IIB 

114TH CONGRESS 

2D SESSION H. R. 2947 

IN THE SENATE OF THE UNITED STATES 

APRIL 13, 2016 

Received; read twice and referred to the Committee on the Judiciary 

AN ACT 

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

facilitate the resolution of an insolvent financial institution in bankruptcy. 

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


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1 SECTION 1. SHORT TITLE. 

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

3 Bankruptcy Act of 2016’’. 

4 SEC. 2. GENERAL PROVISIONS RELATING TO COVERED FI5 NANCIAL CORPORATIONS. 

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

7 States Code, is amended by inserting the following after 

8 paragraph (9): 

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

10 means any corporation incorporated or organized 

11 under any Federal or State law, other than a stock12 broker, a commodity broker, or an entity of the kind 

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

14 that is— 

15 ‘‘(A) a bank holding company, as defined 

16 in section 2(a) of the Bank Holding Company 

17 Act of 1956; or 

18 ‘‘(B) a corporation that exists for the pri19 mary purpose of owning, controlling and financ20 ing its subsidiaries, that has total consolidated 

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

22 which, in its most recently completed fiscal 

23 year— 

24 ‘‘(i) annual gross revenues derived by 

25 the corporation and all of its subsidiaries 

26 from activities that are financial in nature 


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

2 Holding Company Act of 1956) and, if ap3 plicable, from the ownership or control of 

4 one or more insured depository institu5 tions, represents 85 percent or more of the 

6 consolidated annual gross revenues of the 

7 corporation; or 

8 ‘‘(ii) the consolidated assets of the 

9 corporation and all of its subsidiaries re10 lated to activities that are financial in na11 ture (as defined in section 4(k) of the 

12 Bank Holding Company Act of 1956) and, 

13 if applicable, related to the ownership or 

14 control of one or more insured depository 

15 institutions, represents 85 percent or more 

16 of the consolidated assets of the corpora17 tion.’’. 

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

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

20 end the following: 

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

22 only in a case under chapter 11 concerning a covered fi23 nancial corporation.’’. 

24 (c) WHO MAY BE A DEBTOR.—Section 109 of title 

25 11, United States Code, is amended— 


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1 (1) in subsection (b)— 

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

3 the end; 

4 (B) in paragraph (3)(B), by striking the 

5 period at the end and inserting ‘‘; or’’; and 

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

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

8 (2) in subsection (d)— 

9 (A) by striking ‘‘and’’ before ‘‘an unin10 sured State member bank’’; 

11 (B) by striking ‘‘or’’ before ‘‘a corpora12 tion’’; and 

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

14 corporation’’ after ‘‘Federal Deposit Insurance 

15 Corporation Improvement Act of 1991’’. 

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

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

18 end the following: 

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

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

21 7 if— 

22 ‘‘(1) a transfer approved under section 1185 

23 has been consummated; 

24 ‘‘(2) the court has ordered the appointment of 

25 a special trustee under section 1186; and 


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

2 that conversion is in the best interest of the credi3 tors and the estate.’’. 

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

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

6 ‘‘in payment of any unpaid fees, costs, and expenses of 

7 a special trustee appointed under section 1186, and then’’. 

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

9 is amended by inserting after paragraph (16) the fol10 lowing: 

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

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

13 been paid or the plan provides for the payment of 

14 all such fees, costs, and expenses on the effective 

15 date of the plan. 

16 ‘‘(18) In a case under subchapter V, confirma17 tion of the plan is not likely to cause serious adverse 

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

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

20 is amended by striking ‘‘The’’ and inserting ‘‘In cases 

21 under subchapter V, the United States trustee shall rec22 ommend to 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 amend5 ed by adding at the end the following: 

6 ‘‘SUBCHAPTER V—LIQUIDATION, REORGANIZA7 TION, OR RECAPITALIZATION OF A COV8 ERED FINANCIAL CORPORATION 

9 ‘‘§ 1181. Inapplicability of other sections 

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

11 under this subchapter concerning a covered financial cor12 poration. Section 365 does not apply to a transfer under 

13 section 1185, 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 

18 Governors 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 

22 equity securities of which may be transferred to a 

23 special 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 


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1 a 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 sec12 tion 761. 

