19–008

108TH CONGRESS REPORT " HOUSE OF REPRESENTATIVES ! 1st Session 108–42

PROVIDING FOR CONSIDERATION OF H.R. 975, THE BANKRUPTCY ABUSE PREVENTION AND CONSUMER PROTECTION ACT OF 2003

MARCH 18, 2003.—Referred to the House Calendar and ordered to be printed 

Mr. SESSIONS, from the Committee on Rules, 

submitted the following 

R E P O R T 

[To accompany H. Res. 147]

The Committee on Rules, having had under consideration House 

Resolution 147, by a nonrecord vote, report the same to the House 

with the recommendation that the resolution be adopted. 

SUMMARY OF PROVISIONS OF THE RESOLUTION

The resolution provides for consideration of H.R. 975, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2003, 

under a structured rule. The rule provides one hour of general debate, equally divided and controlled by the Chairman and ranking 

minority member of the Committee on the Judiciary. The rule 

makes in order the amendment in the nature of a substitute recommended by the Committee on the Judiciary now printed in the 

bill as an original bill for the purpose of amendment, which shall 

be considered as read. 

The rule makes in order only those amendments printed in this 

report, and it provides that the amendments made in order may be 

offered only in the order printed in this report, may be offered only 

by a Member designated in this report, shall be considered as read, 

shall be debatable for the time specified in this report equally divided and controlled by the proponent and an opponent, shall not 

be subject to amendment, and shall not be subject to a demand for 

a division of the question in the House or in the Committee of the 

Whole. The rule waives all points of order against the amendments 

printed in this report and provides one motion to recommit with or 

without instructions. 

The waiver of all points of order against consideration of the bill 

in the rule includes a waiver of clause 4(a) of rule XIII (requiring 

a three-day layover of the committee report), which is necessary beVerDate Jan 31 2003 05:50 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00001 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
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cause the committee report was not filed until Tuesday, March 18, 

and the bill may be considered by the House as early as Wednesday, March 19, 2003.

COMMITTEE VOTES

Pursuant to clause 3(b) of House rule XIII the results of each 

record vote on an amendment or motion to report, together with 

the names of those voting for and against, are printed below: 

Rules Committee record vote No. 38

Date: March 18, 2003. 

Measure: H.R. 975—Bankruptcy Abuse Prevention and Consumer Protection Act of 2003. 

Motion by: Mr. Frost. 

Summary of motion: To grant an open rule. 

Results: Defeated 3 to 9. 

Vote by Members: Goss—Nay; Linder—Nay; Pryce—Nay; DiazBalart—Nay; Hastings (WA)—Nay; Myrick—Nay; Sessions—Nay; 

Reynolds—Nay; Frost—Yea; McGovern—Yea; Hastings (FL)—Yea; 

Dreier—Nay. 

Rules Committee record vote No. 39

Date: March 18, 2003. 

Measure: H.R. 975—Bankruptcy Abuse Prevention and Consumer Protection Act of 2003. 

Motion by: Mr. Hastings of Florida. 

Summary of motion: To make in order the amendment offered by 

Representatives Conyers, Slaughter, and Jackson Lee which allows 

the court to waive provisions of new cram down, luxury, ATM, and 

credit cards used to pay taxes, in any case in which the court determines it would impair the debtors ability to pay domestic support 

obligations. 

Results: Defeated 3 to 9. 

Vote by Members: Goss—Nay; Linder—Nay; Pryce—Nay; DiazBalart—Nay; Hastings (WA)—Nay; Myrick—Nay; Sessions—Nay; 

Reynolds—Nay; Frost—Yea; McGovern—Yea; Hastings (FL)—Yea; 

Dreier—Nay.

SUMMARY OF AMENDMENTS MADE IN ORDER UNDER THE RULE

(Summaries derived from information provided by sponsors.) 

1. Toomey/Sherman—Redrafts Title IX so that the same provisions in Title IX are applicable to both the bank and credit union 

federal regulators that must manage these matters should a problem occur. (10 minutes) 

2. Gutierrez—Provides that upon enactment, Section 1234 applies both prospectively and to involuntary cases now pending in 

the bankruptcy courts. (10 minutes) 

3. Cannon/Delahunt—(1) Increases the monetary cap on wage 

and employee benefit claims entitled to priority under the Bankruptcy Code from $4,650 to $10,000 and lengthens the reachback 

period for wage claims from 90 days to 180 days; (2) increases the 

reachback period during which fraudulent transfers can be rescinded from one to two years and provides that certain compensation payments (e.g. bonuses) to a corporation’s insiders during this 

two-year reachback period can be rescinded, under certain cirVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00002 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
3

cumstances; and (3) requires the court to reinstate retiree benefits 

that a corporate debtor modified within the 180-day period preceding the bankruptcy filing, unless the balance of the equities justifies the modification. (10 minutes) 

4. Sherman—Requires corporations filing for bankruptcy to file 

their case in the district court of the district in which the corporation’s principal place of business in the United States is located. 

For cases in which the debtor is an affiliate, the bankruptcy case 

may be filed in the district in which the principal place of business 

of the affiliate with the greatest assets in the United States is located. (10 minutes) 

5. Conyers—Amendment in the Nature of a Substitute. Modifies 

the means test and requires the court, in considering a motion to 

dismiss or convert a ch. 7 case, to take into account the debtor’s 

actual reasonable and necessary expenses and income, and determine whether the debtor can repay 30% of unsecured debt. Protects 

child and spousal support obligations by limiting the ability of 

creditors to deprive debtors of the right to a fresh start and emerge 

from bankruptcy able to pay their obligations to their children. 

Modifies changes to ch. 13 to make it more workable and increase 

the likelihood that debtors who choose ch. 13 will succeed. Makes 

restrictions on automobile cram-down more workable (1-year instead of 2-year lookback) and other personalty (6-month instead of 

1-year lookback). Prevents debtors from using bankruptcy court to 

evade lawful debts for certain criminal civil rights violations. Provides enhanced protection for employee benefits, ensures fairness 

for employees, and provides a remedy for corporate wrongdoing in 

ch. 11. Provides bankruptcy courts with flexibility to protect small 

businesses from premature or unnecessary liquidation if they are 

able to reorganize successfully. Closes loophole in current law by 

preventing debtors from taking cases to courts far away from 

where the business is actually conducted. Protects the right of 

debtors to uphold contracts in bankruptcy. Provides for additional 

bankruptcy judges according to the most recent needs assessment 

by the Judicial Conference. Strikes pro-IRS amendments that 

would elevate the rights of taxing authorities over other creditors 

and debtors. Provides for enhanced disclosure on credit card statements to help consumers understand the cost to repay balances 

using their actual debts. Protects against corruption in bankruptcy 

proceedings by deleting amendments that would allow for abusive 

motions, allow for conflicts of interest on the part of investment 

bankers, and allow bankruptcy professionals to evade accountability in court for their wrongdoing. (40 minutes) 

TEXT OF AMENDMENTS MADE IN ORDER

1. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE TOOMEY OF

PENNSYLVANIA, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

Strike section 901 of the bill, as reported, and all that follows 

through section 905 and insert the following new sections: 

SEC. 901. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS 

OR RECEIVERS OF INSURED DEPOSITORY INSTITUTIONS. 

(a) DEFINITION OF QUALIFIED FINANCIAL CONTRACT.—

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(1) FDIC-INSURED DEPOSITORY INSTITUTIONS.—Section 

11(e)(8)(D) of the Federal Deposit Insurance Act (12 U.S.C. 

1821(e)(8)(D)) is amended—

(A) by striking ‘‘subsection—’’ and inserting ‘‘subsection, 

the following definitions shall apply:’’; and 

(B) in clause (i), by inserting ‘‘, resolution, or order’’ after 

‘‘any similar agreement that the Corporation determines 

by regulation’’. 

(2) INSURED CREDIT UNIONS.—Section 207(c)(8)(D) of the Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) is amended—

(A) by striking ‘‘subsection—’’ and inserting ‘‘subsection, 

the following definitions shall apply:’’; and 

(B) in clause (i), by inserting ‘‘, resolution, or order’’ after 

‘‘any similar agreement that the Board determines by regulation’’. 

(b) DEFINITION OF SECURITIES CONTRACT.—

(1) FDIC-INSURED DEPOSITORY INSTITUTIONS.—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 the foregoing, including 

any option to purchase or sell any such security, 

certificate of deposit, mortgage loan, interest, 

group or index, or option, and including any repurchase or reverse repurchase transaction on any 

such security, certificate of deposit, mortgage 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, mortgage loan, 

interest, group or index, or option; 

‘‘(V) means any margin loan; 

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‘‘(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, including any guarantee or reimbursement 

obligation in connection with any agreement or 

transaction referred to in this clause.’’. 

(2) INSURED CREDIT UNIONS.—Section 207(c)(8)(D)(ii) of the 

Federal Credit Union Act (12 U.S.C. 1787(c)(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 the foregoing, including 

any option to purchase or sell any such security, 

certificate of deposit, mortgage loan, interest, 

group or index, or option, and including any repurchase or reverse repurchase transaction on any 

such security, certificate of deposit, mortgage 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 Board 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; 

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‘‘(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, mortgage 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, including any guarantee or reimbursement 

obligation in connection with any agreement or 

transaction referred to in this clause.’’. 

(c) DEFINITION OF COMMODITY CONTRACT.— (1) FDIC-INSURED DEPOSITORY INSTITUTIONS.—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 

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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) any security agreement or arrangement or 

other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.’’. 

(2) INSURED CREDIT UNIONS.—Section 207(c)(8)(D)(iii) of the 

Federal Credit Union Act (12 U.S.C. 1787(c)(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; 

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‘‘(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) any security agreement or arrangement or 

other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with any agreement or transaction referred to in this clause.’’. (d) DEFINITION OF FORWARD CONTRACT.— (1) FDIC-INSURED DEPOSITORY INSTITUTIONS.—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, a repurchase transaction, reverse repurchase transaction, 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 

9

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) any security agreement or arrangement or 

other credit enhancement related to any agreement or transaction referred to in subclause (I), 

(II), (III), or (IV), including any guarantee or reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause.’’. (2) INSURED CREDIT UNIONS.—Section 207(c)(8)(D)(iv) of the 

Federal Credit Union Act (12 U.S.C. 1787(c)(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, a repurchase transaction, reverse repurchase transaction, 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) any security agreement or arrangement or 

other credit enhancement related to any agreement or transaction referred to in subclause (I), 

(II), (III), or (IV), including any guarantee or reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause.’’. 

(e) DEFINITION OF REPURCHASE AGREEMENT.—

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(1) FDIC-INSURED DEPOSITORY INSTITUTIONS.—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) means an agreement, including related 

terms, which provides for the transfer of one 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, mortgage loans, or interests 

with a simultaneous agreement by such transferee 

to transfer to the transferor thereof certificates of 

deposit, eligible bankers’ acceptances, securities, 

mortgage 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 any security agreement or arrangement or other credit enhancement related to any 

agreement or transaction referred to in subclause 

(I), (III), (IV), or (V), including any guarantee or 

reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause. 

11

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).’’. (2) INSURED CREDIT UNIONS.—Section 207(c)(8)(D)(v) of the 

Federal Credit Union Act (12 U.S.C. 1787(c)(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) means an agreement, including related 

terms, which provides for the transfer of one 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, mortgage loans, or interests 

with a simultaneous agreement by such transferee 

to transfer to the transferor thereof certificates of 

deposit, eligible bankers’ acceptances, securities, 

mortgage 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 Board 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 

12

‘‘(VI) means any security agreement or arrangement or other credit enhancement related to any 

agreement or transaction referred to in subclause 

(I), (III), (IV), or (V), including any guarantee or 

reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause. 

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.— (1) FDIC-INSURED DEPOSITORY INSTITUTIONS.—Section 

11(e)(8)(D)(vi) 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 total return, credit 

spread or credit swap, option, future, or forward 

agreement; a commodity index or commodity 

swap, option, future, or forward agreement; or a 

weather swap, weather derivative, or weather option; 

‘‘(II) any agreement or transaction that is similar to any other agreement or transaction referred 

to in this clause and that is of a type that has 

been, is presently, or in the future becomes, the 

subject of recurrent dealings in the swap markets 

(including terms and conditions incorporated by 

reference in such agreement) and that is a forward, swap, future, or option on one or more 

rates, currencies, commodities, equity securities or 

other equity instruments, debt securities or other 

debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, 

or contingency associated with a financial, commercial, or economic consequence, or economic or 

financial indices or measures of economic or financial risk or value; 

‘‘(III) any combination of agreements or transactions referred to in this clause; 

13

‘‘(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 subclause (I), 

(II), (III), (IV), or (V), including any guarantee or 

reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause. 

Such term is applicable for purposes of this subsection 

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, the Gramm-Leach-Bliley Act, and the 

Legal Certainty for Bank Products Act of 2000.’’. (2) INSURED CREDIT UNIONS.—Section 207(c)(8)(D) of the Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) is amended by 

adding at the end the following new clause: 

‘‘(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 total return, credit 

spread or credit swap, option, future, or forward 

agreement; a commodity index or commodity 

swap, option, future, or forward agreement; or a 

weather swap, weather derivative, or weather option; 

14

‘‘(II) any agreement or transaction that is similar to any other agreement or transaction referred 

to in this clause and that is of a type that has 

been, is presently, or in the future becomes, the 

subject of recurrent dealings in the swap markets 

(including terms and conditions incorporated by 

reference in such agreement) and that is a forward, swap, future, or option on one or more 

rates, currencies, commodities, equity securities or 

other equity instruments, debt securities or other 

debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, 

or contingency associated with a financial, commercial, or economic consequence, or economic or 

financial indices or measures of economic or financial risk or value; ‘‘(III) any combination of agreements or transactions referred to in this 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 subclause (I), 

(II), (III), (IV), or (V), including any guarantee or 

reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause. 

Such term is applicable for purposes of this subsection 

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, the Gramm-Leach-Bliley Act, and the 

Legal Certainty for Bank Products Act of 2000.’’. 

(g) DEFINITION OF TRANSFER.— (1) FDIC-INSURED DEPOSITORY INSTITUTIONS.—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: 

15

‘‘(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 institution’s equity of redemption.’’. 

(2) INSURED CREDIT UNIONS.—Section 207(c)(8)(D) of the Federal Credit Union Act (12 U.S.C. 1787(c)(8)(D)) (as amended by 

subsection (f) of this section) is amended by adding at the end 

the following new clause: 

‘‘(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 institution’s equity of redemption.’’. 

(h) TREATMENT OF QUALIFIED FINANCIAL CONTRACTS.—

(1) FDIC-INSURED DEPOSITORY INSTITUTIONS.—Section 

11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C. 

1821(e)(8)) is amended—

(A) in subparagraph (A)—

(i) by striking ‘‘paragraph (10)’’ and inserting ‘‘paragraphs (9) and (10)’’; 

(ii) in clause (i), by striking ‘‘to cause the termination or liquidation’’ and inserting ‘‘such person has 

to cause the termination, liquidation, or acceleration’’; 

and 

(iii) by striking clause (ii) and inserting the following new clause: 

‘‘(ii) any right under any security agreement or arrangement or other credit enhancement related to one 

or more qualified financial contracts described in 

clause (i);’’; and 

(B) in subparagraph (E), by striking clause (ii) and inserting the following: 

‘‘(ii) any right under any security agreement or arrangement or other credit enhancement related to one 

or more qualified financial contracts described in 

clause (i);’’. 

(2) INSURED CREDIT UNIONS.—Section 207(c)(8) of the Federal 

Credit Union Act (12 U.S.C. 1787(c)(8)) is amended—

(A) in subparagraph (A)—

(i) by striking ‘‘paragraph (12)’’ and inserting ‘‘paragraphs (9) and (10)’’; 

(ii) in clause (i), by striking ‘‘to cause the termination or liquidation’’ and inserting ‘‘such person has 

to cause the termination, liquidation, or acceleration’’; 

and 

(iii) by striking clause (ii) and inserting the following new clause: 

‘‘(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 

16

(B) in subparagraph (E), by striking clause (ii) and inserting the following new clause: ‘‘(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.— (1) FDIC-INSURED DEPOSITORY INSTITUTIONS.—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 or any other Federal or 

State law relating to the avoidance of preferential or fraudulent transfers,’’ before ‘‘the Corporation’’. (2) INSURED CREDIT UNIONS.—Section 207(c)(8)(C)(i) of the 

Federal Credit Union Act (12 U.S.C. 1787(c)(8)(C)(i)) is amended by inserting ‘‘section 5242 of the Revised Statutes of the 

United States or any other Federal or State law relating to the 

avoidance of preferential or fraudulent transfers,’’ before ‘‘the 

Board’’. 

SEC. 902. AUTHORITY OF THE FDIC AND NCUAB WITH RESPECT TO 

FAILED AND FAILING INSTITUTIONS. 

(a) FEDERAL DEPOSIT INSURANCE CORPORATION.— (1) IN GENERAL.—Section 11(e)(8) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(8)) is amended—

(A) 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 

(B) 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.’’. 

17

(2) 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 by’’ after ‘‘the appointment of’’. (b) NATIONAL CREDIT UNION ADMINISTRATION BOARD.— (1) IN GENERAL.—Section 207(c)(8) of the Federal Credit 

Union Act (12 U.S.C. 1787(c)(8)) is amended— (A) in subparagraph (E) (as amended by section 901(h)), 

by striking ‘‘other than paragraph (12) of this subsection, 

subsection (b)(9)’’ and inserting ‘‘other than subsections 

(b)(9) and (c)(10)’’; and 

(B) 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 Board, or authorizing any court or agency to limit or delay, in any 

manner, the right or power of the Board 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 (c)(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 

credit union 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.’’. (2) TECHNICAL AND CONFORMING AMENDMENT.—Section 

207(c)(12)(A) of the Federal Credit Union Act (12 U.S.C. 

1787(c)(12)(A)) is amended by inserting ‘‘or the exercise of 

rights or powers by’’ after ‘‘the appointment of’’. 

SEC. 903. AMENDMENTS RELATING TO TRANSFERS OF QUALIFIED FINANCIAL CONTRACTS. 

(a) FDIC-INSURED DEPOSITORY INSTITUTIONS.—

(1) 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—

18

‘‘(i) transfer to one 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 IN- STITUTION, OR BRANCH OR AGENCY OF A FOREIGN BANK OR

FINANCIAL INSTITUTION.—In transferring any qualified financial contracts and related claims and property under 

subparagraph (A)(i), the conservator or receiver for the 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 one 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 

cleared by or 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) DEFINITIONS.—For purposes of this paragraph, 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 

19

regulation to be a financial institution, and the term ‘clearing organization’ has the same meaning as in section 402 

of the Federal Deposit Insurance Corporation Improvement Act of 1991.’’. (2) 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 in the material immediately following clause (ii) by striking ‘‘the conservator’’ and all that follows through the period and inserting the 

following: ‘‘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.’’. (3) RIGHTS AGAINST RECEIVER AND CONSERVATOR AND TREAT- MENT OF BRIDGE BANKS.—Section 11(e)(10) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)(10)) is amended— (A) by redesignating subparagraph (B) as subparagraph 

(D); and 

(B) 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 that such person has to terminate, liquidate, or net such contract 

under paragraph (8)(A) of this subsection 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 that such 

person has to terminate, liquidate, or net such contract under paragraph (8)(E) of this subsection 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 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 paragraph, 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 conVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00019 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
20

tract 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). ‘‘(C) TREATMENT OF BRIDGE BANKS.—The following institutions shall not be considered to be 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 paragraph (9): ‘‘(i) A bridge bank. 

‘‘(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 the depository institution and 

the Corporation as receiver for a depository institution in default.’’. (b) INSURED CREDIT UNIONS.— (1) TRANSFERS OF QUALIFIED FINANCIAL CONTRACTS TO FINAN- CIAL INSTITUTIONS.—Section 207(c)(9) of the Federal Credit 

Union Act (12 U.S.C. 1787(c)(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 credit union in default which includes any 

qualified financial contract, the conservator or liquidating 

agent for such credit union 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 

credit union in default; 

‘‘(II) all claims of such person or any affiliate of 

such person against such credit union 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 

credit union); 

‘‘(III) all claims of such credit union 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

21

FINANCIAL INSTITUTION.—In transferring any qualified financial contracts and related claims and property under 

subparagraph (A)(i), the conservator or liquidating agent 

for the credit union 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 liquidating agent transfers any qualified financial 

contract and related claims, property, and credit enhancements pursuant to subparagraph (A)(i) and such contract 

is cleared by or 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) DEFINITIONS.—For purposes of this paragraph— ‘‘(i) the term ‘financial institution’ means a broker or 

dealer, a depository institution, a futures commission 

merchant, a credit union, or any other institution, as 

determined by the Board by regulation to be a financial institution; and ‘‘(ii) the term ‘clearing organization’ has the same 

meaning as in section 402 of the Federal Deposit Insurance Corporation Improvement Act of 1991.’’. (2) NOTICE TO QUALIFIED FINANCIAL CONTRACT

COUNTERPARTIES.—Section 207(c)(10)(A) of the Federal Credit 

Union Act (12 U.S.C. 1787(c)(10)(A)) is amended in the material immediately following clause (ii) by striking ‘‘the conservator’’ and all that follows through the period and inserting the 

following: ‘‘the conservator or liquidating agent 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 liquidating agent in the case of a liquidation, or the business day following such transfer in the 

case of a conservatorship.’’. (3) RIGHTS AGAINST LIQUIDATING AGENT AND CONSERVATOR

AND TREATMENT OF BRIDGE BANKS.—Section 207(c)(10) of the 

Federal Credit Union Act (12 U.S.C. 1787(c)(10)) is amended—

(A) by redesignating subparagraph (B) as subparagraph 

(D); and 

(B) by inserting after subparagraph (A) the following 

new subparagraphs: ‘‘(B) CERTAIN RIGHTS NOT ENFORCEABLE.— ‘‘(i) LIQUIDATION.—A person who is a party to a 

qualified financial contract with an insured credit 

union may not exercise any right that such person has 

22

to terminate, liquidate, or net such contract under 

paragraph (8)(A) of this subsection 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 liquidating agent for 

the credit union institution (or the insolvency or financial condition of the credit union for which the liquidating agent has been appointed)— ‘‘(I) until 5:00 p.m. (eastern time) on the business day following the date of the appointment of 

the liquidating agent; 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 credit 

union may not exercise any right that such person has 

to terminate, liquidate, or net such contract under 

paragraph (8)(E) of this subsection 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 conservator for the 

credit union or the insolvency or financial condition of 

the credit union for which the conservator has been 

appointed). 

‘‘(iii) NOTICE.—For purposes of this paragraph, the 

Board as conservator or liquidating agent of an insured credit union shall be deemed to have notified a 

person who is a party to a qualified financial contract 

with such credit union if the Board has taken steps 

reasonably calculated to provide notice to such person 

by the time specified in subparagraph (A). 

‘‘(C) TREATMENT OF BRIDGE BANKS.—The following institutions shall not be considered to be 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 paragraph (9): ‘‘(i) A bridge bank. 

‘‘(ii) A credit union organized by the Board, for 

which a conservator is appointed either— ‘‘(I) immediately upon the organization of the 

credit union; or ‘‘(II) at the time of a purchase and assumption 

transaction between the credit union and the 

Board as receiver for a credit union in default.’’. 

SEC. 904. AMENDMENTS RELATING TO DISAFFIRMANCE OR REPUDIATION OF QUALIFIED FINANCIAL CONTRACTS. 

(a) FDIC-INSURED DEPOSITORY INSTITUTIONS.—Section 11(e) of 

the Federal Deposit Insurance Act (12 U.S.C. 1821(e)) is amended—

(1) by redesignating paragraphs (11) through (15) as paragraphs (12) through (16), respectively; 

(2) by inserting after paragraph (10) the following new paragraph: 

23

‘‘(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).’’; and 

(3) by adding at the end the following new paragraph: 

‘‘(17) SAVINGS CLAUSE.—The meanings of terms used in this 

subsection are applicable for purposes of this subsection only, 

and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any similar terms under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank 

Products Act of 2000, the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 

1934), and the Commodity Exchange Act.’’. 

(b) INSURED CREDIT UNIONS.—Section 207(c) of the Federal Credit Union Act (12 U.S.C. 1787(c)) is amended—

(1) by redesignating paragraphs (11), (12), and (13) as paragraphs (12), (13), and (14), respectively; 

(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 liquidating agent with respect 

to any qualified financial contract to which an insured credit 

union is a party, the conservator or liquidating agent for such 

credit union shall either—

‘‘(A) disaffirm or repudiate all qualified financial contracts between—

‘‘(i) any person or any affiliate of such person; and 

‘‘(ii) the credit union 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).’’; and 

(3) by adding at the end the following new paragraph: 

‘‘(15) SAVINGS CLAUSE.—The meanings of terms used in this 

subsection are applicable for purposes of this subsection only, 

and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any similar terms under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank 

Products Act of 2000, the securities laws (as that term is defined in section (a)(47) of the Securities Exchange Act of 1934), 

and the Commodity Exchange Act.’’. 

24

SEC. 905. CLARIFYING AMENDMENT RELATING TO MASTER AGREEMENTS. 

(a) FDIC-INSURED DEPOSITORY INSTITUTIONS.—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 ONE

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.’’. 

(b) INSURED CREDIT UNIONS.—Section 207(c)(8)(D) of the Federal 

Credit Union Act (12 U.S.C. 1787(c)(8)(D)) is amended by inserting 

after clause (vi) (as added by section 901(f)) the following new 

clause: 

‘‘(vii) TREATMENT OF MASTER AGREEMENT AS ONE

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.’’.

In the amendment made by section 906(b)(1) of the bill to section 

403(a) of the Federal Deposit Insurance Corporation Improvement 

Act of 1991, insert ‘‘, paragraphs (8)(E), (8)(F), and (10)(B) of section 207(c) of the Federal Credit Union Act,’’ after ‘‘Deposit Insurance Act’’. In the amendment made by section 906(b)(2) of the bill, adding 

a new subsection (f) at the end of section 403 of the Federal Deposit Insurance Corporation Improvement Act of 1991, insert ‘‘, paragraphs (8)(E), (8)(F), and (10)(B) of section 207(c) of the Federal Credit Union Act,’’ after ‘‘Deposit Insurance Act’’. 

In the amendment made by section 906(c)(1) of the bill to section 

404(a) of the Federal Deposit Insurance Corporation Improvement 

Act of 1991, insert ‘‘, paragraphs (8)(E), (8)(F), and (10)(B) of section 207(c) of the Federal Credit Union Act,’’ after ‘‘Deposit Insurance Act’’. 

In the amendment made by section 906(c)(2) of the bill, adding 

a new subsection (h) at the end of section 404 of the Federal Deposit Insurance Corporation Improvement Act of 1991, insert ‘‘, 

paragraphs (8)(E), (8)(F), and (10)(B) of section 207(c) of the Federal Credit Union Act,’’ after ‘‘Deposit Insurance Act’’. 

25

In the amendment made by section 907(b)(1) of the bill to section 

101(22) of title 11, United States Code, strike ‘‘trust company, or 

receiver’’ (where such term appears in subparagraph (A) of the 

paragraph proposed to be inserted) and insert ‘‘trust company, federally-insured credit union, or receiver, liquidating agent,’’. 

In the amendment made by section 907(b)(1) of the bill to section 

101(22) of title 11, United States Code, insert ‘‘liquidating agent,’’

after ‘‘receiver,’’ (the 2d place such term appears in subparagraph 

(A) of the paragraph proposed to be inserted). 

In section 908 of the bill, strike ‘‘Section 11(e)(8)’’ and insert ‘‘(a) 

FDIC-INSURED DEPOSITORY INSTITUTIONS.—Section 11(e)(8)’’. 

Insert the following new subsection at the end of section 908 of 

the bill:

(b) INSURED CREDIT UNIONS.—Section 207(c)(8) of the Federal 

Credit Union Act (12 U.S.C. 1787(c)(8)) is amended by adding at 

the end the following new subparagraph: 

‘‘(H) RECORDKEEPING REQUIREMENTS.—The Board, in 

consultation with the appropriate Federal banking agencies, may prescribe regulations requiring more detailed 

recordkeeping by any insured credit union with respect to 

qualified financial contracts (including market valuations) 

only if such insured credit union is in a troubled condition 

(as such term is defined by the Board pursuant to section 

212).’’. 

2. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE GUTIERREZ

OF ILLINOIS, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

Subsection (b) of section 1234 (Involuntary Cases) of H.R. 975 is 

amended by striking ‘‘shall not apply with respect to cases commenced under title 11 of the United States Code before such date’’

and inserting ‘‘shall apply with respect to cases commenced under 

title 11 of the United States Code before, on, and after such date’’, 

3. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE CANNON

OF UTAH, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

Add at the end the following: 

TITLE ll—PREVENTING CORPORATE 

BANKRUPTCY ABUSE 

SEC. ll01. EMPLOYEE WAGE AND BENEFIT PRIORITIES. 

Section 507(a) of title 11, United States Code, is amended—

(1) in paragraph (3) by striking ‘‘90’’ and inserting ‘‘180’’, and 

(2) in paragraphs (3) and (4) by striking ‘‘$4,000’’ and inserting ‘‘$10,000’’. 

SEC. ll02. FRAUDULENT TRANSFERS AND OBLIGATIONS. 

Section 548 of title 11, United States Code, is amended—

(1) in subsections (a) and (b) by striking ‘‘one year’’ and inserting ‘‘2 years’’, 

(2) in subsection (a)—

26

(A) by inserting ‘‘(including any transfer to or for the 

benefit of an insider under an employment contract)’’ after ‘‘transfer’’ the 1st place it appears, and 

(B) by inserting ‘‘(including any obligation to or for the 

benefit of an insider under an employment contract)’’ after ‘‘obligation’’ the 1st place it appears, and 

(3) in subsection (a)(1)(B)(ii)— (A) in subclause (II) by striking ‘‘or’’ at the end, 

(B) in subclause (III) by striking the period at the end 

and inserting ‘‘; or’’, and 

(C) by adding at the end the following: ‘‘(IV) made such transfer to or for the benefit of an insider, 

or incurred such obligation to or for the benefit of an insider, 

under an employment contract and not in the ordinary course 

of business.’’. 

SEC. ll03. PAYMENT OF INSURANCE BENEFITS TO RETIRED EMPLOYEES. 

Section 1114 of title 11, United States Code, is amended— (1) by redesignating subsection (l) as subsection (m), and 

(2) by inserting after subsection (k) the following: ‘‘(l) If the debtor, during the 180-day period ending on the date 

of the filing of the petition— ‘‘(1) modified retiree benefits; and 

‘‘(2) was insolvent on the date such benefits were modified; 

the court, on motion of a party in interest, and after notice and a 

hearing, shall issue an order reinstating as of the date the modification was made, such benefits as in effect immediately before 

such date unless the court finds that the balance of the equities 

clearly favors such modification.’’. 

SEC. ll04. EFFECTIVE DATE; APPLICATION OF AMENDMENTS. 

(a) EFFECTIVE DATE.—Except as provided in subsection (b), this 

Act and the amendments made by this Act shall take effect on the 

date of the enactment of this Act. 

(b) APPLICATION OF AMENDMENTS.— (1) IN GENERAL.—Except as provided in paragraph (2), the 

amendments made by this Act shall apply only with respect to 

cases commenced under title 11 of the United States Code on 

or after the date of the enactment of this Act. 

(2) AVOIDANCE PERIOD.—The amendment made by section 

3(1) shall apply only with respect to cases commenced under 

title 11 of the United States Code more than 1 year after the 

date of the enactment of this Act. 

4. AN AMENDMENT TO BE OFFERED BY REPRESENTATIVE SHERMAN

OF CALIFORNIA, OR HIS DESIGNEE, DEBATABLE FOR 10 MINUTES

Add at the end of the following: 

TITLE ll—

SEC. ll. LOCAL FILING OF BANKRUPTCY CASES. 

(a) VENUE OF CASES UNDER TITLE 11.—Section 1408 of title 28, 

United States Code, is amended—

(1) by striking ‘‘Except’’ and inserting the following: 

27

‘‘(a) Except’’; 

(2) in paragraph (2), by inserting ‘‘as defined in section 

101(2)(A) of title 11’’ after ‘‘affiliate’’; and 

(3) by adding at the end the following: 

‘‘(b) For purposes of subsection (a)—

‘‘(1) 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; 

and 

‘‘(2) if an affiliate, as defined in section 101(2)(A) of title 11, 

is not a debtor in a case under title 11, but the debtor is an 

affiliate as defined in subparagraph (B), (C), or (D) of that section, then the bankruptcy case may be filed in the district in 

which the principal place of business of the affiliate with the 

greatest assets in the United States is located.’’. 

