Calendar No. 109

106TH CONGRESS

1ST SESSION S. 625

[Report No. 106–49]

A BILL

To amend title 11, United States Code, and for

other purposes.

MAY 11, 1999

Reported with amendments
II

Calendar No. 109

106TH CONGRESS

1ST SESSION S. 625

[Report No. 106–49]

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

IN THE SENATE OF THE UNITED STATES

MARCH 16, 1999

Mr. GRASSLEY (for himself, Mr. TORRICELLI, Mr. BIDEN, Mr. SESSIONS, Mr.

ROTH, Mr. JOHNSON, Mr. BREAUX, Mr. KERREY, and Mr. ROBB) introduced the following bill; which was read twice and referred to the Committee on the Judiciary

MAY 11, 1999

Reported by Mr. HATCH, with amendments

[Omit the part struck through and insert the part printed in italic]

A BILL

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

purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Bankruptcy Reform Act of 1999’’.
2

•S 625 RS

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

2 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—NEEDS-BASED BANKRUPTCY

Sec. 101. Conversion.

Sec. 102. Dismissal or conversion.

Sec. 103. Notice of alternatives.

Sec. 104. Debtor financial management training test program.

Sec. 105. Credit counseling.

TITLE II—ENHANCED CONSUMER PROTECTION

Subtitle A—Penalties for Abusive Creditor Practices

Sec. 201. Promotion of alternative dispute resolution.

Sec. 202. Effect of discharge.

Sec. 203. Violations of the automatic stay.

Sec. 204. Discouraging abuse of reaffirmation practices.

Subtitle B—Priority Child Support

Sec. 211. Definition of domestic support obligation.

Sec. 211 212. Priorities for claims for domestic support obligations.

Sec. 212 213. Requirements to obtain confirmation and discharge in cases involving domestic support obligations.

Sec. 213 214. Exceptions to automatic stay in domestic support obligation proceedings.

Sec. 214 215. Nondischargeability of certain debts for alimony, maintenance,

and support.

Sec. 215 216. Continued liability of property.

Sec. 216 217. Protection of domestic support claims against preferential transfer motions.

Sec. 217. Amendment to section 1325 of title 11, United States Code.

Sec. 218. Definition of domestic support obligation.

Sec. 218. Disposable income defined.

Sec. 219. Collection of child support.

Subtitle C—Other Consumer Protections

Sec. 221. Definitions.

Sec. 222. Disclosures.

Sec. 223. Debtor’s bill of rights.

Sec. 224. Enforcement.

Sec. 221. Amendments to discourage abusive bankruptcy filings.

Sec. 225 222. Sense of Congress.

Sec. 226 223. Additional amendments to title 11, United States Code.

Sec. 224. Protection of retirement savings in bankruptcy.

TITLE III—DISCOURAGING BANKRUPTCY ABUSE

Sec. 301. Reinforcement of the fresh start.

Sec. 302. Discouraging bad faith repeat filings.

Sec. 303. Curbing abusive filings.
3

•S 625 RS

Sec. 304. Debtor retention of personal property security.

Sec. 305. Relief from the automatic stay when the debtor does not complete intended surrender of consumer debt collateral.

Sec. 306. Giving secured creditors fair treatment in chapter 13.

Sec. 307. Exemptions.

Sec. 308. Residency requirement for homestead exemption.

Sec. 309. Protecting secured creditors in chapter 13 cases.

Sec. 310. Limitation on luxury goods.

Sec. 311. Automatic stay.

Sec. 312. Extension of period between bankruptcy discharges.

Sec. 313. Definition of household goods and antiques.

Sec. 314. Debt incurred to pay nondischargeable debts.

Sec. 315. Giving creditors fair notice in chapters 7 and 13 cases.

Sec. 316. Dismissal for failure to timely file schedules or provide required information.

Sec. 317. Adequate time to prepare for hearing on confirmation of the plan.

Sec. 318. Chapter 13 plans to have a 5-year duration in certain cases.

Sec. 319. Sense of the Congress regarding expansion of rule 9011 of the Federal Rules of Bankruptcy Procedure.

Sec. 320. Prompt relief from stay in individual cases.

Sec. 321. Treatment of certain earnings of an individual debtor who files a voluntary case under chapter 11.

TITLE IV—GENERAL AND SMALL BUSINESS BANKRUPTCY

PROVISIONS

Subtitle A—General Business Bankruptcy Provisions

Sec. 401. Rolling stock equipment.

Sec. 402. Adequate protection for investors.

Sec. 403. Meetings of creditors and equity security holders.

