IB 

Union Calendar No. 363 

114TH CONGRESS 

2D SESSION H. R. 2947 

[Report No. 114–477] 

To amend title 11 of the United States Code in order to facilitate the 

resolution of an insolvent financial institution in bankruptcy. 

IN THE HOUSE OF REPRESENTATIVES 

JULY 7, 2015 

Mr. TROTT (for himself, Mr. GOODLATTE, Mr. CONYERS, and Mr. MARINO) 

introduced the following bill; which was referred to the Committee on the 

Judiciary 

MARCH 23, 2016 

Additional sponsor: Mr. ROSS

MARCH 23, 2016 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

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

[For text of introduced bill, see copy of bill as introduced on July 7, 2015] 


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A BILL 

To amend title 11 of the United States Code in order to 

facilitate the resolution of an insolvent financial institution in bankruptcy. 


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

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Financial Institution 

5 Bankruptcy Act of 2016’’. 

6 SEC. 2. GENERAL PROVISIONS RELATING TO COVERED FI7 NANCIAL CORPORATIONS. 

8 (a) DEFINITION.—Section 101 of title 11, United 

9 States Code, is amended by inserting the following after 

10 paragraph (9): 

11 ‘‘(9A) The term ‘covered financial corporation’ 

12 means any corporation incorporated or organized 

13 under any Federal or State law, other than a stock14 broker, a commodity broker, or an entity of the kind 

15 specified in paragraph (2) or (3) of section 109(b), 

16 that is— 

17 ‘‘(A) a bank holding company, as defined in 

18 section 2(a) of the Bank Holding Company Act 

19 of 1956; or 

20 ‘‘(B) a corporation that exists for the pri21 mary purpose of owning, controlling and financ22 ing its subsidiaries, that has total consolidated 

23 assets of $50,000,000,000 or greater, and for 

24 which, in its most recently completed fiscal 

25 year— 


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1 ‘‘(i) annual gross revenues derived by 

2 the corporation and all of its subsidiaries 

3 from activities that are financial in nature 

4 (as defined in section 4(k) of the Bank 

5 Holding Company Act of 1956) and, if ap6 plicable, from the ownership or control of 

7 one or more insured depository institutions, 

8 represents 85 percent or more of the consoli9 dated annual gross revenues of the corpora10 tion; or 

11 ‘‘(ii) the consolidated assets of the cor12 poration and all of its subsidiaries related 

13 to activities that are financial in nature (as 

14 defined in section 4(k) of the Bank Holding 

15 Company Act of 1956) and, if applicable, 

16 related to the ownership or control of one or 

17 more insured depository institutions, rep18 resents 85 percent or more of the consoli19 dated assets of the corporation.’’. 

20 (b) APPLICABILITY OF CHAPTERS.—Section 103 of 

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

22 end the following: 

23 ‘‘(l) Subchapter V of chapter 11 of this title applies 

24 only in a case under chapter 11 concerning a covered finan25 cial corporation.’’. 


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1 (c) WHO MAY BE A DEBTOR.—Section 109 of title 11, 

2 United States Code, is amended— 

3 (1) in subsection (b)— 

4 (A) in paragraph (2), by striking ‘‘or’’ at 

5 the end; 

6 (B) in paragraph (3)(B), by striking the pe7 riod at the end and inserting ‘‘; or’’; and 

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

9 ‘‘(4) a covered financial corporation.’’; and 

10 (2) in subsection (d)— 

11 (A) by striking ‘‘and’’ before ‘‘an uninsured 

12 State member bank’’; 

13 (B) by striking ‘‘or’’ before ‘‘a corporation’’; 

14 and 

15 (C) by inserting ‘‘, or a covered financial 

16 corporation’’ after ‘‘Federal Deposit Insurance 

17 Corporation Improvement Act of 1991’’. 

18 (d) CONVERSION TO CHAPTER 7.—Section 1112 of title 

19 11, United States Code, is amended by adding at the end 

20 the following: 

21 ‘‘(g) Notwithstanding section 109(b), the court may 

22 convert a case under subchapter V to a case under chapter 

23 7 if— 

24 ‘‘(1) a transfer approved under section 1185 has 

25 been consummated; 


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1 ‘‘(2) the court has ordered the appointment of a 

2 special trustee under section 1186; and 

3 ‘‘(3) the court finds, after notice and a hearing, 

4 that conversion is in the best interest of the creditors 

5 and the estate.’’. 

