the acquisition of or 
        entitlement to such property, or to deliver or 
        surrender such property to the trustee; [or]
          (3) the debtor committed an act specified in 
        subsection (a)(6) of this section[.]; or
          (4) the debtor has failed to explain satisfactorily--
                  (A) a material misstatement in an audit 
                performed pursuant to section 586(f) of title 
                28, United States Code; or
                  (B) a failure to make available for 
                inspection all necessary accounts, papers, 
                documents, financial records, files, and all 
                other papers, things, or property belonging to 
                the debtor that are requested for an audit 
                conducted pursuant to section 586(f) of title 
                28, United States Code.

           *       *       *       *       *       *       *

                SUBCHAPTER III--STOCKBROKER LIQUIDATION

Sec. 741. Definitions for this subchapter

  In this subchapter--
          (1) * * *

           *       *       *       *       *       *       *

          [(7) ``securities contract'' means contract for the 
        purchase, sale, or loan of a security, including an 
        option for the purchase or sale of a security, 
        certificate of deposit, or group or index of securities 
        (including any interest therein or based on the value 
        thereof), or any option entered into on a national 
        securities exchange relating to foreign currencies, or 
        the guarantee of any settlement of cash or securities 
        by or to a securities clearing agency;]
          (7) ``securities contract''--
                  (A) means--
                          (i) a contract for the purchase, 
                        sale, or loan of a security, a 
                        certificate of deposit, a mortgage loan 
                        or any interest in a mortgage loan, a 
                        group or index of securities, 
                        certificates of deposit or mortgage 
                        loans or interests therein (including 
                        an interest therein or based on the 
                        value thereof), or option on any of the 
                        foregoing, including an option to 
                        purchase or sell any such security 
                        certificate of deposit, loan, interest, 
                        group or index or option;
                          (ii) any option entered into on a 
                        national securities exchange relating 
                        to foreign currencies;
                          (iii) the guarantee by or to any 
                        securities clearing agency of a 
                        settlement of cash, securities, 
                        certificates of deposit mortgage loans 
                        or interests therein, group or index of 
                        securities, or mortgage loans or 
                        interests therein (including any 
                        interest therein or based on the value 
                        thereof), or option on any of the 
                        foregoing, including an option to 
                        purchase or sell any such security 
                        certificate of deposit, loan, interest, 
                        group or index or option;
                          (iv) any margin loan;
                          (v) any other agreement or 
                        transaction that is similar to an 
                        agreement or transaction referred to in 
                        this paragraph;
                          (vi) any combination of the 
                        agreements or transactions referred to 
                        in this paragraph;
                          (vii) any option to enter into any 
                        agreement or transaction referred to in 
                        this paragraph;
                          (viii) a master agreement that 
                        provides for an agreement or 
                        transaction referred to in clause (i), 
                        (ii), (iii), (iv), (v), (vi), or (vii), 
                        together with all supplements to any 
                        such master agreement, without regard 
                        to whether the master agreement 
                        provides for an agreement or 
                        transaction that is not a securities 
                        contract under this paragraph, except 
                        that such master agreement shall be 
                        considered to be a securities contract 
                        under this paragraph only with respect 
                        to each agreement or transaction under 
                        such master agreement that is referred 
                        to in clause (i), (ii), (iii), (iv), 
                        (v), (vi), or (vii); or
                          (ix) any security agreement or 
                        arrangement, or other credit 
                        enhancement, related to any agreement 
                        or transaction referred to in this 
                        paragraph, but not to exceed the actual 
                        value of such contract on the date of 
                        the filing of the petition; and
                  (B) does not include any purchase, sale, or 
                repurchase obligation under a participation in 
                a commercial mortgage loan.

           *       *       *       *       *       *       *

Sec. 753. Stockbroker liquidation and forward contract merchants, 
                    commodity brokers, stockbrokers, financial 
                    institutions, securities clearing agencies, swap 
                    participants, repo participants, and master netting 
                    agreement participants

  Notwithstanding any other provision of this title, the 
exercise of rights by a forward contract merchant, commodity 
broker, stockbroker, financial institution, securities clearing 
agency, swap participant, repo participant, financial 
participant, or master netting agreement participant under this 
title shall not affect the priority of any unsecured claim it 
may have after the exercise of such rights.

              SUBCHAPTER IV--COMMODITY BROKER LIQUIDATION

Sec. 761. Definitions for this subchapter

  In this subchapter--
          (1) * * *

           *       *       *       *       *       *       *

          (4) ``commodity contract'' means--
                  (A) * * *

           *       *       *       *       *       *       *

                  (D) with respect to a clearing organization, 
                contract for the purchase or sale of a 
                commodity for future delivery on, or subject to 
                the rules of, a contract market or board of 
                trade that is cleared by such clearing 
                organization, or commodity option traded on, or 
                subject to the rules of, a contract market or 
                board of trade that is cleared by such clearing 
                organization; [or]

           *       *       *       *       *       *       *

                  (F) any other agreement or transaction that 
                is similar to an agreement or transaction 
                referred to in this paragraph;
                  (G) any combination of the agreements or 
                transactions referred to in this paragraph;
                  (H) any option to enter into an agreement or 
                transaction referred to in this paragraph;
                  (I) a master agreement that provides for an 
                agreement or transaction referred to in 
                subparagraph (A), (B), (C), (D), (E), (F), (G), 
                or (H), together with all supplements to such 
                master netting agreement, without regard to 
                whether the master netting agreement provides 
                for an agreement or transaction that is not a 
                commodity contract under this paragraph, except 
                that the master agreement shall be considered 
                to be a commodity contract under this paragraph 
                only with respect to each agreement or 
                transaction under the master agreement that is 
                referred to in subparagraph (A), (B), (C), (D), 
                (E), (F), (G), or (H); or
                  (J) a security agreement or arrangement, or 
                other credit enhancement related to any 
                agreement or transaction referred to in this 
                paragraph, but not to exceed the actual value 
                of such contract on the date of the filing of 
                the petition;

           *       *       *       *       *       *       *

Sec. 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

  Notwithstanding any other provision of this title, the 
exercise of rights by a forward contract merchant, commodity 
broker, stockbroker, financial institution, securities clearing 
agency, swap participant, repo participant, or master netting 
agreement participant under this title shall not affect the 
priority of any unsecured claim it may have after the exercise 
of such rights.

           *       *       *       *       *       *       *

CHAPTER 9--ADJUSTMENT OF DEBTS OF A MUNICIPALITY

           *       *       *       *       *       *       *

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec. 901. Applicability of other sections of this title

  (a) Sections 301, 344, 347(b), 349, 350(b), 361, 362, 364(c), 
364(d), 364(e), 364(f), 365, 366, 501, 502, 503, 504, 506, 
507(a)(1), 509, 510, 524(a)(1), 524(a)(2), 544, 545, 546, 547, 
548, 549(a), 549(c), 549(d), 550, 551, 552, 553, 555, 556, 557, 
559, 560, 561, 562, 1102, 1103, 1109, 1111(b), 1122, 
1123(a)(1), 1123(a)(2), 1123(a)(3), 1123(a)(4), 1123(a)(5), 
1123(b), 1123(d), 1124, 1125, 1126(a), 1126(b), 1126(c), 
1126(e), 1126(f), 1126(g), 1127(d), 1128, 1129(a)(2), 
1129(a)(3), 1129(a)(6), 1129(a)(8), 1129(a)(10), 1129(b)(1), 
1129(b)(2)(A), 1129(b)(2)(B), 1142(b), 1143, 1144, and 1145 of 
this title apply in a case under this chapter.

           *       *       *       *       *       *       *

                     SUBCHAPTER II--ADMINISTRATION

Sec. 921. Petition and proceedings relating to petition

  (a) * * *

           *       *       *       *       *       *       *

  (d) If the petition is not dismissed under subsection (c) of 
this section, the court shall order relief under this chapter 
notwithstanding section 301(b).

           *       *       *       *       *       *       *

                       CHAPTER 11--REORGANIZATION

                SUBCHAPTER I--OFFICERS AND ADMINISTRATION

Sec.
1101.  Definitions for this chapter.
     * * * * * * *
1115.  Duties of trustee or debtor in possession in small business 
          cases.

           *       *       *       *       *       *       *

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

  (a)(1) * * *
  (2) On its own motion or on request of a party in interest, 
and after notice and hearing, the court may order a change in 
the membership of a committee appointed under this subsection, 
if the court determines that the change is necessary to ensure 
adequate representation of creditors or equity security 
holders. On request of a party in interest, the court may order 
the appointment of additional committees of creditors or of 
equity security holders if necessary to assure adequate 
representation of creditors or of equity security holders. The 
United States trustee shall appoint any such committee.
  (3) On request of a party in interest in a case in which the 
debtor is a small business debtor and for cause, the court may 
order that a committee of creditors not be appointed.

           *       *       *       *       *       *       *

Sec. 1104. Appointment of trustee or examiner

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

           *       *       *       *       *       *       *

  (e) If grounds exist to convert or dismiss the case under 
section 1112 of this title, the court may instead appoint a 
trustee or examiner, if it determines that such appointment is 
in the best interests of creditors and the estate.

           *       *       *       *       *       *       *

[Sec. 1110. Aircraft equipment and vessels

  [(a)(1) The right of a secured party with a security interest 
in equipment described in paragraph (2) or of a lessor or 
conditionalvendor of such equipment to take possession of such 
equipment in compliance with a security agreement, lease, or 
conditional sale contract is not affected by section 362, 363, or 1129 
or by any power of the court to enjoin the taking of possession 
unless--
          [(A) before the date that is 60 days after the date 
        of the order for relief under this chapter, the 
        trustee, subject to the court's approval, agrees to 
        perform all obligations of the debtor that become due 
        on or after the date of the order under such security 
        agreement, lease, or conditional sale contract; and
          [(B) any default, other than a default of a kind 
        specified in section 365(b)(2), under such security 
        agreement, lease, or conditional sale contract--
                  [(i) that occurs before the date of the order 
                is cured before the expiration of such 60-day 
                period; and
                  [(ii) that occurs after the date of the order 
                is cured before the later of--
                          [(I) the date that is 30 days after 
                        the date of the default; or
                          [(II) the expiration of such 60-day 
                        period.
  [(2) Equipment is described in this paragraph if it is--
          [(A) an aircraft, aircraft engine, propeller, 
        appliance, or spare part (as defined in section 40102 
        of title 49) that is subject to a security interest 
        granted by, leased to, or conditionally sold to a 
        debtor that is a citizen of the United States (as 
        defined in section 40102 of title 49) holding an air 
        carrier operating certificate issued by the Secretary 
        of Transportation pursuant to chapter 447 of title 49 
        for aircraft capable of carrying 10 or more individuals 
        or 6,000 pounds or more of cargo; or
          [(B) a documented vessel (as defined in section 
        30101(1) of title 46) that is subject to a security 
        interest granted by, leased to, or conditionally sold 
        to a debtor that is a water carrier that holds a 
        certificate of public convenience and necessity or 
        permit issued by the Interstate Commerce Commission.
  [(3) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as 
trustee or otherwise in behalf of another party.
  [(b) The trustee and the secured party, lessor, or 
conditional vendor whose right to take possession is protected 
under subsection (a) may agree, subject to the court's 
approval, to extend the 60-day period specified in subsection 
(a)(1).
  [(c) With respect to equipment first placed in service on or 
prior to the date of enactment of this subsection, for purposes 
of this section--
          [(1) the term ``lease'' includes any written 
        agreement with respect to which the lessor and the 
        debtor, as lessee, have expressed in the agreement or 
        in a substantially contemporaneous writing that the 
        agreement is to be treated as a lease for Federal 
        income tax purposes; and
          [(2) the term ``security interest'' means a purchase-
        money equipment security interest.]

Sec. 1110. Aircraft equipment and vessels

  (a)(1) Except as provided in paragraph (2) and subject to 
subsection (b), the right of a secured party with a security 
interest in equipment described in paragraph (3), or of a 
lessor or conditional vendor of such equipment, to take 
possession of such equipment in compliance with a security 
agreement, lease, or conditional sale contract, and to enforce 
any of its other rights or remedies, under such security 
agreement, lease, or conditional sale contract, to sell, lease, 
or otherwise retain or dispose of such equipment, is not 
limited or otherwise affected by any other provision of this 
title or by any power of the court.
  (2) The right to take possession and to enforce the other 
rights and remedies described in paragraph (1) shall be subject 
to section 362 of this title if--
          (A) before the date that is 60 days after the date of 
        the order for relief under this chapter, the trustee, 
        subject to the approval of the court, agrees to perform 
        all obligations of the debtor under such security 
        agreement, lease, or conditional sale contract; and
          (B) any default, other than a default of a kind 
        specified in section 365(b)(2) of this title, under 
        such security agreement, lease, or conditional sale 
        contract--
                  (i) that occurs before the date of the order 
                is cured before the expiration of such 60-day 
                period;
                  (ii) that occurs after the date of the order 
                and before the expiration of such 60-day period 
                is cured before the later of--
                          (I) the date that is 30 days after 
                        the date of the default; or
                          (II) the expiration of such 60-day 
                        period; and
                  (iii) that occurs on or after the expiration 
                of such 60-day period is cured in compliance 
                with the terms of such security agreement, 
                lease, or conditional sale contract, if a cure 
                is permitted under that agreement, lease, or 
                contract.
  (3) The equipment described in this paragraph--
          (A) is--
                  (i) an aircraft, aircraft engine, propeller, 
                appliance, or spare part (as defined in section 
                40102 of title 49) that is subject to a 
                security interest granted by, leased to, or 
                conditionally sold to a debtor that, at the 
                time such transaction is entered into, holds an 
                air carrier operating certificate issued 
                pursuant to chapter 447 of title 49 for 
                aircraft capable of carrying 10 or more 
                individuals or 6,000 pounds or more of cargo; 
                or
                  (ii) a documented vessel (as defined in 
                section 30101(1) of title 46) that is subject 
                to a security interest granted by, leased to, 
                or conditionally sold to a debtor that is a 
                water carrier that, at the time such 
                transaction is entered into, holds a 
                certificate of public convenience and necessity 
                or permit issued by the Department of 
                Transportation; and
          (B) includes all records and documents relating to 
        such equipment that are required, under the terms of 
        the security agreement, lease, or conditional sale 
        contract, to be surrendered or returned by the debtor 
        in connection with the surrender or return of such 
        equipment.
  (4) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as 
trustee or otherwise in behalf of another party.
  (b) The trustee and the secured party, lessor, or conditional 
vendor whose right to take possession is protected under 
subsection (a) may agree, subject to the approval of the court, 
to extend the 60-day period specified in subsection (a)(1).
  (c)(1) In any case under this chapter, the trustee shall 
immediately surrender and return to a secured party, lessor, or 
conditional vendor, described in subsection (a)(1), equipment 
described in subsection (a)(3), if at any time after the date 
of the order for relief under this chapter such secured party, 
lessor, or conditional vendor is entitled pursuant to 
subsection (a)(1) to take possession of such equipment and 
makes a written demand for such possession to the trustee.
  (2) At such time as the trustee is required under paragraph 
(1) to surrender and return equipment described in subsection 
(a)(3), any lease of such equipment, and any security agreement 
or conditional sale contract relating to such equipment, if 
such security agreement or conditional sale contract is an 
executory contract, shall be deemed rejected.
  (d) With respect to equipment first placed in service on or 
before October 22, 1994, for purposes of this section--
          (1) the term ``lease'' includes any written agreement 
        with respect to which the lessor and the debtor, as 
        lessee, have expressed in the agreement or in a 
        substantially contemporaneous writing that the 
        agreement is to be treated as a lease for Federal 
        income tax purposes; and
          (2) the term ``security interest'' means a purchase-
        money equipment security interest.

           *       *       *       *       *       *       *

Sec. 1112. Conversion or dismissal

  (a) The debtor may convert a case under this chapter to a 
case under chapter 7 of this title unless--
  [(b) Except as provided in subsection (c) of this section, on 
request of a party in interest or the United States trustee or 
bankruptcy administrator, and after notice and a hearing, the 
court may convert a case under this chapter to a case under 
chapter 7 of this title or may dismiss a case under this 
chapter, whichever is in the best interest of creditors and the 
estate, for cause, including--
          [(1) continuing loss to or diminution of the estate 
        and absence of a reasonable likelihood of 
        rehabilitation;
          [(2) inability to effectuate a plan;
          [(3) unreasonable delay by the debtor that is 
        prejudicial to creditors;
          [(4) failure to propose a plan under section 1121 of 
        this title within any time fixed by the court;
          [(5) denial of confirmation of every proposed plan 
        and denial of a request made for additional time for 
        filing another plan or a modification of a plan;
          [(6) revocation of an order of confirmation under 
        section 1144 of this title, and denial of confirmation 
        of another plan or a modified plan under section 1129 
        of this title;
          [(7) inability to effectuate substantial consummation 
        of a confirmed plan;
          [(8) material default by the debtor with respect to a 
        confirmed plan;
          [(9) termination of a plan by reason of the 
        occurrence of a condition specified in the plan; or
          [(10) nonpayment of any fees or charges required 
        under chapter 123 of title 28.]
  (b)(1) Except as provided in paragraphs (2) and (4) of this 
subsection, and in subsection (c) of this section, on request 
of a party in interest, and after notice and a hearing, the 
court shall convert a case under this chapter to a case under 
chapter 7 of this title or dismiss a case under this chapter, 
or appoint a trustee or examiner under section 1104(e) of this 
title, whichever is in the best interest of creditors and the 
estate, if the movant establishes cause.
  (2) The court may decline to grant the relief specified in 
paragraph (1) of this subsection if the debtor or another party 
in interest objects and establishes by a preponderance of the 
evidence that--
          (A) it is more likely than not that a plan will be 
        confirmed within a time as fixed by this title or by 
        order of the court entered pursuant to section 
        1121(e)(3), or within a reasonable time if no time has 
        been fixed; and
          (B) if the cause is an act or omission of the debtor 
        that--
                  (i) there exists a reasonable justification 
                for the act or omission; and
                  (ii) the act or omission will be cured within 
                a reasonable time fixed by the court not to 
                exceed 30 days after the court decides the 
                motion, unless the movant expressly consents to 
                a continuance for a specific period of time, or 
                compelling circumstances beyond the control of 
                the debtor justify an extension.
  (3) For purposes of this subsection, cause includes--
          (A) substantial or continuing loss to or diminution 
        of the estate;
          (B) gross mismanagement of the estate;
          (C) failure to maintain insurance that poses a 
        material risk to the estate or the public;
          (D) unauthorized use of cash collateral harmful to 1 
        or more creditors;
          (E) failure to comply with an order of the court;
          (F) failure timely to satisfy any filing or reporting 
        requirement established by this title or by any rule 
        applicable to a case under this chapter;
          (G) failure to attend the meeting of creditors 
        convened under section 341(a) of this title;
          (H) failure timely to provide information or attend 
        meetings reasonably requested by the United States 
        trustee or bankruptcy administrator;
          (I) failure timely to pay taxes due after the date of 
        the order for relief or to file tax returns due after 
        the order for relief;
          (J) failure to file a disclosure statement, or to 
        file or confirm a plan, within the time fixed by this 
        title or by order of the court;
          (K) failure to pay any fees or charges required under 
        chapter 123 of title 28;
          (L) revocation of an order of confirmation under 
        section 1144 of this title;
          (M) inability to effectuate substantial consummation 
        of a confirmed plan;
          (N) material default by the debtor with respect to a 
        confirmed plan; and
          (O) termination of a plan by reason of the occurrence 
        of a condition specified in the plan.
  (4) The court may grant relief under this subsection for 
cause as defined in subparagraphs C, F, G, H, or K of paragraph 
3 of this subsection only upon motion of the United States 
trustee or bankruptcy administrator or upon the court s own 
motion.
  (5) The court shall commence the hearing on any motion under 
this subsection not later than 30 days after filing of the 
motion, and shall decide the motion within 15 days after 
commencement of the hearing, unless the movant expressly 
consents to a continuance for a specific period of time or 
compelling circumstances prevent the court from meeting the 
time limits established by this paragraph.
  (6) In addition to any other relief granted under this 
subsection, if the cause established is an act or omission of 
the debtor, the court may impose monetary sanctions against the 
debtor, debtor's responsible person, and/or a professional 
employed by the debtor responsible for the act or omission.

           *       *       *       *       *       *       *

Sec. 1115. Duties of trustee or debtor in possession in small business 
                    cases

  (a) In a small business case, a trustee or the debtor in 
possession, in addition to the duties provided in this title 
and as otherwise required by law, shall--
          (1) append to the voluntary petition or, in an 
        involuntary case, file within 3 days after the date of 
        the order for relief--
                  (A) its most recent balance sheet, statement 
                of operations, cash-flow statement, Federal 
                income tax return; or
                  (B) a statement made under penalty of perjury 
                that no balance sheet, statement of operations, 
                or cash-flow statement has been prepared and no 
                Federal tax return has been filed;
          (2) attend, through its responsible individual, 
        meetings scheduled by the court or the United States 
        trustee, including initial debtor interviews and 
        meetings of creditors convened under section 341 of 
        this title;
          (3) timely file all schedules and statements of 
        financial affairs, unless the court, after notice and a 
        hearing, grants an extension, which shall not extend 
        such time period to a date later than 30 days after the 
        date of the order for relief, absent extraordinary and 
        compelling circumstances;
          (4) file all postpetition financial and other reports 
        required by the Federal Rules of Bankruptcy Procedure 
        or by local rule of the district court;
          (5) subject to section 363(c)(2) of this title, 
        maintain insurance customary and appropriate to the 
        industry;
          (6)(A) timely file tax returns;
          (B) subject to section 363(c)(2) of this title, 
        timely pay all administrative expense tax claims, 
        except those being contested by appropriate proceedings 
        being diligently prosecuted; and
          (C) subject to section 363(c)(2) of this title, 
        establish 1 or more separate deposit accounts not later 
        than 10 business days after the date of order for 
        relief (or as soon thereafter as possible if all banks 
        contacted decline the business) and deposit therein, 
        not later than 1 business day after receipt thereof or 
        a responsible time set by the court, all taxes payable 
        for periods beginning after the date the case is 
        commenced that are collected or withheld by the debtor 
        for governmental units unless the court waives this 
        requirement after notice and hearing; and
          (7) allow the United States trustee, or its 
        designated representative, to inspect the debtor's 
        business premises, books, and records at reasonable 
        times, after reasonable prior written notice, unless 
        notice is waived by the debtor.

                        SUBCHAPTER II--THE PLAN

Sec. 1121. Who may file a plan

  (a) * * *

           *       *       *       *       *       *       *

  (d) [On] (1) Subject to paragraph (1), on request of a party 
in interest made within the respective periods specified in 
subsections (b) and (c) of this section and after notice and a 
hearing, the court may for cause reduce or increase the 120-day 
period or the 180-day period referred to in this section.
  (2)(A) Such 120-day period may not be extended beyond a date 
that is 18 months after the date of the order for relief under 
this chapter.
  (B) Such 180-day period may not be extended beyond a date 
that is 20 months after the date of the order for relief under 
this chapter.
  [(e) In a case in which the debtor is a small business and 
elects to be considered a small business--
          [(1) only the debtor may file a plan until after 100 
        days after the date of the order for relief under this 
        chapter;
          [(2) all plans shall be filed within 160 days after 
        the date of the order for relief; and
          [(3) on request of a party in interest made within 
        the respective periods specified in paragraphs (1) and 
        (2) and after notice and a hearing, the court may--
                  [(A) reduce the 100-day period or the 160-day 
                period specified in paragraph (1) or (2) for 
                cause; and
                  [(B) increase the 100-day period specified in 
                paragraph (1) if the debtor shows that the need 
                for an increase is caused by circumstances for 
                which the debtor should not be held 
                accountable.]
  (e) In a small business case--
          (1) only the debtor may file a plan until after 90 
        days after the date of the order for relief, unless a 
        trustee has been appointed under this chapter, or 
        unless the court, on request of a party in interest and 
        after notice and hearing, shortens such time;
          (2) the debtor shall file a plan, and any necessary 
        disclosure statement, not later than 90 days after the 
        date of the order for relief, unless the United States 
        Trustee has appointed under section 1102(a)(1) of this 
        title a committee of unsecured creditors that the court 
        has determined, before the 90 days has expired, is 
        sufficiently active and representative to provide 
        effective oversight of the debtor; and
          (3) the time periods specified in paragraphs (1) and 
        (2) of this subsection and the time fixed in section 
        1129(e) of this title for confirmation of a plan, may 
        be extended only as follows:
                  (A) On request of a party in interest made 
                within the respective periods, and after notice 
                and hearing, the court may for cause grant one 
                or more extensions, cumulatively not to exceed 
                60 days, if the movant establishes--
                          (i) that no cause exists to dismiss 
                        or convert the case or appoint a 
                        trustee or examiner under subparagraphs 
                        (A) (I) of section 1112(b) of this 
                        title; and
                          (ii) that there is a reasonable 
                        possibility the court will confirm a 
                        plan within a reasonable time;
                  (B) On request of a party in interest made 
                within the respective periods, and after notice 
                and hearing, the court may for cause grant one 
                or more extensions in excess of those 
                authorized under subparagraph (A) of this 
                paragraph, if the movant establishes:
                          (i) that no cause exists to dismiss 
                        or convert the case or appoint a 
                        trustee or examiner under subparagraphs 
                        (A) (I) of section 1112(b)(3) of this 
                        title; and
                          (ii) that it is more likely than not 
                        that the court will confirm a plan 
                        within a reasonable time; and
                  (C) a new deadline shall be imposed whenever 
                an extension is granted.

           *       *       *       *       *       *       *

Sec. 1124. Impairment of claims or interests

  Except as provided in section 1123(a)(4) of this title, a 
class of claims or interests is impaired under a plan unless, 
with respect to each claim or interest of such class, the 
plan--
          (1) * * *
          (2) notwithstanding any contractual provision or 
        applicable law that entitles the holder of such claim 
        or interest to demand or receive accelerated payment of 
        such claim or interest after the occurrence of a 
        default--
                  (A) cures any such default that occurred 
                before or after the commencement of the case 
                under this title, other than a default of a 
                kind specified in section 365(b)(2) of this 
                title or of a kind that section 365(b)(1)(A) of 
                this title expressly does not require to be 
                cured;

           *       *       *       *       *       *       *

                  (C) compensates the holder of such claim or 
                interest for any damages incurred as a result 
                of any reasonable reliance by such holder on 
                such contractual provision or such applicable 
                law; [and]
                  (D) if such claim or such interest arises 
                from any failure to perform a nonmonetary 
                obligation, compensates the holder of such 
                claim or such interest (other than the debtor 
                or an insider) for any actual pecuniary loss 
                incurred by such holder as a result of such 
                failure; and
                  [(D)] (E) does not otherwise alter the legal, 
                equitable, or contractual rights to which such 
                claim or interest entitles the holder of such 
                claim or interest.

           *       *       *       *       *       *       *

Sec. 1125. Postpetition disclosure and solicitation

  (a) In this section--
          (1) ``adequate information'' means information of a 
        kind, and in sufficient detail, as far as is reasonably 
        practicable in light of the nature and history of the 
        debtor and the condition of the debtor's books and 
        records, including a full discussion of the potential 
        material Federal, State, and local tax consequences of 
        the plan to the debtor, any successor to the debtor, 
        and a hypothetical investor domiciled in the State in 
        which the debtor resides or has its principal place of 
        business typical of the holders of claims or interests 
        in the case, that would enable such a hypothetical 
        [reasonable] investor [typical of holders of claims or 
        interests] of the relevant class to make an informed 
        judgment about the plan, but adequate information need 
        not include such information about any other possible 
        or proposed plan and in determining whether a 
        disclosure statement provides adequate information, the 
        court shall consider the complexity of the case, the 
        benefit of additional information to creditors and 
        other parties in interest, and the cost of providing 
        additional information; and

           *       *       *       *       *       *       *

  [(f) Notwithstanding subsection (b), in a case in which the 
debtor has elected under section 1121(e) to be considered a 
small business--
          [(1) the court may conditionally approve a disclosure 
        statement subject to final approval after notice and a 
        hearing;
          [(2) acceptances and rejections of a plan may be 
        solicited based on a conditionally approved disclosure 
        statement as long as the debtor provides adequate 
        information to each holder of a claim or interest that 
        is solicited, but a conditionally approved disclosure 
        statement shall be mailed at least 10 days prior to the 
        date of the hearing on confirmation of the plan; and
          [(3) a hearing on the disclosure statement may be 
        combined with a hearing on confirmation of a plan.]
  (f) Notwithstanding subsection (b)--
          (1) the court may determine that the plan itself 
        provides adequate information and that a separate 
        disclosure statement is not necessary;
          (2) the court may approve a disclosure statement 
        submitted on standard forms approved by the court or 
        adopted pursuant to section 2075 of title 28; and
          (3)(A) the court may conditionally approve a 
        disclosure statement subject to final approval after 
        notice and a hearing;
          (B) acceptances and rejections of a plan may be 
        solicited based on a conditionally approved disclosure 
        statement if the debtor provides adequate information 
        to each holder of a claim or interest that is 
        solicited, but a conditionally approved disclosure 
        statement shall be mailed not less than 20 days before 
        the date of the hearing on confirmation of the plan; 
        and
          (C) the hearing on the disclosure statement may be 
        combined with the hearing on confirmation of a plan.
  (g) Notwithstanding subsection (b), an acceptance or 
rejection of the plan may be solicited from a holder of a claim 
or interest if such solicitation complies with applicable 
nonbankruptcy law and if such holder was solicited before the 
commencement of the case in a manner complying with applicable 
nonbankruptcy law.

           *       *       *       *       *       *       *

Sec. 1129. Confirmation of plan

  (a) The court shall confirm a plan only if all of the 
following requirements are met:
          (1) * * *

           *       *       *       *       *       *       *

          (9) Except to the extent that the holder of a 
        particular claim has agreed to a different treatment of 
        such claim, the plan provides that--
                  (A) * * *
                  (B) with respect to a class of claims of a 
                kind specified in section 507(a)(3), 507(a)(4), 
                507(a)(5), 507(a)(6), or 507(a)(7) of this 
                title, each holder of a claim of such class 
                will receive--
                          (i) if such class has accepted the 
                        plan, deferred cash payments of a 
                        value, as of the effective date of the 
                        plan, equal to the allowed amount of 
                        such claim; or
                          (ii) if such class has not accepted 
                        the plan, cash on the effective date of 
                        the plan equal to the allowed amount of 
                        such claim; [and]
                  (C) with respect to a claim of a kind 
                specified in section 507(a)(8) of this title, 
                the holder of such claim will receive on 
                account of such claim [deferred cash payments, 
                over a period not exceeding six years after the 
                date of assessment of such claim,] regular 
                installment payments in cash, but in no case 
                with a balloon provision, and no more than 
                three months apart, beginning no later than the 
                effective date of the plan and ending on the 
                earlier of five years after the petition date 
                or the last date payments are to be made under 
                the plan to unsecured creditors, of a value, as 
                of the effective date of the plan, equal to the 
                allowed amount of such claim[.]; and
                  (D) with respect to a secured claim which 
                would be described in section 507(a)(8) of this 
                title but for its secured status, the holder of 
                such claim will receive on account of such 
                claim cash payments of not less than is 
                required in subparagraph (C) and over a period 
                no greater than is required in such 
                subparagraph.

           *       *       *       *       *       *       *

          (14) If the debtor is required by a judicial or 
        administrative order or statute to pay a domestic 
        support obligation, the debtor has paid all amounts 
        payable under such order or statute for such obligation 
        that become payable after the date on which the 
        petition is filed.
          (15) All transfers of property of the plan shall be 
        made in accordance with any applicable provisions of 
        nonbankruptcy law that govern the transfer of property 
        by a corporation or trust that is not a moneyed, 
        business, or commercial corporation or trust.

           *       *       *       *       *       *       *

  (e) In a small business case, the debtor shall confirm a plan 
not later than 150 days after the date of the order for relief 
unless--
          (1) the United States Trustee has appointed, under 
        section 1102(a)(1) of this title, a committee of 
        unsecured creditors that the court has determined, 
        before the 150 days has expired, is sufficiently active 
        and representative to provide effective oversight of 
        the debtor; or
          (2) such 150-day period is extended as provided in 
        section 1121(e)(3) of this title.

           *       *       *       *       *       *       *

                SUBCHAPTER III--POSTCONFIRMATION MATTERS

Sec. 1141. Effect of confirmation

  (a) * * *

           *       *       *       *       *       *       *

  (d)(1) * * *

           *       *       *       *       *       *       *

  (6) Notwithstanding the provisions of paragraph (1), the 
confirmation of a plan does not discharge a debtor which is a 
corporation from any debt for a tax or customs duty with 
respect to which the debtor made a fraudulent return or 
willfully attempted in any manner to evade or defeat such tax.

           *       *       *       *       *       *       *

[Sec. 1168. Rolling stock equipment

  [(a)(1) The right of a secured party with a security interest 
in or of a lessor or conditional vendor of equipment described 
in paragraph (2) to take possession of such equipment in 
compliance with an equipment security agreement, lease, or 
conditional salecontract is not affected by section 362, 363, 
or 1129 or by any power of the court to enjoin the taking of 
possession, unless--
          [(A) before the date that is 60 days after the date 
        of commencement of a case under this chapter, the 
        trustee, subject to the court's approval, agrees to 
        perform all obligations of the debtor that become due 
        on or after the date of commencement of the case under 
        such security agreement, lease, or conditional sale 
        contract; and
          [(B) any default, other than a default of a kind 
        described in section 365(b)(2), under such security 
        agreement, lease, or conditional sale contract--
                  [(i) that occurs before the date of 
                commencement of the case and is an event of 
                default therewith is cured before the 
                expiration of such 60-day period; and
                  [(ii) that occurs or becomes an event of 
                default after the date of commencement of the 
                case is cured before the later of--
                          [(I) the date that is 30 days after 
                        the date of the default or event of 
                        default; or
                          [(II) the expiration of such 60-day 
                        period.
  [(2) Equipment is described in this paragraph if it is 
rolling stock equipment or accessories used on such equipment, 
including superstructures and racks, that is subject to a 
security interest granted by, leased to, or conditionally sold 
to the debtor.
  [(3) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as 
trustee or otherwise in behalf of another party.
  [(b) The trustee and the secured party, lessor, or 
conditional vendor whose right to take possession is protected 
under subsection (a) may agree, subject to the court's 
approval, to extend the 60-day period specified in subsection 
(a)(1).
  [(c) With respect to equipment first placed in service on or 
prior to the date of enactment of this subsection, for purposes 
of this section--
          [(1) the term ``lease'' includes any written 
        agreement with respect to which the lessor and the 
        debtor, as lessee, have expressed in the agreement or 
        in a substantially contemporaneous writing that the 
        agreement is to be treated as a lease for Federal 
        income tax purposes; and
          [(2) the term ``security interest'' means a purchase-
        money equipment security interest.
  [(d) With respect to equipment first placed in service after 
the date of enactment of this subsection, for purposes of this 
section, the term ``rolling stock equipment'' includes rolling 
stock equipment that is substantially rebuilt and accessories 
used on such equipment.]