Sec. 404. Protection of refinance of security interest.

Sec. 405. Executory contracts and unexpired leases.

Sec. 406. Creditors and equity security holders committees.

Sec. 407. Amendment to section 546 of title 11, United States Code.

Sec. 408. Limitation.

Sec. 409. Amendment to section 330(a) of title 11, United States Code.

Sec. 410. Postpetition disclosure and solicitation.

Sec. 411. Preferences.

Sec. 412. Venue of certain proceedings.

Sec. 413. Period for filing plan under chapter 11.

Sec. 414. Fees arising from certain ownership interests.

Sec. 415. Creditor representation at first meeting of creditors.

Sec. 416. Elimination of certain fees payable in chapter 11 bankruptcy cases.

Sec. 417 416. Definition of disinterested person.

Sec. 418 417. Factors for compensation of professional persons.

Sec. 419 418. Appointment of elected trustee.

Sec. 419. Utility service.

Subtitle B—Small Business Bankruptcy Provisions

Sec. 421. Flexible rules for disclosure statement and plan.

Sec. 422. Definitions; effect of discharge.

Sec. 423. Standard form disclosure Statement and plan.

Sec. 424. Uniform national reporting requirements.

Sec. 425. Uniform reporting rules and forms for small business cases.
4

•S 625 RS

Sec. 426. Duties in small business cases.

Sec. 427. Plan filing and confirmation deadlines.

Sec. 428. Plan confirmation deadline.

Sec. 429. Prohibition against extension of time.

Sec. 430. Duties of the United States trustee.

Sec. 431. Scheduling conferences.

Sec. 432. Serial filer provisions.

Sec. 433. Expanded grounds for dismissal or conversion and appointment of

trustee.

Sec. 434. Study of operation of title 11, United States Code, with respect to

small businesses.

Sec. 435. Payment of interest.

TITLE V—MUNICIPAL BANKRUPTCY PROVISIONS

Sec. 501. Petition and proceedings related to petition.

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

TITLE VI—IMPROVED BANKRUPTCY STATISTICS AND DATA

Sec. 601. Audit procedures.

Sec. 602. Improved bankruptcy statistics.

Sec. 603. Uniform rules for the collection of bankruptcy data.

Sec. 604. Sense of Congress regarding availability of bankruptcy data.

TITLE VII—BANKRUPTCY TAX PROVISIONS

Sec. 701. Treatment of certain liens.

Sec. 702. Effective notice to government.

Sec. 703. Notice of request for a determination of taxes.

Sec. 704. Rate of interest on tax claims.

Sec. 705. Tolling of priority of tax claim time periods.

Sec. 706. Priority property taxes incurred.

Sec. 707. Chapter 13 discharge of fraudulent and other taxes.

Sec. 708. Chapter 11 discharge of fraudulent taxes.

Sec. 709. Stay of tax proceedings.

Sec. 710. Periodic payment of taxes in chapter 11 cases.

Sec. 711. Avoidance of statutory tax liens prohibited.

Sec. 712. Payment of taxes in the conduct of business.

Sec. 713. Tardily filed priority tax claims.

Sec. 714. Income tax returns prepared by tax authorities.

Sec. 715. Discharge of the estate’s liability for unpaid taxes.

Sec. 716. Requirement to file tax returns to confirm chapter 13 plans.

Sec. 717. Standards for tax disclosure.

Sec. 718. Setoff of tax refunds.

TITLE VIII—ANCILLARY AND OTHER CROSS-BORDER CASES

Sec. 801. Amendment to add chapter 15 to title 11, United States Code.

Sec. 802. Amendments to other chapters in title 11, United States Code.

Sec. 803. Claims relating to insurance deposits in cases ancillary to foreign proceedings.

TITLE IX—FINANCIAL CONTRACT PROVISIONS

Sec. 901. Bankruptcy Code amendments.

Sec. 902. Damage measure.
5

•S 625 RS

Sec. 903. Asset-backed securitizations.

Sec. 904. Effective date; application of amendments.

TITLE X—PROTECTION OF FAMILY FARMERS

Sec. 1001. Reenactment of chapter 12.

Sec. 1002. Debt limit increase.

Sec. 1003. Elimination of requirement that family farmer and spouse receive

over 50 percent of income from farming operation in year prior

to bankruptcy.

Sec. 1004. Certain claims owed to governmental units.

TITLE XI—HEALTH CARE AND EMPLOYEE BENEFITS

Sec. 1101. Definitions.

Sec. 1102. Disposal of patient records.

Sec. 1103. Administrative expense claim for costs of closing a health care business.