6 (e)(1) Section 726(a)(1) of title 11, United States 

7 Code, is amended by inserting after ‘‘first,’’ the following: 

8 ‘‘in payment of any unpaid fees, costs, and expenses of a 

9 special trustee appointed under section 1186, and then’’. 

10 (2) Section 1129(a) of title 11, United States Code, 

11 is amended by inserting after paragraph (16) the following: 

12 ‘‘(17) In a case under subchapter V, all payable 

13 fees, costs, and expenses of the special trustee have 

14 been paid or the plan provides for the payment of all 

15 such fees, costs, and expenses on the effective date of 

16 the plan. 

17 ‘‘(18) In a case under subchapter V, confirma18 tion of the plan is not likely to cause serious adverse 

19 effects on financial stability in the United States.’’. 

20 (f) Section 322(b)(2) of title 11, United States Code, 

21 is amended by striking ‘‘The’’ and inserting ‘‘In cases under 

22 subchapter V, the United States trustee shall recommend to 

23 the court, and in all other cases, the’’. 


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1 SEC. 3. LIQUIDATION, REORGANIZATION, OR RECAPITAL2 IZATION OF A COVERED FINANCIAL COR3 PORATION. 

4 Chapter 11 of title 11, United States Code, is amended 

5 by adding at the end the following: 

6 ‘‘SUBCHAPTER V—LIQUIDATION, REORGANIZA7 TION, OR RECAPITALIZATION OF A COVERED 

8 FINANCIAL CORPORATION 

9 ‘‘§ 1181. Inapplicability of other sections 

10 ‘‘Sections 303 and 321(c) do not apply in a case under 

11 this subchapter concerning a covered financial corporation. 

12 Section 365 does not apply to a transfer under section 1185, 

13 1187, or 1188. 

14 ‘‘§ 1182. Definitions for this subchapter 

15 ‘‘In this subchapter, the following definitions shall 

16 apply: 

17 ‘‘(1) The term ‘Board’ means the Board of Gov18 ernors of the Federal Reserve System. 

19 ‘‘(2) The term ‘bridge company’ means a newly 

20 formed corporation to which property of the estate 

21 may be transferred under section 1185(a) and the eq22 uity securities of which may be transferred to a spe23 cial trustee under section 1186(a). 

24 ‘‘(3) The term ‘capital structure debt’ means all 

25 unsecured debt of the debtor for borrowed money for 

26 which the debtor is the primary obligor, other than a 


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1 qualified financial contract and other than debt se2 cured by a lien on property of the estate that is to 

3 be transferred to a bridge company pursuant to an 

4 order of the court under section 1185(a). 

5 ‘‘(4) The term ‘contractual right’ means a con6 tractual right of a kind defined in section 555, 556, 

7 559, 560, or 561. 

8 ‘‘(5) The term ‘qualified financial contract’ 

9 means any contract of a kind defined in paragraph 

10 (25), (38A), (47), or (53B) of section 101, section 

11 741(7), or paragraph (4), (5), (11), or (13) of section 

12 761. 

13 ‘‘(6) The term ‘special trustee’ means the trustee 

14 of a trust formed under section 1186(a)(1). 

15 ‘‘§ 1183. Commencement of a case concerning a cov16 ered financial corporation 

17 ‘‘(a) A case under this subchapter concerning a covered 

18 financial corporation may be commenced by the filing of 

19 a petition with the court by the debtor under section 301 

20 only if the debtor states to the best of its knowledge under 

21 penalty of perjury in the petition that it is a covered finan22 cial corporation. 

23 ‘‘(b) The commencement of a case under subsection (a) 

24 constitutes an order for relief under this subchapter. 


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1 ‘‘(c) The members of the board of directors (or body 

2 performing similar functions) of a covered financial com3 pany shall have no liability to shareholders, creditors, or 

4 other parties in interest for a good faith filing of a petition 

5 to commence a case under this subchapter, or for any rea6 sonable action taken in good faith in contemplation of or 

7 in connection with such a petition or a transfer under sec8 tion 1185 or section 1186, whether prior to or after com9 mencement of the case. 

10 ‘‘(d) Counsel to the debtor shall provide, to the greatest 

11 extent practicable without disclosing the identity of the po12 tential debtor, sufficient confidential notice to the chief 

13 judge of the court of appeals for the circuit embracing the 

14 district in which such counsel intends to file a petition to 

15 commence a case under this subchapter regarding the poten16 tial commencement of such case. The chief judge of such 

17 court shall randomly assign to preside over such case a 

18 bankruptcy judge selected from among the bankruptcy 

19 judges designated by the Chief Justice of the United States 

20 under section 298 of title 28. 