13 ‘‘(6) The term ‘special trustee’ means the trust14 ee 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 cov18 ered financial corporation may be commenced by the filing 

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

20 301 only if the debtor states to the best of its knowledge 

21 under penalty of perjury in the petition that it is a covered 

22 financial corporation. 

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

24 (a) 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 great11 est extent practicable without disclosing the identity of the 

12 potential 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 po16 tential commencement of such case. The chief judge of 

17 such court shall randomly assign to preside over such case 

18 a bankruptcy judge selected from among the bankruptcy 

19 judges designated by the Chief Justice of the United 

20 States under section 298 of title 28. 

21 ‘‘§ 1184. Regulators 

22 ‘‘The Board, the Securities Exchange Commission, 

23 the Office of the Comptroller of the Currency of the De24 partment of the Treasury, the Commodity Futures Trad25 ing Commission, and the Federal Deposit Insurance CorVerDate Sep 11 2014 00:15 Apr 14, 2016 Jkt 059200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\H2947.RFS H2947

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1 poration may raise and may appear and be heard on any 

2 issue in any 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 

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

7 this section of property of the estate, and the assignment 

8 of executory contracts, unexpired leases, and qualified fi9 nancial contracts of the debtor, to a bridge company. 

10 Upon the entry of an order approving such transfer, any 

11 property transferred, and any executory contracts, unex12 pired leases, and qualified financial contracts assigned 

13 under such order shall no longer be property of the estate. 

14 Except as provided under this section, the provisions of 

15 section 363 shall apply to a transfer and assignment under 

16 this section. 

17 ‘‘(b) Unless the court orders otherwise, notice of a 

18 request for an order under subsection (a) shall consist of 

19 electronic or telephonic notice of not less than 24 hours 

20 to— 

21 ‘‘(1) the debtor; 

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

23 claims against the debtor; 

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

25 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 Corpora6 tion; 

7 ‘‘(7) the Secretary of the Treasury and the Of8 fice of the Comptroller of the Currency of the Treas9 ury; 

10 ‘‘(8) the Commodity Futures Trading Commis11 sion; 

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

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

14 administrator; and 

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

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

17 Street Reform and Consumer Protection Act, with 

18 respect to any affiliate the equity securities of which 

19 are proposed to be transferred under this section. 

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

21 section unless the court determines, based upon a prepon22 derance of the evidence, that— 

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

24 to prevent serious adverse effects on financial sta25 bility 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 trans5 fer to the bridge company of any property of the es6 tate that is subject to a lien securing a debt, execu7 tory contract, unexpired lease or agreement (includ8 ing a qualified financial contract) of the debtor un9 less— 

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

11 debt, executory contract, unexpired lease or 

12 agreement (including a qualified financial con13 tract), including any claims arising in respect 

14 thereof that would not be allowed secured 

15 claims under section 506(a)(1) and after giving 

16 effect to such transfer, such property remains 

17 subject to the lien securing such debt, executory 

18 contract, unexpired lease or agreement (includ19 ing a qualified financial contract); and 

20 ‘‘(ii) the court has determined that as21 sumption of such debt, executory contract, un22 expired lease or agreement (including a quali23 fied financial contract) by the bridge company 

24 is in the 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 trans13 fer of the equity of the debtor; 

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

15 bridge company is not likely to fail to meet the obli16 gations of any debt, executory contract, qualified fi17 nancial contract, or unexpired lease assumed and as18 signed to the bridge company; 

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

20 special trustee all of the equity securities in the 

21 bridge company and appointment of a special trustee 

22 in accordance with section 1186; 

23 ‘‘(8) after giving effect to the transfer, ade24 quate provision has been made for the fees, costs, 

25 and expenses 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 es4 tate. 

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

6 the bridge company that is the recipient of the transfer 

7 shall— 

8 ‘‘(1) not have any property, executory con9 tracts, unexpired leases, qualified financial contracts, 

10 or debts, other than any property acquired or execu11 tory contracts, unexpired leases, or debts assumed 

12 when acting as a transferee of a transfer under this 

13 section; and 

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

15 the estate, which may be sold or distributed in ac16 cordance with this title. 