(b) CHANGE OF VENUE.—Section 1412 of title 28, United States 

Code, is amended—

(1) by striking ‘‘A’’ and inserting the following: 

‘‘(a) A’’; and 

(2) by adding at the end the following: 

‘‘(b) The district court of a district in which is filed a case laying 

venue in the wrong division or district shall dismiss, or if it be in 

the interest of justice, transfer such case to any district or division 

in which it could have been brought. 

‘‘(c) Nothing in this chapter shall impair the jurisdiction of a district court of any matter involving a party who does not interpose 

timely and sufficient objection to the venue. 

‘‘(d) As used in this section—

‘‘(1) the term ‘‘district court’’ includes—

‘‘(A) the bankruptcy judges of each such court as defined 

in section 151 of this title; and 

‘‘(B) the District Court of Guam, the District Court for 

the Northern Mariana Islands, and the District Court of 

the Virgin Islands, including any bankruptcy judge of each 

such court; and 

‘‘(2) the term ‘‘district’’ includes the territorial jurisdiction of 

each such court.’’. 

5. AN AMENDMENT IN THE NATURE OF A SUBSTITUTE TO BE OFFERED BY REPRESENTATIVE CONYERS OF MICHIGAN, OR HIS DESIGNEE, DEBATABLE FOR 40 MINUTES

Strike all after the enacting clause and insert the following:

SECTION 1. SHORT TITLE. 

This Act may be cited as the ‘‘Bankruptcy Abuse Prevention and 

Consumer Protection Act of 2003’’. 

TITLE I—NEEDS-BASED BANKRUPTCY 

SEC. 101. CONVERSION. 

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

28

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: 

‘‘§ 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’’ and inserting ‘‘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 last sentence and inserting the 

following: 

‘‘(2) In considering under paragraph (1) whether the granting of 

relief would be an abuse of the provisions of this chapter, the court 

shall consider whether—

‘‘(A) under section 1325(b)(1), on the basis of the current income of the debtor, the debtor could pay an amount greater 

than or equal to 30 percent of unsecured claims that are not 

considered to be priority claims (as determined under subchapter I of chapter 5); or 

‘‘(B) the debtor filed a petition for the relief in bad faith. 

‘‘(6) Only the judge or United States trustee (or bankruptcy administrator, if any) may file a motion under section 707(b), if the 

current monthly income of the debtor, or in a joint case, the debtor 

and the debtor’s spouse, as of the date of the order for relief, when 

multiplied by 12, is equal to or less than— ‘‘(A) in the case of a debtor in a household of 1 person, the 

median family income of the applicable State for 1 earner; ‘‘(B) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable 

State for a family of the same number or fewer individuals; or ‘‘(C) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable 

State for a family of 4 or fewer individuals, plus $525 per 

month for each individual in excess of 4. ‘‘(7)(A) No judge, United States trustee (or bankruptcy administrator, if any), trustee, or other party in interest may file a motion 

under paragraph (2) 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 equal to or less than— ‘‘(i) in the case of a debtor in a household of 1 person, the 

median family income of the applicable State for 1 earner; ‘‘(ii) in the case of a debtor in a household of 2, 3, or 4 individuals, the highest median family income of the applicable 

State for a family of the same number or fewer individuals; or 

29

‘‘(iii) in the case of a debtor in a household exceeding 4 individuals, the highest median family income of the applicable 

State for a family of 4 or fewer individuals, plus $525 per 

month for each individual in excess of 4. ‘‘(B) In a case that is not a joint case, current monthly income 

of the debtor’s spouse shall not be considered for purposes of subparagraph (A) if— ‘‘(i)(I) the debtor and the debtor’s spouse are separated under 

applicable nonbankruptcy law; or ‘‘(II) the debtor and the debtor’s spouse are living separate 

and apart, other than for the purpose of evading subparagraph 

(A); and ‘‘(ii) the debtor files a statement under penalty of perjury— ‘‘(I) specifying that the debtor meets the requirement of 

subclause (I) or (II) of clause (i); and ‘‘(II) disclosing the aggregate, or best estimate of the aggregate, amount of any cash or money payments received 

from the debtor’s spouse attributed to the debtor’s current 

monthly income.’’. (b) DEFINITION.—Section 101 of title 11, United States Code, is 

amended by inserting after paragraph (10) the following: ‘‘(10A) ‘current monthly income’— ‘‘(A) means the average monthly income from all sources 

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

the debtor’s spouse receive) without regard to whether 

such income is taxable income, derived during the 60-day 

period ending on— ‘‘(i) the last day of the calendar month immediately 

preceding the date of the commencement of the case if 

the debtor files the schedule of current income required by section 521(a)(1)(B)(ii); or ‘‘(ii) the date on which current income is determined 

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

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

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

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

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

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

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

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

payments to victims of international terrorism (as defined 

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

as victims of such terrorism;’’. 

(c) UNITED STATES TRUSTEE AND BANKRUPTCY ADMINISTRATOR

DUTIES.—Section 704 of title 11, United States Code, is amended— (1) by inserting ‘‘(a)’’ before ‘‘The trustee shall—’’; and 

(2) by adding at the end the following: ‘‘(b)(1) With respect to a debtor who is an individual in a case 

under this chapter— ‘‘(A) the United States trustee (or the bankruptcy administrator, if any) shall review all materials filed by the debtor 

30

and, not later than 10 days after the date of the first meeting 

of creditors, file with the court a statement as to whether the 

debtor’s case would be presumed to be an abuse under section 

707(b); and ‘‘(B) not later than 5 days after receiving a statement under 

subparagraph (A), the court shall provide a copy of the statement to all creditors. ‘‘(2) The United States trustee (or bankruptcy administrator, if 

any) shall, not later than 30 days after the date of filing a statement under paragraph (1), either file a motion to dismiss or convert under section 707(b) or file a statement setting forth the reasons the United States trustee (or the bankruptcy administrator, if 

any) does not consider such a motion to be appropriate, if the 

United States trustee (or the bankruptcy administrator, if any) determines that the debtor’s case should be presumed to be an abuse 

under section 707(b) and the product of the debtor’s current monthly income, multiplied by 12 is not less than— ‘‘(A) in the case of a debtor in a household of 1 person, the 

median family income of the applicable State for 1 earner; or ‘‘(B) in the case of a debtor in a household of 2 or more individuals, the highest median family income of the applicable 

State for a family of the same number or fewer individuals.’’. (d) NOTICE.—Section 342 of title 11, United States Code, is 

amended by adding at the end the following: ‘‘(d) In a case under chapter 7 of this title in which the debtor 

is an individual and in which the presumption of abuse arises 

under section 707(b), the clerk shall give written notice to all creditors not later than 10 days after the date of the filing of the petition that the presumption of abuse has arisen.’’. (e) NONLIMITATION OF INFORMATION.—Nothing in this title shall 

limit the ability of a creditor to provide information to a judge (except for information communicated ex parte, unless otherwise permitted by applicable law), United States trustee (or bankruptcy administrator, if any), or trustee. 

(f) DISMISSAL FOR CERTAIN CRIMES.—Section 707 of title 11, 

United States Code, is amended by adding at the end the following: ‘‘(c)(1) In this subsection— ‘‘(A) the term ‘crime of violence’ has the meaning given such 

term in section 16 of title 18; and ‘‘(B) the term ‘drug trafficking crime’ has the meaning given 

such term in section 924(c)(2) of title 18. ‘‘(2) Except as provided in paragraph (3), after notice and a hearing, the court, on a motion by the victim of a crime of violence or 

a drug trafficking crime, may when it is in the best interest of the 

victim dismiss a voluntary case filed under this chapter by a debtor 

who is an individual if such individual was convicted of such crime. ‘‘(3) The court may not dismiss a case under paragraph (2) if the 

debtor establishes by a preponderance of the evidence that the filing of a case under this chapter is necessary to satisfy a claim for 

a domestic support obligation.’’. 

(g) CONFIRMATION OF PLAN.—Section 1325(a) of title 11, United 

States Code, is amended—

(1) in paragraph (5), by striking ‘‘and’’ at the end; 

(2) in paragraph (6), by striking the period and inserting a 

semicolon; and 

31

(3) by inserting after paragraph (6) the following: 

‘‘(7) the action of the debtor in filing the petition was in good 

faith;’’.

(i) SPECIAL ALLOWANCE FOR HEALTH INSURANCE.—Section 

1329(a) 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) reduce amounts to be paid under the plan by the actual 

amount expended by the debtor to purchase health insurance 

for the debtor (and for any dependent of the debtor if such dependent does not otherwise have health insurance coverage) if 

the debtor documents the cost of such insurance and demonstrates that—

‘‘(A) such expenses are reasonable and necessary; 

‘‘(B)(i) if the debtor previously paid for health insurance, 

the amount is not materially larger than the cost the debtor previously paid or the cost necessary to maintain the 

lapsed policy; or 

‘‘(ii) if the debtor did not have health insurance, the 

amount is not materially larger than the reasonable cost 

that would be incurred by a debtor who purchases health 

insurance, who has similar income, expenses, age, and 

health status, and who lives in the same geographical location with the same number of dependents who do not otherwise have health insurance coverage; and 

‘‘(C) the amount is not otherwise allowed for purposes of 

determining disposable income under section 1325(b) of 

this title;

and upon request of any party in interest, files proof that a 

health insurance policy was purchased.’’.

(j) ADJUSTMENT OF DOLLAR AMOUNTS.—Section 104(b) of title 11, 

United States Code, is amended by striking ‘‘and 523(a)(2)(C)’’ each 

place it appears and inserting ‘‘523(a)(2)(C), 707(b), and 1325(b)(3)’’.

(k) DEFINITION OF ‘MEDIAN FAMILY INCOME’.—Section 101 of title 

11, United States Code, is amended by inserting after paragraph 

(39) the following: 

‘‘(39A) ‘median family income’ means for any year—

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

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

year, adjusted annually after such most recent year until 

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

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

year;’’. 

(k) CLERICAL AMENDMENT.—The table of sections for 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 11 or 13.’’.

32

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 case under this title shall 

be subject to fine, imprisonment, or both; and 

‘‘(B) all information supplied by a debtor in connection 

with a case under this title 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 serve in 

cases under chapter 13 of title 11, 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 debtors who are individuals on 

how to better manage their finances. 

(b) TEST.—

(1) SELECTION OF DISTRICTS.—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) USE.—For an 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 title 11, United States Code. 

(c) EVALUATION.—

(1) IN GENERAL.—During the 18-month 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, United States Code, and by consumer 

counseling groups. 

33

(2) REPORT.—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. 

SEC. 105. CREDIT COUNSELING. 

(d) DEBTOR’S DUTIES.—Section 521 of title 11, United States 

Code, is amended— (1) by inserting ‘‘(a)’’ before ‘‘The debtor shall—’’; and 

(2) by adding at the end the following: ‘‘(b) In addition to the requirements under subsection (a), a debtor who is an individual shall file with the court— ‘‘(1) a certificate from the approved nonprofit budget and 

credit counseling agency that provided the debtor services 

under section 109(h) describing the services provided to the 

debtor; and ‘‘(2) a copy of the debt repayment plan, if any, developed 

under section 109(h) through the approved nonprofit budget 

and credit counseling agency 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: 

‘‘§ 111. Nonprofit budget and credit counseling agencies; financial management instructional courses 

‘‘(a) The clerk shall maintain a publicly available list of— ‘‘(1) nonprofit budget and credit counseling agencies that provide 1 or more services described in section 109(h) currently 

approved by the United States trustee (or the bankruptcy administrator, if any); and ‘‘(2) instructional courses concerning personal financial management currently approved by the United States trustee (or 

the bankruptcy administrator, if any), as applicable. ‘‘(b) The United States trustee (or bankruptcy administrator, if 

any) shall only approve a nonprofit budget and credit counseling 

agency or an instructional course concerning personal financial 

management as follows: ‘‘(1) The United States trustee (or bankruptcy administrator, 

if any) shall have thoroughly reviewed the qualifications of the 

nonprofit budget and credit counseling agency or of the provider of the instructional course under the standards set forth 

in this section, and the services or instructional courses that 

will be offered by such agency or such provider, and may require such agency or such provider that has sought approval 

to provide information with respect to such review. ‘‘(2) The United States trustee (or bankruptcy administrator, 

if any) shall have determined that such agency or such instructional course fully satisfies the applicable standards set forth 

in this section. ‘‘(3) If a nonprofit budget and credit counseling agency or instructional course did not appear on the approved list for the 

district under subsection (a) immediately before approval 

under this section, approval under this subsection of such 

34

agency or such instructional course shall be for a probationary 

period not to exceed 6 months. ‘‘(4) At the conclusion of the applicable probationary period 

under paragraph (3), the United States trustee (or bankruptcy 

administrator, if any) may only approve for an additional 1-

year period, and for successive 1-year periods thereafter, an 

agency or instructional course that has demonstrated during 

the probationary or applicable subsequent period of approval 

that such agency or instructional course— ‘‘(A) has met the standards set forth under this section 

during such period; and ‘‘(B) can satisfy such standards in the future. ‘‘(5) Not later than 30 days after any final decision under 

paragraph (4), an interested person may seek judicial review of 

such decision in the appropriate district court of the United 

States. ‘‘(c)(1) The United States trustee (or the bankruptcy administrator, if any) shall only approve a nonprofit budget and credit 

counseling agency that demonstrates that it will provide qualified 

counselors, maintain adequate provision for safekeeping and payment of client funds, provide adequate counseling with respect to 

client credit problems, and deal responsibly and effectively with 

other matters relating to the quality, effectiveness, and financial 

security of the services it provides. ‘‘(2) To be approved by the United States trustee (or the bankruptcy administrator, if any), a nonprofit budget and credit counseling agency shall, at a minimum— ‘‘(A) have a board of directors the majority of which— ‘‘(i) are not employed by such agency; and 

‘‘(ii) will not directly or indirectly benefit financially from 

the outcome of the counseling services provided by such 

agency; ‘‘(B) if a fee is charged for counseling services, charge a reasonable fee, and provide services without regard to ability to 

pay the fee; 

‘‘(C) provide for safekeeping and payment of client funds, including an annual audit of the trust accounts and appropriate 

employee bonding; 

‘‘(D) provide full disclosures to a client, including funding 

sources, counselor qualifications, possible impact on credit reports, and any costs of such program that will be paid by such 

client and how such costs will be paid;

‘‘(E) provide adequate counseling with respect to a client’s 

credit problems that includes an analysis of such client’s current financial condition, factors that caused such financial condition, and how such client can develop a plan to respond to 

the problems without incurring negative amortization of debt; 

‘‘(F) provide trained counselors who receive no commissions 

or bonuses based on the outcome of the counseling services provided by such agency, and who have adequate experience, and 

have been adequately trained to provide counseling services to 

individuals in financial difficulty, including the matters described in subparagraph (E); 

‘‘(G) demonstrate adequate experience and background in 

providing credit counseling; and 

35

‘‘(H) have adequate financial resources to provide continuing 

support services for budgeting plans over the life of any repayment plan. ‘‘(d) The United States trustee (or the bankruptcy administrator, 

if any) shall only approve an instructional course concerning personal financial management— ‘‘(1) for an initial probationary period under subsection (b)(3) 

if the course will provide at a minimum— ‘‘(A) trained personnel with adequate experience and 

training in providing effective instruction and services; ‘‘(B) learning materials and teaching methodologies designed to assist debtors in understanding personal financial management and that are consistent with stated objectives directly related to the goals of such instructional 

course; ‘‘(C) adequate facilities situated in reasonably convenient 

locations at which such instructional course is offered, except that such facilities may include the provision of such 

instructional course by telephone or through the Internet, 

if such instructional course is effective; and ‘‘(D) the preparation and retention of reasonable records 

(which shall include the debtor’s bankruptcy case number) 

to permit evaluation of the effectiveness of such instructional course, including any evaluation of satisfaction of instructional course requirements for each debtor attending 

such instructional course, which shall be available for inspection and evaluation by the Executive Office for United 

States Trustees, the United States trustee (or the bankruptcy administrator, if any), or the chief bankruptcy judge 

for the district in which such instructional course is offered; and ‘‘(2) for any 1-year period if the provider thereof has demonstrated that the course meets the standards of paragraph (1) 

and, in addition—

‘‘(A) has been effective in assisting a substantial number 

of debtors to understand personal financial management; 

and 

‘‘(B) is otherwise likely to increase substantially the 

debtor’s understanding of personal financial management. 

‘‘(e) The district court may, at any time, investigate the qualifications of a nonprofit budget and credit counseling agency referred to 

in subsection (a), and request production of documents to ensure 

the integrity and effectiveness of such agency. The district court 

may, at any time, remove from the approved list under subsection 

(a) a nonprofit budget and credit counseling agency upon finding 

such agency does not meet the qualifications of subsection (b). 

‘‘(f) The United States trustee (or the bankruptcy administrator, 

if any) shall notify the clerk that a nonprofit budget and credit 

counseling agency or an instructional course is no longer approved, 

in which case the clerk shall remove it from the list maintained 

under subsection (a). 

‘‘(g)(1) No nonprofit budget and credit counseling agency may 

provide to a credit reporting agency information concerning whether a debtor has received or sought instruction concerning personal 

financial management from such agency. 

36

‘‘(2) A nonprofit budget and credit counseling agency that willfully or negligently fails to comply with any requirement under this 

title with respect to a debtor shall be liable for damages in an 

amount equal to the sum of—

‘‘(A) any actual damages sustained by the debtor as a result 

of the violation; and 

‘‘(B) any court costs or reasonable attorneys’ fees (as determined by the court) incurred in an action to recover those damages.’’. 

(2) CLERICAL AMENDMENT.—The table of sections for chapter 

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

end the following:

‘‘111. Nonprofit budget and credit counseling agencies; financial management instructional courses.’’.

(f) LIMITATION.—Section 362 of title 11, United States Code, is 

amended by adding at the end the following: 

‘‘(i) If a case commenced under chapter 7, 11, or 13 is dismissed 

due to the creation of a debt repayment plan, for purposes of subsection (c)(3), any subsequent case commenced by the debtor under 

any such chapter shall not be presumed to be filed not in good 

faith. 

‘‘(j) On request of a party in interest, the court shall issue an 

order under subsection (c) confirming that the automatic stay has 

been terminated.’’. 

SEC. 106. SCHEDULES OF REASONABLE AND NECESSARY EXPENSES. 

For purposes of section 707(b) of title 11, United States Code, as 

amended by this Act, the Director of the Executive Office for 

United States Trustees shall, not later than 180 days after the date 

of enactment of this Act, issue schedules of reasonable and necessary administrative expenses of administering a chapter 13 plan 

for each judicial district of the United States. 

TITLE II—ENHANCED CONSUMER 

PROTECTION 

Subtitle A—Penalties for Abusive Creditor 

Practices

SEC. 201. PRESERVATION OF CLAIMS AND DEFENSES UPON SALE OF 

PREDATORY LOANS. 

Section 363 of title 11, United States Code, is amended—

(1) by redesignating subsection (o) as subsection (p), and 

(2) by inserting after subsection (n) the following: 

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

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

(January 1, 2002), as amended from time to time), and if such interest is purchased through a sale under this section, then such 

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

contract, to the same extent as such person would be subject to 

37

such claims and defenses of the consumer had such interest been 

purchased at a sale not under this section.’’.

SEC. 202. GAO STUDY AND REPORT ON REAFFIRMATION AGREEMENT 

PROCESS. 

(a) STUDY.—The Comptroller General of the United States shall 

conduct a study of the reaffirmation agreement process that occurs 

under title 11 of the United States Code, to determine the overall 

treatment of consumers within the context of such process, and 

shall include in such study consideration of—

(1) the policies and activities of creditors with respect to reaffirmation agreements; and 

(2) whether consumers are fully, fairly, and consistently informed of their rights pursuant to such title. 

(b) REPORT TO THE CONGRESS.—Not later than 18 months after 

the date of the enactment of this Act, the Comptroller General 

shall submit to the President pro tempore of the Senate and the 

Speaker of the House of Representatives a report on the results of 

the study conducted under subsection (a), together with recommendations for legislation (if any) to address any abusive or coercive tactics found in connection with the reaffirmation agreement 

process that occurs under title 11 of the United States Code.

Subtitle B—Priority Child Support 

SEC. 211. 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 date of the order for relief in a case 

under this title, including interest that accrues on that debt as 

provided under applicable nonbankruptcy law notwithstanding 

any other provision of this title, that is—

‘‘(A) owed to or recoverable by—

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

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

‘‘(ii) a governmental unit; 

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

(including assistance provided by a governmental unit) of 

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

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

‘‘(C) established or subject to establishment before or 

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

title, by reason of applicable provisions of—

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

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

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

‘‘(D) not assigned to a nongovernmental entity, unless 

that obligation is assigned voluntarily by the spouse, 

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

38

legal guardian, or responsible relative for the purpose of 

collecting the debt;’’.

SEC. 212. 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 so redesignated, by striking ‘‘First’’ and inserting ‘‘Second’’;

(4) in paragraph (3), as so redesignated, by striking ‘‘Second’’ and inserting ‘‘Third’’; 

(5) in paragraph (4), as so redesignated— (A) by striking ‘‘Third’’ and inserting ‘‘Fourth’’; and 

(B) by striking the semicolon at the end and inserting a 

period; 

(6) in paragraph (5), as so redesignated, by striking ‘‘Fourth’’ and inserting ‘‘Fifth’’; 

(7) in paragraph (6), as so redesignated, by striking ‘‘Fifth’’ and inserting ‘‘Sixth’’; 

(8) in paragraph (7), as so redesignated, by striking ‘‘Sixth’’

and inserting ‘‘Seventh’’; and 

(9) by inserting before paragraph (2), as so redesignated, the 

following: 

‘‘(1) First: 

‘‘(A) Allowed unsecured claims for domestic support obligations that, as of the date of the filing of the petition in 

a case under this title, are owed to or recoverable by a 

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

child’s parent, legal guardian, or responsible relative, without regard to whether the claim is filed by such person or 

is filed by a governmental unit on behalf of such person, 

on the condition that funds received under this paragraph 

by a governmental unit under this title after the date of 

the filing of the petition shall be applied and distributed 

in accordance with applicable nonbankruptcy law. ‘‘(B) Subject to claims under subparagraph (A), allowed 

unsecured claims for domestic support obligations that, as 

of the date of the filing of the petition, are assigned by a 

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

parent, legal guardian, or responsible relative to a governmental unit (unless such obligation is assigned voluntarily 

by the spouse, former spouse, child, parent, legal guardian, 

or responsible relative of the child for the purpose of collecting the debt) or are owed directly to or recoverable by 

a governmental unit under applicable nonbankruptcy law, 

on the condition that funds received under this paragraph 

by a governmental unit under this title after the date of 

the filing of the petition be applied and distributed in accordance with applicable nonbankruptcy law. 

‘‘(C) If a trustee is appointed or elected under section 

701, 702, 703, 1104, 1202, or 1302, the administrative expenses of the trustee allowed under paragraphs (1)(A), (2), 

and (6) of section 503(b) shall be paid before payment of 

claims under subparagraphs (A) and (B), to the extent that 

39

the trustee administers assets that are otherwise available 

for the payment of such claims.’’. 

SEC. 213. 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 by statute, to pay a domestic support obligation, the 

debtor has paid all amounts payable under such order or such 

statute for such obligation that first become payable after the 

date of the filing of the petition.’’; 

(2) in section 1208(c)— (A) in paragraph (8), by striking ‘‘or’’ at the end; 

(B) in paragraph (9), by striking the period at the end 

and inserting ‘‘; and’’; and 

(C) by adding at the end the following: ‘‘(10) failure of the debtor to pay any domestic support obligation that first becomes payable after the date of the filing of 

the petition.’’; 

(3) in section 1222(a)— (A) in paragraph (2), by striking ‘‘and’’ at the end; 

(B) in paragraph (3), by striking the period at the end 

and inserting ‘‘; and’’; and 

(C) by adding at the end the following: 

‘‘(4) notwithstanding any other provision of this section, a 

plan may provide for less than full payment of all amounts 

owed for a claim entitled to priority under section 507(a)(1)(B) 

only if the plan provides that all of the debtor’s projected disposable income for a 5-year period beginning on the date that 

the first payment is due under the plan will be applied to 

make payments under the plan.’’; 

(4) in section 1222(b)—

(A) by redesignating paragraph (11) as paragraph (12); 

and 

(B) by inserting after paragraph (10) the following: 

‘‘(11) provide for the payment of interest accruing after the 

date of the filing of the petition on unsecured claims that are 

nondischargeable under section 1228(a), except that such interest may be paid only to the extent that the debtor has disposable income available to pay such interest after making provision for full payment of all allowed claims;’’; 

(5) in section 1225(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) the debtor has paid all amounts that are required to be 

paid under a domestic support obligation and that first become 

payable after the date of the filing of the petition if the debtor 

is required by a judicial or administrative order, or by statute, 

to pay such domestic support obligation.’’; 

(6) in section 1228(a), in the matter preceding paragraph (1), 

by inserting ‘‘, and in the case of a debtor who is required by 

a judicial or administrative order, or by statute, to pay a doVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00039 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
40

mestic support obligation, after such debtor certifies that all 

amounts payable under such order or such statute that are due 

on or before the date of the certification (including amounts 

due before the petition was filed, but only to the extent provided for by the plan) have been paid’’ after ‘‘completion by the 

debtor of all payments under the plan’’; 

(7) in section 1307(c)—

(A) in paragraph (9), by striking ‘‘or’’ at the end; 

(B) in paragraph (10), by striking the period at the end 

and inserting ‘‘; or’’; and 

(C) by adding at the end the following: 

‘‘(11) failure of the debtor to pay any domestic support obligation that first becomes payable after the date of the filing of 

the petition.’’; 

(8) in section 1322(a)—

(A) in paragraph (2), by striking ‘‘and’’ at the end; 

(B) in paragraph (3), by striking the period at the end 

and inserting ‘‘; and’’; and 

(C) by adding at the end the following: 

‘‘(4) notwithstanding any other provision of this section, a 

plan may provide for less than full payment of all amounts 

owed for a claim entitled to priority under section 507(a)(1)(B) 

only if the plan provides that all of the debtor’s projected disposable income for a 5-year period beginning on the date that 

the first payment is due under the plan will be applied to 

make payments under the plan.’’;

(9) in section 1322(b)—

(A) in paragraph (9), by striking ‘‘; and’’ and inserting a 

semicolon; 

(B) by redesignating paragraph (10) as paragraph (11); 

and 

(C) inserting after paragraph (9) the following: 

‘‘(10) provide for the payment of interest accruing after the 

date of the filing of the petition on unsecured claims that are 

nondischargeable under section 1328(a), except that such interest may be paid only to the extent that the debtor has disposable income available to pay such interest after making provision for full payment of all allowed claims; and’’; 

(10) in section 1325(a), as amended by section 102, by inserting after paragraph (7) the following: 

‘‘(8) the debtor has paid all amounts that are required to be 

paid under a domestic support obligation and that first become 

payable after the date of the filing of the petition if the debtor 

is required by a judicial or administrative order, or by statute, 

to pay such domestic support obligation; and’’; 

(11) in section 1328(a), in the matter preceding paragraph 

(1), by inserting ‘‘, and in the case of a debtor who is required 

by a judicial or administrative order, or by statute, to pay a domestic support obligation, after such debtor certifies that all 

amounts payable under such order or such statute that are due 

on or before the date of the certification (including amounts 

due before the petition was filed, but only to the extent provided for by the plan) have been paid’’ after ‘‘completion by the 

debtor of all payments under the plan’’. 

41

SEC. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC SUPPORT 

OBLIGATION PROCEEDINGS. 

Section 362(b) of title 11, United States Code, is amended by 

striking paragraph (2) and inserting the following: ‘‘(2) under subsection (a)— ‘‘(A) of the commencement or continuation of a civil action or proceeding— ‘‘(i) for the establishment of paternity; 

‘‘(ii) for the establishment or modification of an 

order for domestic support obligations; ‘‘(iii) concerning child custody or visitation; 

‘‘(iv) for the dissolution of a marriage, except to the 

extent that such proceeding seeks to determine the division of property that is property of the estate; or ‘‘(v) regarding domestic violence; ‘‘(B) of the collection of a domestic support obligation 

from property that is not property of the estate; ‘‘(C) with respect to the withholding of income that is 

property of the estate or property of the debtor for payment of a domestic support obligation under a judicial or 

administrative order or a statute; ‘‘(D) of the withholding, suspension, or restriction of a 

driver’s license, a professional or occupational license, or a 

recreational license, under State law, as specified in section 466(a)(16) of the Social Security Act; ‘‘(E) of the reporting of overdue support owed by a parent to any consumer reporting agency as specified in section 466(a)(7) of the Social Security Act; ‘‘(F) of the interception of a tax refund, as specified in 

sections 464 and 466(a)(3) of the Social Security Act or 

under an analogous State law; or ‘‘(G) of the enforcement of a medical obligation, as specified under title IV of the Social Security Act;’’. 

SEC. 215. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR ALIMONY, 

MAINTENANCE, AND SUPPORT. 

Section 523 of title 11, United States Code, is amended—

(1) in subsection (a)—

(A) by striking paragraph (5) and inserting the following: 

‘‘(5) for a domestic support obligation;’’; and 

(B) by striking paragraph (18); 

(2) in subsection (c), by striking ‘‘(6), or (15)’’ each place it 

appears and inserting ‘‘or (6)’’; and 

(3) in paragraph (15), as added by Public Law 103–394 (108 

Stat. 4133)—

(A) by inserting ‘‘to a spouse, former spouse, or child of 

the debtor and’’ before ‘‘not of the kind’’; 

(B) by inserting ‘‘or’’ after ‘‘court of record,’’; and 

(C) by striking ‘‘unless—’’ and all that follows through 

the end of the paragraph and inserting a semicolon. 

SEC. 216. 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 

42

applicable nonbankruptcy law to the contrary, such property 

shall be liable for a debt of a kind specified in section 

523(a)(5));’’; 

(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’’; and 

(3) in subsection (g)(2), by striking ‘‘subsection (f)(2)’’ and inserting ‘‘subsection (f)(1)(B)’’. 

SEC. 217. 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;’’. 

SEC. 218. DISPOSABLE INCOME DEFINED. 

Section 1225(b)(2)(A) of title 11, United States Code, is amended 

by inserting ‘‘or for a domestic support obligation that first becomes 

payable after the date of the filing of the petition’’ after ‘‘dependent 

of the debtor’’.

SEC. 219. 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) in subsection (a)— (A) in paragraph (8), by striking ‘‘and’’ at the end; 

(B) in paragraph (9), by striking the period and inserting 

a semicolon; and 

(C) by adding at the end the following: ‘‘(10) if with respect to the debtor there is a claim for a domestic support obligation, provide the applicable notice specified in subsection (c); and’’; and 

(2) by adding at the end the following: ‘‘(c)(1) In a case described in subsection (a)(10) to which subsection (a)(10) applies, the trustee shall—

‘‘(A)(i) provide written notice to the holder of the claim described in subsection (a)(10) of such claim and of the right of 

such holder to use the services of the State child support enforcement agency established under sections 464 and 466 of 

the Social Security Act for the State in which such holder resides, for assistance in collecting child support during and after 

the case under this title; 

‘‘(ii) include in the notice provided under clause (i) the address and telephone number of such State child support enforcement agency; and 

‘‘(iii) include in the notice provided under clause (i) an explanation of the rights of such holder to payment of such claim 

under this chapter; 

‘‘(B)(i) provide written notice to such State child support enforcement agency of such claim; and 

‘‘(ii) include in the notice provided under clause (i) the name, 

address, and telephone number of such holder; and 

‘‘(C) at such time as the debtor is granted a discharge under 

section 727, provide written notice to such holder and to such 

State child support enforcement agency of—

‘‘(i) the granting of the discharge; 

43

‘‘(ii) the last recent known address of the debtor; 

‘‘(iii) the last recent known name and address of the 

debtor’s employer; and ‘‘(iv) the name of each creditor that holds a claim that— ‘‘(I) is not discharged under paragraph (2), (4), or 

(14A) of section 523(a); or ‘‘(II) was reaffirmed by the debtor under section 

524(c). ‘‘(2)(A) The holder of a claim described in subsection (a)(10) or 

the State child support enforcement agency of the State in which 

such holder resides may request from a creditor described in paragraph (1)(C)(iv) the last known address of the debtor. ‘‘(B) Notwithstanding any other provision of law, a creditor that 

makes a disclosure of a last known address of a debtor in connection with a request made under subparagraph (A) shall not be liable by reason of making such disclosure.’’. (b) DUTIES OF TRUSTEE UNDER CHAPTER 11.—Section 1106 of 

title 11, United States Code, is amended— (1) in subsection (a)— (A) in paragraph (6), by striking ‘‘and’’ at the end; 

(B) in paragraph (7), by striking the period and inserting ‘‘; and’’; and 

(C) by adding at the end the following: ‘‘(8) if with respect to the debtor there is a claim for a domestic support obligation, provide the applicable notice specified in 

subsection (c).’’; and 

(2) by adding at the end the following: ‘‘(c)(1) In a case described in subsection (a)(8) to which subsection 

(a)(8) applies, the trustee shall— ‘‘(A)(i) provide written notice to the holder of the claim described in subsection (a)(8) of such claim and of the right of 

such holder to use the services of the State child support enforcement agency established under sections 464 and 466 of 

the Social Security Act for the State in which such holder resides, for assistance in collecting child support during and after 

the case under this title; and 

‘‘(ii) include in the notice required by clause (i) the address 

and telephone number of such State child support enforcement 

agency; 

‘‘(B)(i) provide written notice to such State child support enforcement agency of such claim; and 

‘‘(ii) include in the notice required by clause (i) the name, address, and telephone number of such holder; and 

‘‘(C) at such time as the debtor is granted a discharge under 

section 1141, provide written notice to such holder and to such 

State child support enforcement agency of—

‘‘(i) the granting of the discharge; 

‘‘(ii) the last recent known address of the debtor; 

‘‘(iii) the last recent known name and address of the 

debtor’s employer; and 

‘‘(iv) the name of each creditor that holds a claim that—

‘‘(I) is not discharged under paragraph (2), (4), or 

(14A) of section 523(a); or 

‘‘(II) was reaffirmed by the debtor under section 

524(c). 