21 ‘‘§ 1184. Regulators 

22 ‘‘The Board, the Securities Exchange Commission, the 

23 Office of the Comptroller of the Currency of the Department 

24 of the Treasury, the Commodity Futures Trading Commis25 sion, and the Federal Deposit Insurance Corporation may 


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1 raise and may appear and be heard on any issue in any 

2 case or proceeding under this subchapter. 

3 ‘‘§ 1185. Special transfer of property of the estate 

4 ‘‘(a) On request of the trustee, and after notice and 

5 a hearing that shall occur not less than 24 hours after the 

6 order for relief, the court may order a transfer under this 

7 section of property of the estate, and the assignment of exec8 utory contracts, unexpired leases, and qualified financial 

9 contracts of the debtor, to a bridge company. Upon the entry 

10 of an order approving such transfer, any property trans11 ferred, and any executory contracts, unexpired leases, and 

12 qualified financial contracts assigned under such order 

13 shall no longer be property of the estate. Except as provided 

14 under this section, the provisions of section 363 shall apply 

15 to a transfer and assignment under this section. 

16 ‘‘(b) Unless the court orders otherwise, notice of a re17 quest for an order under subsection (a) shall consist of elec18 tronic or telephonic notice of not less than 24 hours to— 

19 ‘‘(1) the debtor; 

20 ‘‘(2) the holders of the 20 largest secured claims 

21 against the debtor; 

22 ‘‘(3) the holders of the 20 largest unsecured 

23 claims against the debtor; 


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1 ‘‘(4) counterparties to any debt, executory con2 tract, unexpired lease, and qualified financial con3 tract requested to be transferred under this section; 

4 ‘‘(5) the Board; 

5 ‘‘(6) the Federal Deposit Insurance Corporation; 

6 ‘‘(7) the Secretary of the Treasury and the Office 

7 of the Comptroller of the Currency of the Treasury; 

8 ‘‘(8) the Commodity Futures Trading Commis9 sion; 

10 ‘‘(9) the Securities and Exchange Commission; 

11 ‘‘(10) the United States trustee or bankruptcy 

12 administrator; and 

13 ‘‘(11) each primary financial regulatory agency, 

14 as defined in section 2(12) of the Dodd-Frank Wall 

15 Street Reform and Consumer Protection Act, with re16 spect to any affiliate the equity securities of which are 

17 proposed to be transferred under this section. 

18 ‘‘(c) The court may not order a transfer under this 

19 section unless the court determines, based upon a prepon20 derance of the evidence, that— 

21 ‘‘(1) the transfer under this section is necessary 

22 to prevent serious adverse effects on financial stability 

23 in the United States; 


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1 ‘‘(2) the transfer does not provide for the as2 sumption of any capital structure debt by the bridge 

3 company; 

4 ‘‘(3) the transfer does not provide for the transfer 

5 to the bridge company of any property of the estate 

6 that is subject to a lien securing a debt, executory 

7 contract, unexpired lease or agreement (including a 

8 qualified financial contract) of the debtor unless— 

9 ‘‘(A)(i) the bridge company assumes such 

10 debt, executory contract, unexpired lease or 

11 agreement (including a qualified financial con12 tract), including any claims arising in respect 

13 thereof that would not be allowed secured claims 

14 under section 506(a)(1) and after giving effect to 

15 such transfer, such property remains subject to 

16 the lien securing such debt, executory contract, 

17 unexpired lease or agreement (including a quali18 fied financial contract); and 

19 ‘‘(ii) the court has determined that assump20 tion of such debt, executory contract, unexpired 

21 lease or agreement (including a qualified finan22 cial contract) by the bridge company is in the 

23 best interests of the estate; or 


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1 ‘‘(B) such property is being transferred to 

2 the bridge company in accordance with the pro3 visions of section 363; 

4 ‘‘(4) the transfer does not provide for the as5 sumption by the bridge company of any debt, execu6 tory contract, unexpired lease or agreement (includ7 ing a qualified financial contract) of the debtor se8 cured by a lien on property of the estate unless the 

9 transfer provides for such property to be transferred 

10 to the bridge company in accordance with paragraph 

11 (3)(A) of this subsection; 

12 ‘‘(5) the transfer does not provide for the transfer 

13 of the equity of the debtor; 