Sec. 1104. Appointment of ombudsman to act as patient advocate.

Sec. 1105. Debtor in possession; duty of trustee to transfer patients.

TITLE XII XI—TECHNICAL AMENDMENTS

Sec. 1201 1101. Definitions.

Sec. 1202 1102. Adjustment of dollar amounts.

Sec. 1203 1103. Extension of time.

Sec. 1204 1104. Technical amendments.

Sec. 1205 1105. Penalty for persons who negligently or fraudulently prepare

bankruptcy petitions.

Sec. 1206 1106. Limitation on compensation of professional persons.

Sec. 1207 1107. Special tax provisions.

Sec. 1208 1108. Effect of conversion.

Sec. 1209 1109. Allowance of administrative expenses.

Sec. 1210. Priorities.

Sec. 1211. Exemptions.

Sec. 1212 1110. Exceptions to discharge.

Sec. 1213 1111. Effect of discharge.

Sec. 1214 1112. Protection against discriminatory treatment.

Sec. 1215 1113. Property of the estate.

Sec. 1216 1114. Preferences.

Sec. 1217 1115. Postpetition transactions.

Sec. 1218 1116. Disposition of property of the estate.

Sec. 1219 1117. General provisions.

Sec. 1220 1118. Abandonment of railroad line.

Sec. 1221 1119. Contents of plan.

Sec. 1222 1120. Discharge under chapter 12.

Sec. 1223 1121. Bankruptcy cases and proceedings.

Sec. 1224 1122. Knowing disregard of bankruptcy law or rule.

Sec. 1225 1123. Transfers made by nonprofit charitable corporations.

Sec. 1226 1124. Protection of valid purchase money security interests.

Sec. 1227 1125. Extensions.

Sec. 1228 1126. Bankruptcy judgeships.

TITLE XIII XII—GENERAL EFFECTIVE DATE; APPLICATION OF

AMENDMENTS

Sec. 1301 1201. Effective date; application of amendments.
6

•S 625 RS

1 TITLE I—NEEDS-BASED

2 BANKRUPTCY

3 SEC. 101. CONVERSION.

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

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

6 SEC. 102. DISMISSAL OR CONVERSION.

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

8 States Code, is amended—

9 (1) by striking the section heading and insert10 ing the following:

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

12 under chapter 13’’;

13 and

14 (2) in subsection (b)—

15 (A) by inserting ‘‘(1)’’ after ‘‘(b)’’;

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

17 subparagraph (A) of this paragraph—

18 (i) in the first sentence—

19 (I) by striking ‘‘but not at the re20 quest or suggestion’’ and inserting ‘‘,

21 panel trustee or’’;

22 (II) by inserting ‘‘, or, with the

23 debtor’s consent, convert such a case

24 to a case under chapter 13 of this

25 title,’’ after ‘‘consumer debts’’; and
7

•S 625 RS

1 (III) by striking ‘‘substantial

2 abuse’’ and inserting ‘‘abuse’’; and

3 (ii) by striking the next to last sen4 tence; and

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

6 ‘‘(2)(A)(i) In considering under paragraph (1) wheth7 er the granting of relief would be an abuse of the provi8 sions of this chapter, the court shall presume abuse exists

9 if the debtor’s current monthly income reduced by the

10 amounts determined under clauses (ii), (iii), and (iv), and

11 multiplied by 60 is not less than the lesser of—

12 ‘‘(I) 25 percent of the debtor’s nonpriority un13 secured claims in the case; or

14 ‘‘(II) $15,000.

15 ‘‘(ii) The debtor’s monthly expenses shall be the ap16 plicable monthly (excluding payments for debts) expenses

17 under standards issued by the Internal Revenue Service

18 for the area in which the debtor resides, as in effect on

19 the date of the entry of the order for relief, for the debtor,

20 the dependents of the debtor, and the spouse of the debtor

21 in a joint case, if the spouse is not otherwise a dependent.

22 ‘‘(iii) The debtor’s average monthly payments on ac23 count of secured debts shall be calculated as—

24 ‘‘(I) the total of all amounts scheduled as con25 tractually due to secured creditors in each month of
8

•S 625 RS

1 the 60 months following the date of the petition; di2 vided by

3 ‘‘(II) 60.

4 ‘‘(iv) The debtor’s expenses for payment of all pri5 ority claims (including priority child support and alimony

6 claims) shall be calculated as—

7 ‘‘(I) the total amount of debts entitled to pri8 ority; divided by

9 ‘‘(II) 60.