17 ‘‘§ 1186. Special trustee 

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

19 1185 shall require the trustee to transfer to a qualified 

20 and independent special trustee, who is appointed by the 

21 court, all of the equity securities in the bridge company 

22 that is the recipient of a transfer under section 1185 to 

23 hold in trust for the sole benefit of the estate, subject to 

24 satisfaction of the special trustee’s fees, costs, and ex25 penses. The trust of which the special trustee is the trustVerDate Sep 11 2014 00:15 Apr 14, 2016 Jkt 059200 PO 00000 Frm 00013 Fmt 6652 Sfmt 6201 E:\BILLS\H2947.RFS H2947

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1 ee shall be a newly formed trust governed by a trust agree2 ment approved by the court as in the best interests of the 

3 estate, and shall exist for the sole purpose of holding and 

4 administering, and shall be permitted to dispose of, the 

5 equity securities of the bridge company in accordance with 

6 the trust agreement. 

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

8 transfer under section 1185, the trustee shall confirm to 

9 the court that the Board has been consulted regarding the 

10 identity of the proposed special trustee and advise the 

11 court of the results of such consultation. 

12 ‘‘(b) The trust agreement governing the trust shall 

13 provide— 

14 ‘‘(1) for the payment of the fees, costs, ex15 penses, and indemnities of the special trustee from 

16 the assets of the debtor’s estate; 

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

18 ‘‘(A) quarterly reporting to the estate, 

19 which shall be filed with the court; and 

20 ‘‘(B) information about the bridge com21 pany reasonably requested by a party in inter22 est to prepare a disclosure statement for a plan 

23 providing for distribution of any securities of 

24 the bridge company if such information is nec25 essary to prepare such disclosure statement; 


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

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

3 trustee shall file a notice with the court in connec4 tion with— 

5 ‘‘(A) any change in a director or senior of6 ficer of the bridge company; 

7 ‘‘(B) any modification to the governing 

8 documents of the bridge company; and 

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

10 bridge company, including— 

11 ‘‘(i) recapitalization; 

12 ‘‘(ii) a material borrowing; 

13 ‘‘(iii) termination of an intercompany 

14 debt or guarantee; 

15 ‘‘(iv) a transfer of a substantial por16 tion of the assets of the bridge company; 

17 or 

18 ‘‘(v) the issuance or sale of any secu19 rities of the bridge company; 

20 ‘‘(4) that any sale of any equity securities of 

21 the bridge company shall not be consummated until 

22 the special trustee consults with the Federal Deposit 

23 Insurance Corporation and the Board regarding 

24 such sale and discloses the results of such consulta25 tion with the court; 


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1 ‘‘(5) that, subject to reserves for payments per2 mitted under paragraph (1) provided for in the trust 

3 agreement, the proceeds of the sale of any equity se4 curities of the bridge company by the special trustee 

5 be held in trust for the benefit of or transferred to 

6 the estate; 

7 ‘‘(6) the process and guidelines for the replace8 ment of the special trustee; and 

9 ‘‘(7) that the property held in trust by the spe10 cial trustee is subject to distribution in accordance 

11 with subsection (c). 

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

13 held in trust— 

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

15 in accordance with the plan on the effective date of 

16 the plan; or 

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

18 chapter 7, as ordered by the court. 

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

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

21 terminate, except as may be necessary to wind up and con22 clude the business and financial affairs of the trust. 

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

24 section, the special trustee shall be subject only to applica25 ble nonbankruptcy law, and the actions and conduct of 


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1 the special trustee shall no longer be subject to approval 

2 by the court in the case under this subchapter. 

3 ‘‘§ 1187. Temporary and supplemental automatic stay; 

4 assumed debt 

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

6 as a stay, applicable to all entities, of the termination, ac7 celeration, or modification of any debt, contract, lease, or 

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

9 any right or obligation under any such debt, contract, 

10 lease, or agreement, solely because of— 

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

12 debt, contract, lease, or agreement; or 

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

14 or agreement, or in applicable nonbankruptcy law, 

15 that is conditioned on— 

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

17 the debtor at any time before the closing of the 

18 case; 

19 ‘‘(ii) the commencement of a case under 

20 this title concerning the debtor; 

21 ‘‘(iii) the appointment of or taking posses22 sion by a trustee in a case under this title con23 cerning the debtor or by a custodian before the 

24 commencement of the case; or 


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1 ‘‘(iv) a credit rating agency rating, or ab2 sence or withdrawal of a credit rating agency 