44

‘‘(2)(A) The holder of a claim described in subsection (a)(8) or the 

State child enforcement support agency of the State in which such 

holder resides may request from a creditor described in paragraph 

(1)(C)(iv) the last known address of the debtor. ‘‘(B) Notwithstanding any other provision of law, a creditor that 

makes a disclosure of a last known address of a debtor in connection with a request made under subparagraph (A) shall not be liable by reason of making such disclosure.’’. (c) DUTIES OF TRUSTEE UNDER CHAPTER 12.—Section 1202 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 the debtor there is a claim for a domestic support obligation, provide the applicable notice specified in 

subsection (c).’’; and 

(2) by adding at the end the following: ‘‘(c)(1) In a case described in subsection (b)(6) to which subsection 

(b)(6) applies, the trustee shall— ‘‘(A)(i) provide written notice to the holder of the claim described in subsection (b)(6) of such claim and of the right of 

such holder to use the services of the State child support enforcement agency established under sections 464 and 466 of 

the Social Security Act for the State in which such holder resides, for assistance in collecting child support during and after 

the case under this title; and ‘‘(ii) include in the notice provided under clause (i) the address and telephone number of such State child support enforcement agency; ‘‘(B)(i) provide written notice to such State child support enforcement agency of such claim; and ‘‘(ii) include in the notice provided under clause (i) the name, 

address, and telephone number of such holder; and 

‘‘(C) at such time as the debtor is granted a discharge under 

section 1228, provide written notice to such holder and to such 

State child support enforcement agency of—

‘‘(i) the granting of the discharge; 

‘‘(ii) the last recent known address of the debtor; 

‘‘(iii) the last recent known name and address of the 

debtor’s employer; and 

‘‘(iv) the name of each creditor that holds a claim that—

‘‘(I) is not discharged under paragraph (2), (4), or 

(14A) of section 523(a); or 

‘‘(II) was reaffirmed by the debtor under section 

524(c). 

‘‘(2)(A) The holder of a claim described in subsection (b)(6) or the 

State child support enforcement agency of the State in which such 

holder resides may request from a creditor described in paragraph 

(1)(C)(iv) the last known address of the debtor. 

‘‘(B) Notwithstanding any other provision of law, a creditor that 

makes a disclosure of a last known address of a debtor in connection with a request made under subparagraph (A) shall not be liable by reason of making that disclosure.’’. 

45

(d) 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 the debtor there is a claim for a domestic support obligation, provide the applicable notice specified in 

subsection (d).’’; and 

(2) by adding at the end the following: 

‘‘(d)(1) In a case described in subsection (b)(6) to which subsection 

(b)(6) applies, the trustee shall—

‘‘(A)(i) provide written notice to the holder of the claim described in subsection (b)(6) of such claim and of the right of 

such holder to use the services of the State child support enforcement agency established under sections 464 and 466 of 

the Social Security Act for the State in which such holder resides, for assistance in collecting child support during and after 

the case under this title; and 

‘‘(ii) include in the notice provided under clause (i) the address and telephone number of such State child support enforcement agency; 

‘‘(B)(i) provide written notice to such State child support enforcement agency of such claim; and 

‘‘(ii) include in the notice provided under clause (i) the name, 

address, and telephone number of such holder; and 

‘‘(C) at such time as the debtor is granted a discharge under 

section 1328, provide written notice to such holder and to such 

State child support enforcement agency of—

‘‘(i) the granting of the discharge; 

‘‘(ii) the last recent known address of the debtor; 

‘‘(iii) the last recent known name and address of the 

debtor’s employer; and

‘‘(iv) the name of each creditor that holds a claim that—

‘‘(I) is not discharged under paragraph (2) or (4) of 

section 523(a); or 

‘‘(II) was reaffirmed by the debtor under section 

524(c). 

‘‘(2)(A) The holder of a claim described in subsection (b)(6) or the 

State child support enforcement agency of the State in which such 

holder resides may request from a creditor described in paragraph 

(1)(C)(iv) the last known address of the debtor. 

‘‘(B) Notwithstanding any other provision of law, a creditor that 

makes a disclosure of a last known address of a debtor in connection with a request made under subparagraph (A) shall not be liable by reason of making that disclosure.’’. 

Subtitle C—Other Consumer Protections 

SEC. 221. AMENDMENTS TO DISCOURAGE ABUSIVE BANKRUPTCY FILINGS. 

Section 110 of title 11, United States Code, is amended— (1) in subsection (b)—

46

(A) in paragraph (1), by adding at the end the following: 

‘‘If a bankruptcy petition preparer is not an individual, 

then an officer, principal, responsible person, or partner of 

the bankruptcy petition preparer shall be required to—

‘‘(A) sign the document for filing; and 

‘‘(B) print on the document the name and address of that officer, principal, responsible person, or partner.’’; and 

(B) by striking paragraph (2) and inserting the following: 

‘‘(2)(A) Before preparing any document for filing or accepting any 

fees from a debtor, the bankruptcy petition preparer shall provide 

to the debtor a written notice which shall be on an official form 

prescribed by the Judicial Conference of the United States in accordance with rule 9009 of the Federal Rules of Bankruptcy Procedure. 

‘‘(B) The notice under subparagraph (A)—

‘‘(i) shall inform the debtor in simple language that a bankruptcy petition preparer is not an attorney and may not practice law or give legal advice; 

‘‘(ii) may contain a description of examples of legal advice 

that a bankruptcy petition preparer is not authorized to give, 

in addition to any advice that the preparer may not give by 

reason of subsection (e)(2); and

‘‘(iii) shall—

‘‘(I) be signed by the debtor and, under penalty of perjury, by the bankruptcy petition preparer; and 

‘‘(II) be filed with any document for filing.’’; 

(2) in subsection (c)—

(A) in paragraph (2)—

(i) by striking ‘‘(2) For purposes’’ and inserting 

‘‘(2)(A) Subject to subparagraph (B), for purposes’’; and 

(ii) by adding at the end the following: 

‘‘(B) If a bankruptcy petition preparer is not an individual, the 

identifying number of the bankruptcy petition preparer shall be the 

Social Security account number of the officer, principal, responsible 

person, or partner of the bankruptcy petition preparer.’’; and 

(B) by striking paragraph (3); 

(3) in subsection (d)—

(A) by striking ‘‘(d)(1)’’ and inserting ‘‘(d)’’; and 

(B) by striking paragraph (2); 

(4) in subsection (e)—

(A) by striking paragraph (2); and 

(B) by adding at the end the following: 

‘‘(2)(A) A bankruptcy petition preparer may not offer a potential 

bankruptcy debtor any legal advice, including any legal advice described in subparagraph (B). 

‘‘(B) The legal advice referred to in subparagraph (A) includes advising the debtor—

‘‘(i) whether—

‘‘(I) to file a petition under this title; or 

‘‘(II) commencing a case under chapter 7, 11, 12, or 13 

is appropriate; 

‘‘(ii) whether the debtor’s debts will be discharged in a case 

under this title; 

47

‘‘(iii) whether the debtor will be able to retain the debtor’s 

home, car, or other property after commencing a case under 

this title; ‘‘(iv) concerning— ‘‘(I) the tax consequences of a case brought under this 

title; or ‘‘(II) the dischargeability of tax claims; ‘‘(v) whether the debtor may or should promise to repay 

debts to a creditor or enter into a reaffirmation agreement with 

a creditor to reaffirm a debt; ‘‘(vi) concerning how to characterize the nature of the debtor’s interests in property or the debtor’s debts; or ‘‘(vii) concerning bankruptcy procedures and rights.’’; 

(5) in subsection (f)— (A) by striking ‘‘(f)(1)’’ and inserting ‘‘(f)’’; and 

(B) by striking paragraph (2); 

(6) in subsection (g)— (A) by striking ‘‘(g)(1)’’ and inserting ‘‘(g)’’; and 

(B) by striking paragraph (2); 

(7) in subsection (h)— (A) by redesignating paragraphs (1) through (4) as paragraphs (2) through (5), respectively; 

(B) by inserting before paragraph (2), as so redesignated, 

the following: ‘‘(1) The Supreme Court may promulgate rules under section 

2075 of title 28, or the Judicial Conference of the United States 

may prescribe guidelines, for setting a maximum allowable fee 

chargeable by a bankruptcy petition preparer. A bankruptcy petition preparer shall notify the debtor of any such maximum amount 

before preparing any document for filing for a debtor or accepting 

any fee from the debtor.’’; 

(C) in paragraph (2), as so redesignated— (i) by striking ‘‘Within 10 days after the date of the 

filing of a petition, a bankruptcy petition preparer 

shall file a’’ and inserting ‘‘A’’; 

(ii) by inserting ‘‘by the bankruptcy petition preparer shall be filed together with the petition,’’ after 

‘‘perjury’’; and 

(iii) by adding at the end the following: ‘‘If rules or 

guidelines setting a maximum fee for services have 

been promulgated or prescribed under paragraph (1), 

the declaration under this paragraph shall include a 

certification that the bankruptcy petition preparer 

complied with the notification requirement under 

paragraph (1).’’; 

(D) by striking paragraph (3), as so redesignated, and inserting the following: 

‘‘(3)(A) The court shall disallow and order the immediate turnover to the bankruptcy trustee any fee referred to in paragraph (2) 

found to be in excess of the value of any services—

‘‘(i) rendered by the bankruptcy petition preparer during the 

12-month period immediately preceding the date of the filing 

of the petition; or 

‘‘(ii) found to be in violation of any rule or guideline promulgated or prescribed under paragraph (1). 

48

‘‘(B) All fees charged by a bankruptcy petition preparer may be 

forfeited in any case in which the bankruptcy petition preparer 

fails to comply with this subsection or subsection (b), (c), (d), (e), 

(f), or (g). ‘‘(C) An individual may exempt any funds recovered under this 

paragraph under section 522(b).’’; and 

(E) in paragraph (4), as so redesignated, by striking ‘‘or 

the United States trustee’’ and inserting ‘‘the United 

States trustee (or the bankruptcy administrator, if any) or 

the court, on the initiative of the court,’’; 

(8) in subsection (i)(1), by striking the matter preceding subparagraph (A) and inserting the following: ‘‘(i)(1) If a bankruptcy petition preparer violates this section or 

commits any act that the court finds to be fraudulent, unfair, or 

deceptive, on the motion of the debtor, trustee, United States trustee (or the bankruptcy administrator, if any), and after notice and 

a hearing, the court shall order the bankruptcy petition preparer 

to pay to the debtor—’’; 

(9) in subsection (j)— (A) in paragraph (2)— (i) in subparagraph (A)(i)(I), by striking ‘‘a violation 

of which subjects a person to criminal penalty’’; 

(ii) in subparagraph (B)— (I) by striking ‘‘or has not paid a penalty’’ and 

inserting ‘‘has not paid a penalty’’; and 

(II) by inserting ‘‘or failed to disgorge all fees ordered by the court’’ after ‘‘a penalty imposed 

under this section,’’; 

(B) by redesignating paragraph (3) as paragraph (4); and 

(C) by inserting after paragraph (2) the following: ‘‘(3) The court, as part of its contempt power, may enjoin a bankruptcy petition preparer that has failed to comply with a previous 

order issued under this section. The injunction under this paragraph may be issued on the motion of the court, the trustee, or the 

United States trustee (or the bankruptcy administrator, if any).’’; 

and 

(10) by adding at the end the following: 

‘‘(l)(1) A bankruptcy petition preparer who fails to comply with 

any provision of subsection (b), (c), (d), (e), (f), (g), or (h) may be 

fined not more than $500 for each such failure. 

‘‘(2) The court shall triple the amount of a fine assessed under 

paragraph (1) in any case in which the court finds that a bankruptcy petition preparer—

‘‘(A) advised the debtor to exclude assets or income that 

should have been included on applicable schedules; 

‘‘(B) advised the debtor to use a false Social Security account 

number; 

‘‘(C) failed to inform the debtor that the debtor was filing for 

relief under this title; or 

‘‘(D) prepared a document for filing in a manner that failed 

to disclose the identity of the bankruptcy petition preparer. 

‘‘(3) A debtor, trustee, creditor, or United States trustee (or the 

bankruptcy administrator, if any) may file a motion for an order 

imposing a fine on the bankruptcy petition preparer for any violation of this section. 

49

‘‘(4)(A) Fines imposed under this subsection in judicial districts 

served by United States trustees shall be paid to the United States 

trustee, who shall deposit an amount equal to such fines in a special account of the United States Trustee System Fund referred to 

in section 586(e)(2) of title 28. Amounts deposited under this subparagraph shall be available to fund the enforcement of this section 

on a national basis. ‘‘(B) Fines imposed under this subsection in judicial districts 

served by bankruptcy administrators shall be deposited as offsetting receipts to the fund established under section 1931 of title 28, 

and shall remain available until expended to reimburse any appropriation for the amount paid out of such appropriation for expenses 

of the operation and maintenance of the courts of the United 

States.’’. 

SEC. 222. SENSE OF CONGRESS. 

It is the sense of Congress that States should develop curricula 

relating to the subject of personal finance, designed for use in elementary and secondary schools. 

SEC. 223. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED STATES 

CODE. 

Section 507(a) of title 11, United States Code, as amended by section 212, is amended by inserting after paragraph (9) the following: 

‘‘(10) Tenth, allowed claims for death or personal injury 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. 224. PROTECTION OF RETIREMENT SAVINGS IN BANKRUPTCY. 

(a) IN GENERAL.—Section 522 of title 11, United States Code, is 

amended— (1) in subsection (b)— (A) in paragraph (2)— (i) in subparagraph (A), by striking ‘‘and’’ at the end; 

(ii) in subparagraph (B), by striking the period at 

the end and inserting ‘‘; and’’; 

(iii) by adding at the end the following: 

‘‘(C) 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.’’; and 

(iv) by striking ‘‘(2)(A) any property’’ and inserting: 

‘‘(3) Property listed in this paragraph is—

‘‘(A) any property’’;

(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) by striking ‘‘(b) Notwithstanding’’ and inserting 

‘‘(b)(1) Notwithstanding’’; 

(D) by striking ‘‘paragraph (2)’’ each place it appears and 

inserting ‘‘paragraph (3)’’; 

(E) by striking ‘‘paragraph (1)’’ each place it appears and 

inserting ‘‘paragraph (2)’’; 

(F) by striking ‘‘Such property is—’’; and 

(G) by adding at the end the following: 

50

‘‘(4) For purposes of paragraph (3)(C) and subsection (d)(12), the 

following shall apply: ‘‘(A) If the retirement funds are in a retirement fund that 

has received a favorable determination under section 7805 of 

the Internal Revenue Code of 1986, and that determination is 

in effect as of the date of the filing of the petition in a case 

under 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 under 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)(I) the retirement fund is in substantial compliance 

with the applicable requirements of the Internal Revenue 

Code of 1986; or ‘‘(II) the retirement fund fails to be in substantial compliance with the applicable requirements of the Internal 

Revenue Code of 1986 and the debtor is not materially responsible for that failure. ‘‘(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, 

under section 401(a)(31) of the Internal Revenue Code of 1986, 

or otherwise, shall not cease to qualify for exemption under 

paragraph (3)(C) or subsection (d)(12) by reason of such 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)(C) 

or subsection (d)(12) by reason of such 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 such 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, is amended—

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

(2) in paragraph (18), by striking the period and inserting a 

semicolon; and 

51

(3) by inserting after paragraph (18) the following: 

‘‘(19) under subsection (a), of withholding of income from a 

debtor’s wages and collection of amounts withheld, under 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(c) 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 under 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) a loan from a thrift savings plan permitted under 

subchapter III of chapter 84 of title 5, that satisfies the requirements of section 8433(g) of such title; 

but nothing in this paragraph may be construed to provide 

that any loan made under a governmental plan under section 

414(d), or a contract or account under section 403(b), of the Internal Revenue Code of 1986 constitutes a claim or a debt 

under this title;’’. (c) EXCEPTIONS TO DISCHARGE.—Section 523(a) of title 11, United 

States Code, as amended by section 215, is amended by inserting 

after paragraph (17) the following: ‘‘(18) owed to a pension, profit-sharing, stock bonus, or other 

plan established under section 401, 403, 408, 408A, 414, 457, 

or 501(c) of the Internal Revenue Code of 1986, under— ‘‘(A) a loan permitted under section 408(b)(1) of the Employee Retirement Income Security Act of 1974, or subject 

to section 72(p) of the Internal Revenue Code of 1986; or ‘‘(B) a loan from a thrift savings plan permitted under 

subchapter III of chapter 84 of title 5, that satisfies the requirements of section 8433(g) of such title; 

but nothing in this paragraph may be construed to provide 

that any loan made under a governmental plan under section 

414(d), or a contract or account under section 403(b), of the Internal Revenue Code of 1986 constitutes a claim or a debt 

under this title; or’’. 

(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)(19) and any amounts required to repay such loan 

shall not constitute ‘disposable income’ under section 1325.’’. 

(e) ASSET LIMITATION.—

(1) LIMITATION.—Section 522 of title 11, United States Code, 

is amended by adding at the end the following: 

‘‘(n) For assets in individual retirement accounts described in section 408 or 408A of the Internal Revenue Code of 1986, other than 

a simplified employee pension under section 408(k) of such Code or 

a simple retirement account under section 408(p) of such Code, the 

aggregate value of such assets exempted under this section, without regard to amounts attributable to rollover contributions under 

section 402(c), 402(e)(6), 403(a)(4), 403(a)(5), and 403(b)(8) of the 

Internal Revenue Code of 1986, and earnings thereon, shall not exVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00051 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
52

ceed $1,000,000 in a case filed by a debtor who is an individual, 

except that such amount may be increased if the interests of justice 

so require.’’. 

(2) ADJUSTMENT OF DOLLAR AMOUNTS.—Paragraphs (1) and 

(2) of section 104(b) of title 11, United States Code, are amended by inserting ‘‘522(n),’’ after ‘‘522(d),’’. 

SEC. 225. PROTECTION OF EDUCATION SAVINGS IN BANKRUPTCY. 

(a) EXCLUSIONS.—Section 541 of title 11, United States Code, is 

amended—

(1) in subsection (b)—

(A) in paragraph (4), by striking ‘‘or’’ at the end; 

(B) by redesignating paragraph (5) as paragraph (9); and 

(C) by inserting after paragraph (4) the following: 

‘‘(5) funds placed in an education individual retirement account (as defined in section 530(b)(1) of the Internal Revenue 

Code of 1986) not later than 365 days before the date of the 

filing of the petition in a case under this title, but—

‘‘(A) only if the designated beneficiary of such account 

was a child, stepchild, grandchild, or stepgrandchild of the 

debtor for the taxable year for which funds were placed in 

such account; 

‘‘(B) only to the extent that 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 

‘‘(C) in the case of funds placed in all such accounts having the same designated beneficiary not earlier than 720 

days nor later than 365 days before such date, only so 

much of such funds as does not exceed $5,000; 

‘‘(6) funds used to purchase a tuition credit or certificate or 

contributed to an account in accordance with section 

529(b)(1)(A) of the Internal Revenue Code of 1986 under a 

qualified State tuition program (as defined in section 529(b)(1) 

of such Code) not later than 365 days before the date of the 

filing of the petition in a case under this title, but—

‘‘(A) only if the designated beneficiary of the amounts 

paid or contributed to such tuition program was a child, 

stepchild, grandchild, or stepgrandchild of the debtor for 

the taxable year for which funds were paid or contributed; 

‘‘(B) with respect to the aggregate amount paid or contributed to such program having the same designated beneficiary, only so much of such amount as does not exceed 

the total contributions permitted under section 529(b)(7) of 

such Code with respect to such beneficiary, as adjusted beginning on the date of the filing of the petition in a case 

under this title by the annual increase or decrease (rounded to the nearest tenth of 1 percent) in the education expenditure category of the Consumer Price Index prepared 

by the Department of Labor; and 

‘‘(C) in the case of funds paid or contributed to such program having the same designated beneficiary not earlier 

than 720 days nor later than 365 days before such date, 

53

only so much of such funds as does not exceed $5,000;’’; 

and 

(2) by adding at the end the following: ‘‘(e) In determining whether any of the relationships specified in 

paragraph (5)(A) or (6)(A) of subsection (b) exists, a legally adopted 

child of an individual (and a child who is a member of an individual’s household, if placed with such individual by an authorized 

placement agency for legal adoption by such individual), or a foster 

child of an individual (if such child has as the child’s principal 

place of abode the home of the debtor and is a member of the debtor’s household) shall be treated as a child of such individual by 

blood.’’. (b) DEBTOR’S DUTIES.—Section 521 of title 11, United States 

Code, as amended by section 106, is amended by adding at the end 

the following: ‘‘(c) In addition to meeting the requirements under subsection (a), 

a debtor shall file with the court a record of any interest that a 

debtor has in an education individual retirement account (as defined in section 530(b)(1) of the Internal Revenue Code of 1986) or 

under a qualified State tuition program (as defined in section 

529(b)(1) of such Code).’’. 

SEC. 226. 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 the value of whose nonexempt 

property is 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 case 

or proceeding under this title;’’; and 

(3) by inserting after paragraph (12) the following: 

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

any bankruptcy assistance to an assisted person in return for 

the payment of money or other valuable consideration, or who 

is a bankruptcy petition preparer under section 110, but does 

not include— ‘‘(A) any person who is an officer, director, employee, or 

agent of a person who provides such assistance or of the 

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

of 1986; ‘‘(C) a creditor of such assisted person, to the extent that 

the creditor is assisting such assisted person to restructure 

any debt owed by such assisted person to the creditor; ‘‘(D) a depository institution (as defined in section 3 of 

the Federal Deposit Insurance Act) or any Federal credit 

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

section 101 of the Federal Credit Union Act), or any affilVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00053 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
54

iate or subsidiary of such depository institution or credit 

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

subject to copyright protection under title 17, when acting 

in such capacity.’’. (b) CONFORMING AMENDMENT.—Section 104(b) of title 11, United 

States Code, is amended by inserting ‘‘101(3),’’ after ‘‘sections’’ each 

place it appears. 

SEC. 227. RESTRICTIONS ON DEBT RELIEF AGENCIES. 

(a) ENFORCEMENT.—Subchapter II of chapter 5 of title 11, United 

States Code, is amended by adding at the end the following: 

‘‘§ 526. Restrictions on debt relief agencies 

‘‘(a) A debt relief agency shall not— ‘‘(1) fail to perform any service that such agency informed an 

assisted person or prospective assisted person it would provide 

in connection with a case or proceeding under this title; ‘‘(2) make any statement, or counsel or advise any assisted 

person or prospective assisted person to make a statement in 

a document filed in a case or proceeding under this title, that 

is untrue and misleading, or that upon the exercise of reasonable care, should have been known by such agency to be untrue or misleading; ‘‘(3) misrepresent to any assisted person or prospective assisted person, directly or indirectly, affirmatively or by material omission, with respect to— ‘‘(A) the services that such agency will provide to such 

person; or ‘‘(B) the benefits and risks that may result if such person 

becomes a debtor in a case under this title; or ‘‘(4) advise an assisted person or prospective assisted person 

to incur more debt in contemplation of such person filing a 

case under this title or 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 case under this 

title. ‘‘(b) Any waiver by any assisted person of any protection or right 

provided 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)(1) Any contract for bankruptcy assistance between a debt relief agency and an assisted person that does not comply with the 

material requirements of this section, section 527, or section 528 

shall be void and may not be enforced by any Federal or State 

court or by any other person, other than such assisted 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 that such debt relief agency 

has received, for actual damages, and for reasonable attorneys’ fees 

and costs if such agency is found, after notice and a hearing, to 

have—

‘‘(A) intentionally or negligently failed to comply with any 

provision of this section, section 527, or section 528 with respect to a case or proceeding under this title for such assisted 

person; 

55

‘‘(B) provided bankruptcy assistance to an assisted person in 

a case or proceeding under this title that is dismissed or converted to a case under another chapter of this title because of 

such agency’s intentional or negligent failure to file any required document including those specified in section 521; or 

‘‘(C) intentionally or negligently disregarded the material requirements of this title or the Federal Rules of Bankruptcy 

Procedure applicable to such 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 attorneys’ fees as determined by the court. 

‘‘(4) The district courts of the United States for districts 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. 

‘‘(d) No provision of this section, section 527, or section 528 

shall—

‘‘(1) annul, alter, affect, or exempt any person subject to such 

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; or 

‘‘(2) be deemed to limit or curtail the authority or ability—

‘‘(A) of a State or subdivision or instrumentality thereof, 

to determine and enforce qualifications for the practice of 

law under the laws of that State; or 

‘‘(B) of a Federal court to determine and enforce the 

qualifications for the practice of law before that court.’’. 

(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 525, the following:

‘‘526. Restrictions on debt relief agencies.’’.

SEC. 228. DISCLOSURES. 

(a) DISCLOSURES.—Subchapter II of chapter 5 of title 11, United 

States Code, as amended by section 227, is amended by adding at 

the end the following: 

‘‘§ 527. Disclosures 

‘‘(a) A debt relief agency providing bankruptcy assistance to an 

assisted person shall provide—

56

‘‘(1) the written notice required under section 342(b)(1); and 

‘‘(2) to the extent not covered in the written notice described 

in paragraph (1), and not later than 3 business days after the 

first date on which a debt relief agency first offers to provide 

any bankruptcy assistance services to an assisted person, a 

clear and conspicuous written notice advising assisted persons 

that—‘‘(A) all information that the assisted person is required 

to provide with a petition and thereafter during a case 

under this title is required to be complete, accurate, and 

truthful; ‘‘(B) all assets and all liabilities are required to be completely and accurately disclosed in the documents filed to 

commence the case, and the replacement value of each 

asset as defined in section 506 must be stated in those documents where requested after reasonable inquiry to establish such value; ‘‘(C) current monthly income, the amounts specified in 

section 707(b)(2), and, in a case under chapter 13 of this 

title, disposable income (determined in accordance with 

section 707(b)(2)), are required to be stated after reasonable inquiry; and ‘‘(D) information that an assisted person provides during 

their case may be audited pursuant to this title, and that 

failure to provide such information may result in dismissal 

of the case under this title or other sanction, including a 

criminal sanction. ‘‘(b) A debt relief agency providing bankruptcy assistance to an 

assisted person shall provide each assisted person at the same time 

as the notices required under subsection (a)(1) the following statement, to the extent applicable, or one substantially similar. The 

statement shall be clear and conspicuous and shall be in a single 

document separate from other documents or notices provided to the 

assisted person: 

‘‘ ‘IMPORTANT INFORMATION ABOUT BANKRUPTCY ASSISTANCE SERVICES FROM AN ATTORNEY OR BANKRUPTCY PETITION PREPARER. 

‘‘ ‘If you decide to seek bankruptcy relief, you can represent yourself, you can hire an attorney to represent you, or you can get help 

in some localities from a bankruptcy petition preparer who is not 

an attorney. THE LAW REQUIRES AN ATTORNEY OR BANKRUPTCY PETITION PREPARER TO GIVE YOU A WRITTEN 

CONTRACT SPECIFYING WHAT THE ATTORNEY OR BANKRUPTCY PETITION PREPARER WILL DO FOR YOU AND HOW 

MUCH IT WILL COST. Ask to see the contract before you hire 

anyone. 

‘‘ ‘The following information helps you understand what must be 

done in a routine bankruptcy case to help you evaluate how much 

service you need. Although bankruptcy can be complex, many cases 

are routine. 

‘‘ ‘Before filing a bankruptcy case, either you or your attorney 

should analyze your eligibility for different forms of debt relief 

available under the Bankruptcy Code and which form of relief is 

most likely to be beneficial for you. Be sure you understand the relief you can obtain and its limitations. To file a bankruptcy case, 

57

documents called a Petition, Schedules and Statement of Financial 

Affairs, as well as in some cases a Statement of Intention need to 

be prepared correctly and filed with the bankruptcy court. You will 

have to pay a filing fee to the bankruptcy court. Once your case 

starts, you will have to attend the required first meeting of creditors where you may be questioned by a court official called a ‘trustee’ and by creditors. 

‘‘ ‘If you choose to file a chapter 7 case, you may be asked by a 

creditor to reaffirm a debt. You may want help deciding whether 

to do so. A creditor is not permitted to coerce you into reaffirming 

your debts. 

‘‘ ‘If you choose to file a chapter 13 case in which you repay your 

creditors what you can afford over 3 to 5 years, you may also want 

help with preparing your chapter 13 plan and with the confirmation hearing on your plan which will be before a bankruptcy judge. 

‘‘ ‘If you select another type of relief under the Bankruptcy Code 

other than chapter 7 or chapter 13, you will want to find out what 

should be done from someone familiar with that type of relief.

‘‘ ‘Your bankruptcy case may also involve litigation. You are generally permitted to represent yourself in litigation in bankruptcy 

court, but only attorneys, not bankruptcy petition preparers, can 

give you legal advice.’. 

‘‘(c) Except to the extent the debt relief agency provides the required information itself after reasonably diligent inquiry of the assisted person or others so as to obtain such information reasonably 

accurately for inclusion on the petition, schedules or statement of 

financial affairs, a debt relief agency providing bankruptcy assistance to an assisted person, to the extent permitted by nonbankruptcy law, shall provide each assisted person at the time required 

for the notice required under subsection (a)(1) reasonably sufficient 

information (which shall be provided in a clear and conspicuous 

writing) to the assisted person on how to provide all the information the assisted person is required to provide under this title pursuant to section 521, including—

‘‘(1) how to value assets at replacement value, determine current monthly income, the amounts specified in section 707(b)(2) 

and, in a chapter 13 case, how to determine disposable income 

in accordance with section 707(b)(2) and related calculations; 

‘‘(2) how to complete the list of creditors, including how to 

determine what amount is owed and what address for the creditor should be shown; and 

‘‘(3) how to determine what property is exempt and how to 

value exempt property at replacement value as defined in section 506. 

‘‘(d) A debt relief agency shall maintain a copy of the notices required under subsection (a) of this section for 2 years after the date 

on which the notice is given the assisted person.’’. 

(b) CONFORMING AMENDMENT.—The table of sections for chapter 

5 of title 11, United States Code, as amended by section 227, is 

amended by inserting after the item relating to section 526 the following:

‘‘527. Disclosures.’’.

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SEC. 229. REQUIREMENTS FOR DEBT RELIEF AGENCIES. 

(a) ENFORCEMENT.—Subchapter II of chapter 5 of title 11, United 

States Code, as amended by sections 227 and 228, is amended by 

adding at the end the following: 

‘‘§ 528. Requirements for debt relief agencies 

‘‘(a) A debt relief agency shall— ‘‘(1) not later than 5 business days after the first date on 

which such agency provides any bankruptcy assistance services 

to an assisted person, but prior to such assisted person’s petition under this title being filed, execute a written contract with 

such assisted person that explains clearly and conspicuously—

‘‘(A) the services such agency will provide to such assisted person; and 

‘‘(B) the fees or charges for such services, and the terms 

of payment; 

‘‘(2) provide the assisted person with a copy of the fully executed and completed contract; 

‘‘(3) clearly and conspicuously disclose in any advertisement 

of bankruptcy assistance services or of the benefits of bankruptcy directed to the general public (whether in general 

media, seminars or specific mailings, telephonic or electronic 

messages, or otherwise) that the services or benefits are with 

respect to bankruptcy relief under this title; and ‘‘(4) clearly and conspicuously use the following statement in 

such advertisement: ‘We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.’ or a 

substantially similar statement. 