10 ‘‘(B)(i) In any proceeding brought under this sub11 section, the presumption of abuse may be rebutted by

12 demonstrating special circumstances that justify addi13 tional expenses or adjustments of current monthly total

14 income. In order to establish special circumstances, the

15 debtor shall be required to—

16 ‘‘(I) itemize each additional expense or adjust17 ment of income; and

18 ‘‘(II) provide—

19 ‘‘(aa) documentation for such expenses;

20 and

21 ‘‘(bb) a detailed explanation of the special

22 circumstances that make such expenses nec23 essary and reasonable.

24 ‘‘(ii) The debtor, and the attorney for the debtor if

25 the debtor has an attorney, shall attest under oath to the
9

•S 625 RS

1 accuracy of any information provided to demonstrate that

2 additional expenses or adjustments to income are required.

3 ‘‘(iii) The presumption of abuse may be rebutted if

4 the additional expenses or adjustments to income referred

5 to in clause (i) cause the product of the debtor’s current

6 monthly income reduced by the amounts determined under

7 clauses (ii), (iii), and (iv) of subparagraph (A) multiplied

8 by 60 to be less than the lesser of—

9 ‘‘(I) 25 percent of the debtor’s nonpriority un10 secured claims; or

11 ‘‘(II) $15,000.

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

13 expenditures required under section 521, the debtor shall

14 include a statement of the debtor’s current monthly in15 come, and the calculations that determine whether a pre16 sumption arises under subparagraph (A)(i), that shows

17 how each such amount is calculated.

18 ‘‘(ii) The Supreme Court shall promulgate rules

19 under section 2075 of title 28, that prescribe a form for

20 a statement under clause (i) and may provide general rules

21 on the content of the statement.

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

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

24 this chapter in a case in which the presumption in sub-
10

•S 625 RS

1 paragraph (A)(i) of such paragraph does not apply or has

2 been rebutted, the court shall consider—

3 ‘‘(A) whether the debtor filed the petition in

4 bad faith; or

5 ‘‘(B) the totality of the circumstances (includ6 ing whether the debtor seeks to reject a personal

7 services contract and the financial need for such re8 jection as sought by the debtor) of the debtor’s fi9 nancial situation demonstrates abuse.’’.

10 (b) DEFINITION.—Title 11, United States Code, is

11 amended—

12 (1) in section 101, by inserting after paragraph

13 (10) the following:

14 ‘‘(10A) ‘current monthly income’—

15 ‘‘(A) means the average monthly income

16 from all sources which the debtor, or in a joint

17 case, the debtor and the debtor’s spouse, receive

18 without regard to whether the income is taxable

19 income, derived during the 180-day period pre20 ceding the date of determination; and

21 ‘‘(B) includes any amount paid by any en22 tity other than the debtor (or, in a joint case,

23 the debtor and the debtor’s spouse), on a reg24 ular basis to the household expenses of the

25 debtor or the debtor’s dependents (and, in a
11

•S 625 RS

1 joint case, the debtor’s spouse if not otherwise

2 a dependent);’’; and

3 (2) in section 704—

4 (A) by inserting ‘‘(a)’’ before ‘‘The trustee

5 shall—’’; and

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

7 ‘‘(b)(1) With respect to an individual debtor under

8 this chapter—

9 ‘‘(A) the United States trustee or bankruptcy

10 administrator shall review all materials filed by the

11 debtor and, not later than 10 days before the first

12 meeting of creditors, file with the court a statement

13 as to whether the debtor’s case would be presumed

14 to be an abuse under section 707(b); and

15 ‘‘(B) not later than 5 days after receiving a

16 statement under subparagraph (A), the court shall

17 provide a copy of the statement to all creditors.

18 ‘‘(2) The United States trustee or bankruptcy admin19 istrator shall not later than 30 days after receiving a

20 statement filed under paragraph (1) file a motion to dis21 miss or convert under section 707(b), or file a statement

22 setting forth the reasons the United States trustee or

23 bankruptcy administrator does not believe that such a mo24 tion would be appropriate. If, appropriate, if based on the

25 filing of such statement with the court, the United States
12

•S 625 RS

1 trustee or bankruptcy administrator determines that the

2 debtor’s case should be presumed to be an abuse under

3 section 707(b) and the product of the debtor’s current

4 monthly income, multiplied by 12 is not less than—

5 ‘‘(A) the highest national or applicable State

6 median family income reported for a family of equal

7 or lesser size, whichever is greater; or

8 ‘‘(B) in the case of a household of 1 person, the

9 national or applicable State median household in10 come for 1 earner, whichever is greater.