14 ‘‘(6) the trustee has demonstrated that the bridge 

15 company is not likely to fail to meet the obligations 

16 of any debt, executory contract, qualified financial 

17 contract, or unexpired lease assumed and assigned to 

18 the bridge company; 

19 ‘‘(7) the transfer provides for the transfer to a 

20 special trustee all of the equity securities in the bridge 

21 company and appointment of a special trustee in ac22 cordance with section 1186; 

23 ‘‘(8) after giving effect to the transfer, adequate 

24 provision has been made for the fees, costs, and ex25 penses of the estate and special trustee; and 


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1 ‘‘(9) the bridge company will have governing 

2 documents, and initial directors and senior officers, 

3 that are in the best interest of creditors and the estate. 

4 ‘‘(d) Immediately before a transfer under this section, 

5 the bridge company that is the recipient of the transfer 

6 shall— 

7 ‘‘(1) not have any property, executory contracts, 

8 unexpired leases, qualified financial contracts, or 

9 debts, other than any property acquired or executory 

10 contracts, unexpired leases, or debts assumed when 

11 acting as a transferee of a transfer under this section; 

12 and 

13 ‘‘(2) have equity securities that are property of 

14 the estate, which may be sold or distributed in accord15 ance with this title. 

16 ‘‘§ 1186. Special trustee 

17 ‘‘(a)(1) An order approving a transfer under section 

18 1185 shall require the trustee to transfer to a qualified and 

19 independent special trustee, who is appointed by the court, 

20 all of the equity securities in the bridge company that is 

21 the recipient of a transfer under section 1185 to hold in 

22 trust for the sole benefit of the estate, subject to satisfaction 

23 of the special trustee’s fees, costs, and expenses. The trust 

24 of which the special trustee is the trustee shall be a newly 

25 formed trust governed by a trust agreement approved by 


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1 the court as in the best interests of the estate, and shall 

2 exist for the sole purpose of holding and administering, and 

3 shall be permitted to dispose of, the equity securities of the 

4 bridge company in accordance with the trust agreement. 

5 ‘‘(2) In connection with the hearing to approve a 

6 transfer under section 1185, the trustee shall confirm to the 

7 court that the Board has been consulted regarding the iden8 tity of the proposed special trustee and advise the court of 

9 the results of such consultation. 

10 ‘‘(b) The trust agreement governing the trust shall pro11 vide— 

12 ‘‘(1) for the payment of the fees, costs, expenses, 

13 and indemnities of the special trustee from the assets 

14 of the debtor’s estate; 

15 ‘‘(2) that the special trustee provide— 

16 ‘‘(A) quarterly reporting to the estate, which 

17 shall be filed with the court; and 

18 ‘‘(B) information about the bridge company 

19 reasonably requested by a party in interest to 

20 prepare a disclosure statement for a plan pro21 viding for distribution of any securities of the 

22 bridge company if such information is necessary 

23 to prepare such disclosure statement; 

24 ‘‘(3) that for as long as the equity securities of 

25 the bridge company are held by the trust, the special 


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1 trustee shall file a notice with the court in connection 

2 with— 

3 ‘‘(A) any change in a director or senior offi4 cer of the bridge company; 

5 ‘‘(B) any modification to the governing doc6 uments of the bridge company; and 

7 ‘‘(C) any material corporate action of the 

8 bridge company, including— 

9 ‘‘(i) recapitalization; 

10 ‘‘(ii) a material borrowing; 

11 ‘‘(iii) termination of an intercompany 

12 debt or guarantee; 

13 ‘‘(iv) a transfer of a substantial por14 tion of the assets of the bridge company; or 

15 ‘‘(v) the issuance or sale of any securi16 ties of the bridge company; 

17 ‘‘(4) that any sale of any equity securities of the 

18 bridge company shall not be consummated until the 

19 special trustee consults with the Federal Deposit In20 surance Corporation and the Board regarding such 

21 sale and discloses the results of such consultation with 

22 the court; 

23 ‘‘(5) that, subject to reserves for payments per24 mitted under paragraph (1) provided for in the trust 

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1 rities of the bridge company by the special trustee be 

2 held in trust for the benefit of or transferred to the 

3 estate; 

4 ‘‘(6) the process and guidelines for the replace5 ment of the special trustee; and 

6 ‘‘(7) that the property held in trust by the spe7 cial trustee is subject to distribution in accordance 

8 with subsection (c). 