‘‘(b)(1) An advertisement of bankruptcy assistance services or of 

the benefits of bankruptcy directed to the general public includes—

‘‘(A) descriptions of bankruptcy assistance in connection with 

a chapter 13 plan whether or not chapter 13 is specifically 

mentioned in such advertisement; and 

‘‘(B) statements such as ‘federally supervised repayment 

plan’ or ‘Federal debt restructuring help’ or other similar statements that could lead a reasonable consumer to believe that 

debt counseling was being offered when in fact the services 

were directed to providing bankruptcy assistance with a chapter 13 plan or other form of bankruptcy relief under this title. 

‘‘(2) An advertisement, directed to the general public, indicating 

that the debt relief agency provides assistance with respect to credit defaults, mortgage foreclosures, eviction proceedings, excessive 

debt, debt collection pressure, or inability to pay any consumer 

debt shall—

‘‘(A) disclose clearly and conspicuously in such advertisement 

that the assistance may involve bankruptcy relief under this 

title; and 

‘‘(B) include the following statement: ‘We are a debt relief 

agency. We help people file for bankruptcy relief under the 

Bankruptcy Code.’ or a substantially similar statement.’’. 

(b) CONFORMING AMENDMENT.—The table of sections for chapter 

5 of title 11, United States Code, as amended by section 227 and 

228, is amended by inserting after the item relating to section 527, 

the following:

‘‘528. Requirements for debt relief agencies.’’.

59

SEC. 230. GAO STUDY. 

(a) STUDY.—Not later than 270 days after the date of 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, United States Code, or the bankruptcy courts, to provide to the Office of Child Support Enforcement promptly after the commencement of cases by debtors who 

are individuals under such title, the names and social security account 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 enactment 

of this Act, the Comptroller General shall submit to the President 

pro tempore of the Senate and the Speaker of the House of Representatives a report containing the results of the study required 

by subsection (a).

SEC. 231. PROTECTION OF PERSONALLY IDENTIFIABLE INFORMATION. 

(a) LIMITATION.—Section 363(b)(1) of title 11, United States Code, 

is amended by striking the period at the end and inserting the following: 

‘‘, except that if the debtor in connection with offering a product or 

a service discloses to an individual a policy prohibiting the transfer 

of personally identifiable information about individuals to persons 

that are not affiliated with the debtor and if such policy is in effect 

on the date of the commencement of the case, then the trustee may 

not sell or lease personally identifiable information to any person 

unless—

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

‘‘(B) after appointment of a consumer privacy ombudsman in 

accordance with section 332, and after notice and a hearing, 

the court approves such sale or such lease—

‘‘(i) giving due consideration to the facts, circumstances, 

and conditions of such sale or such lease; and 

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

such lease would violate applicable nonbankruptcy law.’’.

(b) DEFINITION.—Section 101 of title 11, United States Code, is 

amended by inserting after paragraph (41) the following: 

‘‘(41A) ‘personally identifiable information’ means—

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

primarily for personal, family, or household purposes—

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

individual, whether given at birth or time of adoption, 

or resulting from a lawful change of name; 

‘‘(ii) the geographical address of a physical place of 

residence of such individual; 

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

‘‘(iv) a telephone number dedicated to contacting 

such individual at such physical place of residence; 

‘‘(v) a social security account number issued to such 

individual; or 

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

such individual; or 

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

items of information specified in subparagraph (A)—

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

or adoption, or a place of birth; or 

‘‘(ii) any other information concerning an identified 

individual that, if disclosed, will result in contacting or 

identifying such individual physically or electronically;’’.

SEC. 232. CONSUMER PRIVACY OMBUDSMAN. 

(a) CONSUMER PRIVACY OMBUDSMAN.—Title 11 of the United 

States Code is amended by inserting after section 331 the following: 

‘‘§ 332. Consumer privacy ombudsman 

‘‘(a) If a hearing is required under section 363(b)(1)(B), the court 

shall order the United States trustee to appoint, not later than 5 

days before the commencement of the hearing, 1 disinterested person (other than the United States trustee) to serve as the consumer 

privacy ombudsman in the case and shall require that notice of 

such hearing be timely given to such ombudsman. 

‘‘(b) The consumer privacy ombudsman may appear and be heard 

at such hearing and shall provide to the court information to assist 

the court in its consideration of the facts, circumstances, and conditions of the proposed sale or lease of personally identifiable information under section 363(b)(1)(B). Such information may include 

presentation of—

‘‘(1) the debtor’s privacy policy; 

‘‘(2) the potential losses or gains of privacy to consumers if 

such sale or such lease is approved by the court; 

‘‘(3) the potential costs or benefits to consumers if such sale 

or such lease is approved by the court; and 

‘‘(4) the potential alternatives that would mitigate potential 

privacy losses or potential costs to consumers. 

‘‘(c) A consumer privacy ombudsman shall not disclose any personally identifiable information obtained by the ombudsman under 

this title.’’. 

(b) COMPENSATION OF CONSUMER PRIVACY OMBUDSMAN.—Section 

330(a)(1) of title 11, United States Code, is amended in the matter 

preceding subparagraph (A), by inserting ‘‘a consumer privacy ombudsman appointed under section 332,’’ before ‘‘an examiner’’. 

(c) CONFORMING AMENDMENT.—The table of sections for subchapter II of chapter 3 of title 11, United States Code, is amended 

by adding at the end the following:

‘‘332. Consumer privacy ombudsman.’’.

SEC. 233. PROHIBITION ON DISCLOSURE OF NAME OF MINOR CHILDREN. 

(a) PROHIBITION.—Title 11 of the United States Code, as amended by section 106, is amended by inserting after section 111 the following: 

61

‘‘§ 112. Prohibition on disclosure of name of minor children 

‘‘The debtor may be required to provide information regarding a 

minor child involved in matters under this title but may not be required to disclose in the public records in the case the name of such 

minor child. The debtor may be required to disclose the name of 

such minor child in a nonpublic record that is maintained by the 

court and made available by the court for examination by the 

United States trustee, the trustee, and the auditor (if any) serving 

under section 586(f) of title 28, in the case. The court, the United 

States trustee, the trustee, and such auditor shall not disclose the 

name of such minor child maintained in such nonpublic record.’’. (b) CLERICAL AMENDMENT.—The table of sections for chapter 1 of 

title 11, United States Code, as amended by section 106, is amended by inserting after the item relating to section 111 the following:

‘‘112. Prohibition on disclosure of name of minor children.’’.

(c) CONFORMING AMENDMENT.—Section 107(a) of title 11, United 

States Code, is amended by inserting ‘‘and subject to section 112’’ after ‘‘section’’. 

TITLE III —DISCOURAGING 

BANKRUPTCY ABUSE 

SEC. 301. TECHNICAL AMENDMENTS. 

Section 523(a)(17) of title 11, United States Code, is amended— (1) by striking ‘‘by a court’’ and inserting ‘‘on a prisoner 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. 302. 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 property, if the court finds that the filing of the 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, such real property without the consent of the secured 

creditor or court approval; or ‘‘(B) multiple bankruptcy filings affecting such real property. 

If recorded in compliance with applicable State laws governing notices of interests or liens in real property, an order entered under 

paragraph (4) shall be binding in any other case under this title 

purporting to affect such real property filed not later than 2 years 

after the date of the entry of such order by the court, except that 

a debtor in a subsequent case under this title may move for relief 

62

from such order based upon changed circumstances or for good 

cause shown, after notice and a hearing. Any Federal, State, or 

local governmental unit that 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, as amended by section 224, is amended by inserting after 

paragraph (19), the following: 

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

against or security interest in real property following entry of 

the order under subsection (d)(4) as to such real property in 

any prior case under this title, for a period of 2 years after the 

date of the entry of such an order, except that the debtor, in 

a subsequent case under this title, may move for relief from 

such order based upon changed circumstances or for other good 

cause shown, after notice and a hearing; 

‘‘(21) 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) to be 

a debtor in a case under this title; or 

‘‘(B) if the case under this title was filed in violation of 

a bankruptcy court order in a prior case under this title 

prohibiting the debtor from being a debtor in another case 

under this title;’’. 

SEC. 303. GIVING SECURED CREDITORS FAIR TREATMENT IN CHAPTER 13.

(b) RESTORING THE FOUNDATION FOR SECURED CREDIT.—Section 

1325(a) of title 11, United States Code, is amended by adding at 

the end the following: 

‘‘For purposes of paragraph (5), section 506 shall not apply to a 

claim described in that paragraph if the creditor has a purchase 

money security interest securing the debt that is the subject of the 

claim, the debt was incurred within the 365-day preceding the date 

of the filing of the petition, and the collateral for that debt consists 

of a motor vehicle (as defined in section 30102 of title 49) acquired 

for the personal use of the debtor, or if collateral for that debt consists of any other thing of value, if the debt was incurred during 

the 180-day period preceding that filing.’’. 

SEC. 304. DOMICILIARY REQUIREMENTS FOR EXEMPTIONS. 

Section 522(b)(3) of title 11, United States Code, as so designated 

by section 106, is amended—

(1) in subparagraph (A)—

(A) by striking ‘‘180 days’’ and inserting ‘‘730 days’’; and 

(B) 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’’; and 

(2) by adding at the end the following: 

‘‘If the effect of the domiciliary requirement under subparagraph 

(A) is to render the debtor ineligible for any exemption, the debtor 

63

may elect to exempt property that is specified under subsection 

(d).’’.

SEC. 305. REDUCTION OF HOMESTEAD EXEMPTION FOR FRAUD. 

Section 522 of title 11, United States Code, as amended by section 224, is amended—

(1) in subsection (b)(3)(A), as so designated by this Act, by 

inserting ‘‘subject to subsections (o) and (p),’’ 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; 

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

or 

‘‘(4) real or personal property that the debtor or a dependent 

of the debtor claims as a homestead; 

shall be reduced to the extent that such value is attributable to any 

portion of any property that the debtor disposed of in the 10-year 

period ending on 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. 306. LIMITATIONS ON HOMESTEAD EXEMPTION. 

(a) EXEMPTIONS.—Section 522 of title 11, United States Code, as 

amended by sections 224 and 308, is amended by adding at the end 

the following: 

‘‘(p)(1) Except as provided in paragraph (2) of this subsection and 

sections 544 and 548, as a result of electing under subsection 

(b)(3)(A) to exempt property under State or local law, a debtor may 

not exempt any amount of interest that was acquired by the debtor 

during the 1215-day period preceding the date of the filing of the 

petition that exceeds in the aggregate $125,000 in value 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; 

‘‘(C) a burial plot for the debtor or a dependent of the debtor; 

or 

‘‘(D) real or personal property that the debtor or dependent 

of the debtor claims as a homestead. 

‘‘(2)(A) 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 such farmer. 

‘‘(B) For purposes of paragraph (1), any amount of such interest 

does not include any interest transferred from a debtor’s previous 

principal residence (which was acquired prior to the beginning of 

such 1215-day period) into the debtor’s current principal residence, 

if the debtor’s previous and current residences are located in the 

same State. 

64

‘‘(q)(1) As a result of electing under subsection (b)(3)(A) to exempt 

property under State or local law, a debtor may not exempt any 

amount of an interest in property described in subparagraphs (A), 

(B), (C), and (D) of subsection (p)(1) which exceeds in the aggregate 

$125,000 if— ‘‘(A) the court determines, after notice and a hearing, that 

the debtor has been convicted of a felony (as defined in section 

3156 of title 18), which under the circumstances, demonstrates 

that the filing of the case was an abuse of the provisions of this 

title; or ‘‘(B) the debtor owes a debt arising from— ‘‘(i) any violation of the Federal securities laws (as defined in section 3(a)(47) of the Securities Exchange Act of 

1934), any State securities laws, or any regulation or order 

issued under Federal securities laws or State securities 

laws; ‘‘(ii) fraud, deceit, or manipulation in a fiduciary capacity 

or in connection with the purchase or sale of any security 

registered under section 12 or 15(d) of the Securities Exchange Act of 1934 or under section 6 of the Securities Act 

of 1933; 

‘‘(iii) any civil remedy under section 1964 of title 18; or 

‘‘(iv) any criminal act, intentional tort, or willful or reckless misconduct that caused serious physical injury or 

death to another individual in the preceding 5 years. 

‘‘(2) Paragraph (1) shall not apply to the extent the amount of an 

interest in property described in subparagraphs (A), (B), (C), and 

(D) of subsection (p)(1) is reasonably necessary for the support of 

the debtor and any dependent of the debtor.’’. 

(b) ADJUSTMENT OF DOLLAR AMOUNTS.—Paragraphs (1) and (2) of 

section 104(b) of title 11, United States Code, as amended by section 224, are amended by inserting ‘‘522(p), 522(q),’’ after ‘‘522(n),’’.

SEC. 307. EXCLUDING EMPLOYEE BENEFIT PLAN PARTICIPANT CONTRIBUTIONS AND OTHER PROPERTY FROM THE ESTATE. 

Section 541(b) of title 11, United States Code, as amended by section 225, is amended by adding after paragraph (6), as added by 

section 225(a)(1)(C), the following: 

‘‘(7) any amount—

‘‘(A) withheld by an employer from the wages of employees for payment as contributions—

‘‘(i) to—

‘‘(I) an employee benefit plan that is subject to 

title I of the Employee Retirement Income Security Act of 1974 or under an employee benefit plan 

which is a governmental plan under section 414(d) 

of the Internal Revenue Code of 1986; 

‘‘(II) a deferred compensation plan under section 

457 of the Internal Revenue Code of 1986; or 

‘‘(III) a tax-deferred annuity under section 

403(b) of the Internal Revenue Code of 1986; 

except that such amount under this subparagraph 

shall not constitute disposable income as defined in 

section 1325(b)(2); or 

‘‘(ii) to a health insurance plan regulated by State 

law whether or not subject to such title; or 

65

‘‘(B) received by an employer from employees for payment as contributions—

‘‘(i) to—

‘‘(I) an employee benefit plan that is subject to 

title I of the Employee Retirement Income Security Act of 1974 or under an employee benefit plan 

which is a governmental plan under section 414(d) 

of the Internal Revenue Code of 1986; 

‘‘(II) a deferred compensation plan under section 

457 of the Internal Revenue Code of 1986; or 

‘‘(III) a tax-deferred annuity under section 

403(b) of the Internal Revenue Code of 1986; 

except that such amount under this subparagraph 

shall not constitute disposable income, as defined in 

section 1325(b)(2); or 

‘‘(ii) to a health insurance plan regulated by State 

law whether or not subject to such title;’’. 

SEC. 308. UNITED STATES TRUSTEE PROGRAM FILING FEE INCREASE. 

(a) ACTIONS UNDER CHAPTER 7 OR 13 OF TITLE 11, UNITED

STATES CODE.—Section 1930(a) of title 28, United States Code, is 

amended by striking paragraph (1) and inserting the following: 

‘‘(1) For a case commenced—

‘‘(A) under chapter 7 of title 11, $160; or 

‘‘(B) under chapter 13 of title 11, $150.’’. 

(b) UNITED STATES TRUSTEE SYSTEM FUND.—Section 589a(b) of 

title 28, United States Code, is amended—

(1) by striking paragraph (1) and inserting the following: 

‘‘(1)(A) 40.63 percent of the fees collected under section 

1930(a)(1)(A) of this title in cases commenced under chapter 7 

of title 11; and 

‘‘(B) 70.00 percent of the fees collected under section 

1930(a)(1)(B) of this title in cases commenced under chapter 13 

of title 11;’’; 

(2) in paragraph (2), by striking ‘‘one-half’’ and inserting 

‘‘three-fourths’’; and 

(3) in paragraph (4), by striking ‘‘one-half’’ and inserting 

‘‘100 percent’’. 

(c) COLLECTION AND DEPOSIT OF MISCELLANEOUS BANKRUPTCY

FEES.—Section 406(b) of the Judiciary Appropriations Act, 1990 (28 

U.S.C. 1931 note) is amended by striking ‘‘pursuant to 28 U.S.C. 

section 1930(b)’’ and all that follows through ‘‘28 U.S.C. section 

1931’’ and inserting ‘‘under section 1930(b) of title 28, United 

States Code, and 31.25 percent of the fees collected under section 

1930(a)(1)(A) of that title, 30.00 percent of the fees collected under 

section 1930(a)(1)(B) of that title, and 25 percent of the fees collected under section 1930(a)(3) of that title shall be deposited as 

offsetting receipts to the fund established under section 1931 of 

that title’’. 

SEC. 309. 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 

66

regulating attorney referral services and with rules of professional 

responsibility applicable to attorney acceptance of referrals.’’. 

SEC. 310. 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 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, if it is impossible for the trustee to cure such default by performing nonmonetary acts at and after the 

time of assumption, except that if such default arises from 

a failure to operate in accordance with a nonresidential 

real property lease, then such default shall be cured by 

performance at and after the time of assumption in accordance with such lease, and pecuniary losses resulting from 

such default shall be compensated in accordance with the 

provisions of this paragraph;’’; and 

(B) in paragraph (2)(D), by striking ‘‘penalty rate or provision’’ and inserting ‘‘penalty rate or penalty provision’’; 

(2) in subsection (c)—

(A) in paragraph (2), by inserting ‘‘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)(2) 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, other than a default arising from failure to operate a nonresidential real 

property lease subject to section 365(b)(1)(A), compensates 

the holder of such claim or such interest (other than the 

debtor or an insider) for any actual pecuniary loss incurred 

by such holder as a result of such failure; and’’.

SEC. 311. CLARIFICATION OF POSTPETITION WAGES AND BENEFITS. 

Section 503(b)(1)(A) of title 11, United States Code, is amended 

to read as follows: 

67

‘‘(A) the actual, necessary costs and expenses of preserving the 

estate including—

‘‘(i) wages, salaries, and commissions for services rendered after the commencement of the case; and 

‘‘(ii) wages and benefits awarded pursuant to a judicial 

proceeding or a proceeding of the National Labor Relations 

Board as back pay attributable to any period of time occurring after commencement of the case under this title, as a 

result of a violation of Federal or State law by the debtor, 

without regard to the time of the occurrence of unlawful 

conduct on which such award is based or to whether any 

services were rendered, if the court determines that payment of wages and benefits by reason of the operation of 

this clause will not substantially increase the probability 

of layoff or termination of current employees, or of nonpayment of domestic support obligations, during the case 

under this title;’’.

SEC. 312. DELAY OF DISCHARGE DURING PENDENCY OF CERTAIN 

PROCEEDINGS. 

(a) CHAPTER 7.—Section 727(a) of title 11, United States Code, 

as amended by section 106, is amended—

(1) in paragraph (10), by striking ‘‘or’’ at the end; 

(2) in paragraph (11) by striking the period at the end and 

inserting ‘‘; or’’; and 

(3) by inserting after paragraph (11) the following: 

‘‘(12) the court after notice and a hearing held not more than 

10 days before the date of the entry of the order granting the 

discharge finds that there is reasonable cause to believe that—

‘‘(A) section 522(q)(1) may be applicable to the debtor; 

and 

‘‘(B) there is pending any proceeding in which the debtor 

may be found guilty of a felony of the kind described in 

section 522(q)(1)(A) or liable for a debt of the kind described in section 522(q)(1)(B).’’. 

(b) CHAPTER 11.—Section 1141(d) of title 11, United States Code, 

as amended by section 321, is amended by adding at the end the 

following: 

‘‘(C) unless after notice and a hearing held not more than 10 

days before the date of the entry of the order granting the discharge, the court finds that there is no reasonable cause to believe that—

‘‘(i) section 522(q)(1) may be applicable to the debtor; 

and 

‘‘(ii) there is pending any proceeding in which the debtor 

may be found guilty of a felony of the kind described in 

section 522(q)(1)(A) or liable for a debt of the kind described in section 522(q)(1)(B).’’. 

(c) CHAPTER 12.—Section 1228 of title 11, United States Code, is 

amended—

(1) in subsection (a) by striking ‘‘As’’ and inserting ‘‘Subject 

to subsection (d), as’’, 

(2) in subsection (b) by striking ‘‘At’’ and inserting ‘‘Subject 

to subsection (d), at’’, and 

(3) by adding at the end the following: 

68

‘‘(f) The court may not grant a discharge under this chapter unless the court after notice and a hearing held not more than 10 

days before the date of the entry of the order granting the discharge finds that there is no reasonable cause to believe that— ‘‘(1) section 522(q)(1) may be applicable to the debtor; and 

‘‘(2) there is pending any proceeding in which the debtor may 

be found guilty of a felony of the kind described in section 

522(q)(1)(A) or liable for a debt of the kind described in section 

522(q)(1)(B).’’. (d) CHAPTER 13.—Section 1328 of title 11, United States Code, as 

amended by section 106, is amended— (1) in subsection (a) by striking ‘‘As’’ and inserting ‘‘Subject 

to subsection (d), as’’, (2) in subsection (b) by striking ‘‘At’’ and inserting ‘‘Subject 

to subsection (d), at’’, and 

(3) by adding at the end the following: ‘‘(h) The court may not grant a discharge under this chapter unless the court after notice and a hearing held not more than 10 

days before the date of the entry of the order granting the discharge finds that there is no reasonable cause to believe that— ‘‘(1) section 522(q)(1) may be applicable to the debtor; and 

‘‘(2) there is pending any proceeding in which the debtor may 

be found guilty of a felony of the kind described in section 

522(q)(1)(A) or liable for a debt of the kind described in section 

522(q)(1)(B).’’.

SEC. 313. NONDISCHARGEABILITY OF DEBTS INCURRED THROUGH 

VIOLATIONS OF CIVIL RIGHTS LAWS. 

(a) DEBTS INCURRED THROUGH VIOLATIONS OF CIVIL RIGHTS

LAWS.—Section 523(a) of title 11, United States Code, as amended 

by section 224, is amended—

(1) in paragraph (18) by striking ‘‘or’’ at the end; 

(2) in paragraph (19) by striking the period at the end and 

inserting ‘‘; or’’; and 

(3) by adding at the end the following: 

‘‘(20) that results from any judgment, order, consent order, 

or decree entered in any Federal or State court, or contained 

in any settlement agreement entered into by the debtor (including any court-ordered damages, fine, penalty, or attorney 

fee or cost owed by the debtor), that arises from—

‘‘(A) the violation by the debtor of any offense described 

in section 244 (relating to discrimination against a person 

wearing the uniform of the Armed Forces), section 245 (relating to federally protected rights), section 247 (relating to 

damage to religious property; obstruction of persons in the 

free exercise of religious beliefs), or section 248 (relating to 

the freedom of access to clinic entrances), of title 18, 

United States Code; 

‘‘(B) an offense under State law that consists of conduct 

that would be a civil rights crime described in subparagraph (A) of this paragraph; or 

‘‘(C) a valid court order enforcing a civil rights law described in subparagraphs (A) or (B) of this paragraph.’’. 

(b) RESTITUTION.—Section 523(a)(13) of title 11, United States 

Code, is amended by inserting ‘‘or under the criminal law of a 

State’’ after ‘‘title 18’’.

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TITLE IV—GENERAL AND SMALL 

BUSINESS BANKRUPTCY PROVISIONS 

Subtitle A—General Business Bankruptcy 

Provisions 

SEC. 401. 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 under section 15A of the Securities Exchange Act of 1934 or a national securities exchange registered 

with the Securities and Exchange Commission under section 6 

of the Securities Exchange Act of 1934;’’. 

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

Code, as amended by sections 224, 303, and 311, is amended by inserting after paragraph (24) the following: 

‘‘(25) under subsection (a), of—

‘‘(A) the commencement or continuation of an investigation or action by a securities self regulatory organization 

to enforce such organization’s regulatory power; 

‘‘(B) the enforcement of an order or decision, other than 

for monetary sanctions, obtained in an action by such securities self regulatory organization to enforce such organization’s regulatory power; or 

‘‘(C) any act taken by such securities self regulatory organization to delist, delete, or refuse to permit quotation 

of any stock that does not meet applicable regulatory requirements;’’. 

SEC. 402. 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. 403. EXECUTORY CONTRACTS AND UNEXPIRED LEASES. 

(a) IN GENERAL.—Section 365(d)(4) of title 11, United States 

Code, is amended to read as follows: 

‘‘(4)(A) Subject to subparagraph (B), an unexpired lease of nonresidential real property under which the debtor is the lessee shall 

be deemed rejected, and the trustee shall immediately surrender 

that nonresidential real 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. 

70

‘‘(B)(i) The court may extend the period determined under subparagraph (A), prior to the expiration of the 120-day period, for 90 

days on the motion of the trustee or 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 in each instance.

‘‘(iii) The court may extend the time periods specified in this 

paragraph if the debtor establishes by clear and convincing evidence that an extension is justified by circumstances beyond the 

debtor’s control that were not foreseeable on the date of the order 

for relief.’’. 

(b) EXCEPTION.—Section 365(f)(1) of title 11, United States Code, 

is amended by striking ‘‘subsection’’ the first place it appears and 

inserting ‘‘subsections (b) and’’. 

SEC. 404. CREDITORS AND EQUITY SECURITY HOLDERS COMMITTEES. 

(a) APPOINTMENT.—Section 1102(a) of title 11, United States 

Code, is amended by adding at the end the following: 

‘‘(4) On request of a party in interest and after notice and a hearing, the court may order the United States trustee to change the 

membership of a committee appointed under this subsection, if the 

court determines that the change is necessary to ensure adequate 

representation of creditors or equity security holders. The court 

may order the United States trustee to increase the number of 

members of a committee to include a creditor that is a small business concern (as described in section 3(a)(1) of the Small Business 

Act), if the court determines that the creditor holds claims (of the 

kind represented by the committee) the aggregate amount of which, 

in comparison to the annual gross revenue of that creditor, is disproportionately large.’’. 

(b) INFORMATION.—Section 1102(b) of title 11, United States 

Code, is amended by adding at the end the following: 

‘‘(3) A committee appointed under subsection (a) shall—

‘‘(A) provide access to information for creditors who—

‘‘(i) hold claims of the kind represented by that committee; and 

‘‘(ii) are not appointed to the committee; 

‘‘(B) solicit and receive comments from the creditors described in subparagraph (A); and 

‘‘(C) be subject to a court order that compels any additional 

report or disclosure to be made to the creditors described in 

subparagraph (A).’’. 

SEC. 405. AMENDMENTS 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) by striking ‘‘(A) In’’ and inserting ‘‘In’’; and 

(B) by inserting ‘‘to an examiner, trustee under chapter 

11, or professional person’’ after ‘‘awarded’’; and 

(2) by adding at the end the following: 

‘‘(7) In determining the amount of reasonable compensation to be 

awarded to a trustee, the court shall treat such compensation as 

a commission, based on section 326.’’. 

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SEC. 406. 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. 407. VENUE OF CERTAIN PROCEEDINGS. 

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

SEC. 408. 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 

(2), on’’; and 

(2) by adding at the end the following: 

‘‘(2)(A) Unless the debtor establishes by clear and convincing evidence that there are circumstances beyond the debtor’s control that 

were not foreseeable on the date of the order of relief, the 120-day 

period specified in paragraph (1) may not be extended beyond a 

date that is 18 months after the date of the order for relief under 

this chapter. 

‘‘(B) Unless the debtor establishes by clear and convincing evidence that there are circumstances beyond the debtor’s control that 

were not foreseeable on the date of the order of relief, the 180-day 

period specified in paragraph (1) may not be extended beyond a 

date that is 20 months after the date of the order for relief under 

this chapter.’’. 

SEC. 409. 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. 410. FACTORS FOR COMPENSATION OF PROFESSIONAL PERSONS. 

Section 330(a)(3) of title 11, United States Code, is amended—

(1) in subparagraph (D), by striking ‘‘and’’ at the end; 

(2) by redesignating subparagraph (E) as subparagraph (F); 

and 

(3) by inserting after subparagraph (D) the following: 

‘‘(E) with respect to a professional person, whether the person is board certified or otherwise has demonstrated skill and 

experience in the bankruptcy field; and’’. 

SEC. 411. 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: 

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‘‘(2)(A) If an eligible, disinterested trustee is elected at a meeting 

of creditors under paragraph (1), the United States trustee shall 

file a report certifying that election. 

‘‘(B) Upon the filing of a report under subparagraph (A)—

‘‘(i) the trustee elected under paragraph (1) shall be considered to have been selected and appointed for purposes of this 

section; and 

‘‘(ii) the service of any trustee appointed under subsection (d) 

shall terminate. 

‘‘(C) The court shall resolve any dispute arising out of an election 

described in subparagraph (A).’’. 

SEC. 412. UTILITY SERVICE. 

Section 366 of title 11, United States Code, is amended—

(1) in subsection (a), by striking ‘‘subsection (b)’’ and inserting ‘‘subsections (b) and (c)’’; and 

(2) by adding at the end the following: 

‘‘(c)(1)(A) For purposes of this subsection, the term ‘assurance of 

payment’ means—

‘‘(i) a cash deposit; 

‘‘(ii) a letter of credit; 

‘‘(iii) a certificate of deposit; 

‘‘(iv) a surety bond; 

‘‘(v) a prepayment of utility consumption; or 

‘‘(vi) another form of security that is mutually agreed on between the utility and the debtor or the trustee. 

‘‘(B) For purposes of this subsection an administrative expense 

priority shall not constitute an assurance of payment. 

‘‘(2) Subject to paragraphs (3) and (4), with respect to a case filed 

under chapter 11, a utility referred to in subsection (a) may alter, 

refuse, or discontinue utility service, if during the 30-day period beginning on the date of the filing of the petition, the utility does not 

receive from the debtor or the trustee adequate assurance of payment for utility service that is satisfactory to the utility. 

‘‘(3)(A) On request of a party in interest and after notice and a 

hearing, the court may order modification of the amount of an assurance of payment under paragraph (2). 

‘‘(B) In making a determination under this paragraph whether an 

assurance of payment is adequate, the court may not consider—

‘‘(i) the absence of security before the date of the filing of the 

petition; 

‘‘(ii) the payment by the debtor of charges for utility service 

in a timely manner before the date of the filing of the petition; 

or 

‘‘(iii) the availability of an administrative expense priority. 

‘‘(4) Notwithstanding any other provision of law, with respect to 

a case subject to this subsection, a utility may recover or set off 

against a security deposit provided to the utility by the debtor before the date of the filing of the petition without notice or order of 

the court.

‘‘(5) The court may extend the time period specified in paragraph 

(2) if the debtor establishes by clear and convincing evidence that 

an extension is justified by circumstances beyond the debtor’s control that were not foreseeable on the date the assurance of payment 

was due.’’. 

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SEC. 413. 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) Under the procedures prescribed by the Judicial Conference of the United States, the district court or the bankruptcy 

court may waive the filing fee in a case under chapter 7 of title 11 

for an individual if the court determines that such individual has 

income less than 150 percent of the income official poverty line (as 

defined by the Office of Management and Budget, and revised annually in accordance with section 673(2) of the Omnibus Budget 

Reconciliation Act of 1981) applicable to a family of the size involved and is unable to pay that fee in installments. For purposes 

of this paragraph, the term ‘filing fee’ means the filing required by 

subsection (a), or any other fee prescribed by the Judicial Conference under subsections (b) and (c) that is payable to the clerk 

upon the commencement of a case under chapter 7. 

‘‘(2) The district court or the bankruptcy court may waive for 

such debtors other fees prescribed under subsections (b) and (c). 

‘‘(3) This subsection does not restrict the district court or the 

bankruptcy court from waiving, in accordance with Judicial Conference policy, fees prescribed under this section for other debtors 

and creditors.’’.

SEC. 414. EFFECT OF SALE OF ASSETS ON EMPLOYEE BENEFITS. 

Section 363(b) of title 11, United States Code, is amended by 

adding at the end the following: 

‘‘(3) The court shall not approve the sale of all or substantially 

all the assets of a debtor with 50 or more employees until the debtor has reported to the court on the potential adverse impact that 

such sale is likely to have on employee benefits, including any pension and health care plans sponsored by the debtor.’’.

SEC. 415. ADMINISTRATIVE EXPENSES. 

Section 503 of title 11, United States Code, is amended by adding 

at the end the following: 

‘‘(c)(1) Notwithstanding subsection (b), there shall neither be allowed, nor paid—

‘‘(A) a transfer made to, or an obligation incurred for the 

benefit of, an insider of the debtor for the purpose of inducing 

such person to remain with the debtor’s business, absent a 

finding by the court based on evidence in the record that—

‘‘(i) the transfer or obligation is essential to retention of 

the person because the individual has a bona fide job offer 

from another business at the same or greater rate of compensation; 

‘‘(ii) the services provided by the person are essential to 

the survival of the business; and 

‘‘(iii) either—

‘‘(I) the amount of the transfer made to, or obligation 

incurred for the benefit of, the person is not greater 

than an amount equal to 10 times the amount of the 

mean transfer or obligation of a similar kind given to 

nonmanagement employees for any purpose during the 

74

calendar year in which the transfer is made or the obligation is incurred; or 

‘‘(II) if no such similar transfers were made to, or 

obligations were incurred for the benefit of, such nonmanagement employees during such calendar year, 

the amount of the transfer or obligation is not greater 

than an amount equal to 25 percent of the amount of 

any similar transfer or obligation made to or incurred 

for the benefit of such insider for any purpose during 

the calendar year before the year in which such transfer is made or obligation is incurred; 

‘‘(B) a severance payment to an insider of the debtor, unless—

‘‘(i) the payment is part of a program that is generally 

applicable to all full-time employees; and 

‘‘(ii) the amount of the payment is not greater than 10 

times the amount of the mean severance pay given to nonmanagement employees during the calendar year in which 

the payment is made; or 

‘‘(C) other transfers or obligations that are outside the ordinary course of business and not justified by the facts and circumstances of the case. 