3 rating— 

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

5 the commencement of the case; 

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

7 from the commencement of the case until 

8 48 hours after such order is entered; 

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

10 trustee or the special trustee is a direct or 

11 indirect beneficial holder of more than 50 

12 percent of the equity securities of— 

13 ‘‘(aa) the bridge company; or 

14 ‘‘(bb) the affiliate, if all of the di15 rect or indirect interests in the affil16 iate that are property of the estate 

17 are transferred under section 1185; or 

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

19 or the special trustee is a direct or indirect 

20 beneficial holder of more than 50 percent 

21 of the equity securities of— 

22 ‘‘(aa) the bridge company; or 

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1 iate that are property of the estate 

2 are transferred under section 1185. 

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

4 in this paragraph is— 

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

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

7 debtor (other than a qualified financial contract); 

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

9 issued or is obligated for debt (other than capital 

10 structure debt); 

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

12 lease of an affiliate (other than a qualified financial 

13 contract); or 

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

15 issued or is obligated for debt. 

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

17 ‘‘(A) for the benefit of the debtor, upon the ear18 liest of— 

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

20 the case; 

21 ‘‘(ii) assumption of the debt, contract, 

22 lease, or agreement by the bridge company 

23 under an order authorizing a transfer under 

24 section 1185; 


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

2 request for a transfer under section 1185; or 

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

4 ‘‘(B) for the benefit of an affiliate, upon the 

5 earliest of— 

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

7 transfer under section 1185 in which the direct 

8 or indirect interests in the affiliate that are 

9 property of the estate are not transferred under 

10 section 1185; 

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

12 request for a transfer under section 1185; 

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

14 the case if the court has not ordered a transfer 

15 under section 1185; or 

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

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

18 apply to a stay under this subsection. 

19 ‘‘(b) A debt, executory contract (other than a quali20 fied financial contract), or unexpired lease of the debtor, 

21 or an agreement under which the debtor has issued or is 

22 obligated for any debt, may be assumed by a bridge com23 pany in a transfer under section 1185 notwithstanding 

24 any provision in an agreement or in applicable nonbank25 ruptcy law that— 


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1 ‘‘(1) prohibits, restricts, or conditions the as2 signment of the debt, contract, lease, or agreement; 

3 or 

4 ‘‘(2) accelerates, terminates, or modifies, or 

5 permits a party other than the debtor to terminate 

6 or modify, the debt, contract, lease, or agreement on 

7 account of— 

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

9 lease, or agreement; or 

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

11 the debt, contract, lease, or agreement. 

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

13 kind described in subparagraph (A) or (B) of subsection 

14 (a)(2) may not be accelerated, terminated, or modified, 

15 and any right or obligation under such debt, contract, 

16 lease, or agreement may not be accelerated, terminated, 

17 or modified, as to the bridge company solely because of 

18 a provision in the debt, contract, lease, or agreement or 

19 in applicable nonbankruptcy law— 

20 ‘‘(A) of the kind described in subsection 

21 (a)(1)(B) as applied to the debtor; 

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

23 assignment of the debt, contract, lease, or agree24 ment; or 


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

2 or permits a party other than the debtor to termi3 nate or modify, the debt, contract, lease or agree4 ment on account of— 

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

6 lease, or agreement; or 

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

8 the debt, contract, lease, or agreement. 

9 ‘‘(2) If there is a default by the debtor under a provi10 sion other than the kind described in paragraph (1) in 

11 a debt, contract, lease or agreement of the kind described 

12 in subparagraph (A) or (B) of subsection (a)(2), the 

13 bridge company may assume such debt, contract, lease, 

14 or agreement only if the bridge company— 

15 ‘‘(A) shall cure the default; 

16 ‘‘(B) compensates, or provides adequate assur17 ance in connection with a transfer under section 

18 1185 that the bridge company will promptly com19 pensate, a party other than the debtor to the debt, 

20 contract, lease, or agreement, for any actual pecu21 niary loss to the party resulting from the default; 

22 and 

23 ‘‘(C) provides adequate assurance in connection 

24 with a transfer under section 1185 of future per25 formance under the debt, contract, lease, or agreeVerDate Sep 11 2014 00:15 Apr 14, 2016 Jkt 059200 PO 00000 Frm 00022 Fmt 6652 Sfmt 6201 E:\BILLS\H2947.RFS H2947

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1 ment, as determined by the court under section 

2 1185(c)(4). 