Sec. 1168. Rolling stock equipment

  (a)(1) The right of a secured party with a security interest 
in or of a lessor or conditional vendor of equipment described 
in paragraph (2) to take possession of such equipment in 
compliance with an equipment security agreement, lease, or 
conditional sale contract, and to enforce any of its other 
rights or remedies under such security agreement, lease, or 
conditional sale contract, to sell, lease, or otherwise retain 
or dispose of such equipment, is not limited or otherwise 
affected by any other provision of this title or by any power 
of the court, except that the right to take possession and 
enforce those other rights and remedies shall be subject to 
section 362 of this title, if--
          (A) before the date that is 60 days after the date of 
        commencement of a case under this chapter, the trustee, 
        subject to the court's approval, agrees to perform all 
        obligations of the debtor under such security 
        agreement, lease, or conditional sale contract; and
          (B) any default, other than a default of a kind 
        described in section 365(b)(2) of this title, under 
        such security agreement, lease, or conditional sale 
        contract--
                  (i) that occurs before the date of 
                commencement of the case and is an event of 
                default therewith is cured before the 
                expiration of such 60-day period;
                  (ii) that occurs or becomes an event of 
                default after the date of commencement of the 
                case and before the expiration of such 60-day 
                period is cured before the later of--
                          (I) the date that is 30 days after 
                        the date of the default or event of the 
                        default; or
                          (II) the expiration of such 60-day 
                        period; and
                  (iii) that occurs on or after the expiration 
                of such 60-day period is cured in accordance 
                with the terms of such security agreement, 
                lease, or conditional sale contract, if cure is 
                permitted under that agreement, lease, or 
                conditional sale contract.
  (2) The equipment described in this paragraph--
          (A) is rolling stock equipment or accessories used on 
        rolling stock equipment, including superstructures or 
        racks, that is subject to a security interest granted 
        by, leased to, or conditionally sold to a debtor; and
          (B) includes all records and documents relating to 
        such equipment that are required, under the terms of 
        the security agreement, lease, or conditional sale 
        contract, that is to be surrendered or returned by the 
        debtor in connection with the surrender or return of 
        such equipment.
  (3) Paragraph (1) applies to a secured party, lessor, or 
conditional vendor acting in its own behalf or acting as 
trustee or otherwise in behalf of another party.
  (b) The trustee and the secured party, lessor, or conditional 
vendor whose right to take possession is protected under 
subsection (a) may agree, subject to the court's approval, to 
extend the 60-day period specified in subsection (a)(1).
  (c)(1) In any case under this chapter, the trustee shall 
immediately surrender and return to a secured party, lessor, or 
conditional vendor, described in subsection (a)(1), equipment 
described in subsection (a)(2), if at any time after the date 
of commencement of the case under this chapter such secured 
party, lessor, or conditional vendor is entitled pursuant to 
subsection (a)(1) to take possession of such equipment and 
makes a written demand for such possession of the trustee.
  (2) At such time as the trustee is required under paragraph 
(1) to surrender and return equipment described in subsection 
(a)(2),any lease of such equipment, and any security agreement 
or conditional sale contract relating to such equipment, if such 
security agreement or conditional sale contract is an executory 
contract, shall be deemed rejected.
  (d) With respect to equipment first placed in service on or 
prior to October 22, 1994, for purposes of this section--
          (1) the term ``lease'' includes any written agreement 
        with respect to which the lessor and the debtor, as 
        lessee, have expressed in the agreement or in a 
        substantially contemporaneous writing that the 
        agreement is to be treated as a lease for Federal 
        income tax purposes; and
          (2) the term ``security interest'' means a purchase-
        money equipment security interest.
  (e) With respect to equipment first placed in service after 
October 22, 1994, for purposes of this section, the term 
``rolling stock equipment'' includes rolling stock equipment 
that is substantially rebuilt and accessories used on such 
equipment.

           *       *       *       *       *       *       *

Sec. 1170. Abandonment of railroad line

  (a) * * *

           *       *       *       *       *       *       *

  (e)(1) In authorizing any abandonment of a railroad line 
under this section, the court shall require the rail carrier to 
provide a fair arrangement at least as protective of the 
interests of employees as that established under section 
[11347] 11326(a) of title 49.

           *       *       *       *       *       *       *

Sec. 1172. Contents of plan

  (a) * * *

           *       *       *       *       *       *       *

  (c)(1) In approving an application under subsection (b) of 
this section, the Board shall require the rail carrier to 
provide a fair arrangement at least as protective of the 
interests of employees as that established under section 
[11347] 11326(a) of title 49.

           *       *       *       *       *       *       *

CHAPTER 12--ADJUSTMENT OF DEBTS OF A FAMILY FARMER WITH REGULAR ANNUAL 
INCOME

           *       *       *       *       *       *       *

SUBCHAPTER II--THE PLAN

           *       *       *       *       *       *       *

Sec. 1228. Discharge

  (a) As soon as practicable after completion by the debtor of 
all payments under the plan, other than payments to holders of 
allowed claims provided for under section 1222(b)(5) or 
[1222(b)(10)] 1222(b)(9) of this title, unless the court 
approves a written waiver of discharge executed by the debtor 
after the order for relief under this chapter, the court shall 
grant the debtor a discharge of all debts provided for by the 
plan allowed under section 503 of this title or disallowed 
under section 502 of this title, except any debt--
          (1) provided for under section 1222(b)(5) or 
        [1222(b)(10] 1222(b)(9)) of this title; or
          (2) of the kind specified in section 523(a) of this 
        title.

           *       *       *       *       *       *       *

  (c) A discharge granted under subsection (b) of this section 
discharges the debtor from all unsecured debts provided for by 
the plan or disallowed under section 502 of this title, except 
any debt--
          (1) provided for under section 1222(b)(5) or 
        [1222(b)(10)] 1222(b)(9) of this title; or
          (2) of a kind specified in section 523(a) of this 
        title.

           *       *       *       *       *       *       *

  CHAPTER 13--ADJUSTMENT OF DEBTS OF AN INDIVIDUAL WITH REGULAR INCOME

         SUBCHAPTER I--OFFICERS, ADMINISTRATION, AND THE ESTATE

Sec.
1301.  Stay of action against codebtor.
     * * * * * * *
1307A. Adequate protection in chapter 13 cases.
1308.  Filing of prepetition tax returns.

           *       *       *       *       *       *       *

SUBCHAPTER I--OFFICERS, ADMINISTRATION, AND THE ESTATE

           *       *       *       *       *       *       *

Sec. 1301. Stay of action against codebtor

  (a) * * *
  (b)(1) A creditor may present a negotiable instrument, and 
may give notice of dishonor of such an instrument.
  (2)(A) Notwithstanding subsection (c) and except as provided 
in subparagraph (B), in any case in which the debtor did not 
receive the consideration for the claim held by a creditor, the 
stay provided by subsection (a) shall apply to that creditor 
for a period not to exceed 30 days beginning on the date of the 
order for relief, to the extent the creditor proceeds against--
          (i) the individual that received that consideration; 
        or
          (ii) property not in the possession of the debtor 
        that secures that claim.
  (B) Notwithstanding subparagraph (A), the stay provided by 
subsection (a) shall apply in any case in which the debtor is 
primarily obligated to pay the creditor in whole or in part 
with respect to a claim described in subparagraph (A) under a 
legally binding separation or property settlement agreement or 
divorce or dissolution decree with respect to--
          (i) an individual described in subparagraph (A)(i); 
        or
          (ii) property described in subparagraph (A)(ii).
  (3) Notwithstanding subsection (c), the stay provided by 
subsection (a) shall terminate as of the date of confirmation 
of the plan, in any case in which the plan of the debtor 
provides that the debtor'sinterest in personal property subject 
to a lease with respect to which the debtor is the lessee will be 
surrendered or abandoned or no payments will be made under the plan on 
account of the debtor's obligations under the lease.

           *       *       *       *       *       *       *

Sec. 1302. Trustee

  (a) * * *
  (b) The trustee shall--
          (1) * * *

           *       *       *       *       *       *       *

          (4) advise, other than on legal matters, and assist 
        the debtor in performance under the plan; [and]
          (5) ensure that the debtor commences making timely 
        payments under section 1326 of this title[.]; and
          (6) if, with respect to an individual debtor, there 
        is a claim for support of a child of the debtor or a 
        custodial parent of such child entitled to receive 
        priority under section 507(a)(1) of this title, provide 
        the applicable notification specified in subsection 
        (d).

           *       *       *       *       *       *       *

  (d)(1) In any case described in subsection (b)(6), the 
trustee shall--
          (A)(i) notify in writing the holder of the claim of 
        the right of such holder to use the services of a State 
        child support enforcement agency established under 
        sections 464 and 466 of the Social Security Act for the 
        State in which the holder resides; and
          (ii) include in the notice under this paragraph the 
        address and telephone number of the child support 
        enforcement agency; and
          (B)(i) notify in writing the State child support 
        agency of the State in which the holder of the claim 
        resides of the claim; and
          (ii) include in the notice under this paragraph the 
        name, address, and telephone number of the holder of 
        the claim;
          (iii) at such time as the debtor is granted a 
        discharge under section 1328 of this title, notify the 
        holder of the claim and the State child support agency 
        of the State in which such holder resides of--
                  (I) the granting of the discharge;
                  (II) the last recent known address of the 
                debtor; and
                  (III) with respect to the debtor's case, the 
                name of each creditor that holds a claim that 
                is not discharged under paragraph (2), (4), or 
                (14A) of section 523(a) of this title or that 
                was reaffirmed by the debtor under section 
                524(c) of this title.
  (2)(A) If, after receiving a notice under paragraph 
(1)(B)(iii), a holder of a claim or a State child support 
agency is unable to locate the debtor that is the subject of 
the notice, such holder or such agency may request from a 
creditor described in paragraph (1)(B)(iii) the last known 
address of the debtor.
  (B) Notwithstanding any other provision of law, a creditor 
that makes a disclosure of a last known address of a debtor in 
connection with a request made under subparagraph (A) shall not 
be liable to the debtor or any other person by reason of making 
such disclosure.

           *       *       *       *       *       *       *

Sec. 1307. Conversion or dismissal

  (a) * * *

           *       *       *       *       *       *       *

  (e) Upon the failure of the debtor to file tax returns under 
section 1308 of this title, on request of a party in interest 
or the United States trustee and after notice and a hearing, 
the court shall dismiss a case or convert a case under this 
chapter to a case under chapter 7 of this title, whichever is 
in the best interests of creditors and the estate.
  [(e)] (f) The court may not convert a case under this chapter 
to a case under chapter 7, 11, or 12 of this title if the 
debtor is a farmer, unless the debtor requests such conversion.
  [(f)] (g) Notwithstanding any other provision of this 
section, a case may not be converted to a case under another 
chapter of this title unless the debtor may be a debtor under 
such chapter.

Sec. 1307A. Adequate protection in chapter 13 cases

  (a)(1)(A) On or before the date that is 30 days after the 
filing of a case under this chapter, the debtor shall make cash 
payments in an amount determined under paragraph (2), to--
          (i) any lessor of personal property; and
          (ii) any creditor holding a claim secured by personal 
        property to the extent that the claim is attributable 
        to the purchase of that property by the debtor.
  (B) The debtor or the plan shall continue making the adequate 
protection payments required under subparagraph (A) until the 
earlier of the date on which--
          (i) the creditor begins to receive actual payments 
        under the plan; or
          (ii) the debtor relinquishes possession of the 
        property referred to in subparagraph (A) to--
                  (I) the lessor or creditor; or
                  (II) any third party acting under claim of 
                right, as applicable.
  (2) The payments referred to in paragraph (1)(A) shall be the 
contract amount and shall reduce any amount payable under 
section 1326(a) of the title.
  (b)(1) Subject to the limitations under paragraph (2), the 
court may, after notice and hearing, change the amount and 
timing of the dates of payment of payments made under 
subsection (a).
  (2)(A) The payments referred to in paragraph (1) shall be 
payable not less frequently than monthly.
  (B) The amount of payments referred to in paragraph (1) shall 
not be less than the amount of any weekly, biweekly, monthly, 
or other periodic payment scheduled as payable under the 
contract between the debtor and creditor.
  (c) Notwithstanding section 1326(b), the payments referred to 
in subsection (a)(1)(A) shall be continued in addition to plan 
payments under a confirmed plan until actual payments to the 
creditor begin under that plan, if the confirmed plan 
provides--
          (1) for payments to a creditor or lessor described in 
        subsection (a)(1); and
          (2) for the deferral of payments to such creditor or 
        lessor under the plan until the payment of amounts 
        described in section 1326(b).
  (d) Notwithstanding sections 362, 542, and 543, a lessor or 
creditor described in subsection (a) may retain possession of 
property described in that subsection that was obtained in 
accordance with applicable law before the date of filing of the 
petition until the first payment under subsection (a)(1)(A) is 
received by the lessor or creditor.
  (e) On or before 60 days after the filling of a case under 
this chapter, a debtor retaining possession of personal 
property subject to a lease or securing a claim attributable in 
whole or in part to the purchase price of such property shall 
provide each creditor or lessor reasonable evidence of the 
maintenance of any required insurance coverage with respect to 
the use or ownership of such property and continue to do so for 
so long as the debtor retains possession of such property.

Sec. 1308. Filing of prepetition tax returns

  (a) On or before the day prior to the day on which the first 
meeting of the creditors is convened under section 341(a) of 
this title, the debtor shall have filed with appropriate tax 
authorities all tax returns for all taxable periods ending in 
the 3-year period ending on the date of filing of the petition.
  (b) If the tax returns required by subsection (a) have not 
been filed by the date on which the first meeting of creditors 
is convened under section 341(a) of this title, the trustee may 
continue such meeting for a reasonable period of time, to allow 
the debtor additional time to file any unfiled returns, but 
such additional time shall be no more than--
          (1) for returns that are past due as of the date of 
        the filing of the petition, 120 days from such date;
          (2) for returns which are not past due as of the date 
        of the filing of the petition, the later of 120 days 
        from such date or the due date for such returns under 
        the last automatic extension of time for filing such 
        returns to which the debtor is entitled, and for which 
        request has been timely made, according to applicable 
        nonbankruptcy law; and
          (3) upon notice and hearing, and order entered before 
        the lapse of any deadline fixed according to this 
        subsection, where the debtor demonstrates, by clear and 
        convincing evidence, that the failure to file the 
        returns as required is because of circumstances beyond 
        the control of the debtor, the court may extend the 
        deadlines set by the trustee as provided in this 
        subsection for--
                  (A) a period of no more than 30 days for 
                returns described in paragraph (1) of this 
                subsection; and
                  (B) for no more than the period of time 
                ending on the applicable extended due date for 
                the returns described in paragraph (2).
  (c) For purposes of this section only, a return includes a 
return prepared pursuant to section 6020 (a) or (b) of the 
Internal Revenue Code of 1986 or similar State or local law, or 
a written stipulation to a judgment entered by a nonbankruptcy 
tribunal.

SUBCHAPTER II--THE PLAN

           *       *       *       *       *       *       *

Sec. 1322. Contents of plan

  (a) * * *
  (b) Subject to subsections (a) and (c) of this section, the 
plan may--
          (1) * * *
          [(2) modify the rights of holders of secured claims, 
        other than a claim secured only by a security interest 
        in real property that is the debtor's principal 
        residence, or of holders of unsecured claims, or leave 
        unaffected the rights of holders of any class of 
        claims;]
          (2) modify the rights of holders of secured claims, 
        other than a claim secured primarily by a security 
        interest in property used as the debtor's principal 
        residence at any time during 180 days prior to the 
        filing of the petition, or of holders of unsecured 
        claims, or leave unaffected the rights of holders of 
        any class of claims;

           *       *       *       *       *       *       *

  [(d) The plan may not provide for payments over a period that 
is longer than three years, unless the court, for cause, 
approves a longer period, but the court may not approve a 
period that is longer than five years.]
  (d) If the current monthly income of the debtor and the 
debtor's spouse combined, when multiplied by 12, is not less 
than the highest national median family income last reported by 
the Bureau of the Census for a family of equal or lesser size 
or, in the case of a household of 1 person, not less than the 
national median household income for 1 earner, the plan may not 
provide for payments over a period that is longer than 5 years. 
If the current monthly income of the debtor and the debtor's 
spouse combined, when multiplied by 12, is less than the 
highest national median family income for a family of equal or 
lesser size, or in the case of a household of 1 person, the 
national median household income for 1 earner, the plan may not 
provide for payments over a period that is longer than 3 years, 
unless the court, for cause, approves a longer period, but the 
court may not approve a period that is longer than 5 years. 
Notwithstanding the foregoing, the national median family 
income for a family of more than 4 individuals shall be the 
national median family income last reported by the Bureau of 
the Census for a family of 4 individuals plus $583 for each 
additional member of the family.

           *       *       *       *       *       *       *

  (f) A plan may not materially alter the terms of a loan 
described in section 362(b)(29) of this title.

           *       *       *       *       *       *       *

Sec. 1324. Confirmation hearing

  [After] (a) Except as provided in subsection (b) and after 
notice, the court shall hold a hearing on confirmation of the 
plan. A party in interest may object to confirmation of the 
plan.
  (b) The hearing on confirmation of the plan may be held not 
earlier than 20 days, and not later than 45 days, after the 
meeting of creditors under section 341(a) of this title.
  (c) Whenever a party in interest is given notice of a hearing 
on the confirmation or modification of a plan under this 
chapter, such notice shall include the information provided by 
the debtor on the most recent statement filed with the court 
pursuant to section 521(a)(1)(B)(ii) or (f)(4) of this title.

Sec. 1325. Confirmation of plan

  (a) Except as provided in subsection (b), the court shall 
confirm a plan if--
          (1) * * *

           *       *       *       *       *       *       *

          (5) with respect to each allowed secured claim 
        provided for by the plan--
                  (A) the holder of such claim has accepted the 
                plan;
                  (B)[(i) the plan provides that the holder of 
                such claim retain the lien securing such claim; 
                and] (i) the plan provides that the holder of 
                such claim retain the lien securing such claim 
                until the earlier of payment of the underlying 
                debt determined under nonbankruptcy law or 
                discharge under section 1328 of this title, and 
                that if the case under this chapter is 
                dismissed or converted without completion of 
                the plan, such lien shall also be retained by 
                such holder to the extent recognized by 
                applicable nonbankruptcy law; and
                  (ii) the value, as of the effective date of 
                the plan, of property to be distributed under 
                the plan on account of such claim is not less 
                than the allowed amount of such claim; or
                  (C) the debtor surrenders the property 
                securing such claim to such holder; [and]
          (6) the debtor will be able to make all payments 
        under the plan and to comply with the plan[.];
          (7) if the debtor is required by a judicial or 
        administrative order or statute to pay a domestic 
        support obligation, the debtor has paid all amounts 
        payable under such order for such obligation that 
        become payable after the date on which the petition is 
        filed; and
          (8) if the debtor has filed all Federal, State, and 
        local tax returns as required by section 1308 of this 
        title.
  (b)(1) If the trustee or the holder of an allowed unsecured 
claim objects to the confirmation of the plan, then the court 
may not approve the plan unless, as of the effective date of 
the plan--
          (A) the value of the property to be distributed under 
        the plan on account of such claim is not less than the 
        amount of such claim; or
          (B) the plan provides that all of the debtor's 
        projected disposable income to be received in the 
        [three-year period] applicable commitment period 
        beginning on the date that the first payment is due 
        under the plan will be applied to make payments to 
        unsecured creditors under the plan. The ``applicable 
        commitment period'' shall be not less than 5 years if 
        the current monthly income of the debtor and the 
        debtor's spouse combined, when multiplied by 12, is not 
        less than the highest national median family income 
        last reported by the Bureau of the Census for a family 
        of equal or lesser size, or in the case of a household 
        of 1 person, the national median household income for 1 
        earner. Notwithstanding the foregoing, the national 
        median family income for a family of more than 4 
        individuals shall be the national median family income 
        last reported by the Bureau of the Census for a family 
        of 4 individuals plus $583 for each additional member 
        of the family.
  (2) For purposes of this subsection, ``disposable income'' 
means income which is received by the debtor (other than child 
support payments, foster care payments, or disability payments 
for a dependent child made in accordance with applicable 
nonbankruptcy law and which is reasonably necessary to be 
expended) and [which is not] less amounts reasonably necessary 
to be expended--
          (A) for the maintenance or support of the debtor or a 
        dependent of the debtor, as determined in accordance 
        with section 707(b)(2)(A) and if applicable 
        707(b)(2)(B), including charitable contributions (that 
        meet the definition of ``charitable contribution'' 
        under section 548(d)(3)) to a qualified religious or 
        charitable entity or organization (as that term is 
        defined in section 548(d)(4)) in an amount not to 
        exceed 15 percent of the gross currently monthly income 
        of the debtor for the year in which the contributions 
        are made; and
          (B) if the debtor is engaged in business, for the 
        payment of expenditures necessary for the continuation, 
        preservation, and operation of such business.

           *       *       *       *       *       *       *

Sec. 1328. Discharge

  (a) As soon as practicable after completion by the debtor of 
all payments under the plan, and with respect to a debtor who 
is required by a judicial or administrative order to pay a 
domestic support obligation, certifies that all amounts payable 
under such order or statute that are due on or before the date 
of the certification (including amounts due before or after the 
petition was filed) have been paid, unless the court approves a 
written waiver of discharge executed by the debtor after the 
order for relief under this chapter, the court shall grant the 
debtor a discharge of all debts provided for by the plan or 
disallowed under section 502 of this title, except any debt--
          [(1) provided for under section 1322(b)(5) of this 
        title;
          [(2) of the kind specified in paragraph (5), (8), or 
        (9) of section 523(a) of this title; or
          [(3) for restitution, or a criminal fine, included in 
        a sentence on the debtor's conviction of a crime.]
          (1) provided for under section 1322(b)(5) of this 
        title;
          (2) of the kind specified in paragraph (1), (2), (4), 
        (3)(B), (5), (8), or (9) of section 523(a) of this 
        title;
          (3) for restitution, or a criminal fine, included in 
        a sentence on the debtor's conviction of a crime; or
          (4) for restitution, or damages, awarded in a civil 
        action against the debtor as a result of willful or 
        malicious injury by the debtor that caused personal 
        injury to an individual or the death of an individual.

           *       *       *       *       *       *       *

  (f) Notwithstanding subsections (a) and (b), the court shall 
not grant a discharge of all debts provided for by the plan or 
disallowed under section 502 of this title if the debtor has 
received a discharge in any case filed under this title within 
5 years of the order for relief under this chapter.
  (g) The court shall not grant a discharge under this section 
to a debtor, unless after filing a petition the debtor has 
completed an instructional course concerning personal financial 
management described in section 111.
  (h) Subsection (g) shall not apply with respect to a debtor 
who resides in a district for which the United States trustee 
or bankruptcy administrator of the bankruptcy court of that 
district determines that the approved instructional courses are 
not adequate to provide service to the additional individuals 
who would be required to complete the instructional course by 
reason of the requirements of this section.
  (i) Each United States trustee or bankruptcy administrator 
that makes a determination described in subsection (h) shall 
review that determination not later than 1 year after the date 
of that determination, and not less frequently than every year 
thereafter.

Sec. 1329. Modification of plan after confirmation

  (a) * * *

           *       *       *       *       *       *       *

  (c) A plan modified under this section may not provide for 
payments over a period that expires after [three years] the 
applicable commitment period under section 1325(b)(1)(B) after 
the time that the first payment under the original confirmed 
plan was due, unless the court, for cause, approves a longer 
period, but the court may not approve a period that expires 
after five years after such time. The duration period shall be 
5 years if the current monthly income of the debtor and the 
debtor's spouse combined, when multiplied by 12, is not less 
than the highest national median family income last reported by 
the Bureau of the Census for a family of equal or lesser size 
or, in the case of a household of 1 person, the national median 
household income for 1 earner, as of the date of the 
modification and shall be 3 years if the current monthly total 
income of the debtor and the debtor's spouse combined, when 
multiplied by 12, is less than the highest national median 
family income last reported by the Bureau of the Census for a 
family of equal or lesser size or, in the case of a household 
of 1 person, less than the national median household income for 
1 earner as of the date of the modification. Notwithstanding 
the foregoing, the national median family income for a family 
of more than 4 individuals shall be the national median family 
income last reported by the Bureau of the Census for a family 
of 4 individuals plus $583 for each additional member of the 
family.

           *       *       *       *       *       *       *

           CHAPTER 15--ANCILLARY AND OTHER 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.
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.

Sec. 1501. Purpose and scope of application

  (a) The purpose of this of chapter is to incorporate the 
Model Law on Cross-Border Insolvency so as to provide effective 
mechanisms for dealing with cases of cross-border insolvency 
with the objectives of--
          (1) cooperation between--
                  (A) United States courts, United States 
                trustees, trustees, examiners, debtors, and 
                debtors in possession; and
                  (B) the courts and other competent 
                authorities of foreign countries involved in 
                cross-border insolvency cases;
          (2) greater legal certainty for trade and investment;
          (3) fair and efficient administration of cross-border 
        insolvencies that protects the interests of all 
        creditors, and other interested entities, including the 
        debtor;
          (4) protection and maximization of the value of the 
        debtor's assets; and
          (5) facilitation of the rescue of financially 
        troubled businesses, thereby protecting investment and 
        preserving employment.
  (b) This chapter applies where--
          (1) assistance is sought in the United States by a 
        foreign court or a foreign representative in connection 
        with a foreign proceeding;
          (2) assistance is sought in a foreign country in 
        connection with a case under this title;
          (3) a foreign proceeding and a case under this title 
        with respect to the same debtor are taking place 
        concurrently; or
          (4) creditors or other interested persons in a 
        foreign country have an interest in requesting the 
        commencement of, or participating in, a case or 
        proceeding under this title.
  (c) This chapter does not apply to--
          (1) a proceeding concerning an entity identified by 
        exclusion in subsection 109(b);
          (2) an individual, or to an individual and such 
        individual's spouse, who have debts within the limits 
        specified in section 109(e) and who are citizens of the 
        United States or aliens lawfully admitted for permanent 
        residence in the United States; or
          (3) an entity subject to a proceeding under the 
        Securities Investor Protection Act, a stockbroker 
        subject to subchapter III of chapter 7 of this title, 
        or a commodity broker subject to subchapter IV of 
        chapter 7 of this title.

                    SUBCHAPTER I--GENERAL PROVISIONS

Sec. 1502. Definitions

  For the purposes of this chapter, the term--
          (1) ``debtor'' means an entity that is the subject of 
        a foreign proceeding;
          (2) ``establishment'' means any place of operations 
        where the debtor carries out a nontransitory economic 
        activity;
          (3) ``foreign court'' means a judicial or other 
        authority competent to control or supervise a foreign 
        proceeding;
          (4) ``foreign main proceeding'' means a foreign 
        proceeding taking place in the country where the debtor 
        has the center of its main interests;
          (5) ``foreign nonmain proceeding'' means a foreign 
        proceeding, other than a foreign main proceeding, 
        taking place in a country where the debtor has an 
        establishment;
          (6) ``trustee'' includes a trustee, a debtor in 
        possession in a case under any chapter of this title, 
        or a debtor under chapter 9 of this title; and
          (7) ``within the territorial jurisdiction of the 
        United States'' when used with reference to property of 
        a debtor refers to tangible property located within the 
        territory of the United States and intangible property 
        deemed under applicable nonbankruptcy law to be located 
        within that territory, including any property subject 
        to attachment or garnishment that may properly be 
        seized or garnished by an action in a Federal or State 
        court in the United States.

Sec. 1503. International obligations of the United States

  To the extent that this chapter conflicts with an obligation 
of the United States arising out of any treaty or other form of 
agreement to which it is a party with 1 or more other 
countries, the requirements of the treaty or agreement prevail.

Sec. 1504. Commencement of ancillary case

  A case under this chapter is commenced by the filing of a 
petition for recognition of a foreign proceeding under section 
1515.

Sec. 1505. Authorization to act in a foreign country

  A trustee or another entity (including an examiner) may be 
authorized by the court to act in a foreign country on behalf 
of an estate created under section 541. An entity authorized to 
act under this section may act in any way permitted by the 
applicable foreign law.

Sec. 1506. Public policy exception

  Nothing in this chapter prevents the court from refusing to 
take an action governed by this chapter if the action would be 
manifestly contrary to the public policy of the United States.

Sec. 1507. Additional assistance

  (a) Subject to the specific limitations stated elsewhere in 
this chapter the court, upon recognition of a foreign 
proceeding, the court may provide additional assistance to a 
foreign representative under this title or under other laws of 
the United States.
  (b) In determining whether to provide additional assistance 
under this title or under other laws of the United States, the 
court shall consider whether such additional assistance, 
consistent with the principles of comity, will reasonably 
assure--
          (1) just treatment of all holders of claims against 
        or interests in the debtor's property;
          (2) protection of claim holders in the United States 
        against prejudice and inconvenience in the processing 
        of claims in such foreign proceeding;
          (3) prevention of preferential or fraudulent 
        dispositions of property of the debtor;
          (4) distribution of proceeds of the debtor's property 
        substantially in accordance with the order prescribed 
        by this title; and
          (5) if appropriate, the provision of an opportunity 
        for a fresh start for the individual that such foreign 
        proceeding concerns.

Sec. 1508. Interpretation

  In interpreting this chapter, the court shall consider its 
international origin, and the need to promote an application of 
this chapter that is consistent with the application of similar 
statutes adopted by foreign jurisdictions.

 SUBCHAPTER II--ACCESS OF FOREIGN REPRESENTATIVES AND CREDITORS TO THE 
                                 COURT

Sec. 1509. Right of direct access

  (a) A foreign representative may commence a case under 
section 1504 of this title by filing with the court a petition 
for recognition of a foreign proceeding under section 1515 of 
this title.
  (b) If the court grants recognition under section 1515 of 
this title, and subject to any limitations that the court may 
impose consistent with the policy of this chapter--
          (1) the foreign representative has the capacity to 
        sue and be sued in a court in the United States;
          (2) the foreign representative may apply directly to 
        a court in the United States for appropriate relief in 
        that court; and
          (3) a court in the United States shall grant comity 
        or cooperation to the foreign representative.
  (c) A request for comity or cooperation by a foreign 
representative in a court in the United States shall be 
accompanied by a certified copy of an order granting 
recognition under section 1517 of this title.
  (d) If the court denies recognition under this chapter, the 
court may issue any appropriate order necessary to prevent the 
foreign representative from obtaining comity or cooperation 
from courts in the United States.
  (e) Whether or not the court grants recognition, and subject 
to sections 306 and 1510 of this title, a foreign 
representative is subject to applicable nonbankruptcy law.
  (f) Notwithstanding any other provision of this section, the 
failure of a foreign representative to commence a case or to 
obtain recognition under this chapter does not affect any right 
the foreign representative may have to sue in a court in the 
United State to collect or recover a claim which is the 
property of the debtor.

Sec. 1510. Limited jurisdiction

  The sole fact that a foreign representative files a petition 
under section 1515 does not subject the foreign representative 
to the jurisdiction of any court in the United States for any 
other purpose.

Sec. 1511. Commencement of case under section 301 or 303

  (a) Upon recognition, a foreign representative may commence--
          (1) an involuntary case under section 303; or
          (2) a voluntary case under section 301 or 302, if the 
        foreign proceeding is a foreign main proceeding.
  (b) The petition commencing a case under subsection (a) must 
be accompanied by certified copy of an order granting 
recognition. The court where the petition for recognition has 
been filed must be advised of the foreign representative's 
intent to commence a case under subsection (a) prior to such 
commencement.

Sec. 1512. Participation of a foreign representative in a case under 
                    this title

  Upon recognition of a foreign proceeding, the foreign 
representative in that proceeding is entitled to participate as 
a party in interest in a case regarding the debtor under this 
title.

Sec. 1513. Access of foreign creditors to a case under this title

  (a) Foreign creditors have the same rights regarding the 
commencement of, and participation in, a case under this title 
as domestic creditors.
  (b)(1) Subsection (a) does not change or codify present law 
as to the priority of claims under section 507 or 726 of this 
title, except that the claim of a foreign creditor under those 
sections shall not be given a lower priority than that of 
general unsecured claims without priority solely because the 
holder of such claim is a foreign creditor.
  (2)(A) Subsection (a) and paragraph (1) do not change or 
codify present law as to the allowability of foreign revenue 
claims or other foreign public law claims in a proceeding under 
this title.
  (B) Allowance and priority as to a foreign tax claim or other 
foreign public law claim shall be governed by any applicable 
tax treaty of the United States, under the conditions and 
circumstances specified therein.

Sec. 1514. Notification to foreign creditors concerning a case under 
                    this title

  (a) Whenever in a case under this title notice is to be given 
to creditors generally or to any class or category of 
creditors, such notice shall also be given to the known 
creditors generally, or to creditors in the notified class or 
category, that do not have addresses in the United States. The 
court may order that appropriate steps be taken with a view to 
notifying any creditor whose address is not yet known.
  (b) Such notification to creditors with foreign addresses 
described in subsection (a) shall be given individually, unless 
the court considers that, under the circumstances, some other 
form of notification would be more appropriate. No letters 
rogatory or other similar formality is required.
  (c) When a notification of commencement of a case is to be 
given to foreign creditors, the notification shall--
          (1) indicate the time period for filing proofs of 
        claim and specify the place for their filing;
          (2) indicate whether secured creditors need to file 
        their proofs of claim; and
          (3) contain any other information required to be 
        included in such a notification to creditors under this 
        title and the orders of the court.
  (d) Any rule of procedure or order of the court as to notice 
or the filing of a claim shall provide such additional time to 
creditors with foreign addresses as is reasonable under the 
circumstances.

     SUBCHAPTER III--RECOGNITION OF A FOREIGN PROCEEDING AND RELIEF

Sec. 1515. Application for recognition of a foreign proceeding

  (a) A foreign representative applies to the court for 
recognition of the foreign proceeding in which the foreign 
representative has been appointed by filing a petition for 
recognition.
  (b) A petition for recognition shall be accompanied by--
          (1) a certified copy of the decision commencing the 
        foreign proceeding and appointing the foreign 
        representative;
          (2) a certificate from the foreign court affirming 
        the existence of the foreign proceeding and of the 
        appointment of the foreign representative; or
          (3) in the absence of evidence referred to in 
        paragraphs (1) and (2), any other evidence acceptable 
        to the court of the existence of the foreign proceeding 
        and of the appointment of the foreign representative.
  (c) A petition for recognition shall also be accompanied by a 
statement identifying all foreign proceedings with respect to 
the debtor that are known to the foreign representative.
  (d) The documents referred to in paragraphs (1) and (2) of 
subsection (b) must be translated into English. The court may 
require a translation into English of additional documents.

Sec. 1516. Presumptions concerning recognition

  (a) If the decision or certificate referred to in section 
1515(b) indicates that the foreign proceeding is a foreign 
proceeding as defined in section 101 and that the person or 
body is a foreign representative as defined in section 101, the 
court is entitled to so presume.
  (b) The court is entitled to presume that documents submitted 
in support of the petition for recognition are authentic, 
whether or not they have been legalized.
  (c) In the absence of evidence to the contrary, the debtor's 
registered office, or habitual residence in the case of an 
individual, is presumed to be the center of the debtor's main 
interests.

Sec. 1517. Order recognizing a foreign proceeding

  (a) Subject to section 1506, after notice and a hearing an 
order recognizing a foreign proceeding shall be entered if--
          (1) the foreign proceeding is a foreign main 
        proceeding or foreign nonmain proceeding within the 
        meaning of section 1502;
          (2) the foreign representative applying for 
        recognition is a person or body as defined in section 
        101; and
          (3) the petition meets the requirements of section 
        1515.
  (b) The foreign proceeding shall be recognized--
          (1) as a foreign main proceeding if it is taking 
        place in the country where the debtor has the center of 
        its main interests; or
          (2) as a foreign nonmain proceeding if the debtor has 
        an establishment within the meaning of section 1502 in 
        the foreign country where the proceeding is pending.
  (c) A petition for recognition of a foreign proceeding shall 
be decided upon at the earliest possible time. Entry of an 
order recognizing a foreign proceeding constitutes recognition 
under this chapter.
  (d) The provisions of this subchapter do not prevent 
modification or termination of recognition if it is shown that 
the grounds for granting it were fully or partially lacking or 
have ceased to exist, but in considering such action the court 
shall give due weight to possible prejudice to parties that 
have relied upon the granting of recognition. The case under 
this chapter may be closed in the manner prescribed for a case 
under section 350.

Sec. 1518. Subsequent information

  From the time of filing the petition for recognition of the 
foreign proceeding, the foreign representative shall file with 
the court promptly a notice of change of status concerning--
          (1) any substantial change in the status of the 
        foreign proceeding or the status of the foreign 
        representative's appointment; and
          (2) any other foreign proceeding regarding the debtor 
        that becomes known to the foreign representative.

Sec. 1519. Relief that may be granted upon petition for recognition of 
                    a foreign proceeding

  (a) From the time of filing a petition for recognition until 
the court rules on the petition, the court may, at the request 
of the foreign representative, where relief is urgently needed 
to protect the assets of the debtor or the interests of the 
creditors, grant relief of a provisional nature, including--
          (1) staying execution against the debtor's assets;
          (2) entrusting the administration or realization of 
        all or part of the debtor's assets located in the 
        United States to the foreign representative or another 
        person authorized by the court, including an examiner, 
        in order to protect and preserve the value of assets 
        that, by their nature or because of other 
        circumstances, are perishable, susceptible to 
        devaluation or otherwise in jeopardy; and
          (3) any relief referred to in paragraph (3), (4), or 
        (7) of section 1521(a).
  (b) Unless extended under section 1521(a)(6), the relief 
granted under this section terminates when the petition for 
recognition is decided upon.
  (c) It is a ground for denial of relief under this section 
that such relief would interfere with the administration of a 
foreign main proceeding.
  (d) The court may not enjoin a police or regulatory act of a 
governmental unit, including a criminal action or proceeding, 
under this section.
  (e) The standards, procedures, and limitations applicable to 
an injunction shall apply to relief under this section.