‘‘(2) For purposes of paragraph (1)(C), transfers made to, or obligations incurred for the benefit of, officers, managers, or consultants hired after the date of the filing of the petition shall be considered outside the ordinary course of business.’’.

SEC. 416. PRIORITIES. 

Section 507(a) of title 11, United States Code, is amended—

(1) in paragraph (3), by striking ‘‘$4,000’’ and inserting 

‘‘$13,500’’; 

(2) in paragraph (3), striking ‘‘90 days’’ and inserting ‘‘180 

days’’; 

(3) in paragraph (4)(A), striking ‘‘180 days’’ and inserting 

‘‘360 days’’; and 

(4) in paragraph (4)(B)(i), by striking ‘‘$4,000’’ and inserting 

‘‘$13,500’’. 

SEC. 417. LOCAL FILING OF BANKRUPTCY CASES. 

(a) VENUE OF CASES UNDER TITLE 11.—Section 1408 of title 28, 

United States Code, is amended—

(1) by striking ‘‘Except’’ and inserting the following: 

‘‘(a) Except’’; 

(2) in paragraph (2), by inserting ‘‘as defined in section 

101(2)(A) of title 11’’ after ‘‘affiliate’’; and 

(3) by adding at the end the following: 

‘‘(b) For purposes of subsection (a)—

‘‘(1) 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; 

and 

‘‘(2) if an affiliate, as defined in section 101(2)(A) of title 11, 

is not a debtor in a case under title 11, but the debtor is an 

affiliate as defined in subparagraph (B), (C), or (D) of that section, then the bankruptcy case may be filed in the district in 

75

which the principal place of business of the affiliate with the 

greatest assets in the United States is located.’’. (b) CHANGE OF VENUE.—Section 1412 of title 28, United States 

Code, is amended— (1) by striking ‘‘A’’ and inserting the following: ‘‘(a) A’’; and 

(2) by adding at the end the following: ‘‘(b) The district court of a district in which is filed a case laying 

venue in the wrong division or district shall dismiss, or if it be in 

the interest of justice, transfer such case to any district or division 

in which it could have been brought. ‘‘(c) Nothing in this chapter shall impair the jurisdiction of a district court of any matter involving a party who does not interpose 

timely and sufficient objection to the venue. ‘‘(d) As used in this section— ‘‘(1) the term ‘‘district court’’ includes— ‘‘(A) the bankruptcy judges of each such court as defined 

in section 151 of this title; and ‘‘(B) the District Court of Guam, the District Court for 

the Northern Mariana Islands, and the District Court of 

the Virgin Islands, including any bankruptcy judge of each 

such court; and ‘‘(2) the term ‘‘district’’ includes the territorial jurisdiction of 

each such court.’’. 

SEC. 418. ASSUMPTION AND TERMINATION OF CERTAIN CONTRACTS 

AND LEASES 

(a) ASSUMPTION.—Section 365(c) of title 11, United States Code, 

is amended— (1) by inserting ‘‘(1) after ‘‘(c)’’; 

(2) by redesignating existing paragraphs (1) through (4) as 

subparagraphs (A) through (D) respectively; 

(3) by redesignating subparagraphs (A) and (B) of paragraph 

(1) as clauses (i) and (ii), respectively; and 

(4) by adding at the end the following: 

‘‘(2) A debtor in possession may assume, but may not assign, an 

executory contract or unexpired lease in the circumstances described in paragraph (1)(A).’’. 

(b) TERMINATION.—Clause (i) of section 365(e)(2)(A) of title 11, 

United States Code, is amended by inserting ‘‘the trustee seeks to 

assign such contract or lease and’’ before ‘‘applicable law’’. 

Subtitle B—Small Business Bankruptcy 

Provisions 

SEC. 431. FLEXIBLE RULES FOR DISCLOSURE STATEMENT AND PLAN. 

Section 1125 of title 11, United States Code, is amended—

(1) in subsection (a)(1), by inserting before the semicolon 

‘‘and in determining whether a disclosure statement provides 

adequate information, the court shall consider the complexity 

of the case, the benefit of additional information to creditors 

and other parties in interest, and the cost of providing additional information’’; and 

(2) by striking subsection (f), and inserting the following: ‘‘(f) Notwithstanding subsection (b), in a small business case—

76

‘‘(1) the court may determine that the plan itself provides 

adequate information and that a separate disclosure statement 

is not necessary; 

‘‘(2) the court may approve a disclosure statement submitted 

on standard forms approved by the court or adopted under section 2075 of title 28; and 

‘‘(3)(A) the court may conditionally approve a disclosure 

statement subject to final approval after notice and a hearing; 

‘‘(B) acceptances and rejections of a plan may be solicited 

based on a conditionally approved disclosure statement if the 

debtor provides adequate information to each holder of a claim 

or interest that is solicited, but a conditionally approved disclosure statement shall be mailed not later than 25 days before 

the date of the hearing on confirmation of the plan; and 

‘‘(C) the hearing on the disclosure statement may be combined with the hearing on confirmation of a plan.’’.

SEC. 432. 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; 

‘‘(51D) ‘small business debtor’—

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

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

and excluding a person whose primary activity is the business of owning or operating real property or activities incidental thereto) that has aggregate noncontingent liquidated secured and unsecured debts as of the date of the 

petition or the date of the order for relief in an amount not 

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

affiliates or insiders) for a case in which the United States 

trustee has not appointed under section 1102(a)(1) a committee of unsecured creditors or where the court has determined that the committee of unsecured creditors is not sufficiently active and representative to provide effective oversight of the debtor; and 

‘‘(B) does not include any member of a group of affiliated 

debtors that has aggregate noncontingent liquidated secured and unsecured debts in an amount greater than 

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

insiders);’’. 

(b) CONFORMING AMENDMENT.—Section 1102(a)(3) of title 11, 

United States Code, is amended by inserting ‘‘debtor’’ after ‘‘small 

business’’. (c) ADJUSTMENT OF DOLLAR AMOUNTS.—Section 104(b) of title 11, 

United States Code, as amended by section 226, is amended by inserting ‘‘101(51D),’’ after ‘‘101(3),’’ each place it appears. 

SEC. 433. STANDARD FORM DISCLOSURE STATEMENT AND PLAN. 

Within a reasonable period of time after the date of enactment 

of this Act, the Judicial Conference of the United States shall prescribe in accordance with rule 9009 of the Federal Rules of Bankruptcy Procedure official standard form disclosure statements and 

plans of reorganization for small business debtors (as defined in 

77

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. 434. UNIFORM NATIONAL REPORTING REQUIREMENTS. 

(a) REPORTING REQUIRED.—

(1) IN GENERAL.—Chapter 3 of title 11, United States Code, 

is amended by inserting after section 307 the following: 

‘‘§ 308. Debtor reporting requirements 

‘‘(a) For purposes of this section, the term ‘profitability’ means, 

with respect to a debtor, the amount of money that the debtor has 

earned or lost during current and recent fiscal periods. 

‘‘(b) A small business debtor shall file periodic financial and other 

reports containing information including—

‘‘(1) the debtor’s profitability; 

‘‘(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; 

‘‘(4)(A) whether the debtor is—

‘‘(i) in compliance in all material respects with 

postpetition requirements imposed by this title and the 

Federal Rules of Bankruptcy Procedure; and 

‘‘(ii) timely filing tax returns and other required government filings and paying taxes and other administrative expenses when due; 

‘‘(B) if the debtor is not in compliance with the requirements 

referred to in subparagraph (A)(i) or filing tax returns and 

other required government filings and making the payments 

referred to in subparagraph (A)(ii), what the failures are and 

how, at what cost, and when the debtor intends to remedy such 

failures; and ‘‘(C) 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) CLERICAL AMENDMENT.—The table of sections for 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 under section 2075 of 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. 435. UNIFORM REPORTING RULES AND FORMS FOR SMALL BUSINESS CASES. 

(a) PROPOSAL OF RULES AND FORMS.—The Judicial Conference of 

the United States shall propose in accordance with section 2073 of 

title 28 of the United States Code amended Federal Rules of Bankruptcy Procedure, and shall prescribe in accordance with rule 9009 

of the Federal Rules of Bankruptcy Procedure official bankruptcy 

78

forms, directing 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 expenses when due. 

(b) PURPOSE.—The rules and forms proposed under subsection (a) 

shall be designed to achieve a practical balance among— (1) the reasonable needs of the bankruptcy court, the United 

States trustee, creditors, and other parties in interest for reasonably complete information; 

(2) a 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 

such debtor to understand such debtor’s financial condition and 

plan the such debtor’s future. 

SEC. 436. DUTIES IN SMALL BUSINESS CASES. 

(a) DUTIES IN CHAPTER 11 CASES.—Subchapter I of chapter 11 of 

title 11, United States Code, as amended by section 321, is amended by adding at the end the following: 

‘‘§ 1116. Duties of trustee or debtor in possession in small 

business cases 

‘‘In a small business case, a trustee or the debtor in possession, 

in addition to the duties provided in this title and as otherwise required by law, shall— ‘‘(1) append to the voluntary petition or, in an involuntary 

case, file not later than 7 days after the date of the order for 

relief—

‘‘(A) its most recent balance sheet, statement of operations, cash-flow statement, Federal income tax return; or ‘‘(B) a statement made under penalty of perjury that no 

balance sheet, statement of operations, or cash-flow statement has been prepared and no Federal tax return has 

been filed; ‘‘(2) attend, through its senior management personnel and 

counsel, meetings scheduled by the court or the United States 

trustee, including initial debtor interviews, scheduling conferences, and meetings of creditors convened under section 341 

unless the court, after notice and a hearing, waives that requirement upon a finding of extraordinary and compelling circumstances; 

‘‘(3) timely file all schedules and statements of financial affairs, unless the court, after notice and a hearing, grants an 

extension, which shall not extend such time period to a date 

later than 30 days after the date of the order for relief, absent 

extraordinary and compelling circumstances; ‘‘(4) file all postpetition financial and other reports required 

by the Federal Rules of Bankruptcy Procedure or by local rule 

of the district court; 

‘‘(5) subject to section 363(c)(2), maintain insurance customary and appropriate to the industry; 

‘‘(6)(A) timely file tax returns and other required government 

filings; and 

79

‘‘(B) subject to section 363(c)(2), timely pay all taxes entitled 

to administrative expense priority except those being contested 

by appropriate proceedings being diligently prosecuted; and ‘‘(7) allow the United States trustee, or a designated representative of the United States trustee, to inspect the debtor’s 

business premises, books, and records at reasonable times, 

after reasonable prior written notice, unless notice is waived by 

the debtor. ‘‘(b) The court may extend the time periods specified in paragraphs (1) and (3) of subsection (a) if the debtor establishes by 

clear and convincing evidence that an extension is justified by circumstances that there are beyond the debtor’s control that were 

not foreseeable on the date of the order of relief.’’. (b) CLERICAL AMENDMENT.—The table of sections for chapter 11 

of title 11, United States Code, as amended by section 321, is 

amended by inserting after the item relating to section 1115 the 

following:

‘‘1116. Duties of trustee or debtor in possession in small business cases.’’.

SEC. 437. PLAN FILING AND CONFIRMATION DEADLINES. 

Section 1121 of title 11, United States Code, is amended by striking subsection (e) and inserting the following: 

‘‘(e) In a small business case—

‘‘(1) only the debtor may file a plan until after 180 days after 

the date of the order for relief, unless that period is—

‘‘(A) extended as provided by this subsection, after notice 

and a hearing; or 

‘‘(B) the court, for cause, orders otherwise; 

‘‘(2) the plan and a disclosure statement (if any) shall be filed 

not later than 300 days after the date of the order for relief; 

and 

‘‘(3) the time periods specified in paragraphs (1) and (2), and 

the time fixed in section 1129(e) within which the plan shall 

be confirmed, may be extended only if—

‘‘(A) the debtor, after providing notice to parties in interest (including the United States trustee), demonstrates by 

a preponderance of the evidence that it is more likely than 

not that the court will confirm a plan within a reasonable 

period of time; 

‘‘(B) a new deadline is imposed at the time the extension 

is granted;

‘‘(C) the debtor establishes by clear and convincing evidence that an extension is justified by circumstances beyond the debtor’s control that were not foreseeable on the 

date of the order of relief; and 

‘‘(D) the order extending time is signed before the existing deadline has expired.’’.

SEC. 438. 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 court shall confirm a plan that 

complies with the applicable provisions of this title and that is filed 

in accordance with section 1121(e) not later than 45 days after the 

plan is filed unless the time for confirmation is extended in accordance with section 1121(e)(3) or the debtor establishes by clear and 

80

convincing evidence that an extension is justified by circumstances 

beyond the debtor’s control that were not foreseeable on the date 

of the order for relief.’’. 

SEC. 439. 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; and’’; 

(2) in paragraph (5), by striking ‘‘and’’ at the end; 

(3) in paragraph (6), by striking the period at the end and 

inserting a semicolon; and 

(4) by adding at the end the following: 

‘‘(7) in each of such small business cases— ‘‘(A) conduct an initial debtor interview as soon as practicable after the date of the order for relief but before the 

first meeting scheduled under section 341(a) of title 11, at 

which time the United States trustee shall—

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

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

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

operating reports and other required reports; 

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

and 

‘‘(v) inform the debtor of other obligations; 

‘‘(B) if determined to be appropriate and advisable, visit 

the appropriate business premises of the debtor, ascertain 

the state of the debtor’s books and records, and verify that 

the debtor has filed its tax returns; and ‘‘(C) review and monitor diligently the debtor’s activities, 

to identify as promptly as possible whether the debtor will 

be unable to confirm a plan; and ‘‘(8) in any case in which the United States trustee finds material grounds for any relief under section 1112 of title 11, the 

United States trustee shall apply promptly after making that 

finding to the court for relief.’’. 

SEC. 440. SCHEDULING CONFERENCES. 

Section 105(d) of title 11, United States Code, is amended—

(1) in the matter preceding paragraph (1), by striking ‘‘, 

may’’; and 

(2) by striking paragraph (1) and inserting the following: 

‘‘(1) shall hold such status conferences as are necessary to 

further the expeditious and economical resolution of the case; 

and’’.

SEC. 441. SERIAL FILER PROVISIONS. 

Section 362 of title 11, United States Code, as amended by sections 106, 305, and 311, is amended—

(1) in subsection (k), as so redesignated by section 305—

(A) by striking ‘‘An’’ and inserting ‘‘(1) Except as provided in paragraph (2), an’’; and 

81

(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, the 

recovery under paragraph (1) of this subsection against such entity 

shall be limited to actual damages.’’; and 

(2) by adding at the end the following: ‘‘(n)(1) Except as provided in paragraph (2), subsection (a) does 

not apply in a case in which the debtor— ‘‘(A) is a debtor in a small business case pending at the time 

the petition is filed; ‘‘(B) was a debtor in a small business case that 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 small business case in which a 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 acquired substantially all of the assets or business of a small business debtor described in subparagraph (A), (B), or (C), unless such entity establishes by a 

preponderance of the evidence that such entity acquired substantially all of the assets or business of such small business 

debtor in good faith and not for the purpose of evading this 

paragraph. 

‘‘(2) Paragraph (1) does not apply—

‘‘(A) to an involuntary case involving no collusion by the 

debtor with creditors; or 

‘‘(B) to the filing of a petition if—

‘‘(i) the debtor proves by a preponderance of the evidence 

that the filing of the petition resulted from circumstances 

beyond the control of the debtor not foreseeable at the time 

the case then pending was filed; and ‘‘(ii) it is more likely than not that the court will confirm 

a feasible plan, but not a liquidating plan, within a reasonable period of time.’’. 

SEC. 442. EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION AND 

APPOINTMENT OF A TRUSTEE. 

(a) EXPANDED GROUNDS FOR DISMISSAL OR CONVERSION.—Section 

1112 of title 11, United States Code, is amended by striking subsection (b) and inserting the following: 

‘‘(b)(1) Except as provided in paragraph (2) of this subsection, 

subsection (c) of this section, and section 1104(a)(3), on request of 

a party in interest, and after notice and a hearing, the court shall 

convert a case under this chapter to a case under chapter 7 or dismiss a case under this chapter, whichever is in the best interests 

of the creditors and the estate, if the movement establishes cause. 

‘‘(2) The relief provided in paragraph (1) shall not be granted if—

‘‘(A) the granting of such relief is not in the best interests of 

the creditors or the estate; or 

‘‘(B) the debtor, or another party in interest, objects and establishes that—

‘‘(i) there is reasonable likelihood that a plan will be confirmed within the time frames established in section 1121(e) 

and 1129(e) of this title, or if such sections do not apply, within 

such a reasonable period of time; and 

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‘‘(ii) the grounds for granting such relief include an act or 

omission of the debtor other than under paragraph (4)(A)—

‘‘(I) for which there exists a reasonable justification for 

the act or omissions; 

‘‘(II) the debtor establishes by clear and convincing evidence that an extension is justified by circumstances beyond the debtor’s control that were not foreseeable on the 

date of the order for relief; and 

‘‘(III) that will be cured within a reasonable period of 

time fixed by the court. 

‘‘(3) The court shall commence the hearing on a motion under 

this subsection not later than 30 days after filing of the motion, 

and shall decide the motion not later than 15 days after commencement of such hearing, unless the movant expressly consents to a 

continuance for a specific period of time or compelling circumstances prevent the court from meeting the time limits established by this paragraph. 

‘‘(4) For purposes of this subsection, the term ‘cause’ includes—

‘‘(A) substantial or continuing loss to or diminution of the estate and the absence of a reasonable likelihood of rehabilitation; 

‘‘(B) gross mismanagement of the estate; 

‘‘(C) failure to maintain appropriate insurance that poses a 

risk to the estate or to the public; 

‘‘(D) unauthorized use of cash collateral substantially harmful to 1 or more creditors; 

‘‘(E) failure to comply with an order of the court; 

‘‘(F) unexcused failure to satisfy timely any filing or reporting requirement established by this title or by any rule applicable to a case under this chapter; 

‘‘(G) failure to attend the meeting of creditors convened 

under section 341(a) or an examination ordered under rule 

2004 of the Federal Rules of Bankruptcy Procedure without 

good cause shown by the debtor; 

‘‘(H) failure timely to provide information or attend meetings 

reasonably requested by the United States trustee (or the 

bankruptcy administrator, if any); 

‘‘(I) failure timely to pay taxes owed after the date of the 

order for relief or to file tax returns due after the date of the 

order for relief; 

‘‘(J) failure to file a disclosure statement, or to file or confirm 

a plan, within the time fixed by this title or by order of the 

court; 

‘‘(K) failure to pay any fees or charges required under chapter 123 of title 28; 

‘‘(L) revocation of an order of confirmation under section 

1144; 

‘‘(M) inability to effectuate substantial consummation of a 

confirmed plan; 

‘‘(N) material default by the debtor with respect to a confirmed plan; 

‘‘(O) termination of a confirmed plan by reason of the occurrence of a condition specified in the plan; and 

83

‘‘(P) failure of the debtor to pay any domestic support obligation that first becomes payable after the date of the filing of 

the petition. ‘‘(5) The court shall commence the hearing on a motion under 

this subsection not later than 30 days after filing of the motion, 

and shall decide the motion not later than 15 days after commencement of such hearing, unless the movant expressly consents to a 

continuance for a specific period of time or compelling circumstances prevent the court from meeting the time limits established by this paragraph.’’. (b) ADDITIONAL GROUNDS FOR APPOINTMENT OF TRUSTEE.—Section 1104(a) of title 11, United States Code, is amended— (1) in paragraph (1), by striking ‘‘or’’ at the end; 

(2) in paragraph (2), by striking the period at the end and 

inserting ‘‘; or’’; and 

(3) by adding at the end the following: 

‘‘(3) if grounds exist to convert or dismiss the case under section 1112, but the court determines that the appointment of a 

trustee or an examiner is in the best interests of creditors and 

the estate.’’. 

SEC. 443. STUDY OF OPERATION OF TITLE 11, UNITED STATES CODE, 

WITH RESPECT TO SMALL BUSINESSES. 

Not later than 2 years after the date of enactment of this Act, 

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, 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, 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. 444. DUTIES WITH RESPECT TO A DEBTOR WHO IS A PLAN ADMINISTRATOR OF AN EMPLOYEE BENEFIT PLAN. 

(a) IN GENERAL.—Section 521(a) of title 11, United States Code, 

as amended by sections 106 and 304, is amended—

(1) in paragraph (5), by striking ‘‘and’’ at the end; 

(2) in paragraph (6), by striking the period at the end and 

inserting ‘‘; and’’; and 

(3) by adding after paragraph (6) the following: 

‘‘(7) unless a trustee is serving in the case, continue to perform the obligations required of the administrator (as defined 

in section 3 of the Employee Retirement Income Security Act 

of 1974) of an employee benefit plan if at the time of the commencement of the case the debtor (or any entity designated by 

the debtor) served as such administrator.’’. 

(b) DUTIES OF TRUSTEES.—Section 704(a) of title 11, United 

States Code, as amended by sections 102 and 219, is amended—

84

(1) in paragraph (10), by striking ‘‘and’’ at the end; and 

(2) by adding at the end the following: 

‘‘(11) if, at the time of the commencement of the case, the 

debtor (or any entity designated by the debtor) served as the 

administrator (as defined in section 3 of the Employee Retirement Income Security Act of 1974) of an employee benefit plan, 

continue to perform the obligations required of the administrator; and’’. 

(c) CONFORMING AMENDMENT.—Section 1106(a)(1) of title 11, 

United States Code, is amended to read as follows: 

‘‘(1) perform the duties of the trustee, as specified in paragraphs (2), (5), (7), (8), (9), (10), and (11) of section 704;’’.

SEC. 445. APPOINTMENT OF COMMITTEE OF RETIRED EMPLOYEES. 

Section 1114(d) of title 11, United States Code, is amended—

(1) by striking ‘‘appoint’’ and inserting ‘‘order the appointment of’’, and 

(2) by adding at the end the following: ‘‘The United States 

trustee shall appoint any such committee.’’.

SEC. 446. EFFECT OF SALE OF ASSETS ON EMPLOYEE BENEFITS. 

Section 363(b) of title 11, United States Code, is amended by 

adding at the end the following: 

‘‘(3) The court shall not approve the sale of all or substantially 

all the assets of a debtor with 50 or more employees until the debtor has reported to the court on the potential adverse impact that 

such sale is likely to have on employee benefits, including any pension and health care plans sponsored by the debtor.’’. 

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 striking the last sentence and inserting the following: 

‘‘(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—BANKRUPTCY DATA 

SEC. 601. IMPROVED BANKRUPTCY STATISTICS. 

(a) IN GENERAL.—Chapter 6 of title 28, United States Code, is 

amended by adding at the end the following: 

85

‘‘§ 159. Bankruptcy statistics 

‘‘(a) The clerk of the district court, or the clerk of the bankruptcy 

court if one is certified pursuant to section 156(b) of this title, shall 

collect statistics regarding debtors who are individuals with primarily consumer debts seeking relief under chapters 7, 11, and 13 

of title 11. Those statistics shall be in a standardized format prescribed by the Director of the Administrative Office of the United 

States Courts (referred to in this section as the ‘Director’). ‘‘(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 July 1, 2006, 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 debtors; ‘‘(B) the current monthly income, average income, and 

average expenses of 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 cases 

filed during 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 date of the 

filing of the petition and the closing of the case for cases 

closed during the reporting period; ‘‘(E) for cases closed during the reporting period— ‘‘(i) the number of cases in which a reaffirmation 

agreement was filed; and ‘‘(ii)(I) the total number of reaffirmation agreements 

filed; ‘‘(II) of those cases in which a reaffirmation agreement was filed, the number of cases in which the debtor was not represented by an attorney; and ‘‘(III) of those cases in which a reaffirmation agreement was filed, the number of cases in which the reaffirmation agreement 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 entered determining 

the value of property securing a claim; 

86

‘‘(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 during the 6-year period preceding 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 attorney or damages awarded 

under such Rule.’’. (b) CLERICAL AMENDMENT.—The table of sections for 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. 602. UNIFORM RULES FOR THE COLLECTION OF BANKRUPTCY 

DATA. 

(a) AMENDMENT.—Chapter 39 of title 28, United States Code, is 

amended by adding at the end the following: 

‘‘§ 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 in 

cases under chapter 11 of title 11. ‘‘(b) REPORTS.—Each report referred to in subsection (a) shall be 

designed (and the requirements as to place and manner of filing 

shall be established) so as to facilitate compilation of data and 

maximum possible access of the public, both by physical inspection 

at one or more central filing locations, and by electronic access 

through the Internet or other appropriate media. 

‘‘(c) REQUIRED INFORMATION.—The information required to be 

filed in the reports referred to in subsection (b) shall be that which 

is in the best interests of debtors and creditors, and in the public 

interest in reasonable and adequate information to evaluate the efficiency and practicality of the Federal bankruptcy system. In 

issuing rules proposing the forms referred to in subsection (a), the 

Attorney General shall strike the best achievable practical balance 

between—

‘‘(1) the reasonable needs of the public for information about 

the operational results of the Federal bankruptcy system; 

‘‘(2) economy, simplicity, and lack of undue burden on persons with a duty to file reports; and 

87

‘‘(3) appropriate privacy concerns and safeguards. ‘‘(d) FINAL REPORTS.—The uniform forms for final reports required under subsection (a) for use 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, including for use under section 707(b), actual costs of administering cases under chapter 

13 of title 11; ‘‘(6) claims asserted; 

‘‘(7) claims allowed; and 

‘‘(8) distributions to claimants and claims discharged without 

payment, 

in each case by appropriate category and, in cases under chapters 

12 and 13 of title 11, date of confirmation of the plan, each modification thereto, and defaults by the debtor in performance under 

the plan. 

‘‘(e) PERIODIC REPORTS.—The uniform forms for periodic reports 

required under subsection (a) for use by trustees or debtors in possession under chapter 11 of title 11 shall, in addition to such other 

matters as are required by law or as the Attorney General in the 

discretion of the Attorney General shall propose, include—

‘‘(1) information about the industry classification, published 

by the Department of Commerce, for the businesses conducted 

by the debtor; 

‘‘(2) length of time the case has been pending; 

‘‘(3) number of full-time employees as of the date of the order 

for relief and at the end of each reporting period since the case 

was filed; ‘‘(4) cash receipts, cash disbursements and profitability of the 

debtor for the most recent period and cumulatively since the 

date of the order for relief; ‘‘(5) compliance with title 11, whether or not tax returns and 

tax payments since the date of the order for relief have been 

timely filed and made; ‘‘(6) all professional fees approved by the court in the case for 

the most recent period and cumulatively since the date of the 

order for relief (separately reported, for the professional fees 

incurred by or on behalf of the debtor, between those that 

would have been incurred absent a bankruptcy case and those 

not); and ‘‘(7) plans of reorganization filed and confirmed and, with respect thereto, by class, the recoveries of the holders, expressed 

in aggregate dollar values and, in the case of claims, as a percentage of total claims of the class allowed.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for chapter 39 

of title 28, United States Code, is amended by adding at the end 

the following:

‘‘589b. Bankruptcy data.’’.

88

SEC. 603. AUDIT PROCEDURES. 

(a) IN GENERAL.—

(1) ESTABLISHMENT OF PROCEDURES.—The Attorney General 

(in judicial districts served by United States trustees) and the 

Judicial Conference of the United States (in judicial districts 

served by bankruptcy administrators) shall establish procedures to determine the accuracy, veracity, and completeness of 

petitions, schedules, and other information that the debtor is 

required to provide under sections 521 and 1322 of title 11, 

United States Code, and, if applicable, section 111 of such title, 

in cases filed under chapter 7 or 13 of such title in which the 

debtor is an individual. Such audits shall be in accordance 

with generally accepted auditing standards and performed by 

independent certified public accountants or independent licensed public accountants, provided that the Attorney General 

and the Judicial Conference, as appropriate, may develop alternative auditing standards not later than 2 years after the date 

of enactment of this Act. 

(2) PROCEDURES.—Those procedures required by paragraph 

(1) shall—

(A) establish a method of selecting appropriate qualified 

persons to contract to perform those audits; 

(B) 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; 

(C) require audits of schedules of income and expenses 

that reflect greater than average variances from the statistical norm of the district in which the schedules were filed 

if those variances occur by reason of higher income or 

higher expenses than the statistical norm of the district in 

which the schedules were filed; and 

(D) 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. 

(b) AMENDMENTS.—Section 586 of title 28, United States Code, is 

amended—

(1) in subsection (a), by striking paragraph (6) and inserting 

the following: 

‘‘(6) make such reports as the Attorney General directs, including the results of audits performed under section 603(a) of 

the Bankruptcy Abuse Prevention and Consumer Protection 

Act of 2003;’’; and 

(2) by adding at the end the following: 

‘‘(f)(1) The United States trustee for each district is authorized to 

contract with auditors to perform audits in cases designated by the 

United States trustee, in accordance with the procedures established under section 603(a) of the Bankruptcy Abuse Prevention 

and Consumer Protection Act of 2003. 

‘‘(2)(A) The report of each audit referred to in paragraph (1) shall 

be filed with the court and transmitted to the United States trustee. Each report shall clearly and conspicuously specify any material 

misstatement of income or expenditures or of assets identified by 

the person performing the audit. In any case in which a material 

89

misstatement of income or expenditures or of assets has been reported, the clerk of the district court (or the clerk of the bankruptcy 

court if one is certified under section 156(b) of this title) shall give 

notice of the misstatement to the creditors in the case. 

‘‘(B) If a material misstatement of income or expenditures or of 

assets is reported, the United States trustee shall—

‘‘(i) report the material misstatement, if appropriate, to the 

United States Attorney pursuant to section 3057 of title 18; 

and 

‘‘(ii) if advisable, take appropriate action, including but not 

limited to commencing an adversary proceeding to revoke the 

debtor’s discharge pursuant to section 727(d) of title 11.’’. 

(c) AMENDMENTS TO SECTION 521 OF TITLE 11, U.S.C.—Section 

521(a) of title 11, United States Code, as so designated by section 

106, is amended in each of paragraphs (3) and (4) by inserting ‘‘or 

an auditor serving under section 586(f) of title 28’’ after ‘‘serving 

in the case’’. 

(d) AMENDMENTS TO SECTION 727 OF TITLE 11, U.S.C.—Section 

727(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) the debtor has failed to explain satisfactorily—

‘‘(A) a material misstatement in an audit referred to in 

section 586(f) of title 28; 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 referred to in section 586(f) of title 28.’’. 

(e) EFFECTIVE DATE.—The amendments made by this section 

shall take effect 18 months after the date of enactment of this Act. 

SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY OF BANKRUPTCY DATA. 

It is the sense of 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, 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 Congress and 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. 

90

TITLE VII—ANCILLARY AND OTHER 

CROSS-BORDER CASES 

SEC. 701. 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. 

‘‘1516. Presumptions concerning recognition. 

‘‘1517. Order granting recognition. 

‘‘1518. Subsequent information. 

‘‘1519. Relief that may be granted upon filing petition for recognition. 

‘‘1520. Effects of recognition of a foreign main proceeding. 

‘‘1521. Relief that may be granted upon recognition. 

‘‘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.

‘‘§ 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 

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for dealing with cases of cross-border insolvency with the objectives 

of—

‘‘(1) cooperation between—

‘‘(A) courts of the United States, 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 pending 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, other than a foreign 

insurance company, identified by exclusion in section 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 of 1970, 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. 

‘‘(d) The court may not grant relief under this chapter 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. 

‘‘SUBCHAPTER I—GENERAL PROVISIONS 

‘‘§ 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; 

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‘‘(4) ‘foreign main proceeding’ means a foreign proceeding 

pending 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, pending 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; 

‘‘(7) ‘recognition’ means the entry of an order granting recognition of a foreign main proceeding or foreign nonmain proceeding under this chapter; and 

‘‘(8) ‘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. 

‘‘§ 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 one or more other countries, the 

requirements of the treaty or agreement prevail. 

‘‘§ 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. 

‘‘§ 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. 

‘‘§ 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. 

‘‘§ 1507. Additional assistance 

‘‘(a) Subject to the specific limitations stated elsewhere in this 

chapter the court, if recognition is granted, 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; 

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‘‘(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. 

‘‘§ 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 

‘‘§ 1509. Right of direct access 

‘‘(a) A foreign representative may commence a case under section 

1504 by filing directly with the court a petition for recognition of 

a foreign proceeding under section 1515. 