9 ‘‘(c)(1) The special trustee shall distribute the assets 

10 held in trust— 

11 ‘‘(A) if the court confirms a plan in the case, in 

12 accordance with the plan on the effective date of the 

13 plan; or 

14 ‘‘(B) if the case is converted to a case under 

15 chapter 7, as ordered by the court. 

16 ‘‘(2) As soon as practicable after a final distribution 

17 under paragraph (1), the office of the special trustee shall 

18 terminate, except as may be necessary to wind up and con19 clude the business and financial affairs of the trust. 

20 ‘‘(d) After a transfer to the special trustee under this 

21 section, the special trustee shall be subject only to applicable 

22 nonbankruptcy law, and the actions and conduct of the spe23 cial trustee shall no longer be subject to approval by the 

24 court in the case under this subchapter. 


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1 ‘‘§ 1187. Temporary and supplemental automatic stay; 

2 assumed debt 

3 ‘‘(a)(1) A petition filed under section 1183 operates 

4 as a stay, applicable to all entities, of the termination, ac5 celeration, or modification of any debt, contract, lease, or 

6 agreement of the kind described in paragraph (2), or of any 

7 right or obligation under any such debt, contract, lease, or 

8 agreement, solely because of— 

9 ‘‘(A) a default by the debtor under any such 

10 debt, contract, lease, or agreement; or 

11 ‘‘(B) a provision in such debt, contract, lease, or 

12 agreement, or in applicable nonbankruptcy law, that 

13 is conditioned on— 

14 ‘‘(i) the insolvency or financial condition of 

15 the debtor at any time before the closing of the 

16 case; 

17 ‘‘(ii) the commencement of a case under this 

18 title concerning the debtor; 

19 ‘‘(iii) the appointment of or taking posses20 sion by a trustee in a case under this title con21 cerning the debtor or by a custodian before the 

22 commencement of the case; or 

23 ‘‘(iv) a credit rating agency rating, or ab24 sence or withdrawal of a credit rating agency 

25 rating— 


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1 ‘‘(I) of the debtor at any time after the 

2 commencement of the case; 

3 ‘‘(II) of an affiliate during the period 

4 from the commencement of the case until 48 

5 hours after such order is entered; 

6 ‘‘(III) of the bridge company while the 

7 trustee or the special trustee is a direct or 

8 indirect beneficial holder of more than 50 

9 percent of the equity securities of— 

10 ‘‘(aa) the bridge company; or 

11 ‘‘(bb) the affiliate, if all of the di12 rect or indirect interests in the affiliate 

13 that are property of the estate are 

14 transferred under section 1185; or 

15 ‘‘(IV) of an affiliate while the trustee 

16 or the special trustee is a direct or indirect 

17 beneficial holder of more than 50 percent of 

18 the equity securities of— 

19 ‘‘(aa) the bridge company; or 

20 ‘‘(bb) the affiliate, if all of the di21 rect or indirect interests in the affiliate 

22 that are property of the estate are 

23 transferred under section 1185. 

24 ‘‘(2) A debt, contract, lease, or agreement described in 

25 this paragraph is— 


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1 ‘‘(A) any debt (other than capital structure 

2 debt), executory contract, or unexpired lease of the 

3 debtor (other than a qualified financial contract); 

4 ‘‘(B) any agreement under which the debtor 

5 issued or is obligated for debt (other than capital 

6 structure debt); 

7 ‘‘(C) any debt, executory contract, or unexpired 

8 lease of an affiliate (other than a qualified financial 

9 contract); or 

10 ‘‘(D) any agreement under which an affiliate 

11 issued or is obligated for debt. 

12 ‘‘(3) The stay under this subsection terminates— 

13 ‘‘(A) for the benefit of the debtor, upon the ear14 liest of— 

15 ‘‘(i) 48 hours after the commencement of the 

16 case; 

17 ‘‘(ii) assumption of the debt, contract, lease, 

18 or agreement by the bridge company under an 

19 order authorizing a transfer under section 1185; 

20 ‘‘(iii) a final order of the court denying the 

21 request for a transfer under section 1185; or 

22 ‘‘(iv) the time the case is dismissed; and 

23 ‘‘(B) for the benefit of an affiliate, upon the ear24 liest of— 


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1 ‘‘(i) the entry of an order authorizing a 

2 transfer under section 1185 in which the direct 

3 or indirect interests in the affiliate that are 

4 property of the estate are not transferred under 

5 section 1185; 

6 ‘‘(ii) a final order by the court denying the 

7 request for a transfer under section 1185; 

8 ‘‘(iii) 48 hours after the commencement of 

9 the case if the court has not ordered a transfer 

10 under section 1185; or 

11 ‘‘(iv) the time the case is dismissed. 