Sec. 1520. Effects of recognition of a foreign main proceeding

  (a) Upon recognition of a foreign proceeding that is a 
foreign main proceeding--
          (1) sections 361 and 362 with respect to the debtor 
        and that property of the debtor that is within the 
        territorial jurisdiction of the United States;
          (2) sections 363, 549, and 552 of this title apply to 
        a transfer of an interest of the debtor in property 
        that is within the territorial jurisdiction of the 
        United States to the same extent that the sections 
        would apply to property of an estate;
          (3) unless the court orders otherwise, the foreign 
        representative may operate the debtor's business and 
        may exercise the rights and powers of a trustee under 
        and to the extent provided by sections 363 and 552; and
          (4) section 552 applies to property of the debtor 
        that is within the territorial jurisdiction of the 
        United States.
  (b) Subsection (a) does not affect the right to commence an 
individual action or proceeding in a foreign country to the 
extent necessary to preserve a claim against the debtor.
  (c) Subsection (a) does not affect the right of a foreign 
representative or an entity to file a petition commencing a 
case under this title or the right of any party to file claims 
or take other proper actions in such a case.

Sec. 1521. Relief that may be granted upon recognition of a foreign 
                    proceeding

  (a) Upon recognition of a foreign proceeding, whether main or 
nonmain, where necessary to effectuate the purpose of this 
chapter and to protect the assets of the debtor or the 
interests of the creditors, the court may, at the request of 
the foreign representative, grant any appropriate relief, 
including--
          (1) staying the commencement or continuation of an 
        individual action or proceeding concerning the debtor's 
        assets, rights, obligations or liabilities to the 
        extent they have not been stayed under section 1520(a);
          (2) staying execution against the debtor's assets to 
        the extent it has not been stayed under section 
        1520(a);
          (3) suspending the right to transfer, encumber or 
        otherwise dispose of any assets of the debtor to the 
        extent this right has not been suspended under section 
        1520(a);
          (4) providing for the examination of witnesses, the 
        taking of evidence or the delivery of information 
        concerning the debtor's assets, affairs, rights, 
        obligations or liabilities;
          (5) entrusting the administration or realization of 
        all or part of the debtor's assets within the 
        territorial jurisdiction of the United States to the 
        foreign representative or another person, including an 
        examiner, authorized by the court;
          (6) extending relief granted under section 1519(a); 
        and
          (7) granting any additional relief that may be 
        available to a trustee, except for relief available 
        under sections 522, 544, 545, 547, 548, 550, and 
        724(a).
  (b) Upon recognition of a foreign proceeding, whether main or 
nonmain, the court may, at the request of the foreign 
representative, entrust the distribution of all or part of the 
debtor's assets located in the United States to the foreign 
representative or another person, including an examiner, 
authorized by the court, provided that the court is satisfied 
that the interests of creditors in the United States are 
sufficiently protected.
  (c) In granting relief under this section to a representative 
of a foreign nonmain proceeding, the court must be satisfied 
that the relief relates to assets that, under the law of the 
United States, should be administered in the foreign nonmain 
proceeding or concerns information required in that proceeding.
  (d) The court may not enjoin a police or regulatory act of a 
governmental unit, including a criminal action or proceeding, 
under this section.
  (e) The standards, procedures, and limitations applicable to 
an injunction shall apply to relief under paragraphs (1), (2), 
(3), and (6) of subsection (a).

Sec. 1522. Protection of creditors and other interested persons

  (a) The court may grant relief under section 1519 or 1521, or 
may modify or terminate relief under subsection (c), only if 
the interests of the creditors and other interested entities, 
including the debtor, are sufficiently protected.
  (b) The court may subject relief granted under section 1519 
or 1521, or the operation of the debtor's business under 
section 1520(a)(3) of this title, to conditions it considers 
appropriate, including the giving of security or the filing of 
a bond.
  (c) The court may, at the request of the foreign 
representative or an entity affected by relief granted under 
section 1519 or 1521, or at its own motion, modify or terminate 
such relief.
  (d) Section 1104(d) shall apply to the appointment of an 
examiner under this chapter. Any examiner shall comply with the 
qualification requirements imposed on a trustee by section 322.

Sec. 1523. Actions to avoid acts detrimental to creditors

  (a) Upon recognition of a foreign proceeding, the foreign 
representative has standing in a case concerning the debtor 
pending under another chapter of this title to initiate actions 
under sections 522, 544, 545, 547, 548, 550, and 724(a).
  (b) When the foreign proceeding is a foreign nonmain 
proceeding, the court must be satisfied that an action under 
subsection (a) relates to assets that, under United States law, 
should be administered in the foreign nonmain proceeding.

Sec. 1524. Intervention by a foreign representative

  Upon recognition of a foreign proceeding, the foreign 
representative may intervene in any proceedings in a State or 
Federal court in the United States in which the debtor is a 
party.

      SUBCHAPTER IV--COOPERATION WITH FOREIGN COURTS AND FOREIGN 
                            REPRESENTATIVES

Sec. 1525. Cooperation and direct communication between the court and 
                    foreign courts or foreign representatives

  (a) Consistent with section 1501, the court shall cooperate 
to the maximum extent possible with foreign courts or foreign 
representatives, either directly or through the trustee.
  (b) The court is entitled to communicate directly with, or to 
request information or assistance directly from, foreign courts 
or foreign representatives, subject to the rights of parties in 
interest to notice and participation.

Sec. 1526. Cooperation and direct communication between the trustee and 
                    foreign courts or foreign representatives

  (a) Consistent with section 1501, the trustee or other 
person, including an examiner, authorized by the court, shall, 
subject to the supervision of the court, cooperate to the 
maximum extent possible with foreign courts or foreign 
representatives.
  (b) The trustee or other person, including an examiner, 
authorized by the court is entitled, subject to the supervision 
of the court, to communicate directly with foreign courts or 
foreign representatives.

Sec. 1527. Forms of cooperation

  Cooperation referred to in sections 1525 and 1526 may be 
implemented by any appropriate means, including--
          (1) appointment of a person or body, including an 
        examiner, to act at the direction of the court;
          (2) communication of information by any means 
        considered appropriate by the court;
          (3) coordination of the administration and 
        supervision of the debtor's assets and affairs;
          (4) approval or implementation of agreements 
        concerning the coordination of proceedings; and
          (5) coordination of concurrent proceedings regarding 
        the same debtor.

                  SUBCHAPTER V--CONCURRENT PROCEEDINGS

Sec. 1528. Commencement of a case under this title after recognition of 
                    a foreign main proceeding

  After recognition of a foreign main proceeding, a case under 
another chapter of this title may be commenced only if the 
debtor has assets in the United States. The effects of such 
case shall be restricted to the assets of the debtor that are 
within the territorial jurisdiction of the United States and, 
to the extent necessary to implement cooperation and 
coordination under sections 1525, 1526, and 1527, to other 
assets of the debtor that are within the jurisdiction of the 
court under sections 541(a) of this title, and 1334(e) of title 
28, to the extent that such other assets are not subject to the 
jurisdiction and control of a foreign proceeding that has been 
recognized under this chapter.

Sec. 1529. Coordination of a case under this title and a foreign 
                    proceeding

  Where a foreign proceeding and a case under another chapter 
of this title are taking place concurrently regarding the same 
debtor, the court shall seek cooperation and coordination under 
sections 1525, 1526, and 1527, and the following shall apply:
          (1) When the case in the United States is taking 
        place at the time the petition for recognition of the 
        foreign proceeding is filed--
                  (A) any relief granted under sections 1519 or 
                1521 must be consistent with the relief granted 
                in the case in the United States; and
                  (B) even if the foreign proceeding is 
                recognized as a foreign main proceeding, 
                section 1520 does not apply.
          (2) When a case in the United States under this title 
        commences after recognition, or after the filing of the 
        petition for recognition, of the foreign proceeding--
                  (A) any relief in effect under sections 1519 
                or 1521 shall be reviewed by the court and 
                shall be modified or terminated if inconsistent 
                with the case in the United States; and
                  (B) if the foreign proceeding is a foreign 
                main proceeding, the stay and suspension 
                referred to in section 1520(a) shall be 
                modified or terminated if inconsistent with the 
                relief granted in the case in the United 
                States.
          (3) In granting, extending, or modifying relief 
        granted to a representative of a foreign nonmain 
        proceeding, the court must be satisfied that the relief 
        relates to assets that, under the law of the United 
        States, should be administered in the foreign nonmain 
        proceeding or concerns information required in that 
        proceeding.
          (4) In achieving cooperation and coordination under 
        sections 1528 and 1529, the court may grant any of the 
        relief authorized under section 305.

Sec. 1530. Coordination of more than 1 foreign proceeding

  In matters referred to in section 1501, with respect to more 
than 1 foreign proceeding regarding the debtor, the court shall 
seek cooperation and coordination under sections 1525, 1526, 
and 1527, and the following shall apply:
          (1) Any relief granted under section 1519 or 1521 to 
        a representative of a foreign nonmain proceeding after 
        recognition of a foreign main proceeding must be 
        consistent with the foreign main proceeding.
          (2) If a foreign main proceeding is recognized after 
        recognition, or after the filing of a petition for 
        recognition, of a foreign nonmain proceeding, any 
        relief in effect under section 1519 or 1521 shall be 
        reviewed by the court and shall be modified or 
        terminated if inconsistent with the foreign main 
        proceeding.
          (3) If, after recognition of a foreign nonmain 
        proceeding, another foreign nonmain proceeding is 
        recognized, the court shall grant, modify, or terminate 
        relief for the purpose of facilitating coordination of 
        the proceedings.

Sec. 1531. Presumption of insolvency based on recognition of a foreign 
                    main proceeding

  In the absence of evidence to the contrary, recognition of a 
foreign main proceeding is for the purpose of commencing a 
proceeding under section 303, proof that the debtor is 
generally not paying its debts as such debts become due.

Sec. 1532. Rule of payment in concurrent proceedings

  Without prejudice to secured claims or rights in rem, a 
creditor who has received payment with respect to its claim in 
a foreign proceeding pursuant to a law relating to insolvency 
may not receive a payment for the same claim in a case under 
any other chapter of this title regarding the debtor, so long 
as the payment to other creditors of the same class is 
proportionately less than the payment the creditor has already 
received.

                SECTION 127 OF THE TRUTH IN LENDING ACT

Sec. 127. Open end consumer credit plans

  (a) Before opening any account under an open end consumer 
credit plan, the creditor shall disclose to the person to whom 
credit is to be extended each of the following items, to the 
extent applicable:
          (1) * * *

           *       *       *       *       *       *       *

          (9) In the case of any credit or charge card account 
        under an open-end consumer credit plan on which a 
        minimum monthly or periodic payment will be required, 
        other than an account described in paragraph (8)--
                  (A) the following statement: ``The minimum 
                payment amount shown on your billing statement 
                is the smallest payment which you can make in 
                order to keep the account in good standing. 
                This payment option is offered as a convenience 
                and you may make larger payments at any time. 
                Making only the minimum payment each month will 
                increase the amount of interest you pay and the 
                length of time it takes to repay your 
                outstanding balance.''
                  (B) if the plan provides that the consumer 
                will be permitted to forgo making a minimum 
                payment during a specified billing cycle, a 
                statement, if applicable, that if the consumer 
                chooses to forgo making the minimum payment, 
                finance charges will continue to accrue; and
                  (C) an example, based on an annual percentage 
                rate and method for determining minimum 
                periodic payments recently in effect for that 
                creditor, and a $500 outstanding balance, 
                showing the estimated minimum periodic payment, 
                and the estimated period of time it would take 
                to repay the $500 outstanding balance if the 
                consumer paid only the minimum periodic payment 
                on each monthly or periodic statement and 
                obtained no additional extensions of credit.
          (10) With respect to one billing cycle per calendar 
        year, the creditor shall transmit the information 
        required under paragraph (9) to each consumer to whom 
        the creditor is required to transit a statement 
        pursuant to subsection (b) for such billing cycle. The 
        creditor shall also transmit to such consumer for such 
        cycle a worksheet prescribed by the Board to assist the 
        consumer in determining the consumer's household income 
        and debt obligations.
  (b) The creditor of any account under an open end consumer 
credit plan shall transmit to the obligor, for each billing 
cycle at the end of which there is an outstanding balance in 
that account or with respect to which a finance charge is 
imposed, a statement setting forth each of the following items 
to the extent applicable:
          (1) * * *

           *       *       *       *       *       *       *

          (11) The following statement: ``The minimum payment 
        amount shown on your billing statement is the smallest 
        payment which you can make in order to keep the account 
        in good standing. This payment option is offered as a 
        convenience and you may make larger payments at any 
        time. Making only the minimum payment each month will 
        increase the amount of interest you pay and the length 
        of time it takes to repay your outstanding balance.''

           *       *       *       *       *       *       *

  (h) In promulgating regulations to implement the disclosure 
of an example required under subsection (a)(9)(C) and (a)(10), 
the Board shall set forth a model disclosure to accompany the 
example stating that the credit features shown are only an 
example which does not obligate the creditor, but is intended 
to illustrate the approximate length of time it could take to 
repay using the assumptions set forth in subsection (a)(9)(C) 
without regard to any other factors that could impact an 
approximate repayment period, including other credit features 
or the consumer's payment or other behavior with respect to the 
account. Compliance with the disclosures required under 
subsection (a)(9)(C) and (a)(10) shall be enforced exclusively 
by the Federal agencies set forth in section 108.
  (i) Prohibition on Certain Actions for Failure To Incur 
Finance Charges.--A creditor of an account under an open end 
consumer credit plan may not terminate an account prior to its 
expiration date solely because the consumer has not incurred 
finance charges on the account. Nothing in this subsection 
shall prohibit a creditor from terminating an account for 
inactivity in 3 or more consecutive months.
                              ----------                              

TITLE 28, UNITED STATES CODE

           *       *       *       *       *       *       *

PART I--ORGANIZATION OF COURTS

           *       *       *       *       *       *       *

                      CHAPTER 6--BANKRUPTCY JUDGES

Sec.
151  Designation of bankruptcy courts.
     * * * * * * *
159.  Bankruptcy statistics.

           *       *       *       *       *       *       *

Sec. 152. Appointment of bankruptcy judges

  (a)(1) [The United States court of appeals for the circuit 
shall appoint bankruptcy judges for the judicial districts 
established in paragraph (2) in such numbers as are established 
in such paragraph.] Each bankruptcy judge to be appointed for a 
judicial district as provided in paragraph (2) shall be 
appointed by the United States court of appeals for the circuit 
in which such district is located. Such appointments shall be 
made after considering the recommendations of the Judicial 
Conference submitted pursuant to subsection (b). Each 
bankruptcy judge shall be appointed for a term of fourteen 
years, subject to the provisions of subsection (e). However, 
upon the expiration of the term, a bankruptcy judge may, with 
the approval of the judicial council of the circuit, continue 
to perform the duties of the office until the earlier of the 
date which is 180 days after the expiration of the term or the 
date of the appointment of a successor. Bankruptcy judges shall 
serve as judicial officers of the United States district court 
established under Article III of the Constitution.

           *       *       *       *       *       *       *

Sec. 156. Staff; expenses

  (a) * * *

           *       *       *       *       *       *       *

  (g)(1) In this subsection, the term ``travel expenses''--
          (A) means the expenses incurred by a bankruptcy judge 
        for travel that is not directly related to any case 
        assigned to such bankruptcy judge; and
          (B) shall not include the travel expenses of a 
        bankruptcy judge if--
                  (i) the payment for the travel expenses is 
                paid by such bankruptcy judge from the personal 
                funds of such bankruptcy judge; and
                  (ii) such bankruptcy judge does not receive 
                funds (including reimbursement) from the United 
                States or any other person or entity for the 
                payment of such travel expenses.
  (2) Each bankruptcy judge shall annually submit the 
information required under paragraph (3) to the chief 
bankruptcy judge for the district in which the bankruptcy judge 
is assigned.
  (3)(A) Each chief bankruptcy judge shall submit an annual 
report to the Director of the Administrative Office of the 
United States Courts on the travel expenses of each bankruptcy 
judge assigned to the applicable district (including the travel 
expenses of the chief bankruptcy judge of such district).
  (B) The annual report under this paragraph shall include--
          (i) the travel expenses of each bankruptcy judge, 
        with the name of the bankruptcy judge to whom the 
        travel expenses apply;
          (ii) a description of the subject matter and purpose 
        of the travel relating to each travel expense 
        identified under clause (i), with the name of the 
        bankruptcy judge to whom the travel applies; and
          (iii) the number of days of each travel described 
        under clause (ii), with the name of the bankruptcy 
        judge to whom the travel applies.
  (4)(A) The Director of the Administrative Office of the 
United States Courts shall--
          (i) consolidate the reports submitted under paragraph 
        (3) into a single report; and
          (ii) annually submit such consolidated report to 
        Congress.
  (B) The consolidated report submitted under this paragraph 
shall include the specific information required under paragraph 
(3)(B), including the name of each bankruptcy judge with 
respect to clauses (i), (ii), and (iii) of paragraph (3)(B).

Sec. 157. Procedures

  (a) * * *
  (b)(1) Bankruptcy judges may hear and determine all cases 
under title 11 and all core proceedings arising under title 11, 
or arising in a case under title 11, referred under subsection 
(a) of this section, and may enter appropriate orders and 
judgments, subject to review under section 158 of this title.
  (2) Core proceedings include, but are not limited to--
          (A) * * *

           *       *       *       *       *       *       *

          (N) orders approving the sale of property other than 
        property resulting from claims brought by the estate 
        against persons who have not filed claims against the 
        estate; [and]
          (O) other proceedings affecting the liquidation of 
        the assets of the estate or the adjustment of the 
        debtor-creditor or the equity security holder 
        relationship, except personal injury tort or wrongful 
        death claims[.]; and
          (P) recognition of foreign proceedings and other 
        matters under chapter 15 of title 11.

           *       *       *       *       *       *       *

Sec. 159. Bankruptcy statistics

  (a) The clerk of each district shall compile statistics 
regarding individual debtors with primarily consumer debts 
seeking relief under chapters 7, 11, and 13 of title 11. Those 
statistics shall be in a form prescribed by the Director of the 
Administrative Office of the United States Courts (referred to 
in this section as the ``Office'').
  (b) The Director shall--
          (1) compile the statistics referred to in subsection 
        (a);
          (2) make the statistics available to the public; and
          (3) not later than October 31, 2000, and annually 
        thereafter, prepare, and submit to Congress a report 
        concerning theinformation collected under subsection 
(a) that contains an analysis of the information.
  (c) The compilation required under subsection (b) shall--
          (1) be itemized, by chapter, with respect to title 
        11;
          (2) be presented in the aggregate and for each 
        district; and
          (3) include information concerning--
                  (A) the total assets and total liabilities of 
                the debtors described in subsection (a), and in 
                each category of assets and liabilities, as 
                reported in the schedules prescribed pursuant 
                to section 2075 of this title and filed by 
                those debtors;
                  (B) the current monthly income, and average 
                income and average expenses of those debtors as 
                reported on the schedules and statements that 
                each such debtor files under sections 521 and 
                1322 of title 11;
                  (C) the aggregate amount of debt discharged 
                in the reporting period, determined as the 
                difference between the total amount of debt and 
                obligations of a debtor reported on the 
                schedules and the amount of such debt reported 
                in categories which are predominantly 
                nondischargeable;
                  (D) the average period of time between the 
                filing of the petition and the closing of the 
                case;
                  (E) for the reporting period--
                          (i) the number of cases in which a 
                        reaffirmation was filed; and
                          (ii)(I) the total number of 
                        reaffirmations filed;
                          (II) of those cases in which a 
                        reaffirmation was filed, the number in 
                        which the debtor was not represented by 
                        an attorney; and
                          (III) of those cases, the number of 
                        cases in which the reaffirmation was 
                        approved by the court;
                  (F) with respect to cases filed under chapter 
                13 of title 11, for the reporting period--
                          (i)(I) the number of cases in which a 
                        final order was entered determining the 
                        value of property securing a claim in 
                        an amount less than the amount of the 
                        claim; and
                          (II) the number of final orders 
                        determining the value of property 
                        securing a claim issued;
                          (ii) the number of cases dismissed, 
                        the number of cases dismissed for 
                        failure to make payments under the 
                        plan, the number of cases refiled after 
                        dismissal, and the number of cases in 
                        which the plan was completed, 
                        separately itemized with respect to the 
                        number of modifications made before 
                        completion of the plan, if any; and
                          (iii) the number of cases in which 
                        the debtor filed another case within 
                        the 6 years previous to the filing;
                  (G) the number of cases in which creditors 
                were fined for misconduct and any amount of 
                punitive damages awarded by the court for 
                creditor misconduct; and
                  (H) the number of cases in which sanctions 
                under rule 9011 of the Federal Rules of 
                Bankruptcy Procedure were imposed against 
                debtor's counsel and damages awarded under such 
                Rule.

           *       *       *       *       *       *       *

PART II--DEPARTMENT OF JUSTICE

           *       *       *       *       *       *       *

                   CHAPTER 39--UNITED STATES TRUSTEES

Sec.
581.United States trustees.
     * * * * * * *
589b.  Bankruptcy data.

           *       *       *       *       *       *       *

Sec. 586. Duties; supervision by Attorney General

  (a) Each United States trustee, within the region for which 
such United States trustee is appointed, shall----
          (1) * * *

           *       *       *       *       *       *       *

          (3) supervise the administration of cases and 
        trustees in cases under chapter 7, 11, 12, [or 13] 13, 
        or 15, of title 11 by, whenever the United States 
        trustee considers it to be appropriate----
                  (A) * * *

           *       *       *       *       *       *       *

                  (G) monitoring the progress of cases under 
                title 11 and taking such actions as the United 
                States trustee deems to be appropriate to 
                prevent undue delay in such progress; [and]
                  (H) in small business cases (as defined in 
                section 101 of title 11), performing the 
                additional duties specified in title 11 
                pertaining to such cases;
                  [(H)] (I) monitoring applications filed under 
                section 327 of title 11 and, whenever the 
                United States trustee deems it to be 
                appropriate, filing with the court comments 
                with respect to the approval of such 
                applications;

           *       *       *       *       *       *       *

          (5) perform the duties prescribed for the United 
        States trustee under title 11 and this title, and such 
        duties consistent with title 11 and this title as the 
        Attorney General may prescribe; [and]
          (6) make such reports as the Attorney General 
        directs[.];
          (7) in each of such small business cases--
                  (A) conduct an initial debtor interview as 
                soon as practicable after the entry of order 
                for relief but before the first meeting 
                scheduled under section 341(a) of title 11 at 
                which time the United States trustee shall 
                begin to investigate the debtor's viability, 
                inquire about the debtor's business plan, 
                explain the debtor's obligations to file 
                monthly operating reports and other required 
                reports, attempt to develop anagreed scheduling 
order, and inform the debtor of other obligations;
                  (B) when determined to be appropriate and 
                advisable, visit the appropriate business 
                premises of the debtor and ascertain the state 
                of the debtor's books and records and verify 
                that the debtor has filed its tax returns; and
                  (C) review and monitor diligently the 
                debtor's activities, to identify as promptly as 
                possible whether the debtor will be unable to 
                confirm a plan; and
          (8) in cases in which the United States trustee finds 
        material grounds for any relief under section 1112 of 
        title 11, the United States trustee shall apply 
        promptly to the court for relief.

           *       *       *       *       *       *       *

  (d)(1) The Attorney General shall prescribe by rule 
qualifications for membership on the panels established by 
United States trustees under paragraph (a)(1) of this section, 
and qualifications for appointment under subsection (b) of this 
section to serve as standing trustee in cases under chapter 12 
or 13 of title 11. The Attorney General may not require that an 
individual be an attorney in order to qualify for appointment 
under subsection (b) of this section to serve as standing 
trustee in cases under chapter 12 or 13 of title 11.
  (2) A trustee whose appointment under subsection (a)(1) or 
under subsection (b) is terminated or who ceases to be assigned 
to cases filed under title 11 of the United States Code may 
obtain judicial review of the final agency decision by 
commencing an action in the United States district court for 
the district for which the panel to which the trustee is 
appointed under subsection (a)(1), or in the United States 
district court for the district in which the trustee is 
appointed under subsection (b) resides, after first exhausting 
all available administrative remedies, which if the trustee so 
elects, shall also include an administrative hearing on the 
record. Unless the trustee elects to have an administrative 
hearing on the record, the trustee shall be deemed to have 
exhausted all administrative remedies for purposes of this 
paragraph if the agency fails to make a final agency decision 
within 90 days after the trustee requests administrative 
remedies. The Attorney General shall prescribe procedures to 
implement this paragraph. The decision of the agency shall be 
affirmed by the district court unless it is unreasonable and 
without cause based on the administrative record before the 
agency.
  (e)(1) * * *

           *       *       *       *       *       *       *

  (3) After first exhausting all available administrative 
remedies, an individual appointed under subsection (b) may 
obtain judicial review of final agency action to deny a claim 
of actual, necessary expenses under this subsection by 
commencing an action in the United States district court in the 
district where the individual resides. The decision of the 
agency shall be affirmed by the district court unless it is 
unreasonable and without cause based upon the administrative 
record before the agency.
  (4) The Attorney General shall prescribe procedures to 
implement this subsection.

           *       *       *       *       *       *       *

Sec. 589b. Bankruptcy data

  (a) Rules.--The Attorney General shall, within a reasonable 
time after the effective date of this section, issue rules 
requiring uniform forms for (and from time to time thereafter 
to appropriately modify and approve)--
          (1) final reports by trustees in cases under chapters 
        7, 12, and 13 of title 11; and
          (2) periodic reports by debtors in possession or 
        trustees, as the case may be, in cases under chapter 11 
        of title 11.
  (b) Reports.--All reports referred to in subsection (a) shall 
be designed (and the requirements as to place and manner of 
filing shall be established) so as to facilitate compilation of 
data and maximum possible access of the public, both by 
physical inspection at 1 or more central filing locations, and 
by electronic access through the Internet or other appropriate 
media.
  (c) Required Information.--The information required to be 
filed in the reports referred to in subsection (b) shall be 
that which is in the best interests of debtors and creditors, 
and in the public interest in reasonable and adequate 
information to evaluate the efficiency and practicality of the 
Federal bankruptcy system. In issuing rules proposing the forms 
referred to in subsection (a), the Attorney General shall 
strike the best achievable practical balance between--
          (1) the reasonable needs of the public for 
        information about the operational results of the 
        Federal bankruptcy system; and
          (2) economy, simplicity, and lack of undue burden on 
        persons with a duty to file reports.
  (d) Final Reports.--Final reports proposed for adoption by 
trustees under chapters 7, 12, and 13 of title 11 shall, in 
addition to such other matters as are required by law oras the 
Attorney General in the discretion of the Attorney General, shall 
propose, include with respect to a case under such title--
          (1) information about the length of time the case was 
        pending;
          (2) assets abandoned;
          (3) assets exempted;
          (4) receipts and disbursements of the estate;
          (5) expenses of administration;
          (6) claims asserted;
          (7) claims allowed; and
          (8) distributions to claimants and claims discharged 
        without payment,
in each case by appropriate category and, in cases under 
chapters 12 and 13 of title 11, date of confirmation of the 
plan, each modification thereto, and defaults by the debtor in 
performance under the plan.
  (e) Periodic Reports.--Periodic reports proposed for adoption 
by trustees or debtors in possession under chapter 11 of title 
11 shall, in addition to such other matters as are required by 
law or as the Attorney General, in the discretion of the 
Attorney General, shall propose, include--
          (1) information about the standard industry 
        classification, published by the Department of 
        Commerce, for the businesses conducted by the debtor;
          (2) length of time the case has been pending;
          (3) number of full-time employees as at the date of 
        the order for relief and at end of each reporting 
        period since the case was filed;
          (4) cash receipts, cash disbursements and 
        profitability of the debtor for the most recent period 
        and cumulatively since the date of the order for 
        relief;
          (5) compliance with title 11, whether or not tax 
        returns and tax payments since the date of the order 
        for relief have been timely filed and made;
          (6) all professional fees approved by the court in 
        the case for the most recent period and cumulatively 
        since the date of the order for relief (separately 
        reported, in for the professional fees incurred by or 
        on behalf of the debtor, between those that would have 
        been incurred absent a bankruptcy case and those not); 
        and
          (7) plans of reorganization filed and confirmed and, 
        with respect thereto, by class, the recoveries of the 
        holders, expressed in aggregate dollar values and, in 
        the case of claims, as a percentage of total claims of 
        the class allowed.

           *       *       *       *       *       *       *

PART III--COURT OFFICERS AND EMPLOYEES

           *       *       *       *       *       *       *

    CHAPTER 57--GENERAL PROVISIONS APPLICABLE TO COURT OFFICERS AND 
EMPLOYEES

           *       *       *       *       *       *       *

Sec. 960. Tax liability

  (a) Any officers and agents conducting any business under 
authority of a United States court shall be subject to all 
Federal, State and local taxes applicable to such business to 
the same extent as if it were conducted by an individual or 
corporation.
  (b) Such taxes shall be paid when due in the conduct of such 
business unless--
          (1) the tax is a property tax secured by a lien 
        against property that is abandoned within a reasonable 
        time after the lien attaches, by the trustee of a 
        bankruptcy estate, pursuant to section 554 of title 11; 
        or
          (2) payment of the tax is excused under a specific 
        provision of title 11.
  (c) In a case pending under chapter 7 of title 11, payment of 
a tax may be deferred until final distribution is made under 
section 726 of title 11 if--
          (1) the tax was not incurred by a trustee duly 
        appointed under chapter 7 of title 11; or
          (2) before the due date of the tax, the court has 
        made a finding of probable insufficiency of funds of 
        the estate to pay in full the administrative expenses 
        allowed under section 503(b) of title 11 that have the 
        same priority in distribution under section 726(b) of 
        title 11 as such tax.

           *       *       *       *       *       *       *

PART IV--JURISDICTION AND VENUE

           *       *       *       *       *       *       *

CHAPTER 83--COURTS OF APPEALS

           *       *       *       *       *       *       *

Sec. 1293. Bankruptcy appeals

  (a) The courts of appeals (other than the United States Court 
of Appeals for the Federal Circuit) shall have jurisdiction of 
appeals from the following:
          (1) Final orders and judgments entered by bankruptcy 
        courts and district courts in cases under title 11, in 
        proceedings arising under title 11, and in proceedings 
        arising in or related to a case under title 11, 
        including final orders in proceedings regarding the 
        automatic stay of section 362 of title 11.
          (2) Interlocutory orders entered by bankruptcy courts 
        and district courts granting, continuing, modifying, 
        refusing or dissolving injunctions, or refusing to 
        dissolve or modify injunctions in cases under title 11, 
        in proceedings arising under title 11, and in 
        proceedings arising in or related to a case under title 
        11, other than interlocutory orders in proceedings 
        regarding the automatic stay of section 362 of title 
        11.
          (3) Interlocutory orders of bankruptcy courts and 
        district courts entered under section 1104(a) or 
        1121(d) of title 11, or the refusal to enter an order 
        under such section.
          (4) An interlocutory order of a bankruptcy court or 
        district court entered in a case under title 11, in a 
        proceeding arising under title 11, or in a proceeding 
        arising in or related to a case under title 11, if the 
        court of appeals that would have jurisdiction of an 
        appeal of a final order entered in such case or such 
        proceeding permits, in its discretion, appeal to be 
        taken from such interlocutory order.
  (b) Final decisions, judgments, orders, and decrees entered 
by a bankruptcy appellate panel under subsection (b) of this 
section.
  (c)(1) The judicial council of a circuit may establish a 
bankruptcy appellate panel composed of bankruptcy judges in the 
circuit who are appointed by the judicial council, which panel 
shall exercise the jurisdiction to review orders and judgments 
of bankruptcy courts described in paragraphs (1)-(4) of 
subsection (a) of this section unless--
          (A) the appellant elects at the time of filing the 
        appeal; or
          (B) any other party elects, not later than 10 days 
        after service of the notice of the appeal;
to have such jurisdiction exercised by the court of appeals.
  (2) An appeal to be heard by a bankruptcy appellate panel 
under this subsection (b) shall be heard by 3 members of the 
bankruptcy appellate panel, provided that a member of such 
panel may not hear an appeal originating in the district for 
which such member is appointed or designated under section 152 
of this title.
  (3) If authorized by the Judicial Conference of the United 
States, the judicial councils of 2 or more circuits may 
establish a joint bankruptcy appellate panel.

           *       *       *       *       *       *       *

               CHAPTER 85--DISTRICT COURTS; JURISDICTION

Sec. 1334. Bankruptcy cases and proceedings

  (a) * * *

           *       *       *       *       *       *       *

  (c)(1) [Nothing in] Except with respect to a case under 
chapter 15 of title 11, nothing in this section prevents a 
district court in the interest of justice, or in the interest 
of comity with State courts or respect for State law, from 
abstaining from hearing a particular proceeding arising under 
title 11 or arising in or related to a case under title 11.

           *       *       *       *       *       *       *

  (d) Any decision to abstain or not to abstain made [under 
this subsection] made under subsection (c) (other than a 
decision not to abstain in a proceeding described in subsection 
(c)(2)) is not reviewable by appeal or otherwise by the court 
of appeals under section 158(d), 1291, or 1292 of this title or 
by the Supreme Court of the United States under section 1254 of 
this title. [This subsection] Subsection (c) and this 
subsection shall not be construed to limit the applicability of 
the stay provided for by section 362 of title 11, United States 
Code, as such section applies to an action affecting the 
property of the estate in bankruptcy.

           *       *       *       *       *       *       *

                   CHAPTER 87--DISTRICT COURTS; VENUE

Sec. 1408. Venue of cases under title 11

  Except as provided in section 1410 of this title, a case 
under title 11 may be commenced in the district court for the 
district----
          (1) in which the domicile, residence, principal place 
        of business in the United States, or principal assets 
        in the United States, of the person or entity that is 
        the subject of such case have been located for the one 
        hundred and eighty days immediately preceding such 
        commencement, or for a longer portion of such one-
        hundred-and-eighty-day period than the domicile, 
        residence, or principal place of business, in the 
        United States, or principal assets in the United 
        States, of such person were located in any other 
        district; or
          (2) in which there is pending a case under title 11 
        concerning such person's affiliate, general partner, or 
        partnership.

Sec. 1409. Venue of proceedings arising under title 11 or arising in or 
                    related to cases under title 11

  (a) * * *
  (b) Except as provided in subsection (d) of this section, a 
trustee in a case under title 11 may commence a proceeding 
arising in or related to such case to recover a money judgment 
of or property worth less than $1,000 or a consumer debt of 
less than $5,000, or a nonconsumer debt against a noninsider of 
less than $10,000, only in the district court for the district 
in which the defendant resides.

           *       *       *       *       *       *       *

                      CHAPTER 123--FEES AND COSTS

Sec. 1930. Bankruptcy fees

  (a) [Notwithstanding section 1915 of this title, the] The 
parties commencing a case under title 11 shall pay to the clerk 
of the district court or the clerk of the bankruptcy court, if 
one has been certified pursuant to section 156(b) of this 
title, the following filing fees:
          (1) * * *

           *       *       *       *       *       *       *

           (6) In addition to the filing fee paid to the clerk, 
        a quarterly fee shall be paid to the United States 
        trustee, for deposit in the Treasury, in each case 
        under chapter 11 of title 11 for each quarter 
        (including any fraction thereof) [until the case is 
        converted or dismissed, whichever occurs first]. [The] 
        Until the plan is confirmed or the case is converted 
        (whichever occurs first) the fee shall be $250 for each 
        quarter in which disbursements total less than $15,000; 
        $500 for each quarter in which disbursements total 
        $15,000 or more but less than $75,000; $750 for each 
        quarter in which disbursements total $75,000 or more 
        but less than $150,000; $1,250 for each quarter in 
        which disbursements total $150,000 or more but less 
        than $225,000; $1,500 for each quarter in which 
        disbursements total $225,000 or more but less than 
        [$300,000;] less than $300,000. Until the case is 
        converted, dismissed, or closed (whichever occurs first 
        and without regard to confirmation of the plan) the fee 
        shall be $3,750 for each quarter in which disbursements 
        total $300,000 or more but less than $1,000,000; $5,000 
        for each quarter in which disbursements total 
        $1,000,000 or more but less than $2,000,000; $7,500 for 
        each quarter in which disbursements total $2,000,000 or 
        more but less than $3,000,000; $8,000 for each quarter 
        in which disbursements total $3,000,000 or more but 
        less than $5,000,000; $10,000 for each quarter in which 
        disbursements total $5,000,000 or more. The fee shall 
        be payable on the last day of the calendar month 
        following the calendar quarter for which the fee is 
        owed.