‘‘(b) If the court grants recognition under section 1515, 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 other than the court which 

granted recognition shall be accompanied by a certified copy of an 

order granting recognition under section 1517. 

‘‘(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, 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 States to 

collect or recover a claim which is the property of the debtor. 

‘‘§ 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. 

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‘‘§ 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 a 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. 

‘‘§ 1512. Participation of a foreign representative in a case 

under this title 

‘‘Upon recognition of a foreign proceeding, the foreign representative in the recognized proceeding is entitled to participate as a 

party in interest in a case regarding the debtor under this title. 

‘‘§ 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, 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. 

‘‘§ 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 letter or other formality 

is required. 

‘‘(c) When a notification of commencement of a case is to be given 

to foreign creditors, such notification shall—

‘‘(1) indicate the time period for filing proofs of claim and 

specify the place for filing such proofs of claim; 

‘‘(2) indicate whether secured creditors need to file proofs of 

claim; and 

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‘‘(3) contain any other information required to be included in 

such 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 proof of 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 

‘‘§ 1515. Application for recognition 

‘‘(a) A foreign representative applies to the court for recognition 

of a 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 such foreign 

proceeding and appointing the foreign representative; 

‘‘(2) a certificate from the foreign court affirming the existence of such 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 such 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) shall be translated into English. The court may require 

a translation into English of additional documents. 

‘‘§ 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 and that 

the person or body is a foreign representative, 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. 

‘‘§ 1517. Order granting recognition 

‘‘(a) Subject to section 1506, after notice and a hearing, an order 

recognizing a foreign proceeding shall be entered if—

‘‘(1) such foreign proceeding for which recognition is sought 

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; and 

‘‘(3) the petition meets the requirements of section 1515. 

‘‘(b) Such foreign proceeding shall be recognized—

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‘‘(1) as a foreign main proceeding if it is pending 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 order granting recognition. A case under this chapter may be closed in the 

manner prescribed under section 350. 

‘‘§ 1518. Subsequent information 

‘‘From the time of filing the petition for recognition of a 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 such 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. 

‘‘§ 1519. Relief that may be granted upon filing petition for 

recognition 

‘‘(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 

granted. 

‘‘(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. 

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‘‘(f) The exercise of rights not subject to the stay arising under 

section 362(a) pursuant to paragraph (6), (7), (17), or (27) of section 

362(b) or pursuant to section 362(n) shall not be stayed by any 

order of a court or administrative agency in any proceeding under 

this chapter. 

‘‘§ 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 apply with respect to the debtor 

and the property of the debtor that is within the territorial jurisdiction of the United States; 

‘‘(2) sections 363, 549, and 552 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. 

‘‘§ 1521. Relief that may be granted upon recognition 

‘‘(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 

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‘‘(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). 

‘‘(f) The exercise of rights not subject to the stay arising under 

section 362(a) pursuant to paragraph (6), (7), (17), or (27) of section 

362(b) or pursuant to section 362(n) shall not be stayed by any 

order of a court or administrative agency in any proceeding under 

this chapter. 

‘‘§ 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), 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. 

‘‘§ 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, 553, and 724(a). 

‘‘(b) When a 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. 

99

‘‘§ 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 

‘‘§ 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 a foreign court or a foreign representative, either directly or through the trustee. 

‘‘(b) The court is entitled to communicate directly with, or to request information or assistance directly from, a foreign court or a 

foreign representative, subject to the rights of a party in interest 

to notice and participation. 

‘‘§ 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 a foreign court or a foreign representative. 

‘‘(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 a foreign court or a foreign representative. 

‘‘§ 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 

‘‘§ 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 jurisdicVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00099 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
100

tion 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. 

‘‘§ 1529. Coordination of a case under this title and a foreign 

proceeding 

‘‘If a foreign proceeding and a case under another chapter of this 

title are pending concurrently regarding the same debtor, the court 

shall seek cooperation and coordination under sections 1525, 1526, 

and 1527, and the following shall apply: ‘‘(1) If the case in the United States pending at the time the 

petition for recognition of such foreign proceeding is filed— ‘‘(A) any relief granted under section 1519 or 1521 must 

be consistent with the relief granted in the case in the 

United States; and ‘‘(B) section 1520 does not apply even if such foreign proceeding is recognized as a foreign main proceeding. ‘‘(2) If a case in the United States under this title commences 

after recognition, or after the date of the filing of the petition 

for recognition, of such foreign proceeding— ‘‘(A) 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 case in the United States; 

and ‘‘(B) if such 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 

laws 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. 

‘‘§ 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 

101

grant, modify, or terminate relief for the purpose of facilitating 

coordination of the proceedings. 

‘‘§ 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. 

‘‘§ 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.’’. (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. 702. OTHER AMENDMENTS TO TITLES 11 AND 28, 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, 362(n), 555 through 

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

and 

(2) by adding at the end the following: ‘‘(k) 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.—Section 101 of title 11, United States Code, is 

amended by striking paragraphs (23) and (24) and inserting the following: ‘‘(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 such 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; 

102

(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’’. 

(4) VENUE OF CASES ANCILLARY TO FOREIGN PROCEEDINGS.—

Section 1410 of title 28, United States Code, is amended to 

read as follows: 

‘‘§ 1410. Venue of cases ancillary to foreign proceedings 

‘‘A case under chapter 15 of title 11 may be commenced in the 

district court of the United States for the district—

‘‘(1) in which the debtor has its principal place of business 

or principal assets in the United States; 

‘‘(2) if the debtor does not have a place of business or assets 

in the United States, in which there is pending against the 

debtor an action or proceeding in a Federal or State court; or 

‘‘(3) in a case other than those specified in paragraph (1) or 

(2), in which venue will be consistent with the interests of justice and the convenience of the parties, having regard to the 

relief sought by the foreign representative.’’. 

(d) OTHER SECTIONS OF TITLE 11.—Title 11 of the United States 

Code is amended—

(1) in section 109(b), by striking paragraph (3) and inserting 

the following: 

‘‘(3)(A) a foreign insurance company, engaged in such business in the United States; or 

‘‘(B) a foreign bank, savings bank, cooperative bank, savings 

and loan association, building and loan association, or credit 

union, that has a branch or agency (as defined in section 1(b) 

of the International Banking Act of 1978 in the United 

States.’’; 

(2) in section 303, by striking subsection (k); 

(3) by striking section 304; 

(4) in the table of sections for chapter 3 by striking the item 

relating to section 304; 

(5) in section 306 by striking ‘‘, 304,’’ each place it appears; 

(6) in section 305(a) by striking paragraph (2) and inserting 

the following: 

‘‘(2)(A) a petition under section 1515 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.’’; and 

(7) in section 508—

(A) by striking subsection (a); and 

(B) in subsection (b), by striking ‘‘(b)’’.

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TITLE VII—FINANCIAL CONTRACT 

PROVISIONS 

SEC. 801. TREATMENT OF CERTAIN AGREEMENTS BY CONSERVATORS 

OR RECEIVERS OF INSURED DEPOSITORY INSTITUTIONS. 

(a) DEFINITION OF QUALIFIED FINANCIAL CONTRACT.—Section 

11(e)(8)(D) of the Federal Deposit Insurance Act (12 U.S.C. 

1821(e)(8)(D)) is amended—

(1) by striking ‘‘subsection—’’ and inserting ‘‘subsection, the 

following definitions shall apply:’’; and 

(2) in clause (i), 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 the foregoing, including 

any option to purchase or sell any such security, 

certificate of deposit, mortgage loan, interest, 

group or index, or option, and including any repurchase or reverse repurchase transaction on any 

such security, certificate of deposit, mortgage 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, mortgage 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; 

104

‘‘(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, including any guarantee or reimbursement 

obligation in connection with 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; 

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‘‘(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) any security agreement or arrangement or 

other credit enhancement related to any agreement or transaction referred to in this clause, including any guarantee or reimbursement obligation in connection with 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, a repurchase transaction, reverse repurchase transaction, 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) any security agreement or arrangement or 

other credit enhancement related to any agreement or transaction referred to in subclause (I), 

106

(II), (III), or (IV), including any guarantee or reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause.’’. (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) means an agreement, including related 

terms, which provides for the transfer of one 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, mortgage loans, or interests 

with a simultaneous agreement by such transferee 

to transfer to the transferor thereof certificates of 

deposit, eligible bankers’ acceptances, securities, 

mortgage 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 any security agreement or arrangement or other credit enhancement related to any 

agreement or transaction referred to in subclause 

107

(I), (III), (IV), or (V), including any guarantee or 

reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause. 

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)(vi) 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 total return, credit 

spread or credit swap, option, future, or forward 

agreement; a commodity index or commodity 

swap, option, future, or forward agreement; or a 

weather swap, weather derivative, or weather option; ‘‘(II) any agreement or transaction that is similar to any other agreement or transaction referred 

to in this clause and that is of a type that has 

been, is presently, or in the future becomes, the 

subject of recurrent dealings in the swap markets 

(including terms and conditions incorporated by 

reference in such agreement) and that is a forward, swap, future, or option on one or more 

rates, currencies, commodities, equity securities or 

other equity instruments, debt securities or other 

debt instruments, quantitative measures associated with an occurrence, extent of an occurrence, 

or contingency associated with a financial, commercial, or economic consequence, or economic or 

financial indices or measures of economic or financial risk or value; 

‘‘(III) any combination of agreements or transactions referred to in this 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 

108

(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 subclause (I), 

(II), (III), (IV), or (V), including any guarantee or 

reimbursement obligation in connection with any 

agreement or transaction referred to in any such 

subclause. 

Such term is applicable for purposes of this subsection 

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, the Gramm-Leach-Bliley Act, and the 

Legal Certainty for Bank Products Act of 2000.’’. 

(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 institution’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)—

(A) by striking ‘‘paragraph (10)’’ and inserting ‘‘paragraphs (9) and (10)’’; 

(B) in clause (i), by striking ‘‘to cause the termination or 

liquidation’’ and inserting ‘‘such person has to cause the 

termination, liquidation, or acceleration’’; and 

(C) by striking clause (ii) and inserting the following: 

‘‘(ii) any right under any security agreement or arrangement or other credit enhancement related to one 

or more qualified financial contracts described in 

clause (i);’’; and 

(2) in subparagraph (E), by striking clause (ii) and inserting 

the following: 

109

‘‘(ii) any right under any security agreement or arrangement or other credit enhancement related to one 

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 or any other Federal or State law relating to the avoidance 

of preferential or fraudulent transfers,’’ before ‘‘the Corporation’’. 

SEC. 802. 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 by’’ after ‘‘the appointment of’’. 

SEC. 803. 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 inVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00109 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
110

cludes any qualified financial contract, the conservator or 

receiver for such depository institution shall either— ‘‘(i) transfer to one 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 IN- STITUTION, OR BRANCH OR AGENCY OF A FOREIGN BANK OR

FINANCIAL INSTITUTION.—In transferring any qualified financial contracts and related claims and property under 

subparagraph (A)(i), the conservator or receiver for the 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 one 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 

cleared by or 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) DEFINITIONS.—For purposes of this paragraph, the 

term ‘financial institution’ means a broker or dealer, a deVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00110 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
111

pository institution, a futures commission merchant, or 

any other institution, as determined by the Corporation by 

regulation to be a financial institution, and the term ‘clearing organization’ has the same meaning as in section 402 

of the Federal Deposit Insurance Corporation Improvement Act of 1991.’’. (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 in the material 

immediately following clause (ii) by striking ‘‘the conservator’’ and 

all that follows through the period and inserting the following: ‘‘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 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 that such person has to terminate, liquidate, or net such contract 

under paragraph (8)(A) of this subsection 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 that such 

person has to terminate, liquidate, or net such contract under paragraph (8)(E) of this subsection 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 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 paragraph, the 

Corporation as receiver or conservator of an insured 

depository institution shall be deemed to have notified 

112

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). ‘‘(C) TREATMENT OF BRIDGE BANKS.—The following institutions shall not be considered to be 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 paragraph (9): ‘‘(i) A bridge bank. 

‘‘(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 the depository institution and 

the Corporation as receiver for a depository institution in default.’’. 

SEC. 804. 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 amended— (1) by redesignating paragraphs (11) through (15) as paragraphs (12) through (16), respectively; 

(2) by inserting after paragraph (10) the following new paragraph: ‘‘(11) DISAFFIRMANCE OR REPUDIATION OF QUALIFIED FINAN- CIAL 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).’’; and 

(3) by adding at the end the following new paragraph: 

‘‘(17) SAVINGS CLAUSE.—The meanings of terms used in this 

subsection are applicable for purposes of this subsection only, 

and shall not be construed or applied so as to challenge or affect the characterization, definition, or treatment of any similar terms under any other statute, regulation, or rule, including the Gramm-Leach-Bliley Act, the Legal Certainty for Bank 

Products Act of 2000, the securities laws (as that term is defined in section 3(a)(47) of the Securities Exchange Act of 

1934), and the Commodity Exchange Act.’’. 

SEC. 805. 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: 

113

‘‘(vii) TREATMENT OF MASTER AGREEMENT AS ONE

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. 806. 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 (2)— (A) in subparagraph (A)(ii), by inserting before the semicolon ‘‘, or is exempt from such registration by order of the 

Securities and Exchange Commission’’; and 

(B) in subparagraph (B), by inserting before the period ‘‘, that has been granted an exemption under section 

4(c)(1) of the Commodity Exchange Act, or that is a multilateral clearing organization (as defined in section 408 of 

this Act)’’; 

(2) 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), so 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 established the branch or agency, as those 

terms are defined in section 1(b) of the International 

Banking Act of 1978;’’; 

(3) in paragraph (11), by inserting before the period ‘‘and any 

other clearing organization with which such clearing organization has a netting contract’’; 

(4) 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 close out values relating to such obligations or entitlements) among the parties to the 

agreement; and’’; and 

114

(5) 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 striking subsection (a) and inserting the following: 

‘‘(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, United 

States Code).’’; 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 one 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, 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).’’. 

(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 striking subsection (a) and inserting the following: 

‘‘(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 one 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).’’. 

115

(d) ENFORCEABILITY OF CONTRACTS WITH UNINSURED NATIONAL

BANKS, UNINSURED FEDERAL BRANCHES AND AGENCIES, CERTAIN

UNINSURED STATE MEMBER BANKS, AND EDGE ACT CORPORATIONS.—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 407A; and 

(2) by inserting after section 406 the following new section: 

‘‘SEC. 407. TREATMENT OF CONTRACTS WITH UNINSURED NATIONAL 

BANKS, UNINSURED FEDERAL BRANCHES AND AGENCIES, 

CERTAIN UNINSURED STATE MEMBER BANKS, AND EDGE 

ACT CORPORATIONS. 

‘‘(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, a corporation chartered under section 25A of the Federal Reserve Act, or an uninsured State member bank which operates, or operates as, a multilateral clearing organization pursuant to section 409 of this Act, except that for such purpose—

‘‘(1) any reference to the ‘Corporation as receiver’ or ‘the receiver or the Corporation’ shall refer to the receiver appointed 

by the Comptroller of the Currency in the case of an uninsured 

national bank or uninsured Federal branch or agency, or to the 

receiver appointed by the Board of Governors of the Federal 

Reserve System in the case of a corporation chartered under 

section 25A of the Federal Reserve Act or an uninsured State 

member bank; 

‘‘(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 appointed by 

the Comptroller of the Currency in the case of an uninsured 

national bank or uninsured Federal branch or agency, or to the 

receiver or conservator appointed by the Board of Governors of 

the Federal Reserve System in the case of a corporation chartered under section 25A of the Federal Reserve Act or an uninsured State member bank; and 

‘‘(3) any reference to an ‘insured depository institution’ or 

‘depository institution’ shall refer to an uninsured national 

bank, an uninsured Federal branch or Federal agency, a corporation chartered under section 25A of the Federal Reserve 

Act, or an uninsured State member bank which operates, or 

operates as, a multilateral clearing organization pursuant to 

section 409 of this Act. 

‘‘(b) LIABILITY.—The liability of a receiver or conservator of an 

uninsured national bank, uninsured Federal branch or agency, a 

corporation chartered under section 25A of the Federal Reserve 

Act, or an uninsured State member bank which operates, or operates as, a multilateral clearing organization pursuant to section 

409 of this Act, 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.—

116

‘‘(1) IN GENERAL.—The Comptroller of the Currency in the 

case of an uninsured national bank or uninsured Federal 

branch or agency and the Board of Governors of the Federal 

Reserve System in the case of a corporation chartered under 

section 25A of the Federal Reserve Act, or an uninsured State 

member bank that operates, or operates as, a multilateral 

clearing organization pursuant to section 409 of this Act, in 

consultation with the Federal Deposit Insurance Corporation, 

may each promulgate regulations solely to implement this section. ‘‘(2) SPECIFIC REQUIREMENT.—In promulgating regulations, 

limited solely to implementing paragraphs (8), (9), (10), and 

(11) of section 11(e) of the Federal Deposit Insurance Act, the 

Comptroller of the Currency and the Board of Governors of the 

Federal Reserve System each 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 

meanings as in section 1(b) of the International Banking Act of 

1978.’’. 

SEC. 807. BANKRUPTCY LAW AMENDMENTS. 

(a) DEFINITIONS OF FORWARD CONTRACT, REPURCHASE AGREE- MENT, SECURITIES CLEARING AGENCY, SWAP AGREEMENT, COM- MODITY 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) any security agreement or arrangement, or other 

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

to a forward contract merchant or financial participant in 

117

connection with any agreement or transaction referred to 

in any such subparagraph, but not to exceed the damages 

in connection with any such agreement or transaction, 

measured in accordance with section 562;’’; 

(B) in paragraph (46), by striking ‘‘on any day during the 

period beginning 90 days before the date of’’ and inserting ‘‘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)— ‘‘(A) means— ‘‘(i) an agreement, including related terms, which 

provides for the transfer of one or more certificates of 

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

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

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

that are fully guaranteed by, the United States or any 

agency of the United States against the transfer of 

funds by the transferee of such certificates of deposit, 

eligible bankers’ acceptances, securities, mortgage 

loans, or interests, with a simultaneous agreement by 

such transferee to transfer to the transferor thereof 

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

1 year after such transfer or on demand, against the 

transfer of funds; ‘‘(ii) any combination of agreements or transactions 

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

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

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

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

agreement, without regard to whether such master 

agreement provides for an agreement or transaction 

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

considered to be a repurchase agreement under this 

paragraph only with respect to each agreement or 

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

‘‘(v) any security agreement or arrangement or other 

credit enhancement related to any agreement or transaction referred to in clause (i), (ii), (iii), or (iv), including any guarantee or reimbursement obligation by or 

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

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

118

connection with any such agreement or transaction, 

measured in accordance with section 562 of this title; 

and ‘‘(B) does not include a repurchase obligation under a 

participation in a commercial mortgage loan;’’; 

(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—

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

rate collar, cross-currency rate swap, and basis 

swap; ‘‘(II) a spot, same day-tomorrow, tomorrow-next, 

forward, or other foreign exchange or precious 

metals agreement; ‘‘(III) a currency swap, option, future, or forward 

agreement; ‘‘(IV) an equity index or equity swap, option, future, or forward agreement; ‘‘(V) a debt index or debt swap, option, future, 

or forward agreement; ‘‘(VI) a total return, credit spread or credit 

swap, option, future, or forward agreement; ‘‘(VII) a commodity index or a commodity swap, 

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

weather option; 

‘‘(ii) any agreement or transaction that is similar to 

any other agreement or transaction referred to in this 

paragraph and that—

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

in the future becomes, the subject of recurrent 

dealings in the swap markets (including terms 

and conditions incorporated by reference therein); 

and 

‘‘(II) is a forward, swap, future, or option on one 

or more rates, currencies, commodities, equity securities, or other equity instruments, debt securities or other debt instruments, quantitative measures associated with an occurrence, extent of an 

occurrence, or contingency associated with a financial, commercial, or economic consequence, or 

economic or financial indices or measures of economic or financial risk or value; 

‘‘(iii) any combination of agreements or transactions 

referred to in this subparagraph; 

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

119

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

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

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

only with respect to each agreement or transaction 

under the master agreement that is referred to in 

clause (i), (ii), (iii), or (iv); or ‘‘(vi) any security agreement or arrangement or 

other credit enhancement related to any agreements 

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

or to a swap participant or financial participant in 

connection with any agreement or transaction referred 

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

in connection with any such agreement or transaction, 

measured in accordance with section 562; and ‘‘(B) is applicable for purposes of this title only, and shall 

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

characterization, definition, or treatment of any swap 

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

and the Legal Certainty for Bank Products Act of 2000;’’; 

(2) in section 741(7), by striking paragraph (7) and inserting 

the following: ‘‘(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, mortgage loan, interest, 

group or index, or option, and including any repurchase or reverse repurchase transaction on any such 

security, certificate of deposit, mortgage 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, inVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00119 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
120

cluding an option to purchase or sell any such security, certificate of deposit, mortgage 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 

subparagraph; ‘‘(vi) any combination of the agreements or transactions referred to in this subparagraph; ‘‘(vii) any option to enter into any agreement or 

transaction referred to in this subparagraph; ‘‘(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 subparagraph, except that such master agreement shall be considered to be a securities 

contract under this subparagraph 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 subparagraph, including 

any guarantee or reimbursement obligation by or to a 

stockbroker, securities clearing agency, financial institution, or financial participant in connection with any 

agreement or transaction referred to in this subparagraph, but not to exceed the damages in connection 

with any such agreement or transaction, measured in 

accordance with section 562; 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 agreement, without regard to whether the 

master 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 

121

master agreement that is referred to in subparagraph (A), 

(B), (C), (D), (E), (F), (G), or (H); or 

‘‘(J) any security agreement or arrangement or other 

credit enhancement related to any agreement or transaction referred to in this paragraph, including any guarantee or reimbursement obligation by or to a commodity 

broker or financial participant in connection with any 

agreement or transaction referred to in this paragraph, 

but not to exceed the damages in connection with any such 

agreement or transaction, measured in accordance with 

section 562;’’. 

(b) DEFINITIONS OF FINANCIAL INSTITUTION, FINANCIAL PARTICIPANT, AND FORWARD CONTRACT MERCHANT.—Section 101 of title 

11, United States Code, is amended—

(1) by striking paragraph (22) and inserting the following: 

‘‘(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) 

such customer; or 

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

in section 741) an investment company registered under 

the Investment Company Act of 1940;’’; 

(2) by inserting after paragraph (22) the following: 

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

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

contract, commodity contract, swap agreement, repurchase 

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

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

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

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

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

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

amount outstanding on any day during the previous 15-

month period, or has gross mark-to-market positions of not 

less than $100,000,000 (aggregated across counterparties) 

in one or more such agreements or transactions with the 

debtor or any other entity (other than an affiliate) on any 

day during the previous 15-month period; or 

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

the Federal Deposit Insurance Corporation Improvement 

Act of 1991);’’; and 

(3) by striking paragraph (26) and inserting the following: 

‘‘(26) ‘forward contract merchant’ means a Federal reserve 

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

in part of entering into forward contracts as or with merchants 

in a commodity (as defined in section 761) or any similar good, 

article, service, right, or interest which is presently or in the 

future becomes the subject of dealing in the forward contract 

trade;’’. 

122

(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’— ‘‘(A) means an agreement providing for the exercise of 

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

with one or more contracts that are described in any one 

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

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

1 or more of the foregoing; and ‘‘(B) if the agreement contains provisions relating to 

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

shall be deemed to be a master netting agreement only 

with respect to those agreements or transactions that are 

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

of section 561(a); ‘‘(38B) ‘master netting agreement participant’ means an entity that, at any time before the date of the filing of the petition, 

is a party to an outstanding master netting agreement with 

the debtor;’’. (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 224, 303, 311, 401, and 718, is 

amended— (A) in paragraph (6), by inserting ‘‘, pledged to, under 

the control of,’’ after ‘‘held by’’; 

(B) in paragraph (7), by inserting ‘‘, pledged to, under 

the control of,’’ after ‘‘held by’’; 

(C) by striking paragraph (17) and inserting the following: 

‘‘(17) under subsection (a), of the setoff by a swap participant 

or financial participant of a mutual debt and claim under or 

in connection with one 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 or financial 

participant under or in connection with any swap agreement or 

against cash, securities, or other property held by, pledged to, 

under the control of, or due from such swap participant or financial participant to margin, guarantee, secure, or settle any 

swap agreement;’’; and 

(D) by inserting after paragraph (26) the following: 

‘‘(27) under subsection (a), of the setoff by a master netting 

agreement participant of a mutual debt and claim under or in 

connection with one 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 payVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00122 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
123

ment 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 to, 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 that 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; and’’. 

(2) LIMITATION.—Section 362 of title 11, United States Code, 

as amended by sections 106, 305, 311, and 441, is amended by 

adding at the end the following: 

‘‘(o) The exercise of rights not subject to the stay arising under 

subsection (a) pursuant to paragraph (6), (7), (17), or (27) 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, 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 

(C) by inserting ‘‘or financial participant’’ after ‘‘swap 

participant’’; and 

(2) by adding at the end the following: 

‘‘(j) Notwithstanding sections 544, 545, 547, 548(a)(1)(B), and 

548(b) 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) and except to the extent that 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’’ at the end; 

(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 that, with respect to a transfer 

under any individual contract covered thereby, to the extent 

that such master netting agreement participant otherwise did 

not take (or is otherwise not deemed to have taken) such transfer for value.’’. 

124

(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: 

‘‘§ 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 FOR- WARD CONTRACTS.—Section 556 of title 11, United States Code, is 

amended— (1) by amending the section heading to read as follows: 

‘‘§ 556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract’’; 

(2) in the first sentence, by striking ‘‘liquidation’’ and inserting ‘‘liquidation, termination, or acceleration’’; and 

(3) in the second sentence, by striking ‘‘As used’’ and all that 

follows through ‘‘right,’’ and inserting ‘‘As used in this section, 

the term ‘contractual right’ includes a right set forth in a rule 

or bylaw of a derivatives clearing organization (as defined in 

the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, 

a national securities association, a securities clearing agency, 

a contract market designated under the Commodity Exchange 

Act, a derivatives transaction execution facility registered 

under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the 

governing board thereof and a right,’’. (i) TERMINATION OR ACCELERATION OF REPURCHASE AGREE- MENTS.—Section 559 of title 11, United States Code, is amended— (1) by amending the section heading to read as follows: 

‘‘§ 559. Contractual right to liquidate, terminate, or accelerate a repurchase agreement’’; 

(2) in the first sentence, by striking ‘‘liquidation’’ and inserting ‘‘liquidation, termination, or acceleration’’; and 

(3) in the third sentence, by striking ‘‘As used’’ and all that 

follows through ‘‘right,’’ and inserting ‘‘As used in this section, 

the term ‘contractual right’ includes a right set forth in a rule 

or bylaw of a derivatives clearing organization (as defined in 

the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, 

a national securities association, a securities clearing agency, 

a contract market designated under the Commodity Exchange 

Act, a derivatives transaction execution facility registered 

under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the 

governing board thereof and a right,’’. 

(j) LIQUIDATION, TERMINATION, OR ACCELERATION OF SWAP

AGREEMENTS.—Section 560 of title 11, United States Code, is 

amended—

125

(1) by amending the section heading to read as follows: 

‘‘§ 560. Contractual right to liquidate, terminate, or accelerate a swap agreement’’; 

(2) in the first sentence, by striking ‘‘termination of a swap 

agreement’’ and inserting ‘‘liquidation, termination, or acceleration of one or more swap agreements’’; 

(3) by striking ‘‘in connection with any swap agreement’’ and 

inserting ‘‘in connection with the termination, liquidation, or 

acceleration of one or more swap agreements’’; and 

(4) in the second sentence, by striking ‘‘As used’’ and all that 

follows through ‘‘right,’’ and inserting ‘‘As used in this section, 

the term ‘contractual right’ includes a right set forth in a rule 

or bylaw of a derivatives clearing organization (as defined in 

the Commodity Exchange Act), a multilateral clearing organization (as defined in the Federal Deposit Insurance Corporation Improvement Act of 1991), a national securities exchange, 

a national securities association, a securities clearing agency, 

a contract market designated under the Commodity Exchange 

Act, a derivatives transaction execution facility registered 

under the Commodity Exchange Act, or a board of trade (as defined in the Commodity Exchange Act) or in a resolution of the 

governing board thereof and a right,’’. 

(k) LIQUIDATION, TERMINATION, ACCELERATION, OR OFFSET

UNDER A MASTER NETTING AGREEMENT AND ACROSS CONTRACTS.—

(1) IN GENERAL.—Title 11, United States Code, is amended 

by inserting after section 560 the following: 

‘‘§ 561. Contractual right to terminate, liquidate, accelerate, 

or offset under a master netting agreement and 

across contracts; proceedings under chapter 15

‘‘(a) 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 one or 

more (or the termination, liquidation, or acceleration of one 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)(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—

126

‘‘(A) a party may not net or offset an obligation to the debtor 

arising under, or in connection with, a commodity contract 

traded on or subject to the rules of a contract market designated under the Commodity Exchange Act or a derivatives 

transaction execution facility registered under the Commodity 

Exchange Act against any claim arising under, or in connection 

with, other instruments, contracts, or agreements listed in subsection (a) except to the extent that the party has positive net 

equity in the commodity accounts at the debtor, as calculated 

under such subchapter; 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 and traded on or subject to the rules of a 

contract market designated under the Commodity Exchange 

Act or a derivatives transaction execution facility registered 

under the Commodity Exchange Act against any claim arising 

under, or in connection with, other instruments, contracts, or 

agreements listed in subsection (a). ‘‘(3) No provision of subparagraph (A) or (B) of paragraph (2) 

shall prohibit the offset of claims and obligations that arise 

under—

‘‘(A) a cross-margining agreement or similar arrangement 

that has been approved by the Commodity Futures Trading 

Commission or submitted to the Commodity Futures Trading 

Commission under paragraph (1) or (2) of section 5c(c) of the 

Commodity Exchange Act and has not been abrogated or rendered ineffective by the Commodity Futures Trading Commission; or ‘‘(B) any other netting agreement between a clearing organization (as defined in section 761) and another entity that has 

been approved by the Commodity Futures Trading Commission. ‘‘(c) As used in this section, the term ‘contractual right’ includes 

a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral 

clearing organization (as defined in the Federal Deposit Insurance 

Corporation Improvement Act of 1991), a national securities exchange, a national securities association, a securities clearing agency, a contract market designated under the Commodity Exchange 

Act, a derivatives transaction execution facility registered under 

the Commodity Exchange Act, or a board of trade (as defined in the 

Commodity Exchange Act) 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. 

‘‘(d) 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 under chapter 15, 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 

127

to be limited based on the presence or absence of assets of the debtor in the United States).’’. 

(2) 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 560 the following:

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a master 

netting agreement and across contracts; proceedings under chapter 

15.’’.

(l) COMMODITY BROKER LIQUIDATIONS.—Title 11, United States 

Code, is amended by inserting after section 766 the following:

‘‘§ 767. Commodity broker liquidation and forward contract 

merchants, commodity brokers, stockbrokers, financial institutions, financial participants, 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, financial participant, 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.’’. 

(m) STOCKBROKER LIQUIDATIONS.—Title 11, United States Code, 

is amended by inserting after section 752 the following: 

‘‘§ 753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial 

institutions, financial participants, 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, financial participant, 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) SETOFF.—Section 553 of title 11, United States Code, is 

amended—

(1) in subsection (a)(2)(B)(ii), by inserting before the semicolon the following: ‘‘(except for a setoff of a kind described in 

section 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 

559, 560, or 561)’’; 

(2) in subsection (a)(3)(C), by inserting before the period the 

following: ‘‘(except for a setoff of a kind described in section 

362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 555, 556, 559, 560, 

or 561)’’; and 

(3) in subsection (b)(1), by striking ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17), 362(b)(27), 555, 556, 559, 560, 561,’’. 

(o) SECURITIES CONTRACTS, COMMODITY CONTRACTS, AND FORWARD CONTRACTS.—Title 11, United States Code, is amended—

128

(1) in section 362(b)(6), by striking ‘‘financial institutions,’’

each place such term appears and inserting ‘‘financial institution, financial participant,’’; 

(2) in sections 362(b)(7) and 546(f), by inserting ‘‘or financial 

participant’’ after ‘‘repo participant’’ each place such term appears; 

(3) in section 546(e), by inserting ‘‘financial participant,’’

after ‘‘financial institution,’’; 

(4) in section 548(d)(2)(B), by inserting ‘‘financial participant,’’ after ‘‘financial institution,’’; 

(5) in section 548(d)(2)(C), by inserting ‘‘or financial participant’’ after ‘‘repo participant’’; 

(6) in section 548(d)(2)(D), by inserting ‘‘or financial participant’’ after ‘‘swap participant’’; 

(7) in section 555—

(A) by inserting ‘‘financial participant,’’ after ‘‘financial 

institution,’’; and 

(B) by striking the second sentence and inserting the following: ‘‘As used in this section, the term ‘contractual 

right’ includes a right set forth in a rule or bylaw of a derivatives clearing organization (as defined in the Commodity Exchange Act), a multilateral clearing organization 

(as defined in the Federal Deposit Insurance Corporation 

Improvement Act of 1991), a national securities exchange, 

a national securities association, a securities clearing 

agency, a contract market designated under the Commodity Exchange Act, a derivatives transaction execution 

facility registered under the Commodity Exchange Act, or 

a board of trade (as defined in the Commodity Exchange 

Act), 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.’’; 

(8) in section 556, by inserting ‘‘, financial participant,’’ after 

‘‘commodity broker’’; 

(9) in section 559, by inserting ‘‘or financial participant’’ after 

‘‘repo participant’’ each place such term appears; and 

(10) in section 560, by inserting ‘‘or financial participant’’

after ‘‘swap participant’’. 