12 ‘‘(4) Subsections (d), (e), (f), and (g) of section 362 

13 apply to a stay under this subsection. 

14 ‘‘(b) A debt, executory contract (other than a qualified 

15 financial contract), or unexpired lease of the debtor, or an 

16 agreement under which the debtor has issued or is obligated 

17 for any debt, may be assumed by a bridge company in a 

18 transfer under section 1185 notwithstanding any provision 

19 in an agreement or in applicable nonbankruptcy law 

20 that— 

21 ‘‘(1) prohibits, restricts, or conditions the assign22 ment of the debt, contract, lease, or agreement; or 

23 ‘‘(2) accelerates, terminates, or modifies, or per24 mits a party other than the debtor to terminate or 


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1 modify, the debt, contract, lease, or agreement on ac2 count of— 

3 ‘‘(A) the assignment of the debt, contract, 

4 lease, or agreement; or 

5 ‘‘(B) a change in control of any party to the 

6 debt, contract, lease, or agreement. 

7 ‘‘(c)(1) A debt, contract, lease, or agreement of the kind 

8 described in subparagraph (A) or (B) of subsection (a)(2) 

9 may not be accelerated, terminated, or modified, and any 

10 right or obligation under such debt, contract, lease, or agree11 ment may not be accelerated, terminated, or modified, as 

12 to the bridge company solely because of a provision in the 

13 debt, contract, lease, or agreement or in applicable non14 bankruptcy law— 

15 ‘‘(A) of the kind described in subsection (a)(1)(B) 

16 as applied to the debtor; 

17 ‘‘(B) that prohibits, restricts, or conditions the 

18 assignment of the debt, contract, lease, or agreement; 

19 or 

20 ‘‘(C) that accelerates, terminates, or modifies, or 

21 permits a party other than the debtor to terminate or 

22 modify, the debt, contract, lease or agreement on ac23 count of— 

24 ‘‘(i) the assignment of the debt, contract, 

25 lease, or agreement; or 


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1 ‘‘(ii) a change in control of any party to the 

2 debt, contract, lease, or agreement. 

3 ‘‘(2) If there is a default by the debtor under a provi4 sion other than the kind described in paragraph (1) in a 

5 debt, contract, lease or agreement of the kind described in 

6 subparagraph (A) or (B) of subsection (a)(2), the bridge 

7 company may assume such debt, contract, lease, or agree8 ment only if the bridge company— 

9 ‘‘(A) shall cure the default; 

10 ‘‘(B) compensates, or provides adequate assur11 ance in connection with a transfer under section 1185 

12 that the bridge company will promptly compensate, a 

13 party other than the debtor to the debt, contract, lease, 

14 or agreement, for any actual pecuniary loss to the 

15 party resulting from the default; and 

16 ‘‘(C) provides adequate assurance in connection 

17 with a transfer under section 1185 of future perform18 ance under the debt, contract, lease, or agreement, as 

19 determined by the court under section 1185(c)(4). 

20 ‘‘§ 1188. Treatment of qualified financial contracts 

21 and affiliate contracts 

22 ‘‘(a) Notwithstanding sections 362(b)(6), 362(b)(7), 

23 362(b)(17), 362(b)(27), 362(o), 555, 556, 559, 560, and 561, 

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1 ing the period specified in section 1187(a)(3)(A), applicable 

2 to all entities, of the exercise of a contractual right— 

3 ‘‘(1) to cause the modification, liquidation, ter4 mination, or acceleration of a qualified financial con5 tract of the debtor or an affiliate; 

6 ‘‘(2) to offset or net out any termination value, 

7 payment amount, or other transfer obligation arising 

8 under or in connection with a qualified financial con9 tract of the debtor or an affiliate; or 

10 ‘‘(3) under any security agreement or arrange11 ment or other credit enhancement forming a part of 

12 or related to a qualified financial contract of the debt13 or or an affiliate. 

14 ‘‘(b)(1) During the period specified in section 

15 1187(a)(3)(A), the trustee or the affiliate shall perform all 

16 payment and delivery obligations under such qualified fi17 nancial contract of the debtor or the affiliate, as the case 

18 may be, that become due after the commencement of the 

19 case. The stay provided under subsection (a) terminates as 

20 to a qualified financial contract of the debtor or an affiliate 

21 immediately upon the failure of the trustee or the affiliate, 

22 as the case may be, to perform any such obligation during 

23 such period. 