           *       *       *       *       *       *       *

  (f)(1) Pursuant to procedures prescribed by the Judicial 
Conference of the United States, the district court or the 
bankruptcy court may waive the filing fee in a case under 
chapter 7 of title 11 for an individual debtor who is unable to 
pay such fee in installments.For purposes of this paragraph, 
the term `filing fee' means the filing fee required by subsection (a), 
or any other fee prescribed by the Judicial Conference under 
subsections (b) and (c) that is payable to the clerk upon the 
commencement of a case under chapter 7 of title 11.
  (2) The district court or the bankruptcy court may also waive 
for such debtors other fees prescribed pursuant to subsections 
(b) and (c).
  (3) This subsection does not restrict the district court or 
the bankruptcy court from waiving, in accordance with Judicial 
Conference policy, fees prescribed pursuant to such subsections 
for other debtors and creditors.
                              ----------                              

  SECTION 302 OF THE BANKRUPTCY, JUDGES, UNITED STATES TRUSTEES, AND 
                  FAMILY FARMER BANKRUPTCY ACT OF 1986

SEC. 302. EFFECTIVE DATES; APPLICATION OF AMENDMENTS.

  (a) * * *

           *       *       *       *       *       *       *

  (d) Application of Amendments to Judicial Districts.--
          (1) * * *

           *       *       *       *       *       *       *

          (3) Judicial districts for the states of alabama and 
        north carolina.--(A) Notwithstanding paragraphs (1) and 
        (2), and any other provision of law, the amendments 
        made by subtitle A of title II of this Act (Sec. 201 to 
        231 of Pub. L. 99-554, see Tables for classification), 
        and section 1930(a)(6) of title 28 of the United States 
        Code (as added by section 117(4) of this Act), shall 
        not--
                  (i) become effective in or with respect to a 
                judicial district specified in subparagraph (E) 
                until, or
                  (ii) apply to cases while pending in such 
                district before,
         such district elects to be included in a bankruptcy 
        region established in section 581(a) of title 28, 
        United States Code, as amended by section 111(a) of 
        this Act, [or October 1, 2002, whichever occurs first], 
        except that the amendment to section 105(a) of title 
        11, United States Code, shall become effective as of 
        the date of the enactment of the Federal Courts Study 
        Committee Implementation Act of 1990.

           *       *       *       *       *       *       *

          (F)(i) Subject to clause (ii), with respect to cases 
        under chapters 7, 11, 12, and 13 of title 11, United 
        States Code--
                  (I) commenced before the effective date of 
                this Act, and
                  (II) pending in a judicial district in the 
                State of Alabama or the State of North Carolina 
                before any election made under subparagraph (A) 
                by such district becomes effective [or October 
                1, 2002, whichever occurs first],
        the amendments made by section 113 (amending section 
        586 of this title) and subtitle A of title II of this 
        Act, and section 1930(a)(6) of title 28 of the United 
        States Code (as added by section 117(4) of this Act), 
        shall not apply until [October 1, 2003, or] the 
        expiration of the 1-year period beginning on the date 
        such election becomes effective, whichever occurs 
        first.
          (ii) For purposes of clause (i), the amendments made 
        by section 113 and subtitle A of title II of this Act, 
        and section 1930(a)(6) of title 28 of the United States 
        Code (as added by section 117(4) of this Act), shall 
        not apply with respect to a case under chapter 7, 11, 
        12, or 13 of title 11, United States Code, if -
                  (I) the trustee in the case files the final 
                report and account of administration of the 
                estate, required under section 704 of such 
                title, or
                  (II) a plan is confirmed under section 1129, 
                1225, or 1325 of such title,
        [before October 1, 2003, or] the expiration of the 1-
        year period beginning on the date such election becomes 
        effective[, whichever occurs first.]

           *       *       *       *       *       *       *

                              ----------                              

FEDERAL DEPOSIT INSURANCE ACT

           *       *       *       *       *       *       *

  Sec. 11. (a) * * *

           *       *       *       *       *       *       *

  (e) Provisions Relating to Contracts Entered Into Before 
Appointment of Conservator or Receiver.--
          (1) * * *

           *       *       *       *       *       *       *

          (8) Certain qualified financial contracts.--
                  (A) Rights of parties to contracts.--Subject 
                to [paragraph (10)] paragraphs (9) and (10) of 
                this subsection and notwithstanding any other 
                provision of this Act (other than subsection 
                (d)(9) of this section and section 13(e)), any 
                other Federal law, or the law of any State, no 
                person shall be stayed or prohibited from 
                exercising--
                          (i) any right [to cause the 
                        termination or liquidation] such person 
                        has to cause the termination, 
                        liquidation, or acceleration of any 
                        qualified financial contract with an 
                        insured depository institution which 
                        arises upon the appointment of the 
                        Corporation as receiver for such 
                        institution at any time after such 
                        appointment;
                          [(ii) any right under any security 
                        arrangement relating to any contract or 
                        agreement described in clause (i); or]
                          (ii) any right under any security 
                        agreement or arrangement or other 
                        credit enhancement related to 1 or more 
                        qualified financial contracts described 
                        in clause (i);

           *       *       *       *       *       *       *

                  (C) Certain transfers not avoidable.--
                          (i) In general.--Notwithstanding 
                        paragraph (11), section 5242 of the 
                        Revised Statutes of the United States 
                        (12 U.S.C. 91) or any other Federal or 
                        State law relating to the avoidance of 
                        preferential or fraudulent transfers, 
                        the Corporation, whether acting as such 
                        or as conservator or receiver of an 
                        insured depository institution, may not 
                        avoid any transfer of money or other 
                        property in connection with any 
                        qualified financial contract with an 
                        insured depository institution.

           *       *       *       *       *       *       *

                  (D) Certain contracts and agreements 
                defined.--For purposes of this subsection--
                          (i) Qualified financial contract.--
                        The term ``qualified financial 
                        contract'' means any securities 
                        contract, commodity contract, forward 
                        contract, repurchase agreement, swap 
                        agreement, and any similar agreement 
                        that the Corporation determines by 
                        regulation, resolution or order to be a 
                        qualified financial contract for 
                        purposes of this paragraph.
                          [(ii) Securities contract.--The term 
                        ``securities contract''--
                                  [(I) has the meaning given to 
                                such term in section 741 of 
                                title 11, United States Code, 
                                except that the term 
                                ``security'' (as used in such 
                                section) shall be deemed to 
                                include any mortgage loan, any 
                                mortgage-related security (as 
                                defined in section 3(a)(41) of 
                                the Securities Exchange Act of 
                                1934), and any interest in any 
                                mortgage loan or mortgage-
                                related security; and
                                  [(II) does not include any 
                                participation in a commercial 
                                mortgage loan unless the 
                                Corporation determines by 
                                regulation, resolution, or 
                                order to include any such 
                                participation within the 
                                meaning of such term.
                          [(iii) Commodity contract.--The term 
                        ``commodity contract'' has the meaning 
                        given to such term in section 761 of 
                        title 11, United States Code.
                          [(iv) Forward contract.--The term 
                        ``forward contract'' has the meaning 
                        given to such term in section 101 of 
                        title 11, United States Code.
                          [(v) Repurchase agreement.--The term 
                        ``repurchase agreement''--
                                  [(I) has the meaning given to 
                                such term in section 101 of 
                                title 11, the United States 
                                Code, except that the items (as 
                                described in such section) 
                                which may be subject to any 
                                such agreement shall be deemed 
                                to include mortgage-related 
                                securities (as such term is 
                                defined in section 3(a)(41) of 
                                the Securities Exchange Act of 
                                1934), any mortgage loan, and 
                                any interest in any mortgage 
                                loan; and
                                  [(II) does not include any 
                                participation in a commercial 
                                mortgage loan unless the 
                                Corporation determines by 
                                regulation, resolution, or 
                                order to include any such 
                                participation within the 
                                meaning of such term.
                          [(vi) Swap agreement.--The term 
                        ``swap agreement''--
                                  [(I) means any agreement, 
                                including the terms and 
                                conditions incorporated by 
                                reference in any such 
                                agreement, which is a rate swap 
                                agreement, basis swap, 
                                commodity swap, forward rate 
                                agreement, interest rate 
                                future, interest rate option 
                                purchased, forward foreign 
                                exchange agreement, rate cap 
                                agreement, rate floor 
                                agreement, rate collar 
                                agreement, currency swap 
                                agreement, cross-currency rate 
                                swap agreement, currency 
                                future, or currency option 
                                purchased or any other similar 
                                agreement, and
                                  [(II) includes any 
                                combination of such agreements 
                                and any option to enter into 
                                any such agreement.
                          [(vii) Treatment of master agreement 
                        as 1 swap agreement.--Any master 
                        agreement for any agreements described 
                        in clause (vi)(I) together with all 
                        supplements to such master agreement 
                        shall be treated as 1 swap agreement.
                          [(viii) Transfer.--The term 
                        ``transfer'' has the meaning given to 
                        such term in section 101 of title 11, 
                        United States Code.]
                          (ii) Securities contract.--The term 
                        ``securities contract''--
                                  (I) means a contract for the 
                                purchase, sale, or loan of a 
                                security, a certificate of 
                                deposit, a mortgage loan, or 
                                any interest in a mortgage 
                                loan, a group or index of 
                                securities, certificates of 
                                deposit, or mortgage loans or 
                                interests therein (including 
                                any interest therein or based 
                                on the value thereof) or any 
                                option on any of the foregoing, 
                                including any option to 
                                purchase or sell any such 
                                security, certificate of 
                                deposit, loan, interest, group 
                                or index, or option;
                                  (II) does not include any 
                                purchase, sale, or repurchase 
                                obligation under a 
                                participation in a commercial 
                                mortgage loan unless the 
                                Corporation determines by 
                                regulation, resolution, or 
                                order to include any such 
                                agreement within the meaning of 
                                such term;
                                  (III) means any option 
                                entered into on a national 
                                securities exchange relating to 
                                foreign currencies;
                                  (IV) means the guarantee by 
                                or to any securities clearing 
                                agency of any settlement of 
                                cash, securities, certificates 
                                of deposit, mortgage loans or 
                                interests therein, group or 
                                index of securities, 
                                certificates of deposit, or 
                                mortgage loans or interests 
                                therein (including any interest 
                                therein or based on the value 
                                thereof) or option on any of 
                                the foregoing, including any 
                                option to purchase or sell any 
                                such security, certificate of 
                                deposit, loan, interest, group 
                                or index or option;
                                  (V) means any margin loan;
                                  (VI) means any other 
                                agreement or transaction that 
                                is similar to any agreement or 
                                transaction referred to in this 
                                clause;
                                  (VII) means any combination 
                                of the agreements or 
                                transactions referred to in 
                                this clause;
                                  (VIII) means any option to 
                                enter into any agreement or 
                                transaction referred to in this 
                                clause;
                                  (IX) means a master agreement 
                                that provides for an agreement 
                                or transaction referred to in 
                                subclause (I), (III), (IV), 
                                (V), (VI), (VII), or (VIII), 
                                together with all supplements 
                                to any such master agreement, 
                                without regard to whether the 
                                master agreement provides for 
                                an agreement or transaction 
                                that is not a securities 
                                contract under this clause, 
                                except that the master 
                                agreement shall be considered 
                                to be a securities contract 
                                under this clause only with 
                                respect to each agreement or 
                                transaction under the master 
                                agreement that is referred to 
                                in subclause (I), (III), (IV), 
                                (V), (VI), (VII), or (VIII); 
                                and
                                  (X) means any security 
                                agreement or arrangement or 
                                other credit enhancement 
                                related to any agreement or 
                                transaction referred to in this 
                                clause.
                          (iii) Commodity contract.--The term 
                        ``commodity contract'' means--
                                  (I) with respect to a futures 
                                commission merchant, a contract 
                                for the purchase or sale of a 
                                commodity for future delivery 
                                on, or subject to the rules of, 
                                a contract market or board of 
                                trade;
                                  (II) with respect to a 
                                foreign futures commission 
                                merchant, a foreign future;
                                  (III) with respect to a 
                                leverage transaction merchant, 
                                a leverage transaction;
                                  (IV) with respect to a 
                                clearing organization, a 
                                contract for the purchase or 
                                sale of a commodity for future 
                                delivery on, or subject to the 
                                rules of, a contract market or 
                                board of trade that is cleared 
                                by such clearing organization, 
                                or commodity option traded on, 
                                or subject to the rules of, a 
                                contract market or board of 
                                trade that is cleared by such 
                                clearing organization;
                                  (V) with respect to a 
                                commodity options dealer, a 
                                commodity option;
                                  (VI) any other agreement or 
                                transaction that is similar to 
                                any agreement or transaction 
                                referred to in this clause;
                                  (VII) any combination of the 
                                agreements or transactions 
                                referred to in this clause;
                                  (VIII) any option to enter 
                                into any agreement or 
                                transaction referred to in this 
                                clause;
                                  (IX) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in 
                                subclause (I), (II), (III), 
                                (IV), (V), (VI), (VII), or 
                                (VIII), together with all 
                                supplements to any such master 
                                agreement, without regard to 
                                whether the master agreement 
                                provides for an agreement or 
                                transaction that is not a 
                                commodity contract under this 
                                clause, except that the master 
                                agreement shall be considered 
                                to be a commodity contract 
                                under this clause only with 
                                respect to each agreement or 
                                transaction under the master 
                                agreement that is referred to 
                                in subclause (I), (II), (III), 
                                (IV), (V), (VI), (VII), or 
                                (VIII); or
                                  (X) a security agreement or 
                                arrangement or other credit 
                                enhancement related to any 
                                agreement or transaction 
                                referred to in this clause.
                          (iv) Forward contract.--The term 
                        ``forward contract'' means--
                                  (I) a contract (other than a 
                                commodity contract) for the 
                                purchase, sale, or transfer of 
                                a commodity or any similar 
                                good, article, service, right, 
                                or interest which is presently 
                                or in the future becomes the 
                                subject of dealing in the 
                                forward contract trade, or 
                                product or byproduct thereof, 
                                with a maturity date more than 
                                2 days after the date the 
                                contract is entered into, 
                                including, but not limited to, 
                                a repurchase agreement, reverse 
                                repurchase agreement, 
                                consignment, lease, swap, hedge 
                                transaction, deposit, loan, 
                                option, allocated transaction, 
                                unallocated transaction, or any 
                                other similar agreement;
                                  (II) any combination of 
                                agreements or transactions 
                                referred to in subclauses (I) 
                                and (III);
                                  (III) any option to enter 
                                into any agreement or 
                                transaction referred to in 
                                subclause (I) or (II);
                                  (IV) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in 
                                subclauses (I), (II), or (III), 
                                together with all supplements 
                                to any such master agreement, 
                                without regard to whether the 
                                master agreement provides for 
                                an agreement or transaction 
                                that is not a forward contract 
                                under this clause, except that 
                                the master agreement shall be 
                                considered to be a forward 
                                contract under this clause only 
                                with respect to each agreement 
                                or transaction under the master 
                                agreement that is referred to 
                                in subclause (I), (II), or 
                                (III); or
                                  (V) a security agreement or 
                                arrangement or other credit 
                                enhancement related to any 
                                agreement or transaction 
                                referred to in subclause (I), 
                                (II), (III), or (IV).
                          (v) Repurchase agreement.--The term 
                        ``repurchase agreement'' (which 
                        definition also applies to a reverse 
                        repurchase agreement)--
                                  (I) mean an agreement, 
                                including related terms, which 
                                provides for the transfer of 1 
                                or more certificates of 
                                deposit, mortgage-related 
                                securities (as such term is 
                                defined in the Securities 
                                Exchange Act of 1934), mortgage 
                                loans, interests in mortgage-
                                related securities or mortgage 
                                loans, eligible bankers' 
                                acceptances, qualified foreign 
                                government securities or 
                                securities that are direct 
                                obligations of, or that are 
                                fully guaranteed by, the United 
                                States or any agency of the 
                                United States against the 
                                transfer of funds by the 
                                transferee of such certificates 
                                of deposit, eligible bankers' 
                                acceptances, securities, loans, 
                                or interests with a 
                                simultaneous agreement by such 
                                transferee to transfer to the 
                                transferor thereof certificates 
                                of deposit, eligible bankers' 
                                acceptances, securities, loans, 
                                or interests as described 
                                above, at a date certain not 
                                later than 1 year after such 
                                transfers or on demand, against 
                                the transfer of funds, or any 
                                other similar agreement;
                                  (II) does not include any 
                                repurchase obligation under a 
                                participation in a commercial 
                                mortgage loan unless the 
                                Corporation determines by 
                                regulation, resolution, or 
                                order to include any such 
                                participation within the 
                                meaning of such term;
                                  (III) means any combination 
                                of agreements or transactions 
                                referred to in subclauses (I) 
                                and (IV);
                                  (IV) means any option to 
                                enter into any agreement or 
                                transaction referred to in 
                                subclause (I) or (III);
                                  (V) means a master agreement 
                                that provides for an agreement 
                                or transaction referred to in 
                                subclause (I), (III), or (IV), 
                                together with all supplements 
                                to any such master agreement, 
                                without regard to whether the 
                                master agreement provides for 
                                an agreement or transaction 
                                that is not a repurchase 
                                agreement under this clause, 
                                except that the master 
                                agreement shall be considered 
                                to be a repurchase agreement 
                                under this subclause only with 
                                respect to each agreement or 
                                transaction under the master 
                                agreement that is referred to 
                                in subclause (I), (III), or 
                                (IV); and
                                  (VI) means a security 
                                agreement or arrangement or 
                                other credit enhancement 
                                related to any agreement or 
                                transaction referred to in 
                                subclause (I), (III), (IV), or 
                                (V).
                        For purposes of this clause, the term 
                        ``qualified foreign government 
                        security'' means a security that is a 
                        direct obligation of, or that is fully 
                        guaranteed by, the central government 
                        of a member of the Organization for 
                        Economic Cooperation and Development 
                        (as determined by regulation or order 
                        adopted by the appropriate Federal 
                        banking authority).
                          (vi) Swap agreement.--The term ``swap 
                        agreement'' means--
                                  (I) any agreement, including 
                                the terms and conditions 
                                incorporated by reference in 
                                any such agreement, which is an 
                                interest rate swap, option, 
                                future, or forward agreement, 
                                including a rate floor, rate 
                                cap, rate collar, cross-
                                currency rate swap, and basis 
                                swap; a spot, same day-
                                tomorrow, tomorrow-next, 
                                forward, or other foreign 
                                exchange or precious metals 
                                agreement; a currency swap, 
                                option, future, or forward 
                                agreement; an equity index or 
                                equity swap, option, future, or 
                                forward agreement; a debt index 
                                or debt swap, option, future, 
                                or forward agreement; a credit 
                                spread or credit swap, option, 
                                future, or forward agreement; a 
                                commodity index or commodity 
                                swap, option, future, or 
                                forward agreement;
                                  (II) any agreement or 
                                transaction similar to any 
                                other agreement or transaction 
                                referred to in this clause that 
                                is presently, or in the future 
                                becomes, regularly entered into 
                                in the swap market (including 
                                terms and conditions 
                                incorporated by reference in 
                                such agreement) and that is a 
                                forward, swap, future, or 
                                option on 1 or more rates, 
                                currencies, commodities, equity 
                                securities or other equity 
                                instruments, debt securities or 
                                other debt instruments, or 
                                economic indices or measures of 
                                economic risk or value;
                                  (III) any combination of 
                                agreements or transactions 
                                referred to in this clause;
                                  (IV) any option to enter into 
                                any agreement or transaction 
                                referred to in this clause;
                                  (V) a master agreement that 
                                provides for an agreement or 
                                transaction referred to in 
                                subclause (I), (II), (III), or 
                                (IV), together with all 
                                supplements to any such master 
                                agreement, without regard to 
                                whether the master agreement 
                                contains an agreement or 
                                transaction that is not a swap 
                                agreement under this clause, 
                                except that the master 
                                agreement shall be considered 
                                to be a swap agreement under 
                                this clause only with respect 
                                to each agreement or 
                                transaction under the master 
                                agreement that is referred to 
                                in subclause (I), (II), (III), 
                                or (IV); and
                                  (VI) any security agreement 
                                or arrangement or other credit 
                                enhancement related to any 
                                agreements or transactions 
                                referred to in subparagraph 
                                (I), (II), (III), or (IV).
                        Such term is applicable for purposes of 
                        this title only and shall not be 
                        construed or applied so as to challenge 
                        or affect the characterization, 
                        definition, or treatment of any swap 
                        agreement under any other statute, 
                        regulation, or rule, including the 
                        Securities Act of 1933, the Securities 
                        Exchange Act of 1934, the PublicUtility 
Holding Company Act of 1935, the Trust Indenture Act of 1939, the 
Investment Company Act of 1940, the Investment Advisers Act of 1940, 
the Securities Investor Protection Act of 1970, the Commodity Exchange 
Act, and the regulations promulgated by the Securities and Exchange 
Commission or the Commodity Futures Trading Commission.
                          (vii) Treatment of master agreement 
                        as 1 agreement.--Any master agreement 
                        for any contract or agreement described 
                        in any preceding clause of this 
                        subparagraph (or any master agreement 
                        for such master agreement or 
                        agreements), together with all 
                        supplements to such master agreement, 
                        shall be treated as a single agreement 
                        and a single qualified financial 
                        contract. If a master agreement 
                        contains provisions relating to 
                        agreements or transactions that are not 
                        themselves qualified financial 
                        contracts, the master agreement shall 
                        be deemed to be a qualified financial 
                        contract only with respect to those 
                        transactions that are themselves 
                        qualified financial contracts.
                          (viii) Transfer.--The term 
                        ``transfer'' means every mode, direct 
                        or indirect, absolute or conditional, 
                        voluntary or involuntary, of disposing 
                        of or parting with property or with an 
                        interest in property, including 
                        retention of title as a security 
                        interest and foreclosure of the 
                        depository institutions's equity of 
                        redemption.
                  (E) Certain protections in event of 
                appointment of conservator.--Notwithstanding 
                any other provision of this Act ([other than 
                paragraph (12) of this subsection, subsection 
                (d)(9)] other than subsections (d)(9) and 
                (e)(10) of this section, and section 13(e) of 
                this Act), any other Federal law, or the law of 
                any State, no person shall be stayed or 
                prohibited from exercising--
                          (i) * * *
                          [(ii) any right under any security 
                        arrangement relating to such qualified 
                        financial contracts; or]
                          (ii) any right under any security 
                        agreement or arrangement or other 
                        credit enhancement related to 1 or more 
                        qualified financial contracts described 
                        in clause (i);

           *       *       *       *       *       *       *

                  (F) Clarification.--No provision of law shall 
                be construed as limiting the right or power of 
                the Corporation, or authorizing any court or 
                agency to limit or delay, in any manner, the 
                right or power of the Corporation to transfer 
                any qualified financial contract in accordance 
                with paragraphs (9) and (10) of this subsection 
                or to disaffirm or repudiate any such contract 
                in accordance with subsection (e)(1) of this 
                section.
                  (G) Walkaway clauses not effective.--
                          (i) In general.--Notwithstanding the 
                        provisions of subparagraphs (A) and 
                        (E), and sections 403 and 404 of the 
                        Federal Deposit Insurance Corporation 
                        Improvement Act of 1991, no walkaway 
                        clause shall be enforceable in a 
                        qualified financial contract of an 
                        insured depository institution in 
                        default.
                          (ii) Walkaway clause defined.--For 
                        purposes of this subparagraph, the term 
                        ``walkaway clause'' means a provision 
                        in a qualified financial contract that, 
                        after calculation of a value of a 
                        party's position or an amount due to or 
                        from 1 of the parties in accordance 
                        with its terms upon termination, 
                        liquidation, or acceleration of the 
                        qualified financial contract, either 
                        does not create a payment obligation of 
                        a party or extinguishes a payment 
                        obligation of a party in whole or in 
                        part solely because of such party's 
                        status as a nondefaulting party.
                  (H) Recordkeeping requirements.--The 
                Corporation, in consultation with the 
                appropriate Federal banking agencies, may 
                prescribe regulations requiring more detailed 
                recordkeeping with respect to qualified 
                financial contracts (including market 
                valuations) by insured depository institutions.
          [(9) Transfer of qualified financial contracts.--In 
        making any transfer of assets or liabilities of a 
        depository institution in default which includes any 
        qualified financial contract, the conservator or 
        receiver for such depository institution shall either--
                  [(A) transfer to 1 depository institution 
                (other than a depository institution in 
                default)--
                          [(i) all qualified financial 
                        contracts between--
                                  [(I) any person or any 
                                affiliate of such person; and
                                  [(II) the depository 
                                institution in default;
                          [(ii) all claims of such person or 
                        any affiliate of such person against 
                        such depository institution under any 
                        such contract (other than any claim 
                        which, under the terms of any such 
                        contract, is subordinated to the claims 
                        of general unsecured creditors of such 
                        institution);
                          [(iii) all claims of such depository 
                        institution against such person or any 
                        affiliate of such person under any such 
                        contract; and
                          [(iv) all property securing any claim 
                        described in clause (ii) or (iii) under 
                        any such contract; or
                  [(B) transfer none of the financial 
                contracts, claims, or property referred to in 
                subparagraph (A) (with respect to such person 
                and any affiliate of such person).]
          (9) Transfer of qualified financial contracts.--
                  (A) In general.--In making any transfer of 
                assets or liabilities of a depository 
                institution in default which includes any 
                qualified financial contract, the conservator 
                or receiver for such depository institution 
                shall either--
                          (i) transfer to 1 financial 
                        institution, other than a financial 
                        institution for which a conservator, 
                        receiver, trustee in bankruptcy, or 
                        other legal custodian has been 
                        appointed or which is otherwise the 
                        subject of a bankruptcy or insolvency 
                        proceeding--
                                  (I) all qualified financial 
                                contracts between any person or 
                                any affiliate of such person 
                                and the depository institution 
                                in default;
                                  (II) all claims of such 
                                person or any affiliate of such 
                                person against such depository 
                                institution under any such 
                                contract (other than any claim 
                                which, under the terms of any 
                                such contract, is subordinated 
                                to the claims of general 
                                unsecured creditors of such 
                                institution);
                                  (III) all claims of such 
                                depository institution against 
                                such person or any affiliate of 
                                such person under any such 
                                contract; and
                                  (IV) all property securing or 
                                any other credit enhancement 
                                for any contract described in 
                                subclause (I) or any claim 
                                described in subclause (II) or 
                                (III) under any such contract; 
                                or
                          (ii) transfer none of the qualified 
                        financial contracts, claims, property 
                        or other credit enhancement referred to 
                        in clause (i) (with respect to such 
                        person and any affiliate of such 
                        person).
                  (B) Transfer to foreign bank, foreign 
                financial institution, or branch or agency of a 
                foreign bank or financial institution.--In 
                transferring any qualified financial contracts 
                and related claims and property pursuant to 
                subparagraph (A)(i), the conservator or 
                receiver for such depository institution shall 
                not make such transfer to a foreign bank, 
                financial institution organized under the laws 
                of a foreign country, or a branch or agency of 
                a foreign bank or financial institution unless, 
                under the law applicable to such bank, 
                financial institution, branch or agency, to the 
                qualified financial contracts, and to any 
                netting contract, any security agreement or 
                arrangement or other credit enhancement related 
                to 1 or more qualified financial contracts, the 
                contractual rights of the parties to such 
                qualified financial contracts, netting 
                contracts, security agreements or arrangements, 
                or other credit enhancements are enforceable 
                substantially to the same extent as permitted 
                under this section.
                  (C) Transfer of contracts subject to the 
                rules of a clearing organization.--In the event 
                that a conservator or receiver transfers any 
                qualified financial contract and related 
                claims, property and credit enhancements 
                pursuant to subparagraph (A)(i) and such 
                contract is subject to the rules of a clearing 
                organization, the clearing organization shall 
                not be required to accept the transferee as a 
                member by virtue of the transfer.
                  (D) Definition.--For purposes of this 
                section, the term ``financial institution'' 
                means a broker or dealer, a depository 
                institution, a futures commission merchant, or 
                any other institution as determined by the 
                Corporation by regulation to be a financial 
                institution.
          (10) Notification of transfer.--
                  (A) In general.--If--
                          (i) the conservator or receiver for 
                        an insured depository institution in 
                        default makes any transfer of the 
                        assets and liabilities of such 
                        institution; and
                          (ii) the transfer includes any 
                        qualified financial contract,
                [the conservator or receiver shall use such 
                conservator's or receiver's best efforts to 
                notify any person who is a party to any such 
                contract of such transfer by 12:00, noon (local 
                time) on the business day following such 
                transfer.] the conservator or receiver shall 
                notify any person who is a party to any such 
                contract of such transfer by 5:00 p.m. (eastern 
                time) on the business day following the date of 
                the appointment of the receiver, in the case of 
                a receivership, or the business day following 
                such transfer, in the case of a 
                conservatorship.
                  (B) Certain rights not enforceable.--
                          (i) Receivership.--A person who is a 
                        party to a qualified financial contract 
                        with an insured depository institution 
                        may not exercise any right such person 
                        has to terminate, liquidate, or net 
                        such contract under paragraph (8)(A) or 
                        section 403 or 404 of the Federal 
                        Deposit Insurance Corporation 
                        Improvement Act of 1991 solely by 
                        reason of or incidental to the 
                        appointment of a receiver for the 
                        depository institution (or the 
                        insolvency or financial condition of 
                        the depository institution for which 
                        the receiver has been appointed)--
                                  (I) until 5:00 p.m. (eastern 
                                time) on the business day 
                                following the date of the 
                                appointment of the receiver; or
                                  (II) after the person has 
                                received notice that the 
                                contract has been transferred 
                                pursuant to paragraph (9)(A).
                          (ii) Conservatorship.--A person who 
                        is a party to a qualified financial 
                        contract with an insured depository 
                        institution may not exercise any right 
                        such person has to terminate, 
                        liquidate, or net such contract under 
                        paragraph (8)(E) or sections 403 or 404 
                        of the Federal Deposit Insurance 
                        Corporation Improvement Act of 1991, 
                        solely by reason of or incidental to 
                        the appointment of a conservator for 
                        the depository institution (or the 
                        insolvency or financial condition of 
                        the depository institution for which 
                        the conservator has been appointed).
                          (iii) Notice.--For purposes of this 
                        subsection, the Corporation as receiver 
                        or conservator of an insured depository 
                        institution shall be deemed to have 
                        notified a person who is a party to a 
                        qualified financial contract with such 
                        depository institution if the 
                        Corporation has taken steps reasonably 
                        calculated to provide notice to such 
                        person by the time specified in 
                        subparagraph (A) of this subsection.
                  (C) Treatment of bridge banks.--The following 
                institutions shall not be considered a 
                financial institution for which a conservator, 
                receiver, trustee in bankruptcy, orother legal 
custodian has been appointed or which is otherwise the subject of a 
bankruptcy or insolvency proceeding for purposes of subsection (e)(9)--
                          (i) a bridge bank; or
                          (ii) a depository institution 
                        organized by the Corporation, for which 
                        a conservator is appointed either--
                                  (I) immediately upon the 
                                organization of the 
                                institution; or
                                  (II) at the time of a 
                                purchase and assumption 
                                transaction between such 
                                institution and the Corporation 
                                as receiver for a depository 
                                institution in default.
                  [(B)] (D) Business day defined.--For purposes 
                of this paragraph, the term ``business day'' 
                means any day other than any Saturday, Sunday, 
                or any day on which either the New York Stock 
                Exchange or the Federal Reserve Bank of New 
                York is closed.
          (11) Disaffirmance or repudiation of qualified 
        financial contracts.--In exercising the rights of 
        disaffirmance or repudiation of a conservator or 
        receiver with respect to any qualified financial 
        contract to which an insured depository institution is 
        a party, the conservator or receiver for such 
        institution shall either--
                  (A) disaffirm or repudiate all qualified 
                financial contracts between--
                          (i) any person or any affiliate of 
                        such person; and
                          (ii) the depository institution in 
                        default; or
                  (B) disaffirm or repudiate none of the 
                qualified financial contracts referred to in 
                subparagraph (A) (with respect to such person 
                or any affiliate of such person).
          [(11)] (12) Certain security interests not 
        avoidable.--No provision of this subsection shall be 
        construed as permitting the avoidance of any legally 
        enforceable or perfected security interest in any of 
        the assets of any depository institution except where 
        such an interest is taken in contemplation of the 
        institution's insolvency or with the intent to hinder, 
        delay, or defraud the institution or the creditors of 
        such institution.
          [(12)] (13) Authority to enforce contracts.--
                  (A) In general.--The conservator or receiver 
                may enforce any contract, other than a 
                director's or officer's liability insurance 
                contract or a depository institution bond, 
                entered into by the depository institution 
                notwithstanding any provision of the contract 
                providing for termination, default, 
                acceleration, or exercise of rights upon, or 
                solely by reason of, insolvency or the 
                appointment or the exercise of rights or powers 
                of a conservator or receiver.

           *       *       *       *       *       *       *

          [(13)] (14) Exception for federal reserve and federal 
        home loan banks.--No provision of this subsection shall 
        apply with respect to--
                  (A) any extension of credit from any Federal 
                home loan bank or Federal Reserve bank to any 
                insured depository institution; or
                  (B) any security interest in the assets of 
                the institution securing any such extension of 
                credit.
          [(14)] (15) Selling credit card accounts 
        receivable.--
                  (A) * * *

           *       *       *       *       *       *       *

          [(15)] (16) Certain credit card customer lists 
        protected.--
                  (A) * * *

           *       *       *       *       *       *       *

  Sec. 13. (a) * * *

           *       *       *       *       *       *       *

  (e) Agreements Against Interests of Corporation.--
          (1) * * *
          [(2) Public deposits.--An agreement to provide for 
        the lawful collateralization of deposits of a Federal, 
        State, or local governmental entity or of any depositor 
        referred to in section 11(a)(2) shall not be deemed to 
        be invalid pursuant to paragraph (1)(B) solely because 
        such agreement was not executed contemporaneously with 
        the acquisition of the collateral or with any changes 
        in the collateral made in accordance with such 
        agreement.]
          (2) Exemptions from contemporaneous execution 
        requirement.--An agreement to provide for the lawful 
        collateralization of--
                  (A) deposits of, or other credit extension 
                by, a Federal, State, or local governmental 
                entity, or of any depositor referred to in 
                section 11(a)(2), including an agreement to 
                provide collateral in lieu of a surety bond;
                  (B) bankruptcy estate funds pursuant to 
                section 345(b)(2) of title 11, United States 
                Code;
                  (C) extensions of credit, including any 
                overdraft, from a Federal reserve bank or 
                Federal home loan bank; or
                  (D) 1 or more qualified financial contracts, 
                as defined in section 11(e)(8)(D),
        shall not be deemed invalid pursuant to paragraph 
        (1)(B) solely because such agreement was not executed 
        contemporaneously with the acquisition of the 
        collateral or because of pledges, delivery, or 
        substitution of the collateral made in accordance with 
        such agreement.

           *       *       *       *       *       *       *

                              ----------                              

      SECTION 5 OF THE SECURITIES INVESTOR PROTECTION ACT OF 1970

SEC. 5. PROTECTION OF CUSTOMERS.