3 ‘‘§ 1188. Treatment of qualified financial contracts 

4 and affiliate contracts 

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

6 362(b)(17), 362(b)(27), 362(o), 555, 556, 559, 560, and 

7 561, a petition filed under section 1183 operates as a stay, 

8 during the period specified in section 1187(a)(3)(A), ap9 plicable to all entities, of the exercise of a contractual 

10 right— 

11 ‘‘(1) to cause the modification, liquidation, ter12 mination, or acceleration of a qualified financial con13 tract of the debtor or an affiliate; 

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

15 payment amount, or other transfer obligation arising 

16 under or in connection with a qualified financial con17 tract of the debtor or an affiliate; or 

18 ‘‘(3) under any security agreement or arrange19 ment or other credit enhancement forming a part of 

20 or related to a qualified financial contract of the 

21 debtor or an affiliate. 

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

23 1187(a)(3)(A), the trustee or the affiliate shall perform 

24 all payment and delivery obligations under such qualified 

25 financial contract of the debtor or the affiliate, as the case 


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

2 case. The stay provided under subsection (a) terminates 

3 as to a qualified financial contract of the debtor or an 

4 affiliate immediately upon the failure of the trustee or the 

5 affiliate, as the case may be, to perform any such obliga6 tion during such period. 

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

8 financial contract of the debtor or any affiliate to perform 

9 any payment or delivery obligation under such qualified 

10 financial contract, including during the pendency of the 

11 stay provided under subsection (a), shall constitute a 

12 breach of such qualified financial contract by the 

13 counterparty. 

14 ‘‘(c) Subject to the court’s approval, a qualified finan15 cial contract between an entity and the debtor may be as16 signed to or assumed by the bridge company in a transfer 

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

18 if— 

19 ‘‘(1) all qualified financial contracts between 

20 the entity and the debtor are assigned to and as21 sumed by the bridge company in the transfer under 

22 section 1185; 

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

24 in respect of any qualified financial contract between 

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


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1 under the terms of the qualified financial contract, 

2 is subordinated to the claims of general unsecured 

3 creditors) are assigned to and assumed by the bridge 

4 company; 

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

6 under any qualified financial contract between the 

7 entity and the debtor are assigned to and assumed 

8 by the bridge company; and 

9 ‘‘(4) all property securing or any other credit 

10 enhancement furnished by the debtor for any quali11 fied financial contract described in paragraph (1) or 

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

13 any qualified financial contract between the entity 

14 and the debtor is assigned to and assumed by the 

15 bridge company. 

16 ‘‘(d) Notwithstanding any provision of a qualified fi17 nancial contract or of applicable nonbankruptcy law, a 

18 qualified financial contract of the debtor that is assumed 

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

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

21 order approving a transfer under section 1185, and any 

22 right or obligation under the qualified financial contract 

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

24 entry of the order approving a transfer under section 1185 

25 solely because of a condition described in section 


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1 1187(c)(1), other than a condition of the kind specified 

2 in section 1187(b) that occurs after property of the estate 

3 no longer includes a direct beneficial interest or an indi4 rect beneficial interest through the special trustee, in more 

5 than 50 percent of the equity securities of the bridge com6 pany. 

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

8 or in applicable nonbankruptcy law, an agreement of an 

9 affiliate (including an executory contract, an unexpired 

10 lease, qualified financial contract, or an agreement under 

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

12 right or obligation under such agreement may not be ac13 celerated, terminated, or modified, solely because of a con14 dition described in section 1187(c)(1), other than a condi15 tion of the kind specified in section 1187(b) that occurs 

16 after the bridge company is no longer a direct or indirect 

17 beneficial holder of more than 50 percent of the equity 

18 securities of the affiliate, at any time after the commence19 ment of the case if— 

20 ‘‘(1) all direct or indirect interests in the affil21 iate that are property of the estate are transferred 

22 under section 1185 to the bridge company within the 

23 period specified in subsection (a); 

24 ‘‘(2) the bridge company assumes— 


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1 ‘‘(A) any guarantee or other credit en2 hancement issued by the debtor relating to the 

3 agreement of the affiliate; and 

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

5 setoff, netting arrangement, or debt of the debt6 or that directly arises out of or directly relates 

7 to the guarantee or credit enhancement; and 

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

9 serves as collateral for the guarantee or credit en10 hancement is transferred to the bridge company. 