24 ‘‘(2) Any failure by a counterparty to any qualified 

25 financial contract of the debtor or any affiliate to perform 


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1 any payment or delivery obligation under such qualified 

2 financial contract, including during the pendency of the 

3 stay provided under subsection (a), shall constitute a breach 

4 of such qualified financial contract by the counterparty. 

5 ‘‘(c) Subject to the court’s approval, a qualified finan6 cial contract between an entity and the debtor may be as7 signed to or assumed by the bridge company in a transfer 

8 under, and in accordance with, section 1185 if and only 

9 if— 

10 ‘‘(1) all qualified financial contracts between the 

11 entity and the debtor are assigned to and assumed by 

12 the bridge company in the transfer under section 

13 1185; 

14 ‘‘(2) all claims of the entity against the debtor 

15 in respect of any qualified financial contract between 

16 the entity and the debtor (other than any claim that, 

17 under the terms of the qualified financial contract, is 

18 subordinated to the claims of general unsecured credi19 tors) are assigned to and assumed by the bridge com20 pany; 

21 ‘‘(3) all claims of the debtor against the entity 

22 under any qualified financial contract between the 

23 entity and the debtor are assigned to and assumed by 

24 the bridge company; and 


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1 ‘‘(4) all property securing or any other credit en2 hancement furnished by the debtor for any qualified 

3 financial contract described in paragraph (1) or any 

4 claim described in paragraph (2) or (3) under any 

5 qualified financial contract between the entity and 

6 the debtor is assigned to and assumed by the bridge 

7 company. 

8 ‘‘(d) Notwithstanding any provision of a qualified fi9 nancial contract or of applicable nonbankruptcy law, a 

10 qualified financial contract of the debtor that is assumed 

11 or assigned in a transfer under section 1185 may not be 

12 accelerated, terminated, or modified, after the entry of the 

13 order approving a transfer under section 1185, and any 

14 right or obligation under the qualified financial contract 

15 may not be accelerated, terminated, or modified, after the 

16 entry of the order approving a transfer under section 1185 

17 solely because of a condition described in section 1187(c)(1), 

18 other than a condition of the kind specified in section 

19 1187(b) that occurs after property of the estate no longer 

20 includes a direct beneficial interest or an indirect beneficial 

21 interest through the special trustee, in more than 50 percent 

22 of the equity securities of the bridge company. 

23 ‘‘(e) Notwithstanding any provision of any agreement 

24 or in applicable nonbankruptcy law, an agreement of an 

25 affiliate (including an executory contract, an unexpired 


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1 lease, qualified financial contract, or an agreement under 

2 which the affiliate issued or is obligated for debt) and any 

3 right or obligation under such agreement may not be accel4 erated, terminated, or modified, solely because of a condi5 tion described in section 1187(c)(1), other than a condition 

6 of the kind specified in section 1187(b) that occurs after 

7 the bridge company is no longer a direct or indirect bene8 ficial holder of more than 50 percent of the equity securities 

9 of the affiliate, at any time after the commencement of the 

10 case if— 

11 ‘‘(1) all direct or indirect interests in the affil12 iate that are property of the estate are transferred 

13 under section 1185 to the bridge company within the 

14 period specified in subsection (a); 

15 ‘‘(2) the bridge company assumes— 

16 ‘‘(A) any guarantee or other credit enhance17 ment issued by the debtor relating to the agree18 ment of the affiliate; and 

19 ‘‘(B) any obligations in respect of rights of 

20 setoff, netting arrangement, or debt of the debtor 

21 that directly arises out of or directly relates to 

22 the guarantee or credit enhancement; and 

23 ‘‘(3) any property of the estate that directly 

24 serves as collateral for the guarantee or credit en25 hancement is transferred to the bridge company. 


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1 ‘‘§ 1189. Licenses, permits, and registrations 

2 ‘‘(a) Notwithstanding any otherwise applicable non3 bankruptcy law, if a request is made under section 1185 

4 for a transfer of property of the estate, any Federal, State, 

5 or local license, permit, or registration that the debtor or 

6 an affiliate had immediately before the commencement of 

7 the case and that is proposed to be transferred under section 

8 1185 may not be accelerated, terminated, or modified at 

9 any time after the request solely on account of— 

10 ‘‘(1) the insolvency or financial condition of the 

11 debtor at any time before the closing of the case; 

12 ‘‘(2) the commencement of a case under this title 

13 concerning the debtor; 

14 ‘‘(3) the appointment of or taking possession by 

15 a trustee in a case under this title concerning the 

16 debtor or by a custodian before the commencement of 

17 the case; or 

18 ‘‘(4) a transfer under section 1185. 