  (a) * * *

           *       *       *       *       *       *       *

  (b) Court Action.--
          (1) * * *
          (2) Jurisdiction and powers of court.--
                  (A) * * *

           *       *       *       *       *       *       *

                  (C) Exception from stay.--
                          (i) Notwithstanding section 362 of 
                        title 11, United States Code, neither 
                        the filing of an application under 
                        subsection (a)(3) nor any order or 
                        decree obtained by Securities Investor 
                        Protection Corporation from the court 
                        shall operate as a stay of any 
                        contractual rights of a creditor to 
                        liquidate, terminate, or accelerate a 
                        securities contract, commodity 
                        contract, forward contract, repurchase 
                        agreement, swap agreement, or master 
                        netting agreement, each as defined in 
                        title 11, to offset or net termination 
                        values, payment amounts, or other 
                        transfer obligations arising under or 
                        in connection with 1 or more of such 
                        contracts or agreements, or to 
                        foreclose on any cash collateral 
                        pledged by the debtor whether or not 
                        with respect to 1 or more of such 
                        contracts or agreements.
                          (ii) Notwithstanding clause (i), such 
                        application, order, or decree may 
                        operate as a stay of the foreclosure on 
                        securities collateral pledged by the 
                        debtor, whether or not with respect to 
                        1 or more of such contracts or 
                        agreements, securities sold by the 
                        debtor under a repurchase agreement or 
                        securities lent under a securities 
                        lending agreement.
                          (iii) As used in this section, the 
                        term ``contractual right'' includes a 
                        right set forth in a rule or bylaw of a 
                        national securities exchange, a 
                        national securities association, or a 
                        securities clearing agency, a right set 
                        forth in a bylaw of a clearing 
                        organization or contract market or in a 
                        resolution of the governing board 
                        thereof, and a right, whether or not in 
                        writing, arising under common law, 
                        under law merchant, or by reason of 
                        normal business practice.
                              ----------                              

                 SECTION 16 OF THE FEDERAL RESERVE ACT

  Sec. 16. Federal Reserve notes, to be issued at the 
discretion of the Board of Governors of the Federal Reserve 
System for the purpose of making advances to Federal Reserve 
banks through the Federal reserve agents as hereinafter set 
forth and for no other purpose, are hereby authorized. The said 
notes shall be obligations of the United States and shall be 
receivable by all national and member banks and Federal Reserve 
banks and for all taxes, customs, and other public dues. They 
shall be redeemed in lawful money on demand at the Treasury 
Department of the United States, in the city of Washington, 
District of Columbia, or at any Federal Reserve bank. (12 
U.S.C. 411)
  Any Federal Reserve bank may make application to the local 
Federal Reserve agent for such amount of the Federal Reserve 
notes hereinbefore provided for as it may require. Such 
application shall be accompanied with a tender to the local 
Federal Reserve agent of collateral in amount equal to the sum 
of the Federal Reserve notes thus applied for and issued 
pursuant to such application. The collateral security thus 
offered shall be notes, drafts, bills of exchange, or 
[acceptances acquired under the provisions of section 13 of 
this Act] acceptances acquired under section 10A, 10B, 13, or 
13A of this Act, or bills of exchange endorsed by a member bank 
of any Federal Reserve district and purchased under the 
provisions of section 14 of this Act, or bankers' acceptances 
purchased under the provisions of said section 14, or gold 
certificates, or Special Drawing Right certificates, or any 
obligations which are direct obligations of, or are fully 
guaranteed as to principal and interest by, the United States 
or any agency thereof, or assets that Federal Reserve banks may 
purchase or hold under section 14 of this Act. In no event 
shall such collateral security be less than the amount of 
Federal Reserve notes applied for. The Federal Reserve agent 
shall each day notify the Board of Governors of the Federal 
Reserve System of all issues and withdrawals of Federal Reserve 
notes to and by the Federal Reserve bank to which he is 
accredited. The said Board of Governors of the Federal Reserve 
System may at any time call upon a Federal Reserve bank for 
additional security to protect the Federal Reserve notes issued 
to it. Collateral shall not be required for Federal Reserve 
notes which are held in the vaults of Federal Reserve banks.

           *       *       *       *       *       *       *

                              ----------                              

              SECTION 156 OF TITLE 18, UNITED STATES CODE

Sec. 156. Knowing disregard of bankruptcy law or rule

  (a) Definitions.--In this section--
          (1) the term ``bankruptcy petition preparer'' means a 
        person, other than the debtor's attorney or an employee 
        of such an attorney, who prepares for compensation a 
        document for filing[.]; and
          (2) the term ``document for filing'' means a petition 
        or any other document prepared for filing by a debtor 
        in a United States bankruptcy court or a United States 
        district court in connection with a case under [this 
        title] title 11.

           *       *       *       *       *       *       *

                            ADDITIONAL VIEWS

    An overwhelming majority of Americans believe it is too 
easy to declare bankruptcy and that individuals should not be 
allowed to erase their debt in bankruptcy if they are able to 
repay at least a portion of what they owe. The Bankruptcy 
Reform Act of 1999 would restore some degree of personal 
responsibility, fairness, and accountability to our nation's 
bankruptcy laws. The bill ends some of the abuses that have 
allowed individuals to file bankruptcy and walk away from their 
debts, even though many are able to repay a portion of what 
they owe.
    The number of consumer bankruptcy filings hit a record high 
of 1,442,549 million in 1998--a 400 percent increase since 1980 
and an 84.2 percent increase since 1990--erasing some $40 
billion in consumer debt. Total filings in 1998 increased by 
2.7 percent from 1997, when bankruptcies totaled 1,404,145. 
Those losses were borne by businesses and passed on to the 
consumer, costing every household that pays its bills $400 in 
hidden taxes.
    In the first six months of 1997, Chapter 13 bankruptcies in 
Georgia rose 11 percent to a total of 10,576. Chapter 7 
liquidations' filings rose even higher up 26 percent to a total 
of 6,789 in the same period. Georgia had the fifth highest 
number of bankruptcies in the entire nation. These numbers 
clearly illustrate why I cosponsored and fully supported H.R. 
833.
    The bankruptcy debate is really about nothing more than 
personal responsibility. Will we continue to allow a handful of 
individuals to abuse the process, by running high debts and 
then hiding their resources behind lenient bankruptcy laws, or 
will we require individuals to make good on their promises when 
they have the ability to do so? The Bankruptcy Reform Act 
changes these dynamics by initiating comprehensive reforms 
pertaining to consumer and business bankruptcy law and 
practice. The Act includes provisions regarding the treatment 
of tax claims and enhanced data collection regarding annual 
bankruptcy filings.
    When we allow the bankruptcy process to be abused, everyone 
loses. Small businesses are forced to close, employers hire 
fewer employees, new retail establishments do not open, and we 
are all forced to pay higher prices at the cash register. The 
Bankruptcy Reform Act of 1999 will help remedy this problem. In 
the 105th Congress a Conference Report on Bankruptcy Reform 
passed by a vote of 300 to 125. Unfortunately, by a combination 
of factors, Congress was not able to send this comprehensive 
bankruptcy reform to the President before the election end of 
the session.
    Due to a personal medical reason, I was absent on final 
passage in the Judiciary Committee on the vote on H.R. 833. 
However, my strong cosponsorship of this legislation is a clear 
indication of my belief it is time to reform our bankruptcy 
laws. I will continue to support this important bill as it 
moves onto the floor to be considered by the entire House.

                                                          Bob Barr.

                            ADDITIONAL VIEWS

    While some of us support H.R. 833 and others oppose it, we 
are united in our disappointment at the committee's refusal to 
put an end to one of the most notorious abuses of the 
bankruptcy system--the ``financial planning'' strategy by which 
debtors purchase expensive homes in states which allow an 
unlimited homestead exemption under 11 U.S.C. 
Sec. 522(b)(2)(A), declare bankruptcy, and continue to enjoy a 
life of luxury while their creditors get little or nothing.
    During the subcommittee markup, Mr. Delahunt offered an 
amendment to eliminate this abuse--and implement a key 
recommendation of the National Bankruptcy Review Commission 
1--by placing a $100,000 national cap on the 
homestead exemption.2 Mr. Watt proposed that the cap 
be set at $250,000, and with this modification the Delahunt 
amendment was agreed to by a vote of 10-2.
---------------------------------------------------------------------------
    \1\ Recommendation 1.2.2 (Homestead Property), Nat'l Bankr. Rev. 
Comm'n, Final Report: Bankruptcy: The Next Twenty Years 125 (1997).
    \2\ The Delahunt amendment limited the aggregate amount that a 
debtor may exempt in (a) real or personal property that the debtor or a 
dependent of the debtor uses as a residence, (b) a cooperative that 
owns property that the debtor or a dependent of the debtor uses as a 
residence, or (c) a burial plot for the debtor or a dependent of the 
debtor. It protected farm families by specifying that the cap does not 
apply to an exemption claimed for the principal residence of a family 
farmer.
    During the 105th Congress, the committee agreed by voice vote to an 
identical amendment offered by Mr. Delahunt to H.R. 3150. However, 
during floor consideration, the House agreed, by a vote of 222-204, to 
an amendment by Messrs. Gekas, Smith of Texas and McCollum, which 
eliminated the Delahunt provision and put in its place the residency 
requirement retained in section 127 of the present bill. That provision 
reduces the value of an interest in exempt property ``to the extent 
such value is attributable to any portion of any property that the 
debtor disposed of in the 730-day period ending on the date of the 
filing of the petition, with the intent to hinder, delay, or defraud a 
creditor.''
---------------------------------------------------------------------------
    At full committee, Ms. Jackson-Lee offered an amendment to 
negate the Delahunt-Watt provision (section 150 of the 
subcommittee bill) to the extent that it purports to ``modify 
or supersede any provision of State constitutional law that 
prohibits forced sale of a homestead for the payment of 
debts.'' Mr. Bryant offered a substitute amendment providing 
that the cap shall not apply in states which ``opt out'' by 
enacting a subsequent statute. After extensive debate, the 
Bryant amendment was agreed to by a vote of 18-15.
    We opposed the Bryant amendment because it runs counter to 
the stated goals of bankruptcy reform, perpetuating an abuse so 
flagrant and notorious as to bring the entire system into 
disrepute. Proponents of the ``means test'' and other 
provisions included in H.R. 833 seek to eliminate what some 
have characterized as the use of the Bankruptcy Code as a 
``financial planning tool.'' Yet if we are truly serious about 
reform, we cannot confine our attention to those at the bottom 
of the economic ladder.
    Rather, we should start with individuals like Marvin 
Warner, a former ambassador to Switzerland and the owner of a 
failed Ohio Savings & Loan, who paid off only a fraction of 
$300 million in bankruptcy claims while keeping his multi-
million-dollar horse ranch near Ocala, Florida.3
---------------------------------------------------------------------------
    \3\ Larry Rohter, ``Rich Debtors Finding Shelter Under a Populist 
Florida Law,'' N.Y. Times, July 25, 1993, at A1.
---------------------------------------------------------------------------
    Or Martin A. Siegel, a former Wall Street investment banker 
convicted of insider trading. While facing a $2.75 billion 
civil suit, he bought a $3.25 million, 7,000-square-foot 
beachfront home in Ponte Vedra Beach.4
---------------------------------------------------------------------------
    \4\ Id.
---------------------------------------------------------------------------
    Or former baseball commissioner Bowie Kuhn, whose Manhattan 
law firm went into bankruptcy. After creditors seized his 
weekend house in the Hamptons and were about to attach his $1.2 
million home in Ridgewood, New Jersey, Kuhn acquired a million-
dollar house in Florida with five bedrooms and five 
baths.5
---------------------------------------------------------------------------
    \5\ Id.
---------------------------------------------------------------------------
    Or Dr. Carlos Garcia-Rivera, a Miami physician with no 
malpractice insurance, who was named in four separate 
malpractice actions, filed for bankruptcy protection, and kept 
a $500,000 home with a 100-foot swimming pool.6
---------------------------------------------------------------------------
    \6\ David J. Morrow, ``Key to a Cozier Bankruptcy: Location, 
Location, Location,'' N.Y. Times, Jan. 7, 1998, at A1.
---------------------------------------------------------------------------
    Or the Dallas developer, Talmadge Wayne Tinsley, who filed 
under chapter 7 after incurring $60 million in debts. Tinsley 
objected to the Texas law that permitted him to keep only one 
acre of his $3.5 million, 3.1-acre magnolia-lined estate. But 
that acre included a five-bedroom, six-and-a-half-bath mansion 
with two studies, a pool and a guest house.7
---------------------------------------------------------------------------
    \7\ Id.
---------------------------------------------------------------------------
    Or the movie actor, Burt Reynolds, who declared bankruptcy 
in 1996, claiming more than $10 million in debt. Reynolds kept 
a $2.5 million home--appropriately named ``Valhalla''--while 
his creditors received 20 cents on the dollar.8
---------------------------------------------------------------------------
    \8\ Eliot Kleinberg, ``Reynolds Gets Out from under Bankruptcy,'' 
The Palm Beach Post, Oct. 8, 1998.
---------------------------------------------------------------------------
    The situation in Florida has become so notorious that one 
Miami bankruptcy judge told the New York Times, ``You could 
shelter the Taj Mahal in this state and no one could do 
anything about it.'' 9
---------------------------------------------------------------------------
    \9\ Judge A. Jay Cristol, quoted in Rohter, supra note 3.
---------------------------------------------------------------------------
    This is a national problem that demands a uniform solution. 
Without a nationwide cap, debtors who live in the 45 states 
that cap the exemption at less than $250,000 are free to 
relocate to one of the five so-called ``debtors' paradises'' 
that have no cap at all.10
---------------------------------------------------------------------------
    \10\ The following are the state exemption levels (per household, 
i.e., for joint debtors with two dependents), as of Fall 1997. In 18 
jurisdictions, the debtor may choose between the state exemption and a 
Federal exemption (currently $16,150 per debtor):

    Unlimited: Florida, Iowa, Kansas, South Dakota, Texas
    $200,000: Minnesota
    $125,000: Nevada
    $100,000: Arizona, Massachusetts
    $80,000: North Dakota
    $75,000: California, Connecticut, Mississippi
    $60,000: New Mexico
    $54,000: Alaska
    $50,000: Idaho
    $40,000: Montana, Wisconsin, Wyoming
    $33,000: Oregon
    $30,000: Colorado, Hawaii, New Hampshire, Vermont, Virgin Islands, 
Washington
    $20,000: New York
    $15,000: Indiana, Louisiana
    $12,500: Maine
    $10,000: Alabama, Georgia, Nebraska, North Carolina, South 
Carolina, Utah
    $8,000: Missouri
    $7,500: Illinois, Tennessee, West Virginia
    $6,500: Virginia
    $5,500: Maryland
    $5,000: Delaware, Kentucky, Ohio, Oklahoma
    $3,500: Michigan
    $2,500: Arkansas
    $1,500: Puerto Rico
    $0: District of Columbia, New Jersey, Pennsylvania, Rhode Island

    Source: Nat'l Bankr. Rev. Comm'n, supra note 1 at 299-301; Morrow, 
supra note 6, at D3.
---------------------------------------------------------------------------
    Some have suggested that a Federal cap is a ``violation of 
states' rights.'' 11 Yet the Bankruptcy Code is a 
Federal statutory scheme, and the system it envisions is one 
which is administered by the Federal courts. To defer to the 
states on such a matter is like legislating a Federal income 
tax and leaving it to the state legislatures to determine what 
will count as a business deduction. Such an arrangement invites 
forum shopping and encourages gross inequities in the treatment 
of debtors who live in different states.
---------------------------------------------------------------------------
    \11\ See, e.g., Letter from 21 members of the Texas Congressional 
Delegation to Chairman Henry Hyde and Ranking Member John Conyers, Jr. 
(Apr. 19, 1999) (on file with the House Judiciary Committee).
---------------------------------------------------------------------------
    It is important to recognize that section 150 would have no 
effect whatsoever on the 45 jurisdictions that currently place 
their own cap on the exemption. But it will discourage 
residents of those jurisdictions from moving to one of the five 
states with no cap at all in order to take advantage of this 
enormous loophole in the law.
    Nor will unscrupulous debtors be unduly hindered by section 
127 of the bill, which disallows the exemption if the 
individual converted the property within 730 days of the filing 
of the petition ``with the intent to hinder, delay, or defraud 
a creditor.'' Those already resident in a state with no 
exemption cap are unaffected by the limitation. And wealthy 
debtors from other states who are sophisticated enough to plan 
ahead can simply wait the 730 days and then file their 
petition. Debtors who have owned their homestead for two years 
or more can continue to use it to ``hinder, delay, or defraud'' 
their creditors out of millions of dollars.
    During the committee debate, several speakers argued that 
these abuses are not common. That is true. We do not suggest 
that they are daily occurrences. But the fact that a particular 
form of misconduct occurs infrequently is not an argument that 
it should be condoned. By condoning these spectacular abuses by 
a handful of wealthy debtors, we bring the fairness and 
rationality of the entire system into disrepute.
                                   John Conyers, Jr.
                                   Howard L. Berman.
                                   Jerrold Nadler.
                                   Bobby Scott.
                                   Melvin L. Watt.
                                   Zoe Lofgren.
                                   Maxine Waters.
                                   Marty T. Meehan.
                                   William D. Delahunt.
                                   Steven R. Rothman.
                                   Tammy Baldwin.
                                   Anthony D. Weiner.

                            DISSENTING VIEWS

    Although we could support a responsible and balanced 
bankruptcy reform effort that remedies debtor and creditor 
abuses in a balanced manner, we believe the legislation the 
Committee reported is far too extreme. Indeed, the bill is so 
one-sided and anti-consumer that its central element--the use 
of IRS expense standards to determine eligibility for 
bankruptcy--is opposed strongly by such conservative 
Republicans as Chairman Hyde (R-IL) and Rep. Bachus (R-AL).
    H.R. 833 is an omnibus bankruptcy bill that includes titles 
concerning consumer bankruptcy, business bankruptcy, municipal 
bankruptcy, tax, and bankruptcy administration. Although some 
of the bill's titles and provisions are non-controversial and 
stem from recommendations of the congressionally-created 
National Bankruptcy Review Commission (which completed its two-
year review of the bankruptcy laws in October 1997), the titles 
relating to consumer and business bankruptcies and tax matters 
constitute a significant departure from historical bankruptcy 
procedures and would harm low- and middle-income Americans, 
single mothers and children dependent upon domestic support, 
minorities, seniors, and small businesses.
    In its present form, the legislation is strongly opposed by 
the Administration, and surely will be vetoed.1 
Moreover, a number of groups oppose, or have expressed serious 
concerns with, H.R. 833, including:
---------------------------------------------------------------------------
    \1\ Letter from Jacob J. Lew, Director, Office of Management and 
Budget, to the Honorable Jerrold Nadler, Ranking Member, House Subcomm. 
on Commercial and Admin. Law (Mar. 23, 1999).
---------------------------------------------------------------------------
          (1) Executive branch departments (such as the Justice 
        Department); 2
---------------------------------------------------------------------------
    \2\ Letter from Dennis K. Burke, Office of Legislative Affairs, 
U.S. Department of Justice, to the Honorable George W. Gekas, Chair, 
House Subcomm. on Commercial and Admin. Law (Mar. 24, 1999).
---------------------------------------------------------------------------
          (2) groups concerned about the rights of workers 
        (such as the AFL-CIO; the American Federation of State, 
        County, and Municipal Employees (``AFSCME''); the 
        United Auto Workers (``UAW''); and the Union of 
        Needletrades, Industrial and Textile Employees 
        (``UNITE'')); 3
---------------------------------------------------------------------------
    \3\ Letter from Peggy Taylor, Director of Legislation, AFL-CIO, to 
the Honorable Henry J. Hyde, Chair, House Comm. on the Judiciary (Apr. 
20, 1999); Letter from Charles M. Loveless, Director of Legislation, 
AFSCME, to Members of Congress (Apr. 19, 1999); Letter from Alan 
Reuther, Legislative Director, UAW, to Members of Congress (Apr. 26, 
1999); Letter from Ann Hoffman, Legislative Director, UNITE, to the 
Honorable John Conyers, Jr., Ranking Member, House Comm. on the 
Judiciary (May 4, 1998).
---------------------------------------------------------------------------
          (3) groups of non-partisan bankruptcy lawyers, 
        judges, and academics (such as the National Bankruptcy 
        Conference (``NBC''), the American Bankruptcy Institute 
        (``ABI''), the National Conference of Bankruptcy Judges 
        (``NCBJ''), the National Association of Chapter 13 
        Trustees (``NACTT''), the National Association of 
        Bankruptcy Trustees (``NABT''), the Commercial Law 
        League of America, the American College of Bankruptcy, 
        and the National Association of Consumer Bankruptcy 
        Attorneys (``NACBA'')); 4
---------------------------------------------------------------------------
    \4\ Letter from Douglas G. Baird, Vice Chair, NBC, to the Honorable 
Henry J. Hyde, Chair, House Comm. on the Judiciary (Apr. 19, 1999); 
Hearing on H.R. 833, the ``Bankruptcy Reform Act of 1999,'' Before the 
House Subcomm. on Commercial and Admin. Law, 106th Cong., 1st Sess. 
(Mar. 17, 1999) [hereinafter March 17, 1999 Hearing] (written statement 
of the Honorable William Houston Brown, ABI); Id. (written statement of 
the Honorable Randall J. Newsome, NCBJ; Id. (written statement of Henry 
E. Hildebrand, III, NACTT); Id. (written statement of Robert H. 
Waldschmidt, NABT); Commercial Law League of America, Position Paper on 
the Bankruptcy Reform Act of 1999, H.R. 833, Submitted to the U.S. 
House of Representatives and the U.S. Senate (Mar. 9, 1999); Letter 
from Raymond L. Shapiro, Chair, American College of Bankruptcy, to 
Members of Congress (Apr. 26, 1999); Letter from Norma Hammes, 
President, NACBA, to Members of Congress (Apr. 26, 1999).
---------------------------------------------------------------------------
          (4) groups concerned about the rights of women, 
        children, and victims of crimes and torts (such as the 
        National Women's Law Center, the National Partnership 
        for Women and Families, the National Organization for 
        Women (``NOW''), the Association for Children for 
        Enforcement of Support (``ACES''), the California 
        Women's Law Center, Mothers Against Drunk Driving 
        (``MADD''), the National Organization for Victim 
        Assistance (``NOVA''), and the National Victim Center); 
        5 and
---------------------------------------------------------------------------
    \5\ Letter from the National Women's Law Center & the National 
Partnership for Women and Families to the Honorable John Conyers, Jr., 
Ranking Member, House Comm. on the Judiciary (Apr. 19, 1999); Letter 
from Patricia Ireland, President, NOW, to the Honorable John Conyers, 
Jr., Ranking Member, House Comm. on the Judiciary (May 15, 1998); 
Letter from Geraldine Jensen, President, ACES, to the Honorable George 
W. Gekas, Chair, House Subcomm. on Commercial and Admin. Law (Mar. 17, 
1999); Letter from Abby J. Leibman, Executive Director, California 
Women's Law Center, to the Honorable Dianne Feinstein, Senate Comm. on 
the Judiciary (Apr. 27, 1998); Letter from Karolyn V. Nunnallee, 
National President, MADD, to Members of Congress (Apr. 26, 1999); 
Letter from Marlene A. Young, Executive Director, NOVA, to the 
Honorable Henry J. Hyde, Chair, House Comm. on the Judiciary (Apr. 26, 
1999); Letter from David Beatty, Director of Public Policy, The 
National Center for Victims of Crime, to the Honorable Jerrold Nadler, 
Ranking Member, House Subcomm. on Commercial and Admin. Law (Apr. 28, 
1999).
---------------------------------------------------------------------------
         (5) consumer and civil rights organizations (such as 
        the Leadership Conference on Civil Rights (``LCCR''), 
        National Consumer Law Center, Consumers Union, the 
        Consumer Federation of America, U.S. Public Interest 
        Research Group (``U.S. PIRG''), Public Citizen, the 
        Alliance for Justice, and the National Council of 
        Senior Citizens).\6\
---------------------------------------------------------------------------
    \6\ Letter from the Leadership Conference on Civil Rights to 
Members of Congress (Apr. 21, 1999); Letter from Gary Klein, Senior 
Attorney, National Consumer Law Center, to Members of Congress (Apr. 
23, 1999); Press Release of National Consumer Law Center, Consumer 
Federation of America, Consumers Union, and U.S. PIRG (Apr. 19, 1999); 
Letter from Frank Clemente, Legislative Director, Public Citizen, to 
House Comm. on the Judiciary (May 11, 1998); Letter from Nan Aron, 
President, Alliance for Justice, to Members of the Senate Comm. on the 
Judiciary (Apr. 23, 1998); Letter from Dan Schulder, Director 
Legislation, National Council of Senior Citizens, to the Honorable 
Jerrold Nadler, Ranking Member, House Subcomm. on Commercial and Admin. 
Law (June 9, 1998).
---------------------------------------------------------------------------
    In certain respects, H.R. 833 is, relative to last 
Congress's Conference Report, even more anti-consumer, and the 
justifications for its provisions even weaker. For example, the 
means test in the bill does not allow a debtor to count as 
expenses the expenses of a legally-separated spouse receiving 
support for the debtor, even if that spouse is a dependent of 
the debtor.\7\ Also, the bill imports into chapter 13 the rigid 
Internal Revenue Service Collection Standards,\8\ which chapter 
13 trustees have said would be a disaster for the 
administration of voluntary chapter 13 cases.
---------------------------------------------------------------------------
    \7\ H.R. 833, Sec. 102 (proposed amendment to 11 U.S.C. 
Sec. 707(b)(2)(A)(v)).
    \8\ H.R. 833, Sec. 130.
---------------------------------------------------------------------------
    Moreover, new information has become available since the 
vote on the Conference Report that contradicts the basic 
premises of the bill. The nonpartisan American Bankruptcy 
Institute, which includes many creditors and attorneys for 
creditors, released a study showing that, while the credit 
industry estimates it could recover $4 billion under the rigid 
standards of the means test, at most $450 million might be 
recovered.\9\ The Executive Office of United States Trustees in 
the Justice Department conducted a study that reached similar 
results, estimating that passage of the Conference Report 
probably would have netted creditors no more than 3% of the 
$400 per household they claim to be losing. This calls into 
question the hundreds of millions of dollars in bureaucratic 
expenses the means test would require of both government and 
private citizens. Finally, Sears Roebuck has pleaded guilty to 
criminal charges in connection with its illegal reaffirmation 
practices;\10\ making the anti-class action provisions of this 
bill, which would deprive consumers of the most effective 
remedy they have against abusive creditors like Sears, even 
less defensible.
---------------------------------------------------------------------------
    \9\ Culhane and White, ``Means Testing for Chapter 7 Debtors: 
Repayment Capacity Untapped?'' (American Bankruptcy Institute, 1998).
    \10\ Leslie Kaufman, ``Sears to Pay Fine of $60 Million in 
Bankruptcy Fraud Lawsuit,'' N.Y. Times, Feb. 10, 1999, at C2.
---------------------------------------------------------------------------
    Section I of the Dissenting Views points out the general 
concerns we have with the bill. Section II describes concerns 
with the consumer provisions, including, most notably, the 
means test. Section III discusses flaws in the small business 
and single-asset real estate provisions, and Section IV turns 
to the tax sections of H.R. 833.

                          I. General Concerns

              A. The Process has Been Hurried and Partisan

    Up until last year, Congress consistently has addressed 
bankruptcy legislation in a deliberate and bipartisan manner. 
The last major overhaul of the bankruptcy laws--the 1978 
Bankruptcy Code--was enacted a full five years and scores of 
hearings after the 1973 Bankruptcy Commission issued its 
report.\11\ In addition, the House developed in close 
bipartisan cooperation and approved, on a consensus basis--
typically on the suspension calendar--all of the recent 
bankruptcy law changes (enacted in 1978, 1984, and 1994). Such 
careful deliberation is important given the wide-ranging impact 
of the bankruptcy laws and the fact that more Americans come 
into contact with the bankruptcy courts--whether as debtors or 
as creditors--than all other Federal courts combined.
---------------------------------------------------------------------------
    \11\ The 1971 Commission conducted four hearings and deliberated 
for 44 days before filing their two-part report with Congress; the 
second part of the report was a draft statute. Between May of 1975 and 
May 1976, the House Judiciary Committee's Subcommittee on Civil and 
Constitutional Rights held 35 days of hearings on bankruptcy reform 
producing more than 2,700 pages of testimony from over 100 witnesses. 
Kenneth N. Klee, ``Legislative History of the New Bankruptcy Law,'' 28 
DePaul L. Rev. 941, 943-44, 946 (1979). Three more days of hearings 
were held on the House side in December 1977. On the Senate side, 
between February and November 1975, the Senate Judiciary Committee's 
Subcommittee on Improvements in Judicial Machinery held 21 days of 
hearings. The Senate held three more hearings in November and December 
of 1977. Id. at 944, 950. Once developing the Bankruptcy Reform Act of 
1978 specifically, the House Subcommittee on Civil and Constitutional 
Rights spent 42 hours debating the legislation in 22 separate markup 
sessions, during which the legislation was reviewed line- by-line. Over 
120 amendments were offered and over 100 were adopted. Id. at 946. A 
700-page briefing book was prepared for the full Judiciary Committee. 
Id. at 947. Full Committee markup took 3 days, and 6 amendments were 
adopted on the unanimous, bipartisan Subcommittee bill. The Senate held 
additional hearings as well.
---------------------------------------------------------------------------
    Unfortunately, the Committee abandoned this historic 
approach with respect to H.R. 833 and elected a rushed and 
partisan process. For H.R. 833, the Majority began four days of 
Subcommittee hearings on March 11, 1999, the day the Committee 
referred the bill to the Subcommittee,\12\ with three of the 
hearings taking place in the same week.\13\ The two-day 
Subcommittee markup of the bill started on March 24, 1999--the 
week immediately following the fourth hearing. Moreover, the 
Majority delivered to the Minority a copy of Chairman Gekas's 
substitute amendment at approximately 11:00 P.M. the night 
before the Subcommittee markup--barely fifteen hours before 
debate on the bill was to begin.
---------------------------------------------------------------------------
    \12\ Hearings on H.R. 833, the ``Bankruptcy Reform Act of 1999,'' 
Before the House Subcomm. on Commercial and Admin. Law, 106th Cong., 
1st Sess. (1999). Hearings were held on March 18, 1999; March 17, 1999; 
March 16, 1999; and March 11, 1999. The March 11, 1999 hearing was a 
joint hearing between the House Subcommittee on Commercial and 
Administrative Law and the Senate Subcommittee on Administrative 
Oversight and the Courts.
    \13\ Id.
---------------------------------------------------------------------------
    In its further rush to judgment, the Majority has scheduled 
the bill to go through the Rules Committee and to the floor 
less than one week after leaving the Committee. This 
effectively cuts off the Banking Committee, which has joint 
jurisdiction over portions of H.R. 833, from proper 
consideration of the bill; as a result, the House is being 
deprived of that Committee's expertise on issues relating to 
credit card abuse and disclosure of credit card terms. 
Furthermore, this constrained process is hardly sufficient time 
to make technical and conforming amendments and prepare a 
report and dissenting views to this more than 300-page 
legislation, let alone allow Members outside the Committee to 
understand the legislation's implications. This abbreviated 
period also will deny the House the benefit of any CBO cost 
estimate or estimate of the costs of unfunded mandates in this 
legislation.