(p) CONFORMING AMENDMENTS.—Title 11, United States Code, is 

amended—

(1) in the table of sections for 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 for chapter 7—

129

(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, financial participants, 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, financial participants, securities 

clearing agencies, swap participants, repo participants, and master netting agreement participants.’’.

SEC. 808. 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 by any insured depository institution 

with respect to qualified financial contracts (including 

market valuations) only if such insured depository institution is in a troubled condition (as such term is defined by 

the Corporation pursuant to section 32).’’. 

SEC. 809. 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) one 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. 810. DAMAGE MEASURE. 

(a) IN GENERAL.—Title 11, United States Code, is amended—

(1) by inserting after section 561, as added by section 907, 

the following: 

130

‘‘§ 562. Timing of damage measurement in connection with 

swap agreements, securities contracts, forward 

contracts, commodity contracts, repurchase agreements, and master netting agreements 

‘‘(a) If the trustee rejects a swap agreement, securities contract 

(as defined in section 741), forward contract, commodity contract 

(as defined in section 761), repurchase agreement, or master netting agreement pursuant to section 365(a), 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 or dates of such liquidation, termination, or acceleration. 

‘‘(b) If there are not any commercially reasonable determinants 

of value as of any date referred to in paragraph (1) or (2) of subsection (a), damages shall be measured as of the earliest subsequent date or dates on which there are commercially reasonable determinants of value. 

‘‘(c) For the purposes of subsection (b), if damages are not measured as of the date or dates of rejection, liquidation, termination, 

or acceleration, and the forward contract merchant, stockbroker, financial institution, securities clearing agency, repo participant, financial participant, master netting agreement participant, or swap 

participant or the trustee objects to the timing of the measurement 

of damages—

‘‘(1) the trustee, in the case of an objection by a forward contract merchant, stockbroker, financial institution, securities 

clearing agency, repo participant, financial participant, master 

netting agreement participant, or swap participant; or 

‘‘(2) the forward contract merchant, stockbroker, financial institution, securities clearing agency, repo participant, financial 

participant, master netting agreement participant, or swap 

participant, in the case of an objection by the trustee, 

has the burden of proving that there were no commercially reasonable determinants of value as of such date or dates.’’; and 

(2) in the table of sections for chapter 5, by inserting after 

the item relating to section 561 (as added by section 907) the 

following new item:

‘‘562. Timing of 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 inserting ‘‘(1)’’ after ‘‘(g)’’; and 

(2) by adding at the end the following: 

‘‘(2) A claim for damages calculated in accordance with section 

562 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.’’. 

131

SEC. 811. 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 at the end 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 

SIPC 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, as those terms are 

defined in sections 101, 741, and 761 of title 11, 

United States Code, to offset or net termination values, payment amounts, or other transfer obligations 

arising under or in connection with one or more of 

such contracts or agreements, or to foreclose on any 

cash collateral pledged by the debtor, whether or not 

with respect to one 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, or disposition of, securities collateral 

pledged by the debtor, whether or not with respect to 

one 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 subparagraph, 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.’’.

TITLE IX—PROTECTION OF FAMILY 

FARMERS AND FAMILY FISHERMEN 

SEC. 901. PERMANENT REENACTMENT OF CHAPTER 12. 

(a) REENACTMENT.—

(1) IN GENERAL.—Chapter 12 of title 11, United States Code, 

as reenacted by section 149 of division C of the Omnibus Consolidated and Emergency Supplemental Appropriations Act, 

1999 (Public Law 105–277), is hereby reenacted, and as here 

reenacted is amended by this Act. 

(2) EFFECTIVE DATE.—Subsection (a) shall take effect on the 

date of the enactment of this Act. 

(b) CONFORMING AMENDMENT.—Section 302 of the Bankruptcy 

Judges, United States Trustees, and Family Farmer Bankruptcy 

Act of 1986 (28 U.S.C. 581 note) is amended by striking subsection 

(f).

132

SEC. 902. DEBT LIMIT INCREASE. 

Section 104(b) of title 11, United States Code, as amended by section 226, is amended by inserting ‘‘101(18),’’ after ‘‘101(3),’’ each 

place it appears. 

SEC. 903. CERTAIN CLAIMS OWED TO GOVERNMENTAL UNITS. 

(a) CONTENTS OF PLAN.—Section 1222(a)(2) of title 11, United 

States Code, as amended by section 213, is amended to read as follows: 

‘‘(2) provide for the full payment, in deferred cash payments, 

of all claims entitled to priority under section 507, unless—

‘‘(A) the claim is a claim owed to a governmental unit 

that arises as a result of the sale, transfer, exchange, or 

other disposition of any farm asset used in the debtor’s 

farming operation, in which case the claim shall be treated 

as an unsecured claim that is not entitled to priority under 

section 507, but the debt shall be treated in such manner 

only if the debtor receives a discharge; or 

‘‘(B) the holder of a particular claim agrees to a different 

treatment of that claim;’’. 

(b) SPECIAL NOTICE PROVISIONS.—Section 1231(b) of title 11, 

United States Code, as so designated by section 719, is amended 

by striking ‘‘a State or local governmental unit’’ and inserting ‘‘any 

governmental unit’’. 

(c) EFFECTIVE DATE; APPLICATION OF AMENDMENTS.—This section and the amendments made by this section shall take effect on 

the date of the enactment of this Act and shall not apply with respect to cases commenced under title 11 of the United States Code 

before such date.

SEC. 904. DEFINITION OF FAMILY FARMER. 

Section 101(18) of title 11, United States Code, is amended—

(1) in subparagraph (A)—

(A) by striking ‘‘$1,500,000’’ and inserting ‘‘$3,237,000’’; 

and 

(B) by striking ‘‘80’’ and inserting ‘‘50’’; and 

(2) in subparagraph (B)(ii)—

(A) by striking ‘‘$1,500,000’’ and inserting ‘‘$3,237,000’’; 

and 

(B) by striking ‘‘80’’ and inserting ‘‘50’’.

SEC. 905. ELIMINATION OF REQUIREMENT THAT FAMILY FARMER AND 

SPOUSE RECEIVE OVER 50 PERCENT OF INCOME FROM 

FARMING OPERATION IN YEAR PRIOR TO BANKRUPTCY. 

Section 101(18)(A) of title 11, United States Code, is amended by 

striking ‘‘for the taxable year preceding the taxable year’’ and inserting the following: 

‘‘for—

‘‘(i) the taxable year preceding; or 

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

the taxable year’’.

SEC. 906. PROHIBITION OF RETROACTIVE ASSESSMENT OF DISPOSABLE INCOME. 

(a) CONFIRMATION OF PLAN.—Section 1225(b)(1) of title 11, 

United States Code, is amended—

(1) in subparagraph (A) by striking ‘‘or’’ at the end; 

133

(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 value of the property to be distributed under the 

plan in the 3-year period, or such longer period as the court 

may approve under section 1222(c), beginning on the date that 

the first distribution is due under the plan is not less than the 

debtor’s projected disposable income for such period.’’. (b) MODIFICATION OF PLAN.—Section 1229 of title 11, United 

States Code, is amended by adding at the end the following: ‘‘(d) A plan may not be modified under this section— ‘‘(1) to increase the amount of any payment due before the 

plan as modified becomes the plan; ‘‘(2) by anyone except the debtor, based on an increase in the 

debtor’s disposable income, to increase the amount of payments 

to unsecured creditors required for a particular month so that 

the aggregate of such payments exceeds the debtor’s disposable 

income for such month; or ‘‘(3) in the last year of the plan by anyone except the debtor, 

to require payments that would leave the debtor with insufficient funds to carry on the farming operation after the plan is 

completed.’’.

SEC. 907. FAMILY FISHERMEN. 

(a) DEFINITIONS.—Section 101 of title 11, United States Code, is 

amended— (1) by inserting after paragraph (7) the following: 

‘‘(7A) ‘commercial fishing operation’ means— ‘‘(A) the catching or harvesting of fish, shrimp, lobsters, 

urchins, seaweed, shellfish, or other aquatic species or 

products of such species; or ‘‘(B) for purposes of section 109 and chapter 12, aquaculture activities consisting of raising for market any species or product described in subparagraph (A); ‘‘(7B) ‘commercial fishing vessel’ means a vessel used by a 

family fisherman to carry out a commercial fishing operation;’’; 

and 

(2) by inserting after paragraph (19) the following: 

‘‘(19A) ‘family fisherman’ means— ‘‘(A) an individual or individual and spouse engaged in 

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

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

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

commercial fishing operation), on the date the case is 

filed, arise out of a commercial fishing operation 

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

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

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

taxable year preceding the taxable year in which the 

case concerning such individual or such individual and 

spouse was filed; or 

134

‘‘(B) a corporation or partnership—

‘‘(i) in which more than 50 percent of the outstanding stock or equity is held by—

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

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

of such family, and such family or such relatives 

conduct the commercial fishing operation; and 

‘‘(ii)(I) more than 80 percent of the value of its assets consists of assets related to the commercial fishing operation; 

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

and not less than 80 percent of its aggregate noncontingent, liquidated debts (excluding a debt for 1 

dwelling which is owned by such corporation or partnership and which a shareholder or partner maintains 

as a principal residence, unless such debt arises out of 

a commercial fishing operation), on the date the case 

is filed, arise out of a commercial fishing operation 

owned or operated by such corporation or such partnership; and 

‘‘(III) if such corporation issues stock, such stock is 

not publicly traded; 

‘‘(19B) ‘family fisherman with regular annual income’ means 

a family fisherman whose annual income is sufficiently stable 

and regular to enable such family fisherman to make payments 

under a plan under chapter 12 of this title;’’. 

(b) WHO MAY BE A DEBTOR.—Section 109(f) of title 11, United 

States Code, is amended by inserting ‘‘or family fisherman’’ after 

‘‘family farmer’’. 

(c) CHAPTER 12.—Chapter 12 of title 11, United States Code, is 

amended—

(1) in the chapter heading, by inserting ‘‘OR FISHERMAN’’

after ‘‘FAMILY FARMER’’; 

(2) in section 1203, by inserting ‘‘or commercial fishing operation’’ after ‘‘farm’’; and 

(3) in section 1206, by striking ‘‘if the property is farmland 

or farm equipment’’ and inserting ‘‘if the property is farmland, 

farm equipment, or property used to carry out a commercial 

fishing operation (including a commercial fishing vessel)’’. 

(d) CLERICAL AMENDMENT.—In the table of chapters for title 11, 

United States Code, the item relating to chapter 12, is amended to 

read as follows:

‘‘12. Adjustments of Debts of a Family Farmer or Family Fisherman 

with Regular Annual Income .......................................... 1201’’.

(e) APPLICABILITY.—Nothing in this section shall change, affect, 

or amend the Fishery Conservation and Management Act of 1976 

(16 U.S.C. 1801, et seq.). 

135

TITLE X—HEALTH CARE AND 

EMPLOYEE BENEFITS 

SEC. 1001. DEFINITIONS. 

(a) HEALTH CARE BUSINESS DEFINED.—Section 101 of title 11, 

United States Code, as amended by section 306, is amended— (1) by redesignating paragraph (27A) as paragraph (27B); 

and 

(2) by inserting after paragraph (27) the following: 

‘‘(27A) ‘health care business’— ‘‘(A) means any public or private entity (without regard 

to whether that entity is organized for profit or not for 

profit) that is primarily engaged in offering to the general 

public facilities and services for— ‘‘(i) the diagnosis or treatment of injury, deformity, 

or disease; and ‘‘(ii) surgical, drug treatment, psychiatric, or obstetric care; and ‘‘(B) includes— ‘‘(i) any— ‘‘(I) general or specialized hospital; 

‘‘(II) ancillary ambulatory, emergency, or surgical treatment facility; ‘‘(III) hospice; 

‘‘(IV) home health agency; and 

‘‘(V) other health care institution that is similar 

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

or (IV); and ‘‘(ii) any long-term care facility, including any— ‘‘(I) skilled nursing facility; 

‘‘(II) intermediate care facility; 

‘‘(III) assisted living facility; 

‘‘(IV) home for the aged; 

‘‘(V) domiciliary care facility; and 

‘‘(VI) health care institution that is related to a 

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

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

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

to activities of daily living;’’. (b) PATIENT AND PATIENT RECORDS DEFINED.—Section 101 of title 

11, United States Code, is amended by inserting after paragraph 

(40) the following: ‘‘(40A) ‘patient’ means any individual who obtains or receives 

services from a health care business; ‘‘(40B) ‘patient records’ means any written document relating 

to a patient or a record recorded in a magnetic, optical, or 

other form of electronic medium;’’. (c) RULE OF CONSTRUCTION.—The amendments made by subsection (a) of this section shall not affect the interpretation of section 109(b) of title 11, United States Code. 

SEC. 1002. DISPOSAL OF PATIENT RECORDS. 

(a) IN GENERAL.—Subchapter III of chapter 3 of title 11, United 

States Code, is amended by adding at the end the following: 

136

‘‘§ 351. Disposal of patient records 

‘‘If a health care business commences a case under chapter 7, 9, 

or 11, and the trustee does not have a sufficient amount of funds 

to pay for the storage of patient records in the manner required 

under applicable Federal or State law, the following requirements 

shall apply: 

‘‘(1) The trustee shall—

‘‘(A) promptly publish notice, in 1 or more appropriate 

newspapers, that if patient records are not claimed by the 

patient or an insurance provider (if applicable law permits 

the insurance provider to make that claim) by the date 

that is 365 days after the date of that notification, the 

trustee will destroy the patient records; and 

‘‘(B) during the first 180 days of the 365-day period described in subparagraph (A), promptly attempt to notify directly each patient that is the subject of the patient 

records and appropriate insurance carrier concerning the 

patient records by mailing to the most recent known address of that patient, or a family member or contact person 

for that patient, and to the appropriate insurance carrier 

an appropriate notice regarding the claiming or disposing 

of patient records. 

‘‘(2) If, after providing the notification under paragraph (1), 

patient records are not claimed during the 365-day period described under that paragraph, the trustee shall mail, by certified mail, at the end of such 365-day period a written request 

to each appropriate Federal agency to request permission from 

that agency to deposit the patient records with that agency, except that no Federal agency is required to accept patient 

records under this paragraph. 

‘‘(3) If, following the 365-day period described in paragraph 

(2) and after providing the notification under paragraph (1), 

patient records are not claimed by a patient or insurance provider, or request is not granted by a Federal agency to deposit 

such records with that agency, the trustee shall destroy those 

records by—

‘‘(A) if the records are written, shredding or burning the 

records; or 

‘‘(B) if the records are magnetic, optical, or other electronic records, by otherwise destroying those records so 

that those records cannot be retrieved.’’. 

(b) CLERICAL AMENDMENT.—The table of sections for subchapter 

III of chapter 3 of title 11, United States Code, is amended by adding at the end the following:

‘‘351. Disposal of patient records.’’.

SEC. 1003. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS OF CLOSING 

A HEALTH CARE BUSINESS AND OTHER ADMINISTRATIVE 

EXPENSES. 

Section 503(b) of title 11, United States Code, as amended by section 445, is amended by adding at the end the following: 

‘‘(8) the actual, necessary costs and expenses of closing a 

health care business incurred by a trustee or by a Federal 

agency (as defined in section 551(1) of title 5) or a department 

137

or agency of a State or political subdivision thereof, including 

any cost or expense incurred— ‘‘(A) in disposing of patient records in accordance with 

section 351; or ‘‘(B) in connection with transferring patients from the 

health care business that is in the process of being closed 

to another health care business; and’’.

SEC. 1004. APPOINTMENT OF OMBUDSMAN TO ACT AS PATIENT ADVOCATE. 

(a) OMBUDSMAN TO ACT AS PATIENT ADVOCATE.— (1) APPOINTMENT OF OMBUDSMAN.—Title 11, United States 

Code, as amended by section 232, is amended by inserting 

after section 332 the following: 

‘‘§ 333. Appointment of patient care ombudsman 

‘‘(a)(1) If the debtor in a case under chapter 7, 9, or 11 is a health 

care business, the court shall order, not later than 30 days after 

the commencement of the case, the appointment of an ombudsman 

to monitor the quality of patient care and to represent the interests 

of the patients of the health care business unless the court finds 

that the appointment of such ombudsman is not necessary for the 

protection of patients under the specific facts of the case. ‘‘(2)(A) If the court orders the appointment of an ombudsman 

under paragraph (1), the United States trustee shall appoint 1 disinterested person (other than the United States trustee) to serve as 

such ombudsman. ‘‘(B) If the debtor is a health care business that provides longterm care, then the United States trustee may appoint the State 

Long-Term Care Ombudsman appointed under the Older Americans Act of 1965 for the State in which the case is pending to serve 

as the ombudsman required by paragraph (1). 

‘‘(C) If the United States trustee does not appoint a State LongTerm Care Ombudsman under subparagraph (B), the court shall 

notify the State Long-Term Care Ombudsman appointed under the 

Older Americans Act of 1965 for the State in which the case is 

pending, of the name and address of the person who is appointed 

under subparagraph (A). ‘‘(b) An ombudsman appointed under subsection (a) shall— ‘‘(1) monitor the quality of patient care provided to patients 

of the debtor, to the extent necessary under the circumstances, 

including interviewing patients and physicians; ‘‘(2) not later than 60 days after the date of appointment, 

and not less frequently than at 60-day intervals thereafter, report to the court after notice to the parties in interest, at a 

hearing or in writing, regarding the quality of patient care provided to patients of the debtor; and ‘‘(3) if such ombudsman determines that the quality of patient care provided to patients of the debtor is declining significantly or is otherwise being materially compromised, file with 

the court a motion or a written report, with notice to the parties in interest immediately upon making such determination. ‘‘(c)(1) An ombudsman appointed under subsection (a) shall maintain any information obtained by such ombudsman under this section that relates to patients (including information relating to patient records) as confidential information. Such ombudsman may 

138

not review confidential patient records unless the court approves 

such review in advance and imposes restrictions on such ombudsman to protect the confidentiality of such records. 

‘‘(2) An ombudsman appointed under subsection (a)(2)(B) shall 

have access to patient records consistent with authority of such ombudsman under the Older Americans Act of 1965 and under nonFederal laws governing the State Long-Term Care Ombudsman 

program.’’. 

(2) CLERICAL AMENDMENT.—The table of sections for subchapter II of chapter 3 of title 11, United States Code, as 

amended by section 232, is amended by adding at the end the 

following:

‘‘333. Appointment of ombudsman.’’.

(b) COMPENSATION OF OMBUDSMAN.—Section 330(a)(1) of title 11, 

United States Code, is amended—

(1) in the matter preceding subparagraph (A), by inserting 

‘‘an ombudsman appointed under section 333, or’’ before ‘‘a professional person’’; and 

(2) in subparagraph (A), by inserting ‘‘ombudsman,’’ before 

‘‘professional person’’. 

SEC. 1005. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO TRANSFER 

PATIENTS. 

(a) IN GENERAL.—Section 704(a) of title 11, United States Code, 

as amended by sections 102, 219, and 446, is amended by adding 

at the end the following: 

‘‘(12) use all reasonable and best efforts to transfer patients 

from a health care business that is in the process of being 

closed to an appropriate health care business that—

‘‘(A) is in the vicinity of the health care business that is 

closing; 

‘‘(B) provides the patient with services that are substantially similar to those provided by the health care business 

that is in the process of being closed; and 

‘‘(C) maintains a reasonable quality of care.’’. 

(b) CONFORMING AMENDMENT.—Section 1106(a)(1) of title 11, 

United States Code, as amended by section 446, is amended by 

striking ‘‘and (11)’’ and inserting ‘‘(11), and (12)’’. 

SEC. 1006. EXCLUSION FROM PROGRAM PARTICIPATION NOT SUBJECT 

TO AUTOMATIC STAY. 

Section 362(b) of title 11, United States Code, is amended by inserting after paragraph (27), as amended by sections 224, 303, 311, 

401, 718, and 907, the following: 

‘‘(28) under subsection (a), of the exclusion by the Secretary 

of Health and Human Services of the debtor from participation 

in the medicare program or any other Federal health care program (as defined in section 1128B(f) of the Social Security Act 

pursuant to title XI or XVIII of such Act).’’. 

TITLE XI—TECHNICAL AMENDMENTS 

SEC. 1101. DEFINITIONS. 

Section 101 of title 11, United States Code, as hereinbefore 

amended by this Act, is amended—

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(1) by striking ‘‘In this title—’’ and inserting ‘‘In this title the 

following definitions shall apply:’’; 

(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), (38), and (54A), by striking 

‘‘; and’’ at the end and inserting a period; 

(5) in paragraph (51B) by inserting ‘‘who is not a family 

farmer’’ after ‘‘debtor’’ the first place it appears; and 

(6) by striking paragraph (54) and inserting the following: 

‘‘(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) by indenting the left margin of paragraph (54A) 2 ems to 

the right; and 

(8) in each of paragraphs (1) through (35), in each of paragraphs (36), (37), (38A), (38B) and (39A), and in each of paragraphs (40) through (55), by striking the semicolon at the end 

and inserting a period. 

SEC. 1102. ADJUSTMENT OF DOLLAR AMOUNTS. 

Section 104 of title 11, United States Code, is amended by inserting ‘‘522(f)(3),’’ 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, 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)(4) of title 11, United States Code, as so redesignated by section 221, 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. 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. 

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SEC. 1108. 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. 1109. EXCEPTIONS TO DISCHARGE. 

Section 523 of title 11, United States Code, as amended by sections 215 and 314, is amended—

(1) by transferring paragraph (15), as added by section 304(e) 

of Public Law 103–394 (108 Stat. 4133), so as to insert such 

paragraph after subsection (a)(14A); 

(2) in subsection (a)(9), by striking ‘‘motor vehicle’’ and inserting ‘‘motor vehicle, vessel, or aircraft’’; and 

(3) in subsection (e), by striking ‘‘a insured’’ and inserting 

‘‘an insured’’. 

SEC. 1110. 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), or that’’. 

SEC. 1111. 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. 1112. 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. 1113. PREFERENCES. 

(a) IN GENERAL.—Section 547 of title 11, United States Code, as 

amended by section 201, 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 shall be considered 

to 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. 1114. POSTPETITION TRANSACTIONS. 

Section 549(c) of title 11, United States Code, is amended—

(1) by inserting ‘‘an interest in’’ after ‘‘transfer of’’ each place 

it appears; 

(2) by striking ‘‘such property’’ and inserting ‘‘such real property’’; and 

(3) by striking ‘‘the interest’’ and inserting ‘‘such interest’’. 

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SEC. 1115. DISPOSITION OF PROPERTY OF THE ESTATE. 

Section 726(b) of title 11, United States Code, is amended by 

striking ‘‘1009,’’. 

SEC. 1116. GENERAL PROVISIONS. 

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

SEC. 1117. 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. 1118. 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. 1119. 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. 1120. 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. 1121. TRANSFERS MADE BY NONPROFIT CHARITABLE CORPORATIONS. 

(a) SALE OF PROPERTY OF ESTATE.—Section 363(d) of title 11, 

United States Code, is amended 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.’’. 

(b) CONFIRMATION OF PLAN OF REORGANIZATION.—Section 

1129(a) of title 11, United States Code, as amended by sections 213 

and 321, is amended by adding at the end the following: 

‘‘(16) All transfers of property of the plan shall be made in 

accordance with any applicable provisions of nonbankruptcy 

law that govern the transfer of property by a corporation or 

trust that is not a moneyed, business, or commercial corporation or trust.’’. 

(c) TRANSFER OF PROPERTY.—Section 541 of title 11, United 

States Code, as amended by section 225, 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 enVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00141 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
142

tity 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, or filed under that title on or after 

that date of enactment, except that the court shall not confirm a 

plan under chapter 11 of title 11, United States Code, 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 filing 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 

construed to require the court in which a case under chapter 11 of 

title 11, United States Code, 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. 1122. AUTHORIZATION FOR ADDITIONAL BANKRUPTCY 

JUDGSHIPS. 

The following judgeships 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: 

(1) Two additional bankruptcy judgeships for the southern 

district of New York. 

(2) Four additional bankruptcy judgeships for the district of 

Delaware. 

(3) One additional bankruptcy judgeship for the district of 

New Jersey. 

(4) One additional bankruptcy judgeship for the eastern district of Pennsylvania. 

(5) Three additional bankruptcy judgeships for the district of 

Maryland. 

(6) One additional bankruptcy judgeship for the eastern district of North Carolina. 

(7) One additional bankruptcy judgeship for the district of 

South Carolina. 

(8) One additional bankruptcy judgeship for the eastern district of Virginia. 

(9) Two additional bankruptcy judgeships for the eastern district of Michigan. 

(10) Two additional bankruptcy judgeships for the western 

district of Tennessee. 

(11) One additional bankruptcy judgeship for the eastern and 

western districts of Arkansas. 

(12) Two additional bankruptcy judgeships for the district of 

Nevada. 

(13) One additional bankruptcy judgeship for the district of 

Utah. 

(14) Two additional bankruptcy judgeships for the middle 

district of Florida. 

(15) Two additional bankruptcy judgeships for the southern 

district of Florida. 

143

(16) Two additional bankruptcy judgeships for the northern 

district of Georgia. 

(17) One additional bankruptcy judgeship for the southern 

district of Georgia. 

SEC. 1123. TEMPORARY BANKRUPTCY JUDGESHIPS. 

(a) AUTHORIZATION FOR ADDITIONAL TEMPORARY BANKRUPTCY

JUDGESHIPS.—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: 

(1) One additional bankruptcy judgeship for the district of 

Puerto Rico. 

(2) One additional bankruptcy judgeship for the northern 

district of New York. 

(3) One additional bankruptcy judgeship for the middle district of Pennsylvania. 

(4) One additional bankruptcy judgeship for the district of 

Maryland. 

(5) One additional bankruptcy judgeship for the northern 

district of Mississippi. 

(6) One additional bankruptcy judgeship for the southern 

district of Mississippi. 

(7) One additional bankruptcy judgeship for the southern 

district of Georgia. 

(b) VACANCIES.—

(1) IN GENERAL.—The first vacancy occurring in the office of 

bankruptcy judge in each of the judicial districts set forth in 

subsection (a)—

(A) occurring 5 years or more after the appointment date 

of the bankruptcy judge appointed under subsection (a) to 

such office; and 

(B) resulting from the death, retirement, resignation, or 

removal of a bankruptcy judge; 

shall not be filled. 

(2) TERM EXPIRATION.—In the case of a vacancy resulting 

from the expiration of the term of a bankruptcy judge not described in paragraph (1), that judge shall be eligible for reappointment as a bankruptcy judge in that district. 

(c) EXTENSION OF EXISTING TEMPORARY BANKRUPTCY JUDGESHIPS.—

(1) IN GENERAL.—The temporary bankruptcy judgeships authorized for the northern district of Alabama and the eastern 

district of Tennessee under paragraphs (1) and (9) of section 

3(a) 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 5 years or more after the date of 

enactment of this Act. 

(2) APPLICABILITY OF OTHER PROVISIONS.—All other provisions of section 3 of the Bankruptcy Judgeship Act of 1992 (28 

U.S.C. 152 note) remain applicable to the temporary bankruptcy judgeships referred to in this subsection. 

144

SEC. 1124. TRANSFER OF BANKRUPTCY JUDGESHIP SHARED BY THE 

MIDDLE DISTRICT OF GEORGIA AND THE SOUTHERN DISTRICT OF GEORGIA. 

The bankruptcy judgeship presently shared by the southern district of Georgia and the middle district of Georgia shall be converted to a bankruptcy judgeship for the middle district of Georgia. 

SEC. 1125. CONVERSION OF EXISTING TEMPORARY BANKRUPTCY 

JUDGESHIPS. 

(a) DISTRICT OF DELAWARE.—The temporary bankruptcy judgeship authorized for the district of Delaware pursuant to section 3 

of the Bankruptcy Judgeship Act of 1992 (28 U.S.C. 152 note), shall 

be converted to a permanent bankruptcy judgeship. 

(b) DISTRICT OF PUERTO RICO.—The temporary bankruptcy judgeship authorized for the district of Puerto Rico pursuant to section 

3 of the Bankruptcy Judgeship Act of 1992 (28 U.S.C. 152 note), 

shall be converted to a permanent bankruptcy judgeship. 

SEC. 1126. TECHNICAL AMENDMENTS. 

Section 152(a)(2) of title 28, United States Code, is amended— (1) in the item relating to the eastern and western districts 

of Arkansas, by striking ‘‘3’’ and inserting ‘‘4’’; 

(2) in the item relating to the district of Delaware, by striking ‘‘1’’ and inserting ‘‘6’’; 

(3) in the item relating to the middle district of Florida, by 

striking ‘‘8’’ and inserting ‘‘10’’; 

(4) in the item relating to the southern district of Florida, by 

striking ‘‘5’’ and inserting ‘‘7’’; 

(5) in the item relating to the northern district of Georgia, 

by striking ‘‘8’’ and inserting ‘‘10’’; 

(6) in the item relating to the middle district of Georgia, by 

striking ‘‘2’’ and inserting ‘‘3’’; 

(7) in the item relating to the southern district of Georgia, 

by striking ‘‘2’’ and inserting ‘‘3’’; 

(8) in the collective item relating to the middle and southern 

districts of Georgia, by striking ‘‘Middle and Southern . . . . . 

. 1’’; 

(9) in the item relating to the district of Maryland, by striking ‘‘4’’ and inserting ‘‘7’’; 

(10) in the item relating to the eastern district of Michigan, 

by striking ‘‘4’’ and inserting ‘‘6’’; 

(11) in the item relating to the district of Nevada, by striking 

‘‘3’’ and inserting 5’’; 

(12) in the item relating to the district of New Jersey, by 

striking ‘‘8’’ and inserting ‘‘9’’; 

(13) in the item relating to the southern district of New 

York, by striking ‘‘9’’ and inserting ‘‘11’’; 

(14) in the item relating to the eastern district of North 

Carolina, by striking ‘‘2’’ and inserting ‘‘3’’; 

(15) in the item relating to the eastern district of Pennsylvania, by striking ‘‘5’’ and inserting ‘‘6’’; 

(16) in the item relating to the district of Puerto Rico, by 

striking ‘‘2 and inserting ‘‘3’’; 

(17) in the item relating to the district of South Carolina, by 

striking ‘‘2’’ and inserting ‘‘3’’; 

(18) in the item relating to the western district of Tennessee, 

by striking ‘‘4’’ and inserting ‘‘6’’; 

145

(19) in the item relating to the district of Utah, by striking ‘‘3’’ and inserting ‘‘4’’; and 

(20) in the item relating to the eastern district of Virginia, 

by striking ‘‘5’’ and inserting ‘‘6’’. 

SEC. 1126. COMPENSATING TRUSTEES. 

Section 1326 of title 11, United States Code, is amended— (1) in subsection (b)— (A) in paragraph (1), by striking ‘‘and’’; 

(B) in paragraph (2), by striking the period at the end 

and inserting ‘‘; and’’; and 

(C) by adding at the end the following: ‘‘(3) if a chapter 7 trustee has been allowed compensation 

due to the conversion or dismissal of the debtor’s prior case 

pursuant to section 707(b), and some portion of that compensation remains unpaid in a case converted to this chapter or in 

the case dismissed under section 707(b) and refiled under this 

chapter, the amount of any such unpaid compensation, which 

shall be paid monthly— ‘‘(A) by prorating such amount over the remaining duration of the plan; and ‘‘(B) by monthly payments not to exceed the greater of— ‘‘(i) $25; or 

‘‘(ii) the amount payable to unsecured nonpriority 

creditors, as provided by the plan, multiplied by 5 percent, and the result divided by the number of months 

in the plan.’’; and 

(2) by adding at the end the following: ‘‘(d) Notwithstanding any other provision of this title— ‘‘(1) compensation referred to in subsection (b)(3) is payable 

and may be collected by the trustee under that paragraph, 

even if such amount has been discharged in a prior case under 

this title; and ‘‘(2) such compensation is payable in a case under this chapter only to the extent permitted by subsection (b)(3).’’. 