11 ‘‘§ 1189. Licenses, permits, and registrations 

12 ‘‘(a) Notwithstanding any otherwise applicable non13 bankruptcy law, if a request is made under section 1185 

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

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

16 an affiliate had immediately before the commencement of 

17 the case and that is proposed to be transferred under sec18 tion 1185 may not be accelerated, terminated, or modified 

19 at any time after the request solely on account of— 

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

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

22 ‘‘(2) the commencement of a case under this 

23 title concerning the debtor; 

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

25 a trustee in a case under this title concerning the 


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1 debtor or by a custodian before the commencement 

2 of the case; or 

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

4 ‘‘(b) Notwithstanding any otherwise applicable non5 bankruptcy law, any Federal, State, or local license, per6 mit, or registration that the debtor had immediately before 

7 the commencement of the case that is included in a trans8 fer under section 1185 shall be valid and all rights and 

9 obligations thereunder shall vest in the bridge company. 

10 ‘‘§ 1190. Exemption from securities laws 

11 ‘‘For purposes of section 1145, a security of the 

12 bridge company shall be deemed to be a security of a suc13 cessor to the debtor under a plan if the court approves 

14 the disclosure statement for the plan as providing ade15 quate information (as defined in section 1125(a)) about 

16 the bridge company and the security. 

17 ‘‘§ 1191. Inapplicability of certain avoiding powers 

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

19 debtor to an affiliate prior to or after the commencement 

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

21 or the estate to or for the benefit of an affiliate, in con22 templation of or in connection with a transfer under sec23 tion 1185 is not avoidable under section 544, 547, 

24 548(a)(1)(B), or 549, or under any similar nonbankruptcy 

25 law. 


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1 ‘‘§ 1192. Consideration of financial stability 

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

3 in connection with this subchapter may have on financial 

4 stability in the United States.’’. 

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

6 (a) AMENDMENT TO CHAPTER 13.—Chapter 13 of 

7 title 28, United States Code, is amended by adding at the 

8 end the following: 

9 ‘‘§ 298. Judge for a case under subchapter V of chap10 ter 11 of title 11 

11 ‘‘(a)(1) Notwithstanding section 295, the Chief Jus12 tice of the United States shall designate not fewer than 

13 10 bankruptcy judges to be available to hear a case under 

14 subchapter V of chapter 11 of title 11. Bankruptcy judges 

15 may request to be considered by the Chief Justice of the 

16 United States for such designation. 

17 ‘‘(2) Notwithstanding section 155, a case under sub18 chapter V of chapter 11 of title 11 shall be heard under 

19 section 157 by a bankruptcy judge designated under para20 graph (1), who shall be randomly assigned to hear such 

21 case by the chief judge of the court of appeals for the cir22 cuit embracing the district in which the case is pending. 

23 To the greatest extent practicable, the approvals required 

24 under section 155 should be obtained. 

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

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


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1 which the case is pending, the bankruptcy judge shall be 

2 temporarily assigned to the district. 

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

4 11, and all proceedings in the case, shall take place in 

5 the district in which the case is pending. 

6 ‘‘(c) In this section, the term ‘covered financial cor7 poration’ has the meaning given that term in section 

8 101(9A) of title 11.’’. 

9 (b) AMENDMENT TO SECTION 1334 OF TITLE 28.— 

10 Section 1334 of title 28, United States Code, is amended 

11 by adding at the end the following: 

12 ‘‘(f) This section does not grant jurisdiction to the 

13 district court after a transfer pursuant to an order under 

14 section 1185 of title 11 of any proceeding related to a spe15 cial trustee appointed, or to a bridge company formed, in 

16 connection with a case under subchapter V of chapter 11 

17 of title 11.’’. 

18 (c) TECHNICAL AND CONFORMING AMENDMENT.— 

19 The table of sections for chapter 13 of title 28, United 


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1 States Code, is amended by adding at the end the fol2 lowing: 

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

Passed the House of Representatives April 12, 2016. 

Attest: KAREN L. HAAS, 

Clerk. 


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