   B. The Quantitative Evidence Does not Justify Radical Changes in 
                             Bankruptcy Law

    One of the major reasons accounting for the differing views 
regarding H.R. 833 relates to differing understandings of the 
quantitative evidence of the causes, costs, and effects of 
bankruptcy. H.R. 833's proponents point to (1) the fact that 
the United States is experiencing a record number of bankruptcy 
filings (1.4 million filings during the most recent calendar 
year), 14 and (2) credit industry-funded studies by 
Professor Michael Staten of Georgetown University's Credit 
Research Center,15 Ernst & Young,16 and 
the WEFA 17 group that purport to demonstrate that 
the bankruptcy laws allow many relatively high income 
individuals to avoid debts they could otherwise pay and that 
this avoidance imposes substantial costs on the economy. 
Proponents of bankruptcy ``reform,'' in general, and H.R. 833, 
in particular, point to the ``easy'' availability of filing for 
bankruptcy and the declining stigma associated with doing so to 
explain the increase in filings.18
---------------------------------------------------------------------------
    \14\ According to the American Bankruptcy Institute, there were 
1,007,922 personal chapter 7 filings (72.1%), 862 personal chapter 11 
filings, and 389,398 personal chapter 13 filings in 1998. Press Release 
of the American Bankruptcy Institute, ``Bankruptcies Break Another 
Record in 1998'' (Mar. 1, 1999). Personal bankruptcy filings 
represented 96.9% of all filings in 1998; they were 91.7% of all 1990 
filings. Id.
    \15\ Professor Michael E. Staten of Georgetown University's Credit 
Research Center (``CRC''), which has many credit industry officials on 
its board, conducted what is perhaps the most-discussed study. John M. 
Barron & Michael E. Staten, Purdue University Credit Research Center, 
Personal Bankruptcy: A Report on Petitioners' Ability to Pay (Oct. 
1997); see also March 17, 1999 Hearing (written statement of Michael E. 
Staten). Staten concluded that 5% of chapter 7 debtors could repay all 
of their non-priority, non-housing debt over 5 years, 10% could repay 
at least 78% of such debt, and 25% could repay 30% of their debt.
    \16\ An Ernst & Young study, funded by VISA USA and MasterCard 
International, purports to corroborate the CRC findings. Policy 
Economics and Quantitative Analysis Group, ``Chapter 7 Bankruptcy 
Petitioner's Ability to Repay: Additional Evidence from Bankruptcy 
Petition Files,'' Ernst & Young LLP (Feb. 1998).
    \17\ Wharton Econometric Forecasting Associates (``WEFA'') examined 
the financial cost of personal bankruptcy cases filed in 1997, which it 
defined as ``the amount of credit dollars (outstanding loans) lost due 
to bankruptcy filings . . . [and] the costs of the U.S. court system . 
. . and other creditor's expenses relating to bankruptcy.'' WEFA Group 
Resource Planning Service, The Financial Costs of Personal Bankruptcy 4 
(Feb. 1998). The WEFA study calculated that ``financial losses due to 
1997 personal bankruptcies totaled more than $44 billion. . . . 
Unsecured nonpriority losses totaled almost $35 billion in 1997 . . . 
[and] passing such financial losses on to consumers in terms of higher 
prices would cost the average household over $400 annually.'' Id. at 1. 
The WEFA study also concluded that the needs based proposal in H.R. 
3150 ``should decrease financial costs due to bankruptcy . . . from 8% 
to 17% annually.'' Id. at 2.
    \18\ Hearing on H.R. 833, the ``Bankruptcy Reform Act of 1999,'' 
Before the House Subcomm. on Commercial and Admin. Law, 106th Cong., 
1st Sess. (Mar. 17, 1999) (written statement of Michael E. Staten); 
Joint Hearing Before the House Subcomm. on Commercial and Admin. Law 
and the Senate Subcomm. on Admin. Oversight and the Courts, 106th 
Cong., 1st Sess. (Mar. 11, 1999) (written statements of (1) Bruce L. 
Hammonds, Senior Vice Chairman of MBNA Corporation; (2) Judge Edith H. 
Jones, U.S. Court of Appeals for the Fifth Circuit; (3) Professor Todd 
J. Zywicki, George Mason University School of Law; and (4) Dean 
Sheaffer, National Retail Federation).
---------------------------------------------------------------------------
    Despite the earlier trend in higher numbers of bankruptcy 
filings, the vast weight of studies have contradicted the 
proponents' rationales and have shown that the increasing 
filing rate is a symptom, not a root cause, of financial 
difficulties. Analysts with the Congressional Budget 
Office,19 the General Accounting 
Office,20 and the Federal Deposit Insurance 
Corporation all have called into question the conclusions of 
those studies. These critiques focus on a number of grounds, 
including numerous flaws in the analysis and the assumptions 
underlying the studies. Moreover, other analyses indicate that 
the rise in bankruptcies is more properly attributable to a 
number of changes unrelated to the bankruptcy laws, such as 
unexpected medical costs, family crises like divorce, loss of 
high paying full time jobs, and most notably, the deregulation 
of credit card interest rates and the dramatic increase in 
credit card solicitations and overall consumer 
debt.21 Even a credit card industry official found 
that ``[t]he majority of bankruptcies in [its] file are on 
customers who have been on the books for more than three years 
and have had some significant change in their financial 
condition.'' 22 It also has been shown that the 
average income of persons filing for bankruptcy has declined 
from the 1980's, further contradicting assertions of widespread 
abuse by high-income individuals.23
---------------------------------------------------------------------------
    \19\ Kim Kowalewski of the Congressional Budget Office (``CBO''), 
at the request of the National Bankruptcy Review Commission, conducted 
a review of three economic analyses of this question. Kowalewski 
concluded that a 1996 VISA study did not support such a conclusion and, 
in fact, ``because the social trends variable is flat during 1995 and 
early 1996, VISA believes that their social factors played no role 
behind the increase in personal bankruptcies in that period.'' Kim J. 
Kowalewski, Evaluations of Three Studies Submitted to the National 
Bankruptcy Review Commission 4 (Oct. 6, 1997). At the request of 
Subcommittee Democrats, Mr. Kowalewski reviewed the economic issues 
affecting the rate and nature of bankruptcy in the United States. The 
Democratic Members made their original request on January 14, 1998; the 
response from CBO, in draft form only, was delivered April 16, 1999, 
over one year later. Mr. Kowalewski has still not been made available 
to testify before the Subcommittee; the Minority has reserved its right 
under House rules for one day of hearings to hear his testimony.
    \20\ At the request of Senators Charles Grassley and Richard 
Durbin, the General Accounting Office (``GAO'') examined the CRC study 
and found five areas of concern: (1) data supplied by the debtors 
regarding their income expenses, and debts and the stability of their 
income and expenses over a 5-year period were not validated, (2) the 
report did not define the universe of debts for which it estimated 
debtors' ability to pay, (3) payments on non-housing debts that debtors 
stated they intended to reaffirm were not included in debtor expenses 
in determining the net income debtors had, (4) the CRC did not account 
for the considerable variation among the 13 locations used in the 
analysis, and (5) a scientific random sampling methodology was not used 
to select the 13 bankruptcy locations or the bankruptcy petitions used 
in the analysis. General Accounting Office, Personal Bankruptcy: The 
Credit Research Center Report on Debtors' Ability to Pay, GAO/GGD-98-47 
(Feb. 1998).
    \21\ The Federal Deposit Insurance Corporation (``FDIC'') contested 
many of assertions made in the above-noted studies. Federal Deposit 
Insurance Corp., Bank Trends (Mar. 1998); Lawrence M. Ausubel, ``Credit 
Card Defaults, Credit Card Profits, and Bankruptcy,'' 71 American 
Bankruptcy L.J. 249 (1997). The FDIC observed a strong correlation 
between credit card default rates and personal bankruptcies, both of 
which increased in the 1990's. The FDIC found that, because of and 
following interest rate deregulation in 1978, credit card companies 
became more profitable and credit card lenders were able to extend more 
unsecured credit to less creditworthy borrowers.
    \22\ March 11, 1999 Hearing (written statement of Bruce L. 
Hammonds, Senior Vice Chairman, MBNA Corporation).
    \23\ Both the American Bankruptcy Institute and Professor Ausubel 
pointed out, however, that the recent rise in personal bankruptcy 
rates, which were used to manufacture fear of a so-called bankruptcy 
crisis, in fact ended in 1998. American Bankruptcy Institute, 18 ABI 
Journal 1 (Apr. 1999); Lawrence M. Ausubel, University College London, 
A Self-Correcting ``Crisis'': The Status of Personal Bankruptcy in 1999 
1 (Mar. 10, 1999). In fact, the ABI found that ``consumer bankruptcy 
filings have dropped dramatically nationwide in January and February 
[1999], after three consecutive years of record filings.'' American 
Bankruptcy Institute, supra, at 1. Specifically, ``[t]he personal 
bankruptcy filing rate per thousand population grew at an annual rate 
of only 1.5% in the last year, and at a (seasonally-adjusted) annual 
rate of only 1.0% in the last quarter.'' Lawrence M. Ausubel, supra, at 
1. The crisis corrected itself because lenders, as they normally would, 
tightened their lending practices when defaults became more common and 
infringed upon profits, thereby limiting the number of people going 
into debt and filing for bankruptcy. See id. at 3.
---------------------------------------------------------------------------
    The most recent study, however, is the most telling. The 
non-partisan American Bankruptcy Institute commissioned 
Professors Marianne B. Culhane and Michaela M. White of the 
Creighton University School of Law to conduct a study 
independent of the credit industry.24 Professors 
Culhane and White used for their study a database of chapter 7 
cases; the National Conference of Bankruptcy Judges funded the 
compilation of the database. The study estimated that 3.6% of 
the debtors in their sample had sufficient income, after 
deducting allowable living expenses, to pay all of their non-
housing secured debts, all of their unsecured priority debts, 
and at least 20% of their unsecured nonpriority debts. 
Moreover, in making their calculations, Professors Culhane and 
White assumed that 100% of the debtors in chapter 13 would 
complete a five-year repayment plan even though more than 60% 
of voluntary chapter 13 plans currently do not complete. These 
figures are significantly lower than those of the Credit 
Research Center and VISA--two entities that had financial 
stakes in their own bankruptcy studies--and show that the 
credit industry may have overstated the ``problem'' by as much 
as 500%.
---------------------------------------------------------------------------
    \24\ March 17, 1999 Hearing (written statement of Marianne B. 
Culhane); Marianne B. Culhane & Michaela M. White, Taking the New 
Consumer Bankruptcy Model for a Test Drive: Means-Testing Real Chapter 
7 Debtors (Mar. 8, 1999).
---------------------------------------------------------------------------
    Finally, we have never received any evidence that the 
credit card industry likely would pass on any of the 
``savings'' from bankruptcy law changes to individual debtors. 
Instead the evidence shows that credit card companies, which 
represent by far the most profitable sector of the commercial 
banking business,25 tend to maintain high interest 
rates, even when their own cost of credit 
declines.26 The lack of competition in this industry 
has caught even the Justice Department's attention, which has 
brought an antitrust suit against VISA and MasterCard in the 
Southern District of New York.27
---------------------------------------------------------------------------
    \25\ In 1993, credit card banks were nearly four times as 
profitable as all commercial banks. Despite the slight decrease in the 
average credit card interest rate, credit card banks remain twice as 
profitable as commercial banks. March 16, 1999 Hearing (written 
statement of the Honorable Joe Lee) (citing Federal Reserve Board, The 
Profitability of Credit Card Operations of Depository Institutions 
(Aug. 1997)).
    \26\ In 1996, Professor James Medoff, the Meyer Kestnbaum Professor 
of Labor and Industry at Harvard University, pointed out that, between 
1980 and 1992, when the federal funds rate (the interest that banks 
charge for overnight loans) fell from 13.4% to 3.5%, a drop of nearly 
10 percentage points, the average credit card interest rate rose from 
17.3% to 17.8%. Professor Medoff suggests that during the 1980s, when 
interest rates were high, lenders learned a valuable lesson; consumer 
debtors in general pay very little attention to interest rates. March 
16, 1999 Hearing (written statement of the Honorable Joe Lee at 1) 
(citations omitted).
    \27\ Kenneth N. Gilpin, ``Antitrust Suit Filed Against VISA and 
MasterCard,'' N.Y. Times, Oct. 8, 1998, at C1.
---------------------------------------------------------------------------

  II. The Consumer Provisions Are Arbitrary and Costly and Will Harm 
                     Vulnerable Segments of Society

                  A. Current Law and Proposed Changes

    Under current law, individuals facing financial difficulty 
may seek a variety of forms of relief under the bankruptcy 
laws, with chapter 7 (liquidation) being by far the most common 
form of relief sought. Under this chapter, debtors are required 
to forfeit all of their property other than their ``exempt'' 
assets (i.e., deemed necessary for the debtor's maintenance, as 
determined under federal or state law, at the state's option) 
in exchange for receiving a discharge of their unsecured debts. 
Creditors are entitled to receive any net proceeds from the 
sale of the debtor's nonexempt property, subject to the 
statutory priority schedule.28 The Bankruptcy Code 
does not permit the discharge of certain debts whose payments 
are considered to be important to society. Some of this debt is 
of the same nature as priority debt (e.g., family support 
obligations and taxes), but the law also excepts from discharge 
debts incurred through the debtor's misconduct, such as debts 
arising from fraud and intentional injuries.29
---------------------------------------------------------------------------
    \28\ For example, the costs of administering the estate are 
entitled to the first priority, and payments of alimony, child support, 
and taxes are entitled to later priorities, with general unsecured debt 
entitled to any residual assets left over. 11 U.S.C. Sec. 507(a).
    \29\ 11 U.S.C. Sec. 523(a).
---------------------------------------------------------------------------
    While there are no specific financial criteria for 
determining who seeks chapter 7 relief, Sec. 707(b) of the 
Bankruptcy Code grants the court the discretion to deny relief 
where the filing is found to be a ``substantial abuse.'' 
30 Under Sec. 707(b), however, there is a 
presumption in favor of granting relief to the debtor. This 
stems in part from the costs and potential hardships associated 
with developing specific criteria for chapter 7 eligibility, 
the belief that all honest, hard-working individuals are 
entitled to a ``fresh start,'' and the importance of 
encouraging risk-taking and entrepreneurship, and avoiding 
situations where it is impossible for individuals to escape 
aggressive creditor collection tactics. 31 Section 
707(b) is not the only provision in the Bankruptcy Code that 
prevents individuals from misusing chapter 7. For example, 
creditors may request that certain debts be held 
nondischargeable under Sec. 523(a) or that the debtor be denied 
a discharge altogether under Sec. 727.
---------------------------------------------------------------------------
    \30\ The Code does not define the term ``substantial abuse,'' which 
is used in Sec. 707(b), although, some courts have found that the 
ability to pay an appreciable proportion of one's debts over three 
years, using future income, could constitute ``substantial abuse.'' 
See, e.g., Fonder v. United States, 974 F.2d 996 (8th Cir. 1992) 
(debtor could pay 89% of unsecured debts in three years); In re Krohn, 
886 F.2d 123 (6th Cir. 1989) (ability to pay portion of debts from 
``ample income'' in excess of $80,000 per year); In re Walton, 866 F.2d 
981 (8th Cir. 1989) (ability to pay two thirds of debts in three 
years).
    \31\ There are a number of disincentives to filing for bankruptcy, 
such as the fact that a person filed for a chapter 7 bankruptcy will be 
disclosed on a debtor's credit report, and the law's prohibitions on 
repeat chapter 7 filings for six years.
---------------------------------------------------------------------------
    A separate bankruptcy alternative available to individual 
debtors is chapter 13, which was formerly known as a wage 
earner's plan.32 Under chapter 13, a debtor is 
permitted to retain his or her property, but is required to pay 
to creditors over a 3-5 year period out of future income at 
least as much as the creditors would have received under a 
chapter 7 liquidation, and is also required to pay all priority 
debts in full. To accomplish this, the debtor must propose a 
plan, administered by a trustee, that pays creditors in full or 
that devotes the debtor's ``disposable income'' after 
accounting for necessary support of the debtor, his or her 
family, or a business. In order to encourage the use of chapter 
13 plans, which are currently voluntary to the debtor, Congress 
determined that persons who meet their chapter 13 obligations 
are entitled to a broader discharge of their unpaid debts than 
is available under chapter 7. This ``superdischarge'' results 
in the discharge of several types of debt that chapter 7 does 
not discharge. In addition, debtors are permitted to retain 
property whether or not the property is encumbered by liens and 
the debtor committed a prepetition default, so long as the 
chapter 13 plan cures any arrearages. In this manner, debtors 
can use chapter 13 to save their homes from foreclosure. In 
addition, in chapter 13 a debtor is permitted to bifurcate a 
loan on personal property, such as an automobile, into secured 
and unsecured portions based on its present value, and treat 
only the secured portion as a priority debt.33 Also, 
chapter 13 plans can provide for the payment of priority debts, 
such as taxes and family support obligations, before payment on 
general unsecured debts.
---------------------------------------------------------------------------
    \32\ The eligibility requirements for chapter 13 may be found in 11 
U.S.C. Sec. 109(e). To be eligible for chapter 13, an individual must 
have regular income and unsecured debts of less than $269,250 and 
secured debts of less than $807,750. These numbers were indexed for 
inflation in April of 1998. Individuals also may reorganize their 
affairs under chapter 11.
    \33\ This is known as a ``stripdown.'' Specifically, except for 
certain home mortgages, a debtor in chapter 13 may be able to bifurcate 
a debt to a secured creditor, treating only the current value of the 
collateral as secured, even if it is less than the full amount of the 
loan, and treating the remaining debt as unsecured.
---------------------------------------------------------------------------
    H.R. 833 would institute a number of major changes to 
consumer bankruptcy, in general, and chapter 7 and 13, in 
particular, that may reduce the number of bankruptcy filings 
(but will not reduce the number of cases of financial hardship) 
and that are designed to increase pay-outs to non-priority 
unsecured creditors, particularly credit card companies.

1. Means testing

    The most far-reaching change, set forth in section 102 of 
the bill, would institute a so-called ``means testing'' 
approach to consumer bankruptcy. This new standard would create 
a presumption of abuse of the bankruptcy system and deny 
chapter 7 relief to debtors who fail a ``means test.'' The 
means test applies to debtors with income above their regional 
median income levels who are able to pay out $6,000 to their 
unsecured non-priority creditors over 60 months (instead of 36 
months),34 after allowing for deductions for pro-
rated portions of their secured and priority debts and 
projected living expenses, based on Internal Revenue Service 
collection standards, and other administrative expenses, 
reasonable attorneys' fees, and private elementary or secondary 
education costs not exceeding $10,000 per year.35 
Debtors fitting this profile would be forced to utilize chapter 
13 or the expensive chapter 11 of the Bankruptcy Code if they 
wished to obtain bankruptcy relief and would be subject to 
mandatory repayment plans incorporating the same means 
test.36
---------------------------------------------------------------------------
    \34\ H.R. 833, Sec. 102 (proposed amendment to 11 U.S.C. 
Sec. 707(b)(2)(A)).
    \35\ H.R. 833, Sec. 102 (proposed amendment to 11 U.S.C. Sec. 707). 
The consumer provisions were considered so one-sided, that the 
principal sponsor of a predecessor version setting forth these changes 
(H.R. 2500) received a ``Golden Leash'' special interest ``award'' from 
Public Campaign. The banking and credit industry spent approximately 
$40 million to lobby Congress in favor of the anti-debtor provisions of 
H.R. 3150, the 105th Congress version of H.R. 833. Sam Loewenberg, 
``Mad Dash as the Curtain Closes,'' Legal Times, Oct. 5, 1998, at 4; 
Katharine Q. Seelye, ``House to Vote Today on Legislation for 
Bankruptcy Overhaul,'' N.Y. Times, June 10, 1998, at A18.
    \36\ Id.
---------------------------------------------------------------------------
    The only way a debtor can rebut the presumption of abuse 
under the means test is to show that ``extraordinary 
circumstances that require additional expenses or adjustment of 
current monthly total income.'' 37 The debtor must 
swear to the extraordinary circumstances statement, which 
includes detailed itemizations and explanations. To be 
successful in this rebuttal, a debtor must show that 
extraordinary expenses reduce the debtor's monthly income under 
the proposed formula to an extent that renders the debtor 
unable to pay $6,000 over 5 years.38 The bill 
further mandates that private trustees file and litigate a 
motion to convert a case to chapter 13 in any case where the 
debtor has income greater than the debtor's regional household 
semiannual income for a family of equal or lesser size, 
regardless of any other extenuating circumstances.39
---------------------------------------------------------------------------
    \37\ H.R. 833, Sec. Sec. 102 (proposed amendment to 11 U.S.C. 
Sec. 707(b)(2)(B)), 130.
    \38\ H.R. 833, Sec. 102 (proposed amendment to 11 U.S.C. 
Sec. 707(b)(2)(B)).
    \39\ H.R. 833, Sec. 102 (proposed amendment to 11 U.S.C. 
Sec. 707(b)(6)).
---------------------------------------------------------------------------
    Even if a debtor is not barred from chapter 7 by virtue of 
having sufficient debts or expenses such that he or she cannot 
meet the means testing payment requirements, H.R. 833 provides 
another, independent ground for dismissal for debtors earning 
income above the regional median income. Under the bill, a 
court can dismiss or convert a case based upon (1) whether the 
debtor filed for chapter 7 in bad faith or (2) the ``totality 
of the circumstances'' (including whether the debtor sought to 
reject a personal service contract) indicates that ``the 
debtor's financial situation demonstrates abuse.'' 
40 Unlike current law, the bill requires that the 
court consider these factors when determining whether to 
dismiss or convert a case.41 To implement this test, 
motions to dismiss or convert may be brought by creditors, 
rather than only the court or the U.S. Trustee (as under 
current law).42 The court may award a debtor 
reasonable costs and attorneys' fees if a creditor's motion was 
not ``substantially justified'' or if the creditor brought the 
motion solely for the purpose of coercing the debtor to waive a 
right guaranteed under the Bankruptcy Code.43
---------------------------------------------------------------------------
    \40\ H.R. 833, Sec. 102 (proposed 11 U.S.C. Sec. 707(b)(3)).
    \41\ Id.
    \42\ H.R. 833 Sec. 102 (proposed amendment to 11 U.S.C. 
Sec. 707(b)). Section 102 permits creditors to bring such motions 
against debtors, but states that, if the debtor's income is less than 
the highest national median family income for a household of equal 
size, only the court, a private trustee, or a U.S. Trustee could bring 
such a motion to dismiss or convert. H.R. 833, Sec. 102 proposed 11 
U.S.C. Sec. 707(b)(6)). This income threshold is based on ``family'' 
income while the threshold for the trustee's requirement to bring 
motions looks to the regional median ``household'' income, which is 
lower than the family income. The Census Bureau defines a ``family'' as 
a group of two or more people related by birth, marriage, or adoption 
who reside together.'' Bureau of the Census, Econ. and Stats. Admin., 
U.S. Dept. of Commerce, Money Income in the United States A-1 (1997). A 
``household'' consists of all people who occupy a housing unit [and] 
includes the related family members and all the unrelated people, if 
any.'' Id. In 1997, the national median family income was $37,005, 
while the regional incomes ranged from $19,810 to $36,578. Id. at xi-
xii.
    \43\ H.R. 833, Sec. 102 (proposed 11 U.S.C. Sec. 707(b)(5)).
---------------------------------------------------------------------------
    The bill also converts chapter 13 into a mandatory approach 
based upon IRS expense standards rather than a flexible 
approach based upon disposable income. Accordingly, under 
section 130 of the bill, debtors would be required to dedicate 
all of their available income to unsecured debt, again after 
allowing deductions for secured and priority debts and living 
expenses per the means test and its IRS collection standards, 
even if the debtor's actual expenses are reasonable but exceed 
the IRS permitted, but arbitrarily-created, 
expenses.44 Section 130 of the bill also varies from 
current law by failing to allow the debtor to make up arrears 
on secured debts and leases. Although the provisions clarifying 
the means test allow for adjustments for ``extraordinary 
circumstances that require additional expenses or adjustments 
of current monthly total income,'' this requires the debtor to 
file a motion with the court, which may be challenged by the 
trustee or any creditor, with the burden of proof lying with 
the debtor.45
---------------------------------------------------------------------------
    \44\ H.R. 833, Sec. 130 (proposed amendment to 11 U.S.C. 
Sec. 1325(b)).
    \45\ H.R. 833, Sec. 102 (proposed amendment to 11 U.S.C. Sec. 707).
---------------------------------------------------------------------------
    The bill also goes on to calculate the means test using 
expenses over 5 years rather than 3 years. That guarantees 
that, if the means test pushes a debtor into chapter 13, the 
repayment capacity assumptions would force the debtor into a 
five-year repayment plan. Although the bill does say debtors 
will not be forced into a five-year plan unless they are above 
the median income, once in chapter 13 based upon assumptions 
drawn from a five-year calculation, debtors will have little 
choice but to follow a five-year plan. This legislation also 
eliminates the broader discharge requirements currently 
applicable to chapter 13, eliminating any inducement for 
voluntary debtor participation in chapter 13.46
---------------------------------------------------------------------------
    \46\ H.R. 833, Sec. 127 (proposed amendment to 11 U.S.C. 
Sec. 1328(a)).
---------------------------------------------------------------------------

2. Exceptions to Discharge & Loan Bifurcations

    H.R. 833 would make two significant additions to the types 
of debts that a debtor may not discharge under chapters 7 or 13 
and proscribe a debtor's ability to bifurcate a loan into 
secured and unsecured portions based upon the value of the 
collateral. Section 133 grants nondischargeable status to debts 
of $250 in the aggregate (as opposed to $1,075 under current 
law) or more owed to a single creditor for cash advances or 
luxury goods or services incurred within 90 days prior to the 
bankruptcy filing (as opposed to 60 days under current 
law).47 Section 143 adds another exception to 
discharge when the ``debtor incurred the debt to pay such a 
nondischargeable debt with the intent to discharge in 
bankruptcy the newly-created debt.'' 48 Moreover, 
regardless of the debtor's intent, any debts incurred within 90 
days to pay nondischargeable debts would be 
nondischargeable.49
---------------------------------------------------------------------------
    \47\ H.R. 833, Sec. 133 (proposed amendment to 11 U.S.C. 
Sec. 523(a)(2)(C)).
    \48\ H.R. 833, Sec. 143 (proposed amendment to 11 U.S.C. 
Sec. 523(a)).
    \49\ Id.
---------------------------------------------------------------------------
    The legislation would also largely eliminate the 
possibility of loan bifurcations in chapter 13 cases. As noted 
above, under current law a debtor is permitted to bifurcate a 
loan between the secured and unsecured portions, and to treat 
only the secured portion as a priority debt. Section 122 of the 
legislation prevents such bifurcations (including with regard 
to interest and penalty provisions) with respect to any 
personal property acquired within 5 years of the bankruptcy.

3. Domestic support

    Sections 138-144 of the bill make a number of changes to 
current law purportedly intended to enhance the status of child 
support and alimony payments in bankruptcy. These changes are 
presumably being made in an effort to offset the considerable 
criticism the legislation has received from child and spouse 
support advocates.
    Section 138 creates a new definition of ``domestic support 
obligation.'' 50 In addition to applying to debts 
owed on account of child support and alimony, which are largely 
covered by current law, the new definition includes alimony and 
child support debts owed or recoverable to a governmental 
unit.51 This definition is in turn relevant to new 
sections of the bankruptcy code that give certain enhanced 
rights to the holders of domestic support obligations in terms 
of priorities, payments, automatic stay, preferences, and 
foreclosure.52
---------------------------------------------------------------------------
    \50\ H.R. 833, Sec. 138 (proposed amendment to 11 U.S.C. Sec. 101).
    \51\ Id.
    \52\ See H.R. 833, Sec. 139 et seq.
---------------------------------------------------------------------------
    In particular, section 139 grants alimony and child care 
creditors a first priority inbankruptcy (they are currently 
seventh, although most of the higher priority debts are seen rarely in 
consumer bankruptcy cases).53 Section 140 prevents the 
confirmation of a reorganization plan unless the debtor has paid all 
domestic support obligations.54 Section 141 provides that 
the automatic stay does not prevent legal actions enforcing wage orders 
for domestic support obligations and similar actions.55 
Section 142 makes nondischargeable all domestic support obligations, 
including obligations owed to government support agencies.56 
Section 143 permits nondischargeable domestic support obligations to be 
collected from property--notwithstanding state laws making that 
property exempt from collection or attachment--after 
bankruptcy.57 Lastly, section 144 makes clear that a 
transfer that was a bona fide payment for a domestic support obligation 
will not be considered a fraudulent prepetition transfer.58
---------------------------------------------------------------------------
    \53\ H.R. 833, Sec. 139 (proposed amendment to 11 U.S.C. 
Sec. 507(a)). In the current enumeration of priority, the unsecured 
claims of person who raise grain or operate fish-processing facilities 
have fifth priority. 11 U.S.C. Sec. 507(a)(5).
    \54\ H.R. 833, Sec. 140 (proposed amendments to title 11, United 
States Code).
    \55\ H.R. 833, Sec. 141 (proposed amendment to 11 U.S.C. 
Sec. 362(b)). This includes the interception of tax refunds, the 
enforcement of medical obligations, or actions to withhold, suspend, or 
restrict licenses of the debtor for delinquency in support obligations.
    \56\ H.R. 833, Sec. 142 (proposed amendment to 11 U.S.C. Sec. 523). 
Under current law, a property settlement that is not in the nature of 
support is excepted from discharge unless the court finds (1) that the 
debtor does not have the ability to pay the obligation or (2) that 
discharging the debt would result in a benefit to the debtor that 
outweighs the detrimental consequences to the ex-spouse or children.
    \57\ H.R. 833, Sec. 143 (proposed amendment to 11 U.S.C. Sec. 522).
    \58\ H.R. 833, Sec. 144 (proposed amendment to 11 U.S.C. 
Sec. 547(c)(7)).
---------------------------------------------------------------------------
    Finally, a few provisions concerning domestic support were 
added at the initiative of Democratic Members. Section 149 of 
the bill, added by an amendment of Representative Jackson Lee 
(D-TX), requires chapter 7 and chapter 13 trustees to send 
written notice to recipients of alimony and child support 
payments, and to the local and state child support agencies, 
notifying them that a debtor of such payments has filed for 
bankruptcy.59 An amendment offered by Representative 
Nadler (D-NY), provisions of which were struck at markup by 
Representative Gekas (R-PA) creates exceptions to the automatic 
stay for: (1) wage garnishment to satisfy family claims for 
current payments and arrears, and for post-petition debts to 
the government,60 and (2) child custody and 
visitation proceedings, proceedings to dissolve a marriage 
(except to the extent it involves property of the estate), and 
proceedings alleging domestic violence.61
---------------------------------------------------------------------------
    \59\ Notices to domestic support recipients must also state that 
they can use the services of a government support enforcement agency to 
collect the support.
    \60\ H.R. 833, Sec. 152.
    \61\ H.R. 833, Sec. 153. Representative Gekas moved to strike many 
of the provisions in Representative Nadler's amendment that placed the 
claims of women and children above those of the government and other 
creditors. Among those protections were: (1) requiring that a debtor 
pay all domestic support obligations before obtaining confirmation of a 
plan; (2) exempting from the automatic stay actions all proceedings to 
establish paternity, to establish or modify a domestic support 
obligation order, to withhold state licenses, and to intercept tax 
refunds; (3) exempting from bankruptcy all support or property 
reasonably traceable to divorce decrees or property settlement 
agreements; and (4) requiring that creditors who are owed 
nondischargeable debts hold them, when paid, in trust for five years 
for domestic support creditors.
---------------------------------------------------------------------------

4. Other anti-debtor provisions

    The legislation makes a host of additional changes to the 
consumer provisions of the bankruptcy laws. The majority of the 
provisions are designed to increase creditor pay outs and would 
greatly harm low- and middle-class debtors. As Harvard Law 
Professor Elizabeth Warren writes, the bill ``has more than 120 
pages of amendments affecting consumer cases, and they all head 
in the same direction: They give a few creditor interests more 
opportunities to try to recover from their debtors while they 
reduce the protection for other creditors and debtors.'' 
62 Chairman Hyde himself noted that the bill 
contains at least 25 provisions detrimental to debtors and 
favorable to creditors. Among other things, the bill extends 
the period permitted between chapter 7 filings from six years 
(under current law) to eight years; 63 expands the 
ability of residential landlords to evict tenants without 
seeking permission from the court; 64 eliminates the 
right of debtors to bring class action lawsuits and seek 
punitive damages against creditors for abusive reaffirmation 
agreements; 65 requires debtors to make ``adequate 
protection payments,'' or double payments, to retain property 
obtained on secured credit.66
---------------------------------------------------------------------------
    \62\ March 11, 1999 Hearing (written statement of Professor 
Elizabeth Warren).
    \63\ H.R. 833, Sec. 140.
    \64\ H.R. 833, Sec. 139.
    \65\ H.R. 833, Sec. 116 (proposed amendment to 11 U.S.C. Sec. 425).
    \66\ H.R. 833, Sec. 137.
---------------------------------------------------------------------------

              B. Principal Problems with Proposed Changes

1. H.R. 833's means testing is arbitrary and unworkable in practice

    The National Bankruptcy Review Commission's majority 
specifically rejected the so-called ``means testing'' 
approach,67 observing:
---------------------------------------------------------------------------
    \67\ Only two members of the National Bankruptcy Review commission 
signed onto a dissenting statement supporting the consideration of 
various mens testing options. National Bankruptcy Review Commission, 
Final Report: Bankruptcy--The Next Twenty Years (Oct. 20, 1997) 
(Chapter 5, Additional Dissent to Recommendations for Reform of 
Consumer Bankruptcy Law Submitted by the Honorable Edith H. Jones and 
Commissioner James I. Shepard).

          The credit industry has sought means testing 
        consistently for at least 30 years, but Congress has 
        consistently refused to change the basic structure of 
        the consumer bankruptcy laws. * * * Access to chapter 7 
        and to chapter 13, the central feature of the consumer 
        bankruptcy system for nearly 60 years, should be 
        preserved.68
---------------------------------------------------------------------------
    \68\ ``Bankruptcy: The Next Twenty Years,'' National Bankruptcy 
Review Commission Final Report 90-91 (Oct. 20, 1997).

    The 1973 Commission on Bankruptcy Laws similarly considered 
and rejected industry calls for mandatory chapter 13's, noting 
that Congress had itself rejected similar proposals in 1967, 
---------------------------------------------------------------------------
and observed:

          [B]usiness debtors are not subject to any limitation 
        on the availability of straight bankruptcy relief, 
        including discharge from debts, and it was pointed out 
        that, quite apart from bankruptcy, business debtors are 
        able to incorporate and to limit their liability to 
        their investments in corporate assets. To force 
        unwilling wage earners to devote their future earnings 
        to payment of past debts smacked to some of debt 
        peonage, particularly when business debtors could not 
        be subjected to the same kind of regimen under the 
        Bankruptcy Act. * * * The Commission concluded that 
        forced participation by a debtor in a plan requiring 
        contributions out of future income has so little 
        prospect for success that it should not be adopted as a 
        feature of the bankruptcy system.69
---------------------------------------------------------------------------
    \69\ ``Report of the Commission on Bankruptcy Laws,'' H.R. Doc. No. 
137, Part I, 93rd Congress, 158-59 (1973) (citation omitted).

    The principal problem with the means that is that the rigid 
one-size-fits-all test used in determining eligibility for 
chapter 7 and the operation of chapter 13 will often operate in 
anarbitrary fashion. Many of these flaws were highlighted by 
Chairman Hyde when he unsuccessfully sought to delete the use of the 
rigid IRS standards and instead substitute a more fact specific test 
based on the court's assessment of the facts and 
circumstances.70 First, the bill relies upon IRS collection 
standards, which lay out no comprehensive or specific standards for the 
deduction of living expenses. Unless it is clear which of these 
expenses can be deducted from monthly income, it will be very difficult 
to determine if the individuals that are being denied access to chapter 
7 actually would be able to meet their payment obligations in chapter 
13. Part of the problem arises from the fact that the IRS standards 
referenced by the bill are not automatic in many cases. Although the 
IRS does set forth national standards for some expenses, such as food 
and clothing,71 and local standards for expenses such as 
housing and transportation,72 it leaves the determination of 
``other necessary expenses'' to the discretion of the relevant IRS 
employee.73 This means that the bill fails to provide 
specific guidance concerning the appropriateness of deducting part or 
all of the funds a debtor may expend for items such as health care 
(both medical expenses and health insurance), taxes, and accounting and 
legal fees, among other items. Even more dangerously, the IRS 
collection standards specify that it is generally inappropriate to 
allow expense allowances for such important items as school 
tuition,74 and generally discourage payment for expenses 
relating to care for the elderly, invalid, or handicapped.75 
As a result, the means test will have the effect of requiring the 
payment of unsecured debt before allowing for payment of certain 
necessities such as health care.
---------------------------------------------------------------------------
    \70\ The Committee had initially approved an amendment offered by 
Chairman Hyde eliminating the IRS collection standards from the means 
test. Subsequently, however, Rep. Graham (R-SC) offered an amendment 
reintroducing the IRS collection standards into the means test; 
effectively reversing the Chairman's earlier amendment. The Committee 
accepted this amendment by a 17-14 largely party line vote, with 
Chairman Hyde and Rep. Bachus (R-AL), crossing party lines to join with 
most Democrats in opposing the reinsertion of the IRS standards.
    \71\ IRS Manual Sec. 5323.432.
    \72\ IRS Manual Sec. 5323.433.
    \73\ IRS Manual Sec. 5323.12.
    \74\ As amended by Representative Graham (R-SC), the bill allows a 
deduction for ``the continuation of actual expenses of a dependent 
child under the age of 18 for tuition, books, and required fees at a 
private elementary or secondary school, not exceeding $10,000 per 
year.''
    \75\ IRS Manual, Exhibit 5300-46.
---------------------------------------------------------------------------
    Moreover, where the IRS has specific local expense 
standards, those standards do not provide adequately for normal 
expenses. For example, the permitted automobile expense in the 
San Francisco Bay area for two cars is only $373 per month, 
even though most families could barely cover the cost of 
automobile insurance, let alone car payments, gasoline, tolls, 
and insurance under this amount.76 Ironically, 
Congress itself has recognized the inadequacy of such 
collection standards. The Internal Revenue Service 
Restructuring and Reform Act of 1998 directs the IRS to 
``determine, on the basis of the facts and circumstances of 
each taxpayer, whether the use of the schedules * * * is 
appropriate'' and to ensure that they not be used ``to result 
in the taxpayer not having adequate means to provide for basic 
living expenses.'' 77 However, neither that law nor 
H.R. 833 grants this safeguard in the bankruptcy context.
---------------------------------------------------------------------------
    \76\ Hearing on H.R. 3150, the ``Bankruptcy Reform Act of 1998,'' 
Before the House Subcomm. on Commercial and Admin. Law, 105th Cong., 2d 
Sess. (Mar. 10, 1998) (written statement of the Honorable Randall J. 
Newsome, U.S. Bankruptcy Judge, Northern District of California).
    \77\ Internal Revenue Service Restructuring and Reform Act of 1998, 
Pub. L. No. 105-206, Sec. 3462 (1998).
---------------------------------------------------------------------------
    The seemingly arbitrary allowances for such expenses points 
to another problem with the means test under H.R. 833--its bias 
against debtors without secured debts. This is because the bill 
allows all secured debt payments to be deducted from monthly 
income, but limits rental and lease payments to the amount 
permitted by the IRS standards. This means that persons renting 
apartments and leasing cars may not be able to deduct the full 
amount of their housing and transportation costs in bankruptcy, 
while persons with mortgages and automobile debt will be able 
to do so. There is no legitimate policy rationale for this 
discrepancy, which appears to punish personally-responsible 
individuals who tightened their belts and tried to live 
modestly within their means and nonetheless had to resort to 
bankruptcy.
    Also, it is important to note that the IRS collection 
standards can change the manner in which the bankruptcy laws 
are applied. The collection standards serve as internal 
guidelines for the IRS; they are not regulations that are 
subject to the Administrative Procedures Act. As such, the IRS 
does not need to provide notice and comment when introducing 
new standards or when changing the existing ones. If the 
bankruptcy law was amended to incorporate the collection 
standards, as H.R. 833 proposes, and IRS were to change the 
collection standards in the future, the alteration in the 
standards would completely change how the Bankruptcy Code is 
applied. In effect, H.R. 833 would delegate authority to the 
IRS to change the Bankruptcy Code.
    It is no answer to assert, as the legislation's proponents 
have done, that the ``glitches'' in the collection standards 
can be resolved through the bill's allowance for 
``extraordinary circumstances.'' Establishing that a particular 
expense is ``extraordinary'' is not simple or cost or risk-
free. Extraordinary circumstances may be established only upon 
a debtor's motion to the court.78 The motion must be 
heavily detailed and documented; the ``debtor must itemize each 
additional expense or adjustment of income and provide 
documentation for such expenses or adjustment of income and a 
detailed explanation of the extraordinary circumstances which 
make such expenses or adjustment of income necessary and 
reasonable.'' 79 Moreover, the burden of proof lies 
with the debtor in establishing extraordinary circumstances, 
and, if the debtor's motion fails, he or she is subject to 
paying the creditor's fees and costs.80 This risk 
provides a tremendous disincentive for debtors to claim 
extraordinary circumstances, let alone incur the legal costs 
the debtor himself is required to pay to bring the motion.
---------------------------------------------------------------------------
    \78\ H.R. 833, Sec. 102 (proposed amendment to 11 U.S.C. 
Sec. 707(b)(2)(B)).
    \79\ Id.
    \80\ H.R. 833, Sec. 102 (proposed amendment to 11 U.S.C. 
Sec. 707(b)(2)(B)).
---------------------------------------------------------------------------
    Finally, making chapter 13 the only avenue for bankruptcy 
relief for some individuals and imposing the bill's strict 
income and expense tests will undoubtedly result in an even 
smaller proportion of successful chapter 13 plans. It is also 
somewhat unrealistic to expect many chapter 13 cases to result 
in successful completion of repayment plans. The current 
completion rate is less than one-third,81 and this 
is at a time when chapter 13 is voluntary and the disposable 
income tests are less rigid than this bill's proposal.
---------------------------------------------------------------------------
    \81\ National Bankruptcy Review Commission, Final Report: 
``Bankruptcy--The Next Twenty Years, 90-91'' (Oct. 20, 1997).
---------------------------------------------------------------------------

2. Means testing will be costly and bureaucratic

    The bill's attempt to impose rigid financial criteria on 
debtors' eligibility for chapter 7 and the operation of chapter 
13 will impose substantial new costs on the bankruptcy system--
both the portions paid for by private parties (through payment 
for private chapter 7 and chapter 13 trustees and higher 
attorneys' fees) and the federal government (through the 
bankruptcy courts and the U.S. Trustees Program).
            a. Costs to private parties
    Some of these costs would be borne by debtors through 
increased opportunities for creditor-initiated litigation by 
allowing (and, in some cases, mandating) trustees and creditors 
to bring motions for dismissal or conversion based on ``bad 
faith'' or the ``totality of the circumstances,'' and new 
opportunities for creditors to challenge the dischargeability 
of certain consumer debts.82
---------------------------------------------------------------------------
    \82\ H.R. 833, Sec. 102 (proposed amendment to 11 U.S.C. 
Sec. 707(b)(4)(B)).
---------------------------------------------------------------------------
    Additional costs on debtors will be manifested through the 
many provisions providing for fee shifting against the debtor 
and his lawyer if a chapter 7 case is dismissed or converted. 
This could place debtor's attorneys in the position of choosing 
between their clients' best interests and their own--a clear 
conflict of interest. The bill provides no similar provisions 
for fee-shifting with respect to creditor motions. While the 
bill does allow a court to award a debtor all reasonable costs, 
including reasonable attorneys' fees, if a creditor brings an 
unsuccessful and unjustified motion to dismiss or convert, the 
bill does not require creditors' attorneys to vouch for their 
clients' filings.
    The CBO has also noted that ``the direct costs to the 
private sector of complying with mandates in [the predecessor 
legislation] would exceed the [$100 million] statutory 
threshold in [the Unfunded Mandates Reform Act] in each of the 
first five years that the new mandates were effective. The 
lion's share of the costs would be imposed on private trustees 
who administer bankruptcy estates, providers of debt relief 
counseling services, and attorneys.'' 83 In 
particular, with regard to private trustees, the National 
Association of Bankruptcy Trustees has complained:
---------------------------------------------------------------------------
    \83\ Congressional Budget Office, H.R. 3150: Bankruptcy Reform Act 
of 1998--Private-Sector Mandates Statement (June 10, 1998).