SEC. 1126. AMENDMENT TO SECTION 362 OF TITLE 11, UNITED STATES 

CODE. 

Section 362(b)(18) of title 11, United States Code, is amended to 

read as follows: ‘‘(18) under subsection (a) of the creation or perfection of a 

statutory lien for an ad valorem property tax, or a special tax 

or special assessment on real property whether or not ad valorem, imposed by a governmental unit, if such tax or assessment comes due after the date of the filing of the petition;’’. 

SEC. 1127. JUDICIAL EDUCATION. 

The Director of the Federal Judicial Center, in consultation with 

the Director of the Executive Office for United States Trustees, 

shall develop materials and conduct such training as may be useful 

to courts in implementing this Act and the amendments made by 

this Act, including the requirements relating to the means test 

under section 707(b), and reaffirmation agreements under section 

524, of title 11 of the United States Code, as amended by this Act. 

SEC. 1128. RECLAMATION. 

(a) RIGHTS AND POWERS OF THE TRUSTEE.—Section 546(c) of title 

11, United States Code, is amended to read as follows: 

146

‘‘(c)(1) Except as provided in subsection (d) of this section and in 

section 507(c), and subject to the prior rights of a holder of a security interest in such goods or the proceeds thereof, the rights and 

powers of the trustee under sections 544(a), 545, 547, and 549 are 

subject to the 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, 

within 45 days before the date of the commencement of a case 

under this title, but such seller may not reclaim such goods unless 

such seller demands in writing reclamation of such goods—

‘‘(A) not later than 45 days after the date of receipt of such 

goods by the debtor; or 

‘‘(B) not later than 20 days after the date of commencement 

of the case, if the 45-day period expires after the commencement of the case. 

‘‘(2) If a seller of goods fails to provide notice in the manner described in paragraph (1), the seller still may assert the rights contained in section 503(b)(9).’’. 

(b) ADMINISTRATIVE EXPENSES.—Section 503(b) of title 11, United 

States Code, as amended by sections 445 and 1103, is amended by 

adding at the end the following: 

‘‘(9) the value of any goods received by the debtor within 20 

days before the date of commencement of a case under this 

title in which the goods have been sold to the debtor in the ordinary course of such debtor’s business.’’. 

SEC. 1127. PROVIDING REQUESTED TAX DOCUMENTS TO THE COURT. 

(a) CHAPTER 7 CASES.—The court shall not grant a discharge in 

the case of an individual who is a debtor in a case under chapter 

7 of title 11, United States Code, unless requested tax documents 

have been provided to the court. 

(b) CHAPTER 11 AND CHAPTER 13 CASES.—The court shall not 

confirm a plan of reorganization in the case of an individual under 

chapter 11 or 13 of title 11, United States Code, unless requested 

tax documents have been filed with the court. 

(c) DOCUMENT RETENTION.—The court shall destroy documents 

submitted in support of a bankruptcy claim not sooner than 3 years 

after the date of the conclusion of a case filed by an individual 

under chapter 7, 11, or 13 of title 11, United States Code. In the 

event of a pending audit or enforcement action, the court may extend the time for destruction of such requested tax documents.

(d) The prohibition against the granting of a discharge in subsection (a) and the prohibition against the confirmation of a plan 

of reorganization in subsection (b) shall not apply if the debtor is 

unable to provide such tax documents due to circumstance beyond 

the debtor s control including the failure of the taxing authority to 

provide such documents. 

SEC. 1128. ENCOURAGING CREDITWORTHINESS. 

(a) SENSE OF THE CONGRESS.—It is the sense of the Congress 

that—(1) certain lenders may sometimes offer credit to consumers 

indiscriminately, without taking steps to ensure that consumers are capable of repaying the resulting debt, and in a 

manner which may encourage certain consumers to accumulate 

additional debt; and 

147

(2) resulting consumer debt may increasingly be a major contributing factor to consumer insolvency. 

(b) STUDY REQUIRED.—The Board of Governors of the Federal Reserve System (hereafter in this section referred to as the ‘‘Board’’) 

shall conduct a study of— (1) consumer credit industry practices of soliciting and extending credit— (A) indiscriminately; 

(B) without taking steps to ensure that consumers are 

capable of repaying the resulting debt; and 

(C) in a manner that encourages consumers to accumulate additional debt; and 

(2) the effects of such practices on consumer debt and insolvency. 

(c) REPORT AND REGULATIONS.—Not later than 12 months after 

the date of enactment of this Act, the Board— (1) shall make public a report on its findings with respect to 

the indiscriminate solicitation and extension of credit by the 

credit industry; 

(2) may issue regulations that would require additional disclosures to consumers; and 

(3) may take any other actions, consistent with its existing 

statutory authority, that the Board finds necessary to ensure 

responsible industrywide practices and to prevent resulting 

consumer debt and insolvency. 

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, United States Code, may obtain judicial 

review of the final agency decision by commencing an action in the 

district court of the United States for the district for which the 

panel to which the trustee is appointed under subsection (a)(1), or 

in the district court of the United States for the district in which 

the trustee is appointed under subsection (b) resides, after first exhausting all available administrative remedies, which if the trustee 

so elects, shall also include an administrative hearing on the 

record. Unless the trustee elects to have an administrative hearing 

on the record, the trustee shall be deemed to have exhausted all 

administrative remedies for purposes of this paragraph if the agency fails to make a final agency decision within 90 days after the 

trustee requests administrative remedies. The Attorney General 

shall prescribe procedures to implement this paragraph. The decision of the agency shall be affirmed by the district court unless it 

is unreasonable and without cause based on the administrative 

record before the agency.’’. (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 

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expenses under this subsection by commencing an action in the district court of the United States for the district where the individual 

resides. The decision of the agency shall be affirmed by the district 

court unless it is unreasonable and without cause based upon the 

administrative record before the agency. 

‘‘(4) The Attorney General shall prescribe procedures to implement this subsection.’’. 

SEC. 1131. BANKRUPTCY FORMS. 

Section 2075 of title 28, United States Code, is amended by adding at the end the following: 

‘‘The bankruptcy rules promulgated under this section shall prescribe a form for the statement required under section 707(b)(2)(C) 

of title 11 and may provide general rules on the content of such 

statement.’’.

SEC. 1133. DIRECT APPEALS OF BANKRUPTCY MATTERS TO COURTS 

OF APPEALS. 

(a) APPEALS.—Section 158 of title 28, United States Code, is 

amended—

(1) in subsection (c)(1), by striking ‘‘Subject to subsection 

(b),’’ and inserting ‘‘Subject to subsections (b) and (d)(2),’’; and 

(2) in subsection (d)—

(A) by inserting ‘‘(1)’’ after ‘‘(d)’’; and 

(B) by adding at the end the following: 

‘‘(2)(A) The appropriate court of appeals shall have jurisdiction of 

appeals described in the first sentence of subsection (a) if the bankruptcy court, the district court, or the bankruptcy appellate panel 

involved, acting on its own motion or on the request of a party to 

the judgment, order, or decree described in such first sentence, or 

all the appellants and appellees (if any) acting jointly, certify 

that—

‘‘(i) the judgment, order, or decree involves a question of law 

as to which there is no controlling decision of the court of appeals for the circuit or of the Supreme Court of the United 

States, or involves a matter of public importance; 

‘‘(ii) the judgment, order, or decree involves a question of law 

requiring resolution of conflicting decisions; or 

‘‘(iii) an immediate appeal from the judgment, order, or decree may materially advance the progress of the case or proceeding in which the appeal is taken; 

and if the court of appeals authorizes the direct appeal of the judgment, order, or decree. 

‘‘(B) If the bankruptcy court, the district court, or the bankruptcy 

appellate panel— ‘‘(i) on its own motion or on the request of a party, determines that a circumstance specified in clause (i), (ii), or (iii) of 

subparagraph (A) exists; or 

‘‘(ii) receives a request made by a majority of the appellants 

and a majority of appellees (if any) to make the certification 

described in subparagraph (A); 

then the bankruptcy court, the district court, or the bankruptcy appellate panel shall make the certification described in subparagraph (A). ‘‘(C) The parties may supplement the certification with a short 

statement of the basis for the certification. 

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‘‘(D) An appeal under this paragraph does not stay any proceeding of the bankruptcy court, the district court, or the bankruptcy appellate panel from which the appeal is taken, unless the 

respective bankruptcy court, district court, or bankruptcy appellate 

panel, or the court of appeals in which the appeal in pending, 

issues a stay of such proceeding pending the appeal. ‘‘(E) Any request under subparagraph (B) for certification shall 

be made not later than 60 days after the entry of the judgment, 

order, or decree.’’. (b) PROCEDURAL RULES.— (1) TEMPORARY APPLICATION.—A provision of this subsection 

shall apply to appeals under section 158(d)(2) of title 28, 

United States Code, until a rule of practice and procedure relating to such provision and such appeals is promulgated or 

amended under chapter 131 of such title. 

(2) CERTIFICATION.—A district court, a bankruptcy court, or 

a bankruptcy appellate panel may make a certification under 

section 158(d)(2) of title 28, United States Code, only with respect to matters pending in the respective bankruptcy court, 

district court, or bankruptcy appellate panel. 

(3) PROCEDURE.—Subject to any other provision of this subsection, an appeal authorized by the court of appeals under 

section 158(d)(2)(A) of title 28, United States Code, shall be 

taken in the manner prescribed in subdivisions (a)(1), (b), (c), 

and (d) of rule 5 of the Federal Rules of Appellate Procedure. 

For purposes of subdivision (a)(1) of rule 5— (A) a reference in such subdivision to a district court 

shall be deemed to include a reference to a bankruptcy 

court and a bankruptcy appellate panel, as appropriate; 

and 

(B) a reference in such subdivision to the parties requesting permission to appeal to be served with the petition shall be deemed to include a reference to the parties 

to the judgment, order, or decree from which the appeal is 

taken. 

(4) FILING OF PETITION WITH ATTACHMENT.—A petition requesting permission to appeal, that is based on a certification 

made under subparagraph (A) or (B) of section 158(d)(2) 

shall—

(A) be filed with the circuit clerk not later than 10 days 

after the certification is entered on the docket of the bankruptcy court, the district court, or the bankruptcy appellate panel from which the appeal is taken; and 

(B) have attached a copy of such certification. 

(5) REFERENCES IN RULE 5.—For purposes of rule 5 of the 

Federal Rules of Appellate Procedure—

(A) a reference in such rule to a district court shall be 

deemed to include a reference to a bankruptcy court and 

to a bankruptcy appellate panel; and 

(B) a reference in such rule to a district clerk shall be 

deemed to include a reference to a clerk of a bankruptcy 

court and to a clerk of a bankruptcy appellate panel. 

(6) APPLICATION OF RULES.—The Federal Rules of Appellate 

Procedure shall apply in the courts of appeals with respect to 

appeals authorized under section 158(d)(2)(A), to the extent 

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relevant and as if such appeals were taken from final judgments, orders, or decrees of the district courts or bankruptcy 

appellate panels exercising appellate jurisdiction under subsection (a) or (b) of section 158 of title 28, United States Code.

SEC. 1134. INVOLUNTARY CASES. 

(a) AMENDMENTS.—Section 303 of title 11, United States Code, is 

amended—

(1) in subsection (b)(1), by—

(A) inserting ‘‘as to liability or amount’’ after ‘‘bona fide 

dispute’’; and 

(B) striking ‘‘if such claims’’ and inserting ‘‘if such noncontingent, undisputed claims’’; and 

(2) in subsection (h)(1), by inserting ‘‘as to liability or 

amount’’ before the semicolon at the end. 

(b) EFFECTIVE DATE; APPLICATION OF AMENDMENTS.—This section and the amendments made by this section shall take effect on 

the date of the enactment of this Act and shall not apply with respect to cases commenced under title 11 of the United States Code 

before such date. 

SEC. 1135. FEDERAL ELECTION LAW FINES AND PENALTIES AS NONDISCHARGEABLE DEBT. 

Section 523(a) of title 11, United States Code, as amended by section 314, is amended by inserting after paragraph (14A) the following: 

‘‘(14B) incurred to pay fines or penalties imposed under Federal election law;’’. 

TITLE XIII—CONSUMER CREDIT 

DISCLOSURE 

SEC. 1301. ENHANCED DISCLOSURES UNDER AN OPEN END CREDIT 

PLAN. 

(a) AMENDMENTS TO THE TRUTH IN LENDING ACT.—

(1) ENHANCED DISCLOSURE OF REPAYMENT TERMS.—

(A) IN GENERAL.—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)(A) In a clear and conspicuous manner, repayment information that would apply to the outstanding balance of the consumer under the credit plan, including—

‘‘(i) the required minimum monthly payment on that balance, represented as both a dollar figure and a percentage 

of that balance; 

‘‘(ii) the number of months (rounded to the nearest 

month) that it would take to pay the entire amount of that 

current balance if the consumer pays only the required 

minimum monthly payments and if no further advances 

are made; 

‘‘(iii) the total cost to the consumer, including interest 

and principal payments, of paying that balance in full if 

the consumer pays only the required minimum monthly 

payments and if no further advances are made; and 

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‘‘(iv) the following statement: ‘If your current rate is a 

temporary introductory rate, your total costs may be higher.’. ‘‘(B) In making the disclosures under subparagraph (A) the 

creditor shall apply the annual interest rate that applies to 

that balance with respect to the current billing cycle for that 

consumer in effect on the date on which the disclosure is 

made.’’. 

(B) PUBLICATION OF MODEL FORMS.—Not later than 180 

days after the date of enactment of this Act, the Board of 

Governors of the Federal Reserve System shall publish 

model disclosure forms in accordance with section 195 of 

the Truth in Lending Act for the purpose of compliance 

with section 127(b)(11) of the Truth in Lending Act, as 

added by this paragraph. 

(C) CIVIL LIABILITY.—Section 130(a) of the Truth in 

Lending Act (15 U.S.C. 1640(a)) is amended, in the undesignated paragraph following paragraph (4), by striking the 

second sentence and inserting the following: ‘‘In connection 

with the disclosures referred to in subsections (a) and (b) 

of section 1637 of this title, a creditor shall have a liability 

determined under paragraph (2) only for failing to comply 

with the requirements of section 1635, 1637(a), or of paragraph (4), (5), (6), (7), (8), (9), (10), or (11) of section 

1637(b) or for failing to comply with disclosure requirements under State law for any term or item that the 

Board has determined to be substantially the same in 

meaning under section 1610(a)(2) as any of the terms or 

items referred to in section 1637(a), paragraph (4), (5), (6), 

(7), (8), (9), (10), or (11) of section 1637(b) of this title.’’. (2) DISCLOSURES IN CONNECTION WITH SOLICITATIONS.— (A) IN GENERAL.—Section 127(c)(1)(B) of the Truth in 

Lending Act (15 U.S.C. 1637(c)(1)(B)) is amended by adding the following: ‘‘(iv) CREDIT WORKSHEET.—An easily understandable 

credit worksheet designed to aid consumers in determining their ability to assume more debt, including 

consideration of the personal expenses of the consumer 

and a simple formula for the consumer to determine 

whether the assumption of additional debt is advisable. ‘‘(v) BASIS OF PREAPPROVAL.—In any case in which 

the application or solicitation states that the consumer 

has been preapproved for an account under an open 

end consumer credit plan, the following statement 

must appear in a clear and conspicuous manner: ‘Your 

preapproval for this credit card does not mean that we 

have reviewed your individual financial circumstances. 

You should review your own budget before accepting 

this offer of credit.’. ‘‘(vi) AVAILABILITY OF CREDIT REPORT.—That the consumer is entitled to a copy of his or her credit report 

in accordance with the Fair Credit Reporting Act.’’. 

(B) PUBLICATION OF MODEL FORMS.—Not later than 180 

days after the date of enactment of this Act, the Board of 

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Governors of the Federal Reserve System shall publish 

model disclosure forms in accordance with section 195 of 

the Truth in Lending Act for the purpose of compliance 

with section 127(c)(1)(B) of the Truth in Lending Act, as 

amended by this paragraph. 

(b) EFFECTIVE DATE.—The provisions of this section shall apply 

with respect to cases commenced under title 11, United States 

Code, on or after the date of the enactment of this Act. 

SEC. 1302. ENHANCED DISCLOSURE FOR CREDIT EXTENSIONS SECURED BY A DWELLING. 

(a) OPEN END CREDIT EXTENSIONS.—

(1) CREDIT APPLICATIONS.—Section 127A(a)(13) of the Truth 

in Lending Act (15 U.S.C. 1637a(a)(13)) is amended—

(A) by striking ‘‘CONSULTATION OF TAX ADVISER.—A 

statement that the’’ and inserting the following: ‘‘TAX DEDUCTIBILITY.—A statement that—

‘‘(A) the’’; and 

(B) by striking the period at the end and inserting the 

following: ‘‘; and 

‘‘(B) in any case in which the extension of credit exceeds 

the fair market value (as defined under the Internal Revenue Code of 1986) of the dwelling, the interest on the portion of the credit extension that is greater than the fair 

market value of the dwelling is not tax deductible for Federal income tax purposes.’’. 

(2) CREDIT ADVERTISEMENTS.—Section 147(b) of the Truth in 

Lending Act (15 U.S.C. 1665b(b)) is amended—

(A) by striking ‘‘If any’’ and inserting the following: 

‘‘(1) IN GENERAL.—If any’’; and 

(B) by adding at the end the following: 

‘‘(2) CREDIT IN EXCESS OF FAIR MARKET VALUE.—Each advertisement described in subsection (a) that relates to an extension of credit that may exceed the fair market value of the 

dwelling, and which advertisement is disseminated in paper 

form to the public or through the Internet, as opposed to by 

radio or television, shall include a clear and conspicuous statement that—

‘‘(A) the interest on the portion of the credit extension 

that is greater than the fair market value of the dwelling 

is not tax deductible for Federal income tax purposes; and 

‘‘(B) the consumer should consult a tax adviser for further information regarding the deductibility of interest and 

charges.’’. 

(b) NON-OPEN END CREDIT EXTENSIONS.—

(1) CREDIT APPLICATIONS.—Section 128 of the Truth in Lending Act (15 U.S.C. 1638) is amended—

(A) in subsection (a), by adding at the end the following: 

‘‘(15) In the case of a consumer credit transaction that is secured by the principal dwelling of the consumer, in which the 

extension of credit may exceed the fair market value of the 

dwelling, a clear and conspicuous statement that—

‘‘(A) the interest on the portion of the credit extension 

that is greater than the fair market value of the dwelling 

is not tax deductible for Federal income tax purposes; and 

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‘‘(B) the consumer should consult a tax adviser for further information regarding the deductibility of interest and 

charges.’’; and 

(B) in subsection (b), by adding at the end the following: ‘‘(3) In the case of a credit transaction described in paragraph 

(15) of subsection (a), disclosures required by that paragraph shall 

be made to the consumer at the time of application for such extension of credit.’’. (2) CREDIT ADVERTISEMENTS.—Section 144 of the Truth in 

Lending Act (15 U.S.C. 1664) is amended by adding at the end 

the following: ‘‘(e) Each advertisement to which this section applies that relates 

to a consumer credit transaction that is secured by the principal 

dwelling of a consumer in which the extension of credit may exceed 

the fair market value of the dwelling, and which advertisement is 

disseminated in paper form to the public or through the Internet, 

as opposed to by radio or television, shall clearly and conspicuously 

state that— ‘‘(1) the interest on the portion of the credit extension that 

is greater than the fair market value of the dwelling is not tax 

deductible for Federal income tax purposes; and ‘‘(2) the consumer should consult a tax adviser for further information regarding the deductibility of interest and charges.’’. (c) REGULATORY IMPLEMENTATION.— (1) IN GENERAL.—The Board shall promulgate regulations 

implementing the amendments made by this section.

(2) EFFECTIVE DATE.—Regulations issued under paragraph 

(1) shall not take effect until the later of— (A) 12 months after the date of enactment of this Act; 

or 

(B) 12 months after the date of publication of such final 

regulations by the Board. 

SEC. 1303. DISCLOSURES RELATED TO ‘‘INTRODUCTORY RATES’’. 

(a) INTRODUCTORY RATE DISCLOSURES.—Section 127(c) of the 

Truth in Lending Act (15 U.S.C. 1637(c)) is amended by adding at 

the end the following: ‘‘(6) ADDITIONAL NOTICE CONCERNING ‘INTRODUCTORY

RATES’.—

‘‘(A) IN GENERAL.—Except as provided in subparagraph 

(B), an application or solicitation to open a credit card account and all promotional materials accompanying such 

application or solicitation for which a disclosure is required 

under paragraph (1), and that offers a temporary annual 

percentage rate of interest, shall—

‘‘(i) use the term ‘introductory’ in immediate proximity to each listing of the temporary annual percentage rate applicable to such account, which term shall 

appear clearly and conspicuously; 

‘‘(ii) if the annual percentage rate of interest that 

will apply after the end of the temporary rate period 

will be a fixed rate, state in a clear and conspicuous 

manner in a prominent location closely proximate to 

the first listing of the temporary annual percentage 

rate (other than a listing of the temporary annual percentage rate in the tabular format described in section 

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122(c)), the time period in which the introductory period will end and the annual percentage rate that will 

apply after the end of the introductory period; and 

‘‘(iii) if the annual percentage rate that will apply 

after the end of the temporary rate period will vary in 

accordance with an index, state in a clear and conspicuous manner in a prominent location closely proximate to the first listing of the temporary annual percentage rate (other than a listing in the tabular format 

prescribed by section 122(c)), the time period in which 

the introductory period will end and the rate that will 

apply after that, based on an annual percentage rate 

that was in effect within 60 days before the date of 

mailing the application or solicitation. 

‘‘(B) EXCEPTION.—Clauses (ii) and (iii) of subparagraph 

(A) do not apply with respect to any listing of a temporary 

annual percentage rate on an envelope or other enclosure 

in which an application or solicitation to open a credit card 

account is mailed. 

‘‘(C) CONDITIONS FOR INTRODUCTORY RATES.—An application or solicitation to open a credit card account for which 

a disclosure is required under paragraph (1), and that offers a temporary annual percentage rate of interest shall, 

if that rate of interest is revocable under any circumstance 

or upon any event, clearly and conspicuously disclose, in a 

prominent manner on or with such application or solicitation—

‘‘(i) a general description of the circumstances that 

may result in the revocation of the temporary annual 

percentage rate; and 

‘‘(ii) if the annual percentage rate that will apply 

upon the revocation of the temporary annual percentage rate—

‘‘(I) will be a fixed rate, the annual percentage 

rate that will apply upon the revocation of the 

temporary annual percentage rate; or 

‘‘(II) will vary in accordance with an index, the 

rate that will apply after the temporary rate, 

based on an annual percentage rate that was in 

effect within 60 days before the date of mailing 

the application or solicitation. 

‘‘(D) DEFINITIONS.—In this paragraph—

‘‘(i) the terms ‘temporary annual percentage rate of 

interest’ and ‘temporary annual percentage rate’ mean 

any rate of interest applicable to a credit card account 

for an introductory period of less than 1 year, if that 

rate is less than an annual percentage rate that was 

in effect within 60 days before the date of mailing the 

application or solicitation; and 

‘‘(ii) the term ‘introductory period’ means the maximum time period for which the temporary annual 

percentage rate may be applicable. 

‘‘(E) RELATION TO OTHER DISCLOSURE REQUIREMENTS.—

Nothing in this paragraph may be construed to supersede 

155

subsection (a) of section 122, or any disclosure required by 

paragraph (1) or any other provision of this subsection.’’. (b) REGULATORY IMPLEMENTATION.— (1) IN GENERAL.—The Board shall promulgate regulations 

implementing the requirements of section 127(c)(6) of the 

Truth in Lending Act, as added by this section. 

(2) EFFECTIVE DATE.—Section 127(c)(6) of the Truth in Lending Act, as added by this section, and regulations issued under 

paragraph (1) of this subsection shall not take effect until the 

later of—

(A) 12 months after the date of enactment of this Act; 

or 

(B) 12 months after the date of publication of such final 

regulations by the Board. 

SEC. 1304. INTERNET-BASED CREDIT CARD SOLICITATIONS. 

(a) INTERNET-BASED SOLICITATIONS.—Section 127(c) of the Truth 

in Lending Act (15 U.S.C. 1637(c)) is amended by adding at the end 

the following: ‘‘(7) INTERNET-BASED SOLICITATIONS.— ‘‘(A) IN GENERAL.—In any solicitation to open a credit 

card account for any person under an open end consumer 

credit plan using the Internet or other interactive computer service, the person making the solicitation shall 

clearly and conspicuously disclose— ‘‘(i) the information described in subparagraphs (A) 

and (B) of paragraph (1); and ‘‘(ii) the information described in paragraph (6). ‘‘(B) FORM OF DISCLOSURE.—The disclosures required by 

subparagraph (A) shall be— ‘‘(i) readily accessible to consumers in close proximity to the solicitation to open a credit card account; 

and ‘‘(ii) updated regularly to reflect the current policies, 

terms, and fee amounts applicable to the credit card 

account. ‘‘(C) DEFINITIONS.—For purposes of this paragraph— ‘‘(i) the term ‘Internet’ means the international computer network of both Federal and non-Federal interoperable packet switched data networks; and ‘‘(ii) the term ‘interactive computer service’ means 

any information service, system, or access software 

provider that provides or enables computer access by 

multiple users to a computer server, including specifically a service or system that provides access to the 

Internet and such systems operated or services offered 

by libraries or educational institutions.’’. 

(b) REGULATORY IMPLEMENTATION.—

(1) IN GENERAL.—The Board shall promulgate regulations 

implementing the requirements of section 127(c)(7) of the 

Truth in Lending Act, as added by this section. 

(2) EFFECTIVE DATE.—The amendment made by subsection 

(a) and the regulations issued under paragraph (1) of this subsection shall not take effect until the later of—

(A) 12 months after the date of enactment of this Act; 

or 

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(B) 12 months after the date of publication of such final 

regulations by the Board. 

SEC. 1305. DISCLOSURES RELATED TO LATE PAYMENT DEADLINES 

AND PENALTIES. 

(a) DISCLOSURES RELATED TO LATE PAYMENT DEADLINES AND

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

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

‘‘(12) If a late payment fee is to be imposed due to the failure 

of the obligor to make payment on or before a required payment due date, the following shall be stated clearly and conspicuously on the billing statement: 

‘‘(A) The date on which that payment is due or, if different, the earliest date on which a late payment fee may 

be charged. 

‘‘(B) The amount of the late payment fee to be imposed 

if payment is made after such date.’’. 

(b) REGULATORY IMPLEMENTATION.—

(1) IN GENERAL.—The Board shall promulgate regulations 

implementing the requirements of section 127(b)(12) of the 

Truth in Lending Act, as added by this section. 

(2) EFFECTIVE DATE.—The amendment made by subsection 

(a) and regulations issued under paragraph (1) of this subsection shall not take effect until the later of—

(A) 12 months after the date of enactment of this Act; 

or 

(B) 12 months after the date of publication of such final 

regulations by the Board. 

SEC. 1306. PROHIBITION ON CERTAIN ACTIONS FOR FAILURE TO 

INCUR FINANCE CHARGES. 

(a) 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: 

‘‘(h) 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.’’. 

(b) REGULATORY IMPLEMENTATION.— (1) IN GENERAL.—The Board shall promulgate regulations 

implementing the requirements of section 127(h) of the Truth 

in Lending Act, as added by this section. 

(2) EFFECTIVE DATE.—The amendment made by subsection 

(a) and regulations issued under paragraph (1) of this subsection shall not take effect until the later of—

(A) 12 months after the date of enactment of this Act; 

or 

(B) 12 months after the date of publication of such final 

regulations by the Board. 

SEC. 1307. DUAL USE DEBIT CARD. 

(a) REPORT.—The Board may conduct a study of, and present to 

Congress a report containing its analysis of, consumer protections 

under existing law to limit the liability of consumers for unauthorVerDate Jan 31 2003 04:24 Mar 19, 2003 Jkt 019008 PO 00000 Frm 00156 Fmt 6659 Sfmt 6602 E:\HR\OC\HR042.XXX HR042
157

ized use of a debit card or similar access device. Such report, if submitted, shall include recommendations for legislative initiatives, if 

any, of the Board, based on its findings. 

(b) CONSIDERATIONS.—In preparing a report under subsection (a), 

the Board may include—

(1) the extent to which section 909 of the Electronic Fund 

Transfer Act (15 U.S.C. 1693g), as in effect at the time of the 

report, and the implementing regulations promulgated by the 

Board to carry out that section provide adequate unauthorized 

use liability protection for consumers; 

(2) the extent to which any voluntary industry rules have enhanced or may enhance the level of protection afforded consumers in connection with such unauthorized use liability; and 

(3) whether amendments to the Electronic Fund Transfer Act 

(15 U.S.C. 1693 et seq.), or revisions to regulations promulgated by the Board to carry out that Act, are necessary to further address adequate protection for consumers concerning unauthorized use liability. 

SEC. 1308. STUDY OF BANKRUPTCY IMPACT OF CREDIT EXTENDED TO 

DEPENDENT STUDENTS. 

(a) STUDY.—

(1) IN GENERAL.—The Board shall conduct a study regarding 

the impact that the extension of credit described in paragraph 

(2) has on the rate of cases filed under title 11 of the United 

States Code. 

(2) EXTENSION OF CREDIT.—The extension of credit described 

in this paragraph is the extension of credit to individuals who 

are—

(A) claimed as dependents for purposes of the Internal 

Revenue Code of 1986; and 

(B) enrolled within 1 year of successfully completing all 

required secondary education requirements and on a fulltime basis, in postsecondary educational institutions. 

(b) REPORT.—Not later than 1 year after the date of enactment 

of this Act, the Board shall submit to the Senate and the House 

of Representatives a report summarizing the results of the study 

conducted under subsection (a). 

SEC. 1309. CLARIFICATION OF CLEAR AND CONSPICUOUS. 

(a) REGULATIONS.—Not later than 6 months after the date of enactment of this Act, the Board, in consultation with the other Federal banking agencies (as defined in section 3 of the Federal Deposit Insurance Act), the National Credit Union Administration 

Board, and the Federal Trade Commission, shall promulgate regulations to provide guidance regarding the meaning of the term 

‘‘clear and conspicuous’’, as used in subparagraphs (A), (B), and (C) 

of section 127(b)(11) and clauses (ii) and (iii) of section 127(c)(6)(A) 

of the Truth in Lending Act. 

(b) EXAMPLES.—Regulations promulgated under subsection (a) 

shall include examples of clear and conspicuous model disclosures 

for the purposes of disclosures required by the provisions of the 

Truth in Lending Act referred to in subsection (a). 

(c) STANDARDS.—In promulgating regulations under this section, 

the Board shall ensure that the clear and conspicuous standard required for disclosures made under the provisions of the Truth in 

158

Lending Act referred to in subsection (a) can be implemented in a 

manner which results in disclosures which are reasonably understandable and designed to call attention to the nature and significance of the information in the notice. 

SEC. 1310. ISSUANCE OF CREDIT CARDS TO UNDERAGE CONSUMERS. 

Section 127(c) of the Truth in Lending Act (15 U.S.C. 1637(c)) is 

amended by inserting after paragraph (6) (as added by section 1303 

of this title) the following new paragraph: 

‘‘(7) APPLICATIONS FROM UNDERAGE CONSUMERS.—

‘‘(A) PROHIBITION ON ISSUANCE.—No credit card may be 

issued to, or open end credit plan established on behalf of, 

any consumer who has not attained the age of 21, except 

in response to a written request or application to the card 

issuer that meets the requirements of subparagraph (B). 

‘‘(B) APPLICATION REQUIREMENTS.—An application to 

open a credit card account by a consumer who has not 

reached the age of 21 as of the date of submission of the 

application shall require—

‘‘(i) the signature of the parent or guardian of the 

consumer indicating joint liability for debts incurred 

by the consumer in connection with the account before 

the consumer has reached the age of 21; or 

‘‘(ii) submission by the consumer of financial information indicating an independent means of repaying 

any obligation arising from the proposed extension of 

credit in connection with the account.’’. 

TITLE XIV—GENERAL EFFECTIVE DATE; 

APPLICATION OF AMENDMENTS 

SEC. 1401. EFFECTIVE DATE; APPLICATION OF AMENDMENTS. 

(a) EFFECTIVE DATE.—Except as otherwise provided in this Act, 

this Act and the amendments made by this Act shall take effect 

180 days after the date of enactment of this Act. 

(b) APPLICATION OF AMENDMENTS.—

(1) IN GENERAL.—Except as otherwise provided in this Act 

and paragraph (2), the amendments made by this Act shall not 

apply with respect to cases commenced under title 11, United 

States Code, before the effective date of this Act. 

(2) CERTAIN LIMITATIONS APPLICABLE TO DEBTORS.—The 

amendments made by sections 308, 322, and 330 shall apply 

with respect to cases commenced under title 11, United States 

Code, on or after the date of the enactment of this Act.

Æ