19 ‘‘(b) Notwithstanding any otherwise applicable non20 bankruptcy law, any Federal, State, or local license, permit, 

21 or registration that the debtor had immediately before the 

22 commencement of the case that is included in a transfer 

23 under section 1185 shall be valid and all rights and obliga24 tions thereunder shall vest in the bridge company. 


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1 ‘‘§ 1190. Exemption from securities laws 

2 ‘‘For purposes of section 1145, a security of the bridge 

3 company shall be deemed to be a security of a successor 

4 to the debtor under a plan if the court approves the disclo5 sure statement for the plan as providing adequate informa6 tion (as defined in section 1125(a)) about the bridge com7 pany and the security. 

8 ‘‘§ 1191. Inapplicability of certain avoiding powers 

9 ‘‘A transfer made or an obligation incurred by the 

10 debtor to an affiliate prior to or after the commencement 

11 of the case, including any obligation released by the debtor 

12 or the estate to or for the benefit of an affiliate, in con13 templation of or in connection with a transfer under section 

14 1185 is not avoidable under section 544, 547, 548(a)(1)(B), 

15 or 549, or under any similar nonbankruptcy law. 

16 ‘‘§ 1192. Consideration of financial stability 

17 ‘‘The court may consider the effect that any decision 

18 in connection with this subchapter may have on financial 

19 stability in the United States.’’. 

20 SEC. 4. AMENDMENTS TO TITLE 28, UNITED STATES CODE. 

21 (a) AMENDMENT TO CHAPTER 13.—Chapter 13 of title 

22 28, United States Code, is amended by adding at the end 

23 the following: 


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1 ‘‘§ 298. Judge for a case under subchapter V of chap2 ter 11 of title 11 

3 ‘‘(a)(1) Notwithstanding section 295, the Chief Justice 

4 of the United States shall designate not fewer than 10 bank5 ruptcy judges to be available to hear a case under sub6 chapter V of chapter 11 of title 11. Bankruptcy judges may 

7 request to be considered by the Chief Justice of the United 

8 States for such designation. 

9 ‘‘(2) Notwithstanding section 155, a case under sub10 chapter V of chapter 11 of title 11 shall be heard under 

11 section 157 by a bankruptcy judge designated under para12 graph (1), who shall be randomly assigned to hear such case 

13 by the chief judge of the court of appeals for the circuit 

14 embracing the district in which the case is pending. To the 

15 greatest extent practicable, the approvals required under 

16 section 155 should be obtained. 

17 ‘‘(3) If the bankruptcy judge assigned to hear a case 

18 under paragraph (2) is not assigned to the district in which 

19 the case is pending, the bankruptcy judge shall be tempo20 rarily assigned to the district. 

21 ‘‘(b) A case under subchapter V of chapter 11 of title 

22 11, and all proceedings in the case, shall take place in the 

23 district in which the case is pending. 

24 ‘‘(c) In this section, the term ‘covered financial cor25 poration’ has the meaning given that term in section 

26 101(9A) of title 11.’’. 


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1 (b) AMENDMENT TO SECTION 1334 OF TITLE 28.—Sec2 tion 1334 of title 28, United States Code, is amended by 

3 adding at the end the following: 

4 ‘‘(f) This section does not grant jurisdiction to the dis5 trict court after a transfer pursuant to an order under sec6 tion 1185 of title 11 of any proceeding related to a special 

7 trustee appointed, or to a bridge company formed, in con8 nection with a case under subchapter V of chapter 11 of 

9 title 11.’’. 

10 (c) TECHNICAL AND CONFORMING AMENDMENT.—The 

11 table of sections for chapter 13 of title 28, United States 

12 Code, is amended by adding at the end the following: 

‘‘298. Judge for a case under subchapter V of chapter 11 of title 11.’’. 


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Union Calendar No. 363 

114TH CONGRESS 

2D SESSION H. R. 2947 

[Report No. 114–477] 

A BILL 

To amend title 11 of the United States Code in 

financial institution in bankruptcy. order to facilitate the resolution of an insolvent 

MARCH 23, 2016 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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