          [U]nder the bill, trustees must (1) review the 
        debtor's income and expenses prior to five days before 
        the Sec. 341 hearing, (2) file a ``certification'' that 
        the debtor is qualified to be a chapter 7 debtor at 
        least five days before the Sec. 341 hearing, (3) filed 
        motions to dismiss under Sec. 707(b) where the debtor's 
        disposable income would yield [specified payments] to a 
        chapter 13 trustee over a five-year plan. This is a 
        great deal of work for trustees who only receive $60 in 
        the typical chapter 7 case. In addition, the plight of 
        the trustee is multiplied when, even if he is 
        successful, he cannot count on any 
        compensation.84
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    \84\ March 17, 1999 Hearing (written statement of Robert H. 
Waldschmidt, National Association of Bankruptcy Trustees at 3).
---------------------------------------------------------------------------
            b. Costs to the Federal Government
    Increased administrative duties imposed on panel and 
standing trustees would also raise the overall cost of this 
legislation. Henry E. Hildebrand, Chair of the Legislative 
Committee of the National Association of Chapter Thirteen 
Trustees estimated that:

          * * * [i]f the investigation by a [chapter 7] trustee 
        required about an hour and the preparation of the 
        report required on half hour, then the time required 
        would total about 1.5 million hours of time (assuming a 
        bankruptcy filing rate of one million petitions filed 
        in a year which would be a reduction of about 25%). If 
        the value of that time were calculated at $150 per 
        hour, the costs would be $225 million in time. * * * 
        Assuming that one out of nine cases filing for chapter 
        7 relief would be contested and further assuming that 
        the contest would require about two hours of pretrial 
        preparation and one hour of court time, the litigation 
        would require276,000 additional hours, about 90,000 of 
which would occupy the court.85
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    \85\ Henry E. Hildebrand, ``The Hidden Costs of Bankruptcy Reform'' 
2 (1998)(unpublished manuscript on file with the Committee on the 
Judiciary, minority staff).
---------------------------------------------------------------------------
    Another likely source of higher costs for the government is 
the requirement that one in every 250 cases be randomly 
audited, presumably at taxpayer expense under generally-
accepted auditing standards.86 There are 
approximately 1.4 million bankruptcy filings per year; an audit 
of one in every 250 would result in a total of 5,600 audits. In 
his testimony in the 105th Congress, Kevyn Orr of the Executive 
Office for U.S. Trustees, stated that each audit, conducted 
under generally-accepted auditing standards by Certified Public 
Accountants, would cost approximately $2,000.87 At 
this rate, the total annual cost for auditing 5,600 filings 
would be $11.2 million. The Honorable William Houston Brown, a 
U.S. Bankruptcy Judge in the Western District of Tennessee, 
testified on behalf of the ABI that the audits required ``are 
likely to be very expensive, and such formal audits are likely 
unnecessary to determine significant misstatements in debtors' 
petitions and schedules.'' 88
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    \86\ H.R. 833, Sec. 602. Although there is broad support for 
audits, which were a National Bankruptcy Review Commission proposal, 
the purpose of the proposal (to ensure honesty and accuracy) will fail 
unless a reasonable requirement is set on the ratio of cases to audit 
and unless the appropriate substantive standard is applied to the 
audits.
    \87\ Hearing on Business Bankruptcy Issues in H.R. 3150, the 
``Bankruptcy Reform Act of 1998,'' Before the House Subcomm. on 
Commercial and Admin. Law, 105th Cong., 2d Sess. (Mar. 19, 1998).
    \88\ March 17, 1999 Hearing (testimony of the Honorable William 
Houston Brown).
---------------------------------------------------------------------------
    According to a CBO estimate of the costs to the government, 
means testing would require ``between 15 and 30 additional 
bankruptcy judges * * * to meet the increased workload 
requirements that would be imposed on the courts. Costs for the 
salaries and benefits of judges would be between $2 million and 
$4 million annually, and costs for support personnel and other 
administrative expenses would be between $9 million and $12 
million annually.'' 89 In the absence of creating 
new judgeships, the CBO estimated that the courts would suffer 
from a backlog of work because of the means-testing 
provisions.90 An additional $5 million annually 
would be required by the U.S. Trustees for increased 
litigation.91 Overall, CBO estimates that to 
implement the means testing provisions, exclusive of the audit 
costs, ``would most likely cost $16 million to $20 million 
annually.'' 92
---------------------------------------------------------------------------
    \89\ Congressional Budget Office, Comparison of the Means-Testing 
Provisions in S. 1301, as reported by the Senate Judiciary Committee's 
Subcommittee on Administrative Oversight and the Courts on April 2, 
1998, and in H.R. 3150, as introduced on February 3, 1998 5 (May 8, 
1998).
    \90\ Id. at 3.
    \91\ Id. at 5.
    \92\ Id.
---------------------------------------------------------------------------
    In addition, provisions in the legislation mandating that 
all debtors file three years of tax returns with their 
bankruptcy petitions, even if no party in interest requests 
them, 93 would have required appropriations of $33 
million over the next five years * * * to store and provide 
access to over 20 million tax returns.'' 94
---------------------------------------------------------------------------
    \93\ H.R. 833, Sec. 603 (proposed amendment to 11 U.S.C. Sec. 521).
    \94\ Congressional Budget Office, Comparison of the Means-Testing 
Provisions in S. 1301, as reported by the Senate Judiciary Committee's 
Subcommittee on Administrative Oversight and the Courts on April 2, 
1998, and in H.R. 3150, as introduced on February 3, 1998 5 (May 8, 
1998). Democratic Representative Melvin Watt, in an attempt to 
alleviate the burden and cost of this provision to low-income debtors, 
unsuccessfully offered an amendment that would have required debtors to 
submit tax returns only if requested by the court, trustee, or any 
party in interest.
---------------------------------------------------------------------------
    Another concern is the many, many new opportunities for 
litigation and confusion created by the bill. Judge Randall 
Newsome testified on behalf of the National Conference of 
Bankruptcy Judges that at least 16 potential sources of 
litigation are contained in the means testing provisions alone, 
and that another 42 litigation points have been identified in 
the other consumer provisions, noting that ``[t]his is probably 
only the tip of the iceberg.'' 95
---------------------------------------------------------------------------
    \95\ March 17, 1999 Hearing (written statement of the Honorable 
Randall J. Newsome, President, National Conference of Bankruptcy Judges 
at 1).
---------------------------------------------------------------------------

3. Means testing and the other consumer provisions will harm low- and 
        middle-income people

            a. Concerns regarding the means test
    It is incorrect to assume that the effect of H.R. 833's 
harmful provisions would be limited to individuals seeking 
bankruptcy relief who earn more than the regional median 
income. First, there are numerous, significant flaws in the 
manner in which median income is calculated. For example, the 
median income figure required under H.R. 833 will be outdated 
and understated. This is because the bill states that household 
income is to be based on the most recent Census Bureau figures 
available as of January 1. But as of January 1, the Census has 
informationavailable for only the second year prior to the 
date. Accordingly, during this year, 1999, census figures are available 
for only 1997, not 1998. At times of inflation, this two-year lag could 
result in a significant increase in the number of individuals who are 
the subject of motions to dismiss or convert and who may earn more than 
the outdated median income figure being used. In addition, the starting 
point for the calculation of median income may be overstated.
    Another flaw in the median income formula is that the test 
measures a debtor's income based upon how much the debtor 
earned in the six months prior to bankruptcy. If the debtor 
lost a good job in month three and has been working at a low-
wage job ever since, the income from that good job, and help 
from family members, would be counted as if that is what his 
future income would be. The debtor would be expected to pay out 
of income that may no longer exist. Also, the means test will 
pickup a variety of revenue sources--such as Social Security 
Disability receipts, disaster assistance, and Veterans'' 
benefits--which will result in lower- and middle- income 
individuals being cast as bankruptcy ``abusers'' with income 
above the median.
    In addition, due to the fact that H.R. 833, unlike current 
law, will permit creditors and other parties-in-interest to 
bring motions to dismiss or convert, more aggressive and well-
funded creditors will have extremely wide latitude to use such 
motions as a tool for making bankruptcy an expensive, 
protracted, and contentious process for honest debtors, their 
families, and other creditors. Creditors could use such motions 
as leverage to obtain reaffirmation agreements so that their 
unsecured debts survive bankruptcy.
    Collectively, provisions forcing large number of 
individuals from chapter 7 into forced repayment plans under 
chapter 13 will have the effect of relegating large numbers of 
otherwise middle-income families into poverty level 
subsistence. This is because they will have no way of avoiding 
their crushing debt load, whether it was derived from a medical 
emergency or irresponsible credit card borrowing aggravated by 
high interest and penalty rates. Such individuals will actually 
be much worse off than other impoverished families because 
their nominal income is higher than the median income level and 
they cannot qualify for programs such as the earned income tax 
credit, school lunch programs, food stamps, or other 
subsistence provided to families with income below the poverty 
level.
    Another problem with the new means test and its associated 
use of IRS expense standards in chapter 13 is that it will 
apply to low-income debtors with income far below the median 
income.96 Previously, such individuals could have 
voluntarily elected chapter 13 over chapter 7 to attempt to 
catch up on their mortgages and save their homes; now, it is 
less likely this will occur. If the bill's authors chose to 
exempt such low-income individuals from the chapter 7 means 
test, its unclear why they would ensnare them in the chapter 13 
means test.
---------------------------------------------------------------------------
    \96\ H.R. 833, Sec. 130 (proposed amendment to 11 U.S.C. 
Sec. 1325(b)).
---------------------------------------------------------------------------
            b. Other concerns
    As noted above, the bill grants nondischargeable status to 
a wider range of cash advances and debts incurred for so-called 
luxury goods and debts incurred to pay a nondischargeable 
debt.97 These new exceptions from discharge obviate 
many of the benefits that debtors may realize from filing for 
bankruptcy, under chapter 7 or 13 and increase the opportunity 
for creditor abuse. The provisions are opposed by the White 
House also, which has written that it is ``generally 
inappropriate to make post-bankruptcy credit card debt a new 
category of nondischargeable debt. * * * We remain skeptical 
that the current protections against fraud and debt run-up 
prior to bankruptcy are ineffective and that the additional 
debts made nondischargeable by [H.R. 833] meet the standard of 
an overriding public purpose.'' 98
---------------------------------------------------------------------------
    \97\ H.R. 833, Sec. Sec. 133 (proposed amendment to 11 U.S.C. 
Sec. 523(a)(2)(C)), 146.
    \98\ Letter from Jacob J. Lew, Director, Office of Management and 
Budget, to the Honorable Jerrold Nadler, Ranking Member, House Subcomm. 
on Commercial and Admin. Law 2 (Mar. 23, 1999).
---------------------------------------------------------------------------
    Consumer bankruptcy expert Henry Sommer also has explained 
that such provisions:

         * * * increase the opportunity for creditors to file 
        the types of abusive fraud complaints which have been 
        found by many courts to be baseless and unjustified 
        attempts to coerce reaffirmations by debtors who cannot 
        afford to defend them. The new presumptions of 
        nondischargeability will fall mainly on low income 
        debtors who are unsophisticated, do not have the time, 
        budget flexibility, or attorney advice to plan their 
        bankruptcy cases carefully, have to file on short 
        notice to prevent utility shutoffs or other impending 
        creditor actions and will not have the funds to defend 
        dischargeability complaints.'' 99
---------------------------------------------------------------------------
    \99\ Hearing on Consumer Bankruptcy Issues in H.R. 3150, the 
``Bankruptcy Reform Act of 1999,'' Before the House Subcomm. on 
Commerical and Admin. Law, 105th Cong., 2d Sess. (March 10, 1998) 
(written statement of Henry J. Sommer).

    The new ban on loan bifurcations for loans less than 5 
years old will further obviate the possibility of obtaining a 
fresh start through bankruptcy.100 The ban will be 
most pernicious in the case of automobile loans, very few of 
which exceed 5 years. Since an automobile depreciates rapidly 
when it leaves the showroom, it typically declines below its 
value and secured debt by several thousand dollars the day 
after it is bought. Such a prohibition on automobile 
bifurcation is likely to render many chapter 13 plans 
unfeasible because a debtor may be able to repay the entire 
secured value, but not the entire purchase price of the car 
along with penalties. The provision also permits the lender to 
come out of the bankruptcy in a superior position than if it 
had foreclosed on the loan, the usual rule that applies in 
bankruptcy cases.
---------------------------------------------------------------------------
    \100\ H.R. 833, Sec. 122.
---------------------------------------------------------------------------
    Several other consumer provisions also will exact 
significant hardships on all debtors, regardless of income 
level or degree of culpability. For example, by allowing 
landlords to continue eviction or unlawful detainer actions 
even after debtors have obtained an automatic stay, the bill 
will force many battered women and families with children and 
seniors out on to the streets, without ever having an 
opportunity to use bankruptcy to catch up on their 
rent.101 Extending the permitted period between 
bankruptcy filings to eight years 102 exceeds the 
period between filings set forth in the Bible,103 
and could prove a substantial hardship to families in already 
unstable economic situations.
---------------------------------------------------------------------------
    \101\ H.R. 833, Sec. 136.
    \102\ H.R. 833, Sec. 137 (proposed amendment to 11 U.S.C. 
Sec. Sec. 727(a)(8), 1328).
    \103\ The Biblical origin of debt forgiveness may be found in 
Deuteronomy 15:1-3: ``[a]t the end of every seven years you shall grant 
a release of debts. And this is the form of the release: Every creditor 
who has lent anything to his neighbor shall release it; he shall not 
require it of his neighbor or his brother, because it is called the 
Lord's release. Of a foreigner you may require it; but you shall give 
up your claim to what is owed by your brother.'' In Deuteronomy 15:9, 
we are instructed, ``See that you do not harbor iniquitous thoughts 
when you find that the seventh year, the year of remission, is near and 
look askance at your needy countryman and give him nothing. If you do, 
he will appeal to the Lord against you and you will be found guilty of 
sin.''
---------------------------------------------------------------------------

4. The consumer provisions will have a significant, adverse impact on 
        women, children, minorities, and seniors, as well as victims of 
        crimes and Severe Torts

            a. Women and children
    H.R. 833 will have a devastating impact upon single mothers 
and their children, both as debtors and as creditors. On the 
debtor side, the means test will make it far more difficult for 
women to access the bankruptcy system. For example, women whose 
average income was at the median during the last 180 days, 
before the support checks stopped--or women whose child care 
expenses exceed IRS standards--may be denied access to chapter 
7 and forced into restrictive chapter 13 repayment plans. 
Second, the bill does not exempt child support or foster care 
payments from the means test definition of disposable income, 
and does not exclude alimony and child support payments 
received within six months after filing for bankruptcy from the 
property of the estate.104 In addition, the bill 
will also make it more difficult for women to hold onto the car 
they need to get to work, or the refrigerator or washing 
machine they need to care for their families if they were 
purchased on credit in the last five years.105 The 
new nondischargeability categories also are problematic--even 
if a single mother filing for bankruptcy believes they do not 
apply, it will be more difficult for her to litigate a credit 
card company's claim of nondischargeability.106
---------------------------------------------------------------------------
    \104\ H.R. 833, Sec. 102.
    \105\ H.R. 833, Sec. Sec. 133, 146.
    \106\ H.R. 833, Sec. 133.
---------------------------------------------------------------------------
    On the creditor side, the bill will have a particularly 
adverse impact on the payment of domestic support to women and 
children. The basic problem arises from the fact that 
bankruptcy and insolvency are by definition a zero-sum game. 
There is only so much money available to be divided among the 
creditors. By design, H.R. 833 will increase the amount of 
funds being paid to unsecured creditors, and it therefore 
should come as no surprise that such payments will often come 
at the expense of other, less-aggressive creditors, such as 
women and children owed alimony and child support. This problem 
is by no means insignificant given that an estimated 243,000-
325,000 bankruptcy cases involved child support and alimony 
orders during the most recent years.107
---------------------------------------------------------------------------
    \107\ The reported data are from the Consumer Bankruptcy Project, 
Phase II. Principal researchers are Dr. Teresa Sullivan, Vice-President 
of the University of Texas; Jay Westbrook, Benno Schmidt Chair in 
Business Law, University of Texas; and Elizabeth Warren, Leo Gottlieb 
Professor of Law, Harvard Law School. These estimates are based on data 
collected in 1991 in sixteen judicial districts around the country. For 
more details about the study, see Teresa Sullivan et al., ``Consumer 
Debtors Ten Years Later: A Financial Comparison of Consumer Bankrupts 
1981-91,'' 68 Am Bankruptcy L.J. 121 (1994).
---------------------------------------------------------------------------
    Moreover, under current law, alimony and child support are 
treated as priority debt and are not subject to 
discharge.108 This preferential treatment dates from 
as early as 1903 and is based on Congress's determination that 
the payment of these debts is so important to society that it 
should come ahead of most general creditors. Although H.R. 833 
does not revoke this special treatment, viewed as a whole, the 
legislation will have the effect of diminishing the likelihood 
of full payment of alimony and child support. This arises as a 
result of several features of the bill: its creation of 
significant new categories of nondischargeable debt, the 
extension of the length and onerousness of chapter 13 plans, 
and the bill's general limitations on the availability of 
chapter 7 relief.
---------------------------------------------------------------------------
    \108\ 11 U.S.C. Sec. Sec. 507(a)(7) & 523(a)(5).
---------------------------------------------------------------------------
    Each one of these changes will make it less likely that a 
former spouse will be able to make his required alimony and 
child support payments. First, by making significant amounts of 
credit card debt nondischargeable, more of these debts will 
survive bankruptcy. Since most chapter 7 and 13 debtors do not 
have the ability to repay most of their unsecured debts, 
financial pressure on the debtor will continue after 
bankruptcy, decreasing his ability to handle important support 
obligations.
    Collectively considered, these changes will help foster an 
environment where unsecured and credit card debt is far more 
likely to compete against alimony and child support obligations 
in the state law collection process. As a Congressional 
Research Service Memorandum analyzing predecessor legislation 
concluded last year, under the bill ``child support and credit 
card obligations could be ``pitted against'' one another. * * * 
Both the domestic creditor and the commercial credit card 
creditor could pursue the debtor and attempt to collect from 
post-petition assets, but not in the bankruptcy court.'' 
109
---------------------------------------------------------------------------
    \109\ Congressional Research Service, Impact of Consumer Bankruptcy 
Reform Proposals on Child Support Obligations (May 13, 1998).
---------------------------------------------------------------------------
    Of course, outside of the bankruptcy court is precisely the 
arena where sophisticated credit card companies have the 
greatest advantages. While federal bankruptcy court provides a 
strict set of priority and payment rules and generally seeks to 
provide equal treatment of creditors with similar legal rights, 
state law collection is far more akin to ``survival of the 
fittest.'' Whichever creditor engages in the most aggressive 
tactic--be it through repeated collection demands and letters, 
cutting off access to future credit, garnishment wages or 
foreclose on assets--is most likely to be repaid. As Marshall 
Wolf has written on behalf of the Governing Counsel of the 
Family Law Section of the American Bar Association, ``if credit 
card debt is added to the current list of items that are now 
not dischargeable after a bankruptcy of a support payer, the 
alimony and child support recipient will be forced to compete 
with the well organized, well financed, and obscenely 
profitable credit card companies to receive payments form the 
limited income of the poor guy who just went through a 
bankruptcy. It is not a fair fight and it is one that women and 
children who rely on support will lose.'' 110
---------------------------------------------------------------------------
    \110\ Statement of Marshall J. Wolf (May 13, 1998) (on file with 
the House Comm. on the Judiciary).
---------------------------------------------------------------------------
    It is for these reasons that groups concerned about the 
payment of alimony and child support have expressed their 
strong opposition to the bill. Professor Karen Gross of New 
York Law School stated succinctly that ``the proposed 
legislation does not live up to its billing; it fails to 
protect women and children adequately.'' 111 Joan 
Entmacher, on behalf of the National Women's Law Center, 
testified that ``the child support provisions of the bill fail 
to ensure that the increased rights the bill would give to 
commercial creditors do not come at the expense of families 
owed support.'' 112 Last year, First Lady Hillary 
Rodham Clinton highlighted the predecessor legislation's impact 
on women and children, writing, ``I do quarrel with aspects of 
the legislation that would force single parents to compete for 
their child support payments with bank banks trying to collect 
credit card debt.'' 113
---------------------------------------------------------------------------
    \111\ March 18, 1999 Hearing (written statement of Karen Gross, New 
York Law School).
    \112\ Id. (written statement of Joan Entmacher, National Women's 
Law Center).
    \113\ Hillary Rodham Clinton, Bankruptcy Shouldn't let Parents off 
the Hook, Wash. Times, May 7, 1998.
---------------------------------------------------------------------------
    Assertions by the legislation's supporters that any 
disadvantages to women and children under H.R. 833 are offset 
by supposedly pro-child support provisions (sections 138-144) 
are not persuasive. It is useful to recall the context in which 
these provisions were added. First, last Congress, the bill's 
proponents adamantly denied that the bill created any problems 
with regard to alimony and child support.114 
Although the proponents have now changed course, the child 
support and alimony provisions included do not respond to the 
provisions in the bill causing the problem--namely the 
provisions limiting the ability of struggling, single mothers 
to file for bankruptcy; enhancing the bankruptcy and post-
bankruptcy status of credit card debt; and making it more 
difficult for debtors to eliminate debts and focus on domestic 
support obligations. In some instances, the new sections are 
counterproductive in furthering the goal of payment of support 
obligations to ex-spouses and children.
---------------------------------------------------------------------------
    \114\ Letter from Representative George W. Gekas, et al., to 
Members of Congress (Apr. 29, 1998).
---------------------------------------------------------------------------
    For example, section 138 provides a definition of 
``domestic support obligation'' that includes funds owed to 
government units.115 If the government is acting as 
the debt collector for a woman or child, this is appropriate; 
the benefits of this inure to women and children directly. 
However, if the government is collecting for its own benefit 
(say, for example, the woman recipient is on welfare and the 
government is collecting arrearages to reduce a state or 
Federal deficit), then the result is inappropriate and will put 
the government collection agency in direct competition with 
single mothers and children, particularly in chapter 
13.116
---------------------------------------------------------------------------
    \115\ Under current law, domestic support owed to families is a 
priority debt; support owed to the government is nondischargeable, but 
is not priority debt.
    \116\ Although the bill gives priority to support claims owed to 
actual people over those owed to the government in chapter 7 cases 
where there are assets to distribute, those cases are few, and the new 
definition could serve to hurt women and children, the most likely 
creditors of domestic support.
---------------------------------------------------------------------------
    Section 139 purportedly increases to first priority from 
seventh priority obligations for domestic support, including 
debts owed to the government. It is misleading to suggest that 
moving up to ``first priority'' to ``seventh priority'' makes a 
significant difference: the debts that have second through 
sixth priorities almost never appear in consumer 
cases.117 However, knocking out the first priority 
for administrative expenses incurred by the trustee could 
thwart the original purpose of the provision. Putting support 
claims ahead of administrative expenses in priority may prevent 
trustees from liquidating assets because trustees need to use 
estate funds to liquidate property. If the trustee is not 
assured that the estate can cover the expenses of liquidating 
property, the trustee may have to abandon the property back to 
the debtor, resulting in the domestic support obligations 
receiving no distribution--the opposite of bill's intent.
---------------------------------------------------------------------------
    \117\ Those priorities--which would apply in less than 1% of all 
cases--deal with debts of grain storage facility operators, debts of 
fishermen, employee wage claims, retail layaway claims, and the like. 
11 U.S.C. Sec. 507(a).
---------------------------------------------------------------------------
    Section 140, which requires that domestic support 
obligations be paid in full before the debtor receives any 
bankruptcy discharge, may reduce the likelihood that a feasible 
plan can be confirmed. This is because current law gives a 
woman owed support the option to agree to allow the Chapter 13 
discharge to proceed, even if her arrears have not been fully 
paid. That might be in her best interest: her claim for arrears 
is nondischargeable, and allowing other debts to be discharged 
may make it easier for her to collect both current support and 
arrears in the future. Moreover, when combined with the other 
increased payments that must be made to secured creditors under 
Chapter 13, the requirement that state arrears as well as 
family arrears must be paid in full would make it more 
difficult for a debtor to get a Chapter 13 plan confirmed and 
successfully completed, and could, therefore, adversely affect 
the family.
    Section 141 creates additional exceptions to the automatic 
stay 118 that, like other provisions in the bill, 
have the potential of placing women and children at a 
disadvantage. First, these provisions apply only to income 
withholding orders issued by government agencies under the 
Social Security Act, even though an estimated 40-50% of all 
child support cases, and all alimony-only cases, are enforced 
privately, not by government child support agencies. Second, 
income withholding is helpful only if such orders are placed 
against debtors with regular income. Yet, in 1997, more than 
four out of ten cases in state child support systems across the 
country lacked a support order.119
---------------------------------------------------------------------------
    \118\ H.R. 833, Sec. 141 (proposed amendment to 11 U.S.C. 
Sec. 362(b)). Specifically, the bill creates exceptions to the 
automatic stay for enforcement actions undertaken by government child 
support agencies, including income withholding in cases being enforced 
by public agencies; actions to withhold, suspend or restrict drivers', 
professional and occupational, or recreational licenses; reporting 
overdue support to credit bureaus; intercepting tax refunds; and 
enforcing medical support. Furthermore, Representative Gekas struck 
many of the provisions from Representative Nadler's amendment creating 
new exceptions to the automatic stay. As altered by Representative 
Gekas, the exceptions to the automatic stay do not go far enough in 
protecting the interests of women and children because there is no 
exception for proceedings to establish paternity or to establish or 
modify a domestic support obligation. It is inconsistent for the bill 
to except from the stay some family-related proceedings, but to subject 
others to its requirements.
    \119\ March 18, 1999 Hearing (written statement of Joan Entmacher, 
National Women's Law Center) (citing U.S. Dept. of Health and Human 
Servs., Office of Child Support Enforcement, Preliminary Data Report: 
Child Support Enforcement FY 1997 (Aug. 1998).
---------------------------------------------------------------------------
    Section 142, which makes all property settlement 
obligations nondischargeable, also could have unintended 
consequences in practice. For example, under this provision, a 
financially-troubled ex-spouse who is owed alimony and child 
support could be forced to compete with another ex-spouse who 
is not in need of support but had a settlement agreement 
dealing with business debts. Alternatively, a financially-needy 
ex-spouse who files for bankruptcy may be left with 
nondischargeable debt owed to her wealthier ex-spouse because 
of a property settlement. Again, the result is the needy spouse 
and child could be placed at a disadvantage by these changes.
    Section 143, which allows domestic support creditors to 
levy otherwise exempt homesteads and other exempt property, 
also does not go far enough. Like the other provisions, it is 
effective only if a single mother goes to the time and expense 
of hiring an attorney to enforce her new rights. It also grants 
state and local governments the right to pursue claims in 
possible competition with the single mother.
    Finally, section 144's insulation of payments to the 
government from preference actions also may hurt an ex-spouse 
and child of the debtor. This is because those funds, which 
were preferentially paid to the government, otherwise may have 
been available for ongoing support payments.
    The Majority's legislation also totally ignores another 
very serious problem facing women as a result of the Bankruptcy 
Code--the fear that violent and reckless individuals will be 
able to bomb abortion clinics and eliminate their liability 
from that action through the bankruptcy process. Although the 
current bankruptcy laws prevent discharge for ``willful and 
malicious injuries,'' 120 Supreme Court precedent 
has raised doubt whether this standard applies to a clinic 
bombing where a particular victim was not 
targeted.121 It is also unclear whether the law 
applies to damages resulting for barricading clinic entrances. 
At the same time, notorious clinic bomber and ``Operation 
Rescue'' found Randall Terry has specifically filed for 
bankruptcy in order to void a $1.6 million judgment he owed to 
the National Organization for Women and Planned 
Parenthood.122
---------------------------------------------------------------------------
    \120\ 11 U.S.C. Sec. 523(a)(6).
    \121\ Kawaauchau v. Geiger, 523 U.S. 57 (1998) (holding that the 
actor must intend the consequences of the act, injury to someone or 
something, not just the act, itself). If, therefore, the actor intends 
only to damage the building and not any person inside, but does injure 
a person inside, he may be able to discharge the debts arising out of 
the injury to the person because that injury was not intended. See id.
    \122\ ``Operation Rescue Founder Files for Bankruptcy due to 
Lawsuits'', Wash. Post, Nov. 8, 1998, at A29; ``An Anti-Abortion Leader 
Files for Bankruptcy'', N.Y. Times, Nov. 8, 1998, at 45.
---------------------------------------------------------------------------
    In our view, it is totally irresponsible to allow the 
Bankruptcy Code to be used to void debts of this nature 
committed by violent individuals in violation of federal law. 
As the National Abortion and Reproductive Rights Actions League 
has written, ``[d]ebtors whose debts arise from their own 
clinic violence are not honest debtors and should not be able 
to escape the financial liabilities incurred by their illegal 
conduct.'' 123 Unfortunately, the Majority rejected 
along a party line vote an amendment offered by Mr. Nadler that 
would have made nondischargeable debts arising out of 
violations of the Freedom of Access to Clinic Entrances Act.
---------------------------------------------------------------------------
    \123\ Memorandum of NARAL 8 (Mar. 30, 1999).
---------------------------------------------------------------------------
            b. Minorities, seniors, and victims of crimes and severe 
                    torts
    H.R. 833 will have a disparate impact upon minorities and 
victims of crimes and torts, also. The Leadership Conference on 
Civil Rights has warned that, under the legislation, ``African 
American and Hispanic American families, suffering from 
discrimination in home mortgage lending and in housing 
purchases and facing inequality in hiring opportunities, wages, 
and health insurance coverage [will be less able to] turn to 
bankruptcy to stabilize their economic circumstances.'' 
124 We know this because the economic struggle for 
Hispanic American and African American homeowners is harder 
than for any other group. While 68% of whites own their own 
homes, only 44% of African Americans and Hispanic Americans own 
their homes. Both African American and Hispanic American 
families are likely to commit a larger fraction of their take-
home pay for their mortgages, and their homes represent 
virtually all their family wealth. It is no surprise, then, 
that African American and Hispanic American homeowners are six 
hundred percent more likely to seek bankruptcy protection when 
a period of unemployment or uninsured medical loss puts them at 
risk for losing their homes. 125
---------------------------------------------------------------------------
    \124\ Letter from LCCR to Members of Congress (Apr. 21, 1999).
    \125\ Id.
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    Similar concerns have been raised on behalf of seniors, who 
could lose their retirement savings if forced into chapter 13 
plans.126 The National Council of Senior Citizens 
has warned that legislation of this nature:

    \126\ Letter from Dan Schulder, Director, Legislation, National 
Council of Senior Citizens, to the Honorable Jerrold Nadler, Ranking 
Member, House Subcomm. on Commercial and Admin. Law (June 9, 1998).
---------------------------------------------------------------------------
        would have a harsh impact on a group of people who are 
        often subject to job loss or catastrophic health costs; 
        instead of ameliorating these problems, this bill will 
        only exacerbate them. * * *  Since 1992, more than a 
        million people over the age of 50 have filed for 
        bankruptcy; in 1997, an estimated 280,000 older 
        Americans filed. For them it is particularly hard. If 
        they are forced into prolonged repayment schedules, 
        they may not be able to maintain or accumulate savings 
        for retirement. As you know, approximately two-thirds 
        of voluntary, Chapter 13 workout plans fail, and we 
        believe that retirement savings must be protected for 
        that purpose.127
---------------------------------------------------------------------------
    \127\ Id.

    With regard to the concerns of victims' groups, it is 
important to note that current law reserves the 
nondischargeability of debts for obligations arising out of 
willful or malicious injury, death or personal injury caused by 
the operation of a motor vehicle, or criminal restitution 
payments.128 However, making more credit card debt 
nondischargeable, encouraging more reaffirmations of general 
unsecured debt, and discouraging more financially-troubled 
individuals from seeking debt relief will place these 
individual creditors at a relative disadvantage. As the 
National Organization for Victim Assistance has written, ``more 
exempted creditors with rights to the same finite amount of 
resources means lower payments to all. Inevitably, for victim-
creditors, that means either a smaller return on the 
restitution owed, or a longer period of repayment, or both.'' 
129 The National Center for Victims of Crime has 
similarly observed, ``to equate contractual losses of a 
commercial creditor with * * * personal obligations [for victim 
claims as the legislation does] is to belittle their importance 
and to directly reduce the likelihood that crime victims will 
ever be financially restored, despite obtaining an order of 
restitution or a civil judgment.'' 130 Mothers 
Against Drunk Driving (``MADD'') has also complained that if 
``individuals [whose lives] have been shattered financially and 
emotionally by the death or serious injury of their family 
members * * * have to compete with credit card debt holders for 
the limited post-discharge income of debtors available [as the 
predecessor legislation requires], they may themselves end up 
in bankruptcy.'' 131 MADD also noted that in 
contrast to crash victims, ``lending institutions have the 
ability to provide some degree of protection to themselves when 
they issue credit cards to individuals and they are in a better 
financial position to absorb losses, which to them is a cost of 
doing business.'' 132
---------------------------------------------------------------------------
    \128\ 11 U.S.C. Sec. Sec. 523(a)(6), (9), (13).
    \129\ Letter from Marlene A. Young, Executive Director, NOVA, to 
the Honorable Henry J. Hyde, Chair, House Comm. on the Judiciary (Apr. 
26, 1999).
    \130\ Letter from David Beatty, Director of Public Policy, The 
National Center for Victims of Crime, to the Honorable Jerrold Nadler, 
Ranking Member, House Subcomm. on Commercial and Admin. Law (Apr. 28, 
1999).
    \131\ Letter from Karolyn V. Nunnallee, National President, MADD, 
to Members of Congress (Apr. 26, 1999).
    \132\ Id.
---------------------------------------------------------------------------

5. The bill does not address abuses of the bankruptcy system by 
        creditors

    Perhaps the bill's most glaring omission is its failure to 
address the problem of abusive lending practices. At the same 
time the legislation responds to every conceivable debtor 
excess--whether real or imagined--it gives a complete pass to 
the transgressions of the credit industry.
    As noted at the outset, the overwhelming weight of 
authority establishes that it is the massive increase in 
consumer debt, not any change in bankruptcy laws, which has 
brought about the increases in consumer filings. Indeed, there 
is an almost perfect correlation between the increasing amount 
of consumer debt and the number of consumer bankruptcy filings. 
For example, between 1993 and 1998, bank credit card loans in 
the United States more than doubled from $223 billion to nearly 
$500 billion, and personal bankruptcy filings increased 
accordingly.133 The same basic correlation holds 
from 1946 through 1998, as the below chart indicates:
---------------------------------------------------------------------------
    \133\ March 16, 1999 Hearing (written statement of Joe Lee, Charts 
5-6). In 1993, banks issued credit card loans in the amount of $223 
billion; in the same year, there were approximately 900,000 consumer 
bankruptcy filings. Id. (citing the FDIC and the Administrative Office 
of the U.S. Courts). In 1998, banks issued $455 billion in credit card 
loans; that year, there were 1.4 million consumer bankruptcy filings. 
Id.

    Review of this data indicates that the primary factor that 
led to the increase in bankruptcy filings after 1978 was not 
the enactment of the revised bankruptcy laws, but the 
deregulation of credit.

The deregulation resulted from the Supreme Court decision in 
Marquette National Bank of Minneapolis v. First Omaha Service 
Corp.,134 which held that out-of-state banks were 
not subject to the usury laws of the state where the consumer 
was located. This decision led credit card concerns to relocate 
to states with lax usury laws that gave banks the ability to 
charge exorbitant interest rates in all 50 states. 
Subsequently, other legal changes permitted a broad range of 
new entities to get into the ever-growing, and lucrative, 
credit card business.135 Among other things, we know 
that it was this unprecedented increase in high-cost credit, 
not the changed bankruptcy laws, that led to the change by 
virtue of Canada's experience. In Canada, bankruptcy filings 
began to explode in the late 1960's, simultaneous with the 
entry of VISA and MasterCard into that nation and the growth in 
credit card lending. There was no change in Canada's laws that 
could account for the increase.136
---------------------------------------------------------------------------
    \134\ 439 U.S. 299 (1978).
    \135\ See March 16, 1999 Hearing (written statement of Joe Lee at 
1-3).
    \136\ Id. (written statement of Joe Lee at 4-5).
---------------------------------------------------------------------------
    This deregulation of credit and the accompanying explosion 
in credit availability--the number of credit card solicitations 
in 1998 reached 3.5 billion, an increase of 15 percent from the 
prior year 137--and consumer debt, have been 
accompanied by a wide variety of credit card abuses. For 
example, solicitations of minors and college students are a 
particular problem. Credit card companies purposefully solicit 
students and other minors who have little ability to pay their 
debts. Illustrative of the seriousness with which credit card 
companies target students is the following topic from the 1998 
Card Marketing Conference:

    \137\ Press Release of the National Consumer Law Center, Consumers 
Union, Consumer Federation of America, and U.S. PIRG (Apr. 19, 1999).
---------------------------------------------------------------------------
        Targeting Teens: ``You Never Forget Your First Card!'' 
        Most teens never forget their first love. Nor do they 
        forget the issuer who dares to accept their 
        application. Their brand loyalty and propensity to 
        spend make consumers in their mid- to late-teens priced 
        prospects for many card issuers.138
---------------------------------------------------------------------------
    \138\ Id. (quoting Agenda for Card Marketing Conference '98 (Nov. 
9-11, 1998)).

    The credit card tactics are myriad, including offering 
gifts such as mugs, Slinkees, T-shirts, and 
Frisbees.139 Campus groups managing credit card 
tables receive large cash payments from credit card 
companies.140 Such tactics apparently work, as 61% 
of students responsible for their own bills have indicated that 
they received credit cards at college.141 Some 
colleges have become so fed up with card marketing practices 
that they banned the credit card companies from their campus 
142--although they cannot stop mail solicitations.
---------------------------------------------------------------------------
    \139\ Id.
    \140\ Id.
    \141\ U.S. Public Interest Research Group, The Campus Credit Card 
Trap: Results of a PIRG Survey of College Students and Credit Cards 
(Sept. 1998).
    \142\ Press Release of the National Consumer Law Center, Consumers 
Union, Consumer Federation of America, and U.S. PIRG (Apr. 19, 1999).
---------------------------------------------------------------------------
    Credit card companies even go so far as to solicit business 
from the developmentally disabled.143 One 
developmentally-disabled man, aged 35, has the reading and 
mathematic skills of a second-grader and an annual income of 
$7,000 from Social Security disability benefits; nevertheless, 
he has thirteen credit cards, generating a debt of 
$11,745.144 When his counselor asked the bank to 
lower his credit limit to $500, his limit was instead raised to 
$4,900.145 Credit card companies have no answer for 
how this occurs other than to say that they screen all 
applicants to ensure they can handle the risk;146 
clearly, however, credit card companies have not been doing a 
sufficient job of screening their applicants. Unfortunately, 
H.R. 833 does nothing to discourage any of these practices.
---------------------------------------------------------------------------
    \143\ Dan Herbeck, ``Where Credit Isn't Due: Developmentally-
Disable Become Victims'', Buffalo News, Apr. 7, 1998, at 1A.
    \144\ Id.
    \145\ Id.
    \146\ Id.
---------------------------------------------------------------------------
    The bill also ignores the problem of credit card companies 
lending to individuals with already substantial debts and 
little prospect of repayment. Gary Klein of the National 
Consumer Law Center noted ``offering additional credit * * * to 
families already struggling to pay their debts hurts not only 
borrowers, but also the borrowers' honest creditors if the new 
credit pushes the family over the edge. Similarly, failure by 
one creditor to seriously consider payment arrangements outside 
bankruptcy for families facing hardship may lead to a 
bankruptcy filing which affects all creditors.'' 147 
One credit card company goes so far as to solicit debt 
counselors and offers them $10 for each chapter 7 client who 
requests a VISA card.148
---------------------------------------------------------------------------
    \147\ March 11, 1999 Hearing (written statement of Gary Klein, 
National Consumer Law Center).
    \148\ Letter from American Bankruptcy Service to Michael Schwartz 
(Dec. 18, 1998).
---------------------------------------------------------------------------
    A particularly pernicious credit card practice occurs in 
the so-called ``subprime'' market, where lenders seek out 
riskier borrowers and offer home equity financing at loan to 
value ratios in excess of 100%. Another lending abuse targets 
low income and minority neighborhoods with ``serial'' 
refinancing loans that carry high interest rates and other 
onerous terms.149 In essence this causes poor 
individuals to place their homes at risk in order to finance 
their credit card purchases.
---------------------------------------------------------------------------
    \149\ March 18, 1999 Hearing (written statement of Damon A. 
Silvers, AFL-CIO, n.9 (citing Debra Nussbaum, ``Lenders Laud the Value 
of Home Sweet Equity,'' N.Y. Times, Mar. 22, 1998, Sec. 3 at 10; 
Richard W. Stevenson, ``How Serial Refinancings Can Rob Equity,'' N.Y. 
Times, Mar. 22, 1998, Sec. 3 at 10. See also Julia Patterson Forrester, 
``Mortgaging the American Dream: A Critical Evaluation of the Federal 
Government's Promotion of Home Equity Financing,'' 69 Tulane L. Rev. 
373 (1994))).
---------------------------------------------------------------------------
    These problems are compounded by the fact that credit card 
companies fail to disclose clearly on their account statements 
the total amount and total time it would take to pay off 
balances if only the minimum amount due was paid each 
month.150 Unlike mortgage loans and car loans, 
credit card loans do not disclose the amortization rates or the 
total interest that will be paid if the cardholder makes only 
the minimum monthly payment. As a result, using a typical 
minimum monthly payment rate on a credit card, it could take 34 
years to pay off a $2,500 loan, and total payments would exceed 
300 percent of the original principle. This is why many lenders 
encourage minimum payments that do not pay down the 
loan.151 Nevertheless, the Majority defeated an 
amendment offered by Representative Watt (D-NC) that would have 
required credit card companies to disclose on each customer 
account statement how long it would take, and what the total 
cost would be, if the customer paid only the minimum amount 
due.
---------------------------------------------------------------------------
    \150\ Section 112 of the bill requires only that credit card 
companies disclose customer account statements that making the minimum 
payments each month will increase the length of time it takes to pay 
off the account. This ``disclosure'' provision is meaningless because 
it would not require credit card companies to tell customers exactly 
how long it would take, and how much it would cost, if the minimum 
payments were made.
    \151\ March 16, 1999 Hearing (written statement of Frank Torres, 
Consumers Union).
---------------------------------------------------------------------------
    Finally, the legislation does nothing to address the 
problem of abuse in the area of reaffirmation agreements, by 
for example, banning their use with respect to unsecured and 
dischargeable loans.152 Instead the bill actually 
weakens current law by preventing courts from awarding punitive 
damages to debtors in cases where creditor's actions have been 
particularly abusive, and by prohibiting civil lawsuits against 
such creditors from being brought as class 
actions.153 This bans the primary mechanism that 
consumers use for challenging abusive practices on the part of 
creditors,154 and the one which in March of this 
year caused Sears Bankruptcy Recovery Management Services to 
pay a $60 million fines for failing to file reaffirmation 
agreements with bankruptcy courts.155
---------------------------------------------------------------------------
    \152\ The bill fails to address the major problem with respect to 
reaffirmation agreements. It does not penalize creditors that coerce 
debtors into signing such agreements; instead, it merely penalizes 
creditors that violate the terms of such agreements. This does not 
protect already-bankrupt debtors who were coerced into signing 
reaffirmation agreements at the risk of losing appliances, children's 
toys, or clothing.
    \153\ H.R. 833, Sec. 114.
    \154\ See Susan Chandler, ``Sears Keeps Reporting Discharged 
Debts'', Chicago Trib., Nov. 13, 1998, at 2.
    \155\ Leslie Kaufman, ``Sears to Pay Fine of $60 Million in 
Bankruptcy Fraud Lawsuit'', N.Y. Times, Feb. 10, 1999, at C2. Sears 
forced customers to sign such agreements and pay back debts despite the 
fact that the customers had filed for bankruptcy protection. Id. The 
company ultimately had to pay a $60 million criminal penalty following 
a guilty plea and another $180 million in reimbursements and penalties 
to cardholders, and $40 million to settle civil suits brought by state 
attorneys general. ``Sears' Subsidiary Admits Bankruptcy Fraud, Agrees 
to $60 Million Fine'', 8 Consumer Bankruptcy News 11 (Feb. 25, 1999). 
Some reaffirmation agreements are poorly understood by debtors and are 
obtained either through the debtor's lack of understanding or coercive 
creditor tactics. In a separate case involving Sears's reaffirmation 
practices, decided in the Eastern District of New York, In re Bruzzese, 
214 B.R. 444 (E.D.N.Y. 1997), a debtor reaffirmed an $1,800 debt to 
obtain $500 in ``new credit'' that the court calculated would cost the 
debtor $621 in finance charges under the terms of the agreement in the 
first year, or an effective rate of 124.2%. Id. at 448. The court went 
on to point out, ``[w]hat Sears did not disclose and what the debtor's 
attorney did not explain to his client is that, assuming no defaults in 
the timely payment of the reaffirmed amount, it would take 76 months to 
satisfy this amount. Over the 76 months, she would pay a stream of 
payments totaling $3,269.02, of which the aggregate interest would be 
$1,469.02. For a wholly-unsecured obligation, this would exceed the 
maximum payment term of 60 months permitted under a chapter 13 plan by 
15 months. Other credit card issuers charge a far lower actual annual 
percentage rate for a $500 line of credit even to persons who have 
received a recent discharge in chapter 7 bankruptcy case.'' Id. Based 
on its findings, the court ordered Sears to repay all payments made by 
the debtor with respect to the reaffirmed debt, and annulled the 
reaffirmation agreement. Id. at 451.
---------------------------------------------------------------------------

      III. Small Business and Single-Asset Real Estate Provisions

    Under current law, businesses may use chapter 11 of the 
Bankruptcy Code in an effort to obtain relief from the 
creditors while they seek to develop a plan to reorder their 
affairs and pay as much of their debts as their operations will 
allow. Under this chapter, businesses obtain an ``automatic 
stay,'' which forestalls creditor collection efforts. During 
this time period, debtors have an opportunity to examine their 
contracts and leases and determine which ones to assume and 
which ones to reject (with rejection leading to a claim for 
damages). Debtors are subject to a number of requirements 
during this period, such as the formation of creditor 
committees andvarious ongoing financial disclosures.
    The goal of chapter 11 is to determine whether there is any 
ongoing business value that can be preserved to pay off 
creditors while maintaining as many jobs and contractual 
relationships as possible. To this end, the debtor is given an 
exclusive 120-day period (unless lengthened or shortened for 
cause) in which to develop a reorganization plan that satisfies 
a host of statutory requirements and convince a majority of the 
creditors that the plan is in their best interests and is 
preferable to a liquidation ``fire sale.''
    In 1994, Congress enacted two modest exceptions to the 
general rules of chapter 11. The first related to ``small 
businesses,'' defined as entities engaged in commercial or 
business activities whose aggregate debts do not exceed $2 
million. Debtors that elect to be treated as small businesses 
are permitted to dispense with creditor committees, receive 
only a 100-day plan exclusivity period, and are entitled to 
more flexible provisions for disclosure and solicitation for 
acceptances of their proposed reorganization plan. In 1994, 
Congress also developed a special set of rules applicable to 
``single asset real estate,'' generally defined as cases in 
which the principal asset is a single piece of real estate 
subject to debt of no more than $4 million. In cases falling 
within this definition, secured creditors are permitted to 
foreclose on their collateral unless the debtor files a 
reorganization plan which is likely to be confirmed or 
commences payment on the secured loan within a 90-day period. 
This exception to chapter 11 procedures was justified on the 
grounds that single asset real estate cases were seen as 
essentially private two-party loan disputes, which did not 
implicate ongoing businesses or jobs.

                      A. Small Business Provisions

    The business provisions of the bill would effectuate a 
number of changes in the manner in which corporations, 
partnerships and other business entities are permitted to 
reorganize their financial affairs. With respect to small 
business, H.R. 833 would expand the definition of covered small 
business to those companies having debts of less than $4 
million,156 covering approximately 85% of all 
chapter 11 cases.157 It would also make the small 
business requirements mandatory (rather than optional) and 
mandate the operation of numerous additional requirements on 
debtors.158 For example, under H.R. 833, small 
business debtors would be required to provide balance sheets, 
statements of operations, cash-flow statements, and income tax 
returns within three days after filing a bankruptcy petition, 
the time period the debtor has the exclusive right to file a 
plan of reorganization would be further shortened (to 90 days), 
and the standards for being able to seek an extension of this 
time period would be substantially narrowed.159
---------------------------------------------------------------------------
    \156\ H.R. 833, Sec. 402 (proposed amendment to 11 U.S.C. 
Sec. 101(51D)).
    \157\ See March 18, 1999 Hearing (written statement of Jere W. 
Glover, Chief Counsel for Advocacy, SBA).
    \158\ H.R. 833, Sec. 406 (proposed 11 U.S.C. Sec. 1115).
    \159\ H.R. 833, Sec. 407 (proposed amendment to 11 U.S.C. 
Sec. 1121(e)).
---------------------------------------------------------------------------
    It is for these reasons that both the AFL-CIO, the Small 
Business Administration's Office of Advocacy, and a number of 
other organizations representing both debtor and creditor 
interests are opposed to, or have serious concerns with, the 
small business provisions of the bill. The AFL-CIO has warned 
that the small business provisions in the bill will ``threaten 
jobs by placing substantial procedural and substantive barriers 
in the way of small businesses' access to the protections of 
Chapter 11; * * * threaten jobs by requiring commercial debtors 
to assume or reject commercial leases within a rigid timetable, 
which would force debtors to favor one class of creditors over 
others, and threaten their overall ability to successfully 
reorganize.'' 160 Similarly, Jere W. Glover of the 
Office of Advocacy has written that under H.R. 833, ``[u]nder 
the proposals, small business owners who are legitimately using 
Chapter 11 proceedings to reorganize their businesses may be 
forced into a premature dismissal or conversion or may have to 
expend vital resources to fend off challenges by any creditor 
for relatively minor procedural infractions.'' 161
---------------------------------------------------------------------------
    \160\ Letter from Peggy Taylor, Director of Legislation, AFL-CIO, 
to the Honorable Henry J. Hyde, Chair, House Comm. on the Judiciary 
(Apr. 20, 1999).
    \161\ March 18, Hearing (written statement of Jere W. Glover, Small 
Business Administration).
---------------------------------------------------------------------------
    This new bankruptcy mandate, particularly sections 407 
through 409, would impose substantial new costs on small 
businesses, both in terms of document production and legal 
fees, and limit the time frame that the business has to develop 
a reasonable reorganization plan.162 Section 407 
provides an absolute limit on the period the business debtor 
has the exclusive right to file a plan of reorganization. 
Congress has previously enacted laws that have made it far more 
difficult for debtors to unduly delay filing a plan of 
reorganization, and these appear to have had a salutary effect. 
The proposed rigid deadline goes much farther and could work to 
detriment of debtors involved in complex reorganizations and 
force unnecessary liquidations and job losses. In turn, these 
changes will lead to the premature liquidation of small 
businesses with the attendant loss of jobs. The provisions are 
particularly unnecessary at a time when business bankruptcies 
have declined by one-third over the most recent ten-year 
period.163
---------------------------------------------------------------------------
    \162\ March 18, 1999 Hearing (written statement of Jere W. Glover, 
Chief Counsel for Advocacy, SBA).
    \163\ Letter from Jere W. Glover, Chief Counsel for Advocacy, U.S. 
Small Business Administration, to the Honorable Jerrold Nadler, Ranking 
Member, House Subcomm. on Commercial and Admin. Law (Apr. 22, 1998).
---------------------------------------------------------------------------
    The SBA's Office of Advocacy summed up the situation as 
follows: ``the proposals in H.R. 833 go too far in addressing 
the relatively small number of problem cases.'' 164 
Even more dangerously, it has been noted than many--if not 
most--of the business cases in the average district would fall 
prey to these harsh new rules.165
---------------------------------------------------------------------------
    \164\ March 18, 1999 Hearing (written statement of Jere W. Glover, 
Chief Counsel for Advocacy, SBA).
    \165\ Id. (written statement of Damon A. Silvers, AFL-CIO at 4); 
March 17, 1999 Hearing (written statement of Kenneth Klee, National 
Bankruptcy Conference at 7).
---------------------------------------------------------------------------

                 B. Single-Asset Real Estate Provisions

    A similar concern relates specifically to single-asset real 
estate (``SARE'') debtors. While H.R. 833, in section 402, no 
longer specifically includes SARE in the definition of ``Small 
Business,'' it would significantly expand the definition of 
SARE by eliminating the $4 million debt cap. Small business are 
defined under current law as having aggregate non-contingent, 
liquidated secured and unsecured debts in an amount not more 
that $4 million. The definition would take in SARE bankruptcies 
below that cap and treat them as small businesses.
    As a result of these changes, a much wider range of real 
estate operations would be required to conform with the SARE 
requirements when they seek to reorganize, not withstanding the 
fact that those requirements were drafted with a much smaller 
and simpler entity in mind. Large operating entities such as 
Rockefeller Center, as well as hotels and nursing homes, could 
be considered SARE and put back on the track set forth in 
Sec. 362(d)(3) of the Bankruptcy Code. It would create also new 
incentives for lenders to require that all of their real estate 
borrowers place their holdings in the single asset form in 
order to avoid ordinary bankruptcy rules in the future. The 
AFL-CIO noted, ``the significant limiting factor in the 
application of these rules has been the $4 million cap. 
[Eliminating] the cap would place a wide variety of properties 
* * * at risk of foreclosure and threaten jobs at these 
properties. Absent rules that specifically exclude properties 
housing significant business enterprises, there should be no 
expansion in the definition of single asset real estate 
debtor.'' 166
---------------------------------------------------------------------------
    \166\ March 18, 1999 Hearing (written statement of Damon A. 
Silvers, Associate General Counsel, AFL-CIO).
---------------------------------------------------------------------------
    By design, the SARE changes will ``broaden the scope of 
single asset real estate debtors subject to rules which 
increase the threat of disruptive summary foreclosures of 
commercial property.'' 167 This, in turn, would 
likely lead to significant job losses.168 Even if a 
hotel or nursing home remains in existence, the new owner would 
not necessarily be required to honor any previously negotiated 
collective-bargaining agreements applicable to employees at the 
facility. In the case of a large real estate operation, 
premature foreclosure could also allow the new owner to 
terminate many leases, leading to further job losses to the 
extent the business is relying on these leases.
---------------------------------------------------------------------------
    \167\ Letter from Peggy Taylor, Director of Legislation, AFL-CIO, 
to the Honorable Henry J. Hyde, Chair, House Comm. on the Judiciary 
(Apr. 1999).
    \168\ Id.
---------------------------------------------------------------------------

                       C. Other Business Concerns

    A host of additional concerns have been raised by groups 
such as the AFL-CIO and the National Bankruptcy Conference 
regarding the business titles of the legislation. These include 
concerns about the expansion of remedies available to secured 
creditors in the transportation industry;169 the 
imposition of mandatory deadlines for extensions of 
``exclusivity;'' 170 amendments regarding asset 
securitization limiting the assets available to a debtor during 
a bankruptcy case;171 extending the period for 
reclamation of goods by trade creditors;172 and 
limits on repeat filings for troubled businesses (which was 
extended at markup to all businesses and not just ``small 
businesses'').173 In general, the AFL-CIO has warned 
that ``the real danger posed by H.R. 833 is the threat is poses 
to our economy's ability to weather downturns. The bill aims to 
make access to the bankruptcy process more difficult for our 
economy's most vulnerable links--small businesses and 
consumers. This will likely result in increased business 
closures, job loss and home foreclosure, increasing the 
severity and length of any future economic downturn.'' 
174
---------------------------------------------------------------------------
    \169\ March 18, 1999 Hearing (written statement of Damon A. 
Silvers, AFL-CIO); March 17, 1999 Hearing (written statement of Kenneth 
Klee, National Bankruptcy Conference).
    \170\ H.R. 833, Sec. 213.
    \171\ H.R. 833, Sec. 1012.
    \172\ H.R. 833, Sec. 208.
    \173\ H.R. 833, Sec. 412.
    \174\ Letter from Peggy Taylor, Director of Legislation, AFL-CIO, 
to the Honorable Henry J. Hyde, Chair, House Comm. on the Judiciary 
(Apr. 20, 1999).
---------------------------------------------------------------------------
    Similar concerns relate to the power of creditors who lease 
retail property. Section 205 unfairly grants lessors of 
commercial property the ability to coerce debtor-tenants into 
decidingprematurely whether to assume or reject a lease. In a 
retail insolvency, a debtor may need to wait beyond the 240-day period 
until the holiday season is complete to determine which locations have 
a realistic chance to succeed; a trustee or debtor in possession may 
decide to assume and reject some of the leases based upon this 
practical experience.175 If the trustee or debtor in 
possession assumes a nonresidential lease in chapter 11, and the case 
subsequently converts to chapter 7, under the bill, the rent due for a 
one-year period following rejection of the lease becomes an 
administrative expense for compensation, gaining priority over all 
other unsecured claims and limiting the opportunity for other unsecured 
creditors to receive compensation.176 By giving the lessor 
veto power at the end of 240 days, as the bill now does, the 
legislation would have the effect of giving a single creditor 
inordinate bargaining power among creditors and with the debtor.
---------------------------------------------------------------------------
    \175\ The value to the estate of retaining the ability to assign 
certain leases is often a significant issue in determining which lease 
to assume or reject because it impacts upon the ability to pay other 
creditors. It should also be noted that the lessor already is entitled 
to get paid post-petition for the use of the property--the debtor is 
not using it for free.
    \176\ In re Klein Sleep Prods., 78 F.3d 18 (2d Cir. 1996).
---------------------------------------------------------------------------

                           IV. Tax Provisions

    The Bankruptcy Code seeks to effectuate a delicate balance 
between the rights of the Internal Revenue Service and state 
tax agencies to the repayment of any taxes, interest and 
penalties owed them, and the rights of other creditors and the 
ability of individuals and corporations to be financially 
rehabilitated for the benefit of all parties. Title VIII of the 
bill, on balance, manifests a strong preference for the IRS and 
other taxing authorities to the detriment of other participants 
in the bankruptcy system. Concerns have been expressed that, 
not only does H.R. 833 generally enhance the rights and 
position of the IRS and state authorities in bankruptcy, but 
the bill grants the IRS certain rights in bankruptcy cases that 
it does not enjoy outside of bankruptcy, and vests the IRS with 
new enforcement powers that ordinary creditors do not 
posses.177 We are particularly concerned that the 
Majority chose to vary in many significant respects from the 
nonpartisan, and often unanimous, recommendations of the 
Bankruptcy Commission and its Tax Advisory Committee.
---------------------------------------------------------------------------
    \177\ Hearing on Business Bankruptcy Issues Before the House 
Subcomm. on Commercial and Admin. Law, 105th Cong., 2d Sess., (Mar. 18, 
1998) (statement of Paul H. Asofsky).
---------------------------------------------------------------------------
    Title VIII of the bill deals with the treatment of tax 
debts owed to the government by a debtor. It is ironic that the 
Majority, which has normally taken such an anti-tax posture on 
most issues, not only is using the IRS collection standards for 
the means test but also is pressing for changes to the 
Bankruptcy Code that favor governmental collections over the 
rights of debtors and private sector creditors. In his 
testimony on behalf of the American Bar Association's Section 
on Taxation, Paul Asofsky, who served as the Chair of the Task 
Force on the Tax Recommendations of the National Bankruptcy 
Review Commission of the American Bar Association's Tax 
Section, observed that [T]here are many provisions in this 
legislation with which we agree as a matter of principle, but 
the specific provisions are either ambiguously drafted or cut 
against the grain of the principal proposal, causing us to 
oppose what should be noncontroversial proposals.'' 
178
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    \178\ March 18, 1999 Hearing (written statement of Paul Asofsky).
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    Mr. Asofsky provided a somewhat more detailed discussion of 
his concerns in a letter to the Subcommittee's Ranking 
Member.179 Section 802 of the provides new rules for 
debtors to provide notice to a governmental entity. Notice is 
important in a bankruptcy case, because if the debtor is found 
not to have provided adequate notice to a creditor, the debtor 
will not be entitled to a discharge of the debt. Section 802 
``sets forth detailed rules requiring the debtor, in providing 
notice to a governmental creditor, to identify the department 
or agency or instrumentality of a governmental unit through 
which the debtor is indebted and describe the underlying basis 
for the governmental unit's claim. It also requires the debtor 
to identify certain instances in which he may be derivatively 
liable to such governmental agency for a claim against a non-
debtor. It also imposes certain burdens on debtors in 
identifying the particular governmental official to whom notice 
must be sent.'' 180 Forcing the debtor to divine the 
correct person or location for notice would place too high a 
burden on many individual debtors who would then be required to 
demonstrate ``by clear and convincing evidence'' that timely 
notice was given to the appropriate official. Instead of 
providing a fair means of providing notice to governmental 
units, it sets a trap of the unsophisticated and unwary debtor, 
and places governments in the enviable position of having their 
tax debts made non-dischargeable. The second part of the 
provision, which requires a debtor to determine whether she 
might have a derivative tax liability, for example for a trust 
fund tax penalty, places the onus on the debtor to identify and 
pursue claims rightly left to the taxing authority.
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    \179\ Letter from Paul Asofsky to the Honorable Jerrold Nadler, 
Ranking Member, House Subcomm. on Commercial and Admin. Law (Feb. 5, 
1999) [hereinafter Asofsky Letter].
    \180\ Id. at 2.
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    Section 804 provides for a significantly higher uniform 
interest rate to be applied to tax claims in a bankruptcy case. 
The Tax Advisory Committee, which included governmental 
representatives, concluded that the rate for all types of tax 
claims should be the regular tax deficiency rate for federal 
income tax purposes. The bill, however, provides that the rate 
shall be at least the original issue discount rate of 
Sec. 1274(d) of the Internal Revenue Code, plus three points. 
Of greater concern, local governments can set their own 
interest rates, many of which are substantially higher than 
either of the IRS rates.181
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    \181\ Id. at 3-4.
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    Section 807 severely limits the ``superdischarge'' 
available to debtors in chapter 13. It would prevent a debtor 
from discharging tax debts, which is now permitted in chapter 
13, but not in chapter 7. Eliminating the benefit of the 
superdischarge also eliminates the single greatest incentive 
for an individual debtor to choose chapter 13. As Mr. Asofsky 
observed,

          [T]he problem faced by many taxpayers who are 
        delinquent in their obligations is that the IRS 
        standard allowances for installment payment agreements 
        182 clearly do not leave many taxpayers with 
        the minimum amounts necessary to provide for basic 
        necessities, and so called ``offers in compromise'' are 
        very difficult to obtain. Thus, for the most desperate 
        of taxpayers, the chapter 13 superdischarge affords a 
        safety net which is the only thing that provides them 
        with the possibility of living somewhat of a normal 
        life in dignity * * * elimination of the chapter 13 
        superdischarge would be devastating to large numbers of 
        unfortunate individual debtors.183
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    \182\ These are the same standards used in the means test in 
section 102 of H.R. 833.
    \183\ Asofsky Letter at 4.

    Section 817 requires disclosure of the tax consequences of 
a chapter 11 plan of reorganization. Although originally an 
uncontroversial idea, the bill adds extra requirements which 
will likely cause confusion and may be impossible for debtors 
to comply with fully. The section now requires ``a full 
disclosure of the potential material federal, state, and local 
tax consequences of the plan to the debtor, any successor to 
the debtor and a hypothetical investor domiciled in the state 
in which the debtor resides or has its principle place of 
business typical of the holders of claims or interest in the 
case.'' The use of the term ``full disclosure'' will likely 
lead to extensive litigation as these statements are 
scrutinized. In some instances, the precise tax consequences of 
a plan at all levels of government, and for a ``typical'' 
holder of claim, may be difficult to produce with great 
precision.184
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    \184\ Id. at 5-6.
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    Finally, section 818 requires that a debtor actually have 
commenced an action against the taxing authority to determine 
the amount of a disputed tax before a setoff can be prevented. 
Absent such an action by the debtor, a governmental entity is 
free to ``setoff'' any prepetition refund with a liability. The 
Advisory Committee had recommended that such setoff should only 
be permitted in cases where the liability was undisputed. The 
bill goes much further and to the disadvantage of the debtor 
and other, non-governmental creditors.

                             V. Conclusion

    For nearly 100 years, Congress has carefully considered the 
bankruptcy laws and legislated on a deliberate and bipartisan 
basis. In the past, Congress has elected also to preserve 
carefully an insolvency system that provides a fresh start for 
honest, hard-working debtors, protects on-going businesses and 
jobs, and balances the rights of and between debtors and 
creditors. Because H.R. 833 departs from these principles, we 
respectfully dissent.

                                   John Conyers, Jr.
                                   Jerrold Nadler.
                                   Melvin L. Watt.
                                   Sheila Jackson Lee.
                                   Marty Meehan.
                                   Robert Wexler.
                                   Anthony D. Weiner.
                                   Howard L. Berman.
                                   Bobby C. Scott.
                                   Zoe Lofgren.
                                   Maxine Waters.
                                   William D. Delahunt.
                                   Tammy Baldwin.

                      ADDITIONAL DISSENTING VIEWS

    We write separately to express our regret that in a bill 
which holds individual debtors to new, more draconian 
standards, two modest amendments which would each have held 
corporations accountable for their fraudulent activities which 
have taken the lives of average Americans, much the same way 
individual debtors are under current law, were rejected by the 
majority.
    In each case, the amendment would simply create an 
exception to discharge in ch. 11 for civil judgements based on 
fraud or misrepresentation by the debtor in connection with the 
sale of a firearm, in the case of the first amendment, and 
tobacco, in the case of the second amendment. Section 523(a)(2) 
of the Bankruptcy Code already applies this rule to individual 
debtors. The rejected amendment would have merely have required 
gun manufacturers and tobacco companies to abide by the same 
rule as every other American.
    The gun amendment was aimed at a real, not a hypothetical 
problem. For example, in 1996, Lorcin Engineering, one of the 
largest producers of sem-automatic pistols, filed for chapter 
11 because of 18 product liability claims made against it. 
``Lorcin officials said they decided to `take advantage of the 
system' when it became obvious that they would be unable to 
adequately defend themselves against * * * complaint without 
the additional time afforded by filing bankruptcy.'' 
1 According to the Violence Policy Center, ``In 
1993, Lorcin was the number one pistol manufacturer in America, 
churning out 341,243 guns. Many of Lorcin's handguns are of 
such poor quality they are ineligible for importation under the 
Bureau of Alcohol, Tobacco and Firearms' (ATF) `sporting 
purpose' test. Lorcin's .380 pistol tops the list of all guns 
traced to crime by ATF.'' 2 There are now suits 
against the gun industry filed by several U.S. Cities including 
Chicago, New Orleans, Miami, Atlanta, Cleveland, and Bridgeport 
Connecticut. Manufacturers of deadly weapons who commit fraud 
that results in serious injury and death should not be allowed 
to ``take advantage of the system.'' We regret that the long 
arm of the gun lobby has succeeded in cheating the victims in 
these lawsuits from receiving their just compensation by 
preserving this loophole in the Bankruptcy Code.
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    \1\ Firearms Business 3 (Dec. 1, 1996).
    \2\ Violence Policy Center, Don't Let Gun Manufacturerers ``Take 
Advantage of the System'' 1 (Flyer on file with Minority Staff) (April 
1999).
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    Similarly, Rep. Jackson-Lee offered an amendment which 
would have prevented tobacco companies from discharging debt 
from civil judgements arising from the sale of tobacco products 
when fraud or misrepresentation was involved. Certainly there 
can be no industry more guilty of such misconduct than the 
tobacco industry--and the cost has been paid with the lives of 
millions of Americans.
    Who can forget the image of the heads of the seven leading 
tobacco companies swearing an oath before Congress, under 
penalty of perjury, that tobacco was neither harmful nor 
addictive? The Supreme Court has held that fraud and conspiracy 
claims against tobacco merchants could go forward.3 
Since that time numerous states, as well as individual and 
class action claims have been pursued against tobacco 
companies, in part, on these grounds. Many of them have proved 
successful, relying in part on the fraudulent and misleading 
claims of tobacco companies.
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    \3\ Cipollone v. Liggett Group, 505 U.S. 504 (1992).
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    In the last Congress, this Committee accepted a similar 
provision, which was dropped out in a House-Senate conference 
from which the minority was excluded.4 We regret 
that, in the face of mounting evidence of fraud, the dangers of 
smoking, and recognition by the courts, juries, and in some 
instances the tobacco companies themselves, of widespread 
misconduct, the majority has refused to hold these corporate 
giants to the same rules every other American must observe.
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    \4\ Sec. 119A of H.R. 3150 (105th Congress).

                                   John Conyers, Jr.
                                   Jerrold Nadler.
                                   Sheila Jackson Lee.
                                   Marty T. Meehan.
                                   Robert Wexler.
                                   Tammy Baldwin.
                                   Zoe Lofgren.
                                   William D. Delahunt.
                                   Steven R. Rothman.
                                   Anthony D. Weiner.

                                 

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