11 ‘‘(3)(A) The court shall order the counsel for the

12 debtor to reimburse the panel trustee for all reasonable

13 costs in prosecuting a motion brought under section

14 707(b), including reasonable attorneys’ fees, if—

15 ‘‘(i) a panel trustee appointed under section

16 586(a)(1) of title 28 brings a motion for dismissal

17 or conversion under this subsection; and

18 ‘‘(ii) the court—

19 ‘‘(I) grants that motion; and

20 ‘‘(II) finds that the action of the counsel

21 for the debtor in filing under this chapter was

22 not substantially justified.

23 ‘‘(B) If the court finds that the attorney for the debt24 or violated Rule 9011, at a minimum, the court shall

25 order—
13

•S 625 RS

1 ‘‘(i) the assessment of an appropriate civil pen2 alty against the counsel for the debtor; and

3 ‘‘(ii) the payment of the civil penalty to the

4 panel trustee or the United States trustee.

5 ‘‘(C) In the case of a petition referred to in subpara6 graph (B), the signature of an attorney shall constitute

7 a certificate that the attorney has—

8 ‘‘(i) performed a reasonable investigation into

9 the circumstances that gave rise to the petition; and

10 ‘‘(ii) determined that the petition—

11 ‘‘(I) is well grounded in fact; and

12 ‘‘(II) is warranted by existing law or a

13 good faith argument for the extension, modi14 fication, or reversal of existing law and does not

15 constitute an abuse under paragraph (1).

16 ‘‘(4)(A) Except as provided in subparagraph (B) and

17 subject to paragraph (5), the court may award a debtor

18 all reasonable costs in contesting a motion brought by a

19 party in interest (other than a panel trustee or United

20 States trustee) under this subsection (including reasonable

21 attorneys’ fees) if—

22 ‘‘(i) the court does not grant the motion; and

23 ‘‘(ii) the court finds that—

24 ‘‘(I) the position of the party that brought

25 the motion was not substantially justified; or
14

•S 625 RS

1 ‘‘(II) the party brought the motion solely

2 for the purpose of coercing a debtor into

3 waiving a right guaranteed to the debtor under

4 this title.

5 ‘‘(B) A party in interest that has a claim of an aggre6 gate amount less than $1,000 shall not be subject to sub7 paragraph (A).

8 ‘‘(5) Only the judge, United States trustee, bank9 ruptcy administrator, or panel trustee may bring a motion

10 under this section if the debtor and the debtor’s spouse

11 combined, as of the date of the order for relief, have a

12 total current monthly income equal to or less than the na13 tional or applicable State median family monthly income

14 calculated on a monthly basis for a family of equal size.’’.

15 (c) CLERICAL AMENDMENT.—The table of sections

16 for chapter 7 of title 11, United States Code, is amended

17 by striking the item relating to section 707 and inserting

18 the following:

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

19 SEC. 103. NOTICE OF ALTERNATIVES.

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

21 amended to read as follows:

22 ‘‘(b)(1) Before the commencement of a case under

23 this title by an individual whose debts are primarily con24 sumer debts, that individual shall be given or obtain (as

25 required in section 521(a)(1), as part of the certification
15

•S 625 RS

1 process under subchapter I of chapter 5) a written notice

2 prescribed by the United States trustee for the district in

3 which the petition is filed under section 586 of title 28.

4 ‘‘(2) The notice shall contain the following:

5 ‘‘(A) A brief description of chapters 7, 11, 12,

6 and 13 and the general purpose, benefits, and costs

7 of proceeding under each of those chapters.

8 ‘‘(B) A brief description of services that may be

9 available to that individual from a credit counseling

10 service that is approved by the United States trustee

11 for that district.’’.

12 SEC. 104. DEBTOR FINANCIAL MANAGEMENT TRAINING

13 TEST PROGRAM.

14 (a) DEVELOPMENT OF FINANCIAL MANAGEMENT

15 AND TRAINING CURRICULUM AND MATERIALS.—The Di16 rector of the Executive Office for United States Trustees

17 (in this section referred to as the ‘‘Director’’) shall—

18 (1) consult with a wide range of individuals who

19 are experts in the field of debtor education, includ20 ing trustees who are appointed under chapter 13 of

21 title 11, United States Code, and who operate finan22 cial management education programs for debtors;

23 and

24 (2) develop a financial management training

25 curriculum and materials that may be used to edu-
16

•S 625 RS

1 cate individual debtors concerning how to better

2 manage their finances.

3 (b) TEST.—

4 (1) IN GENERAL.—The Director shall select 3

5 judicial districts of the United States in which to

6 test the effectiveness of the financial management

7 training curriculum and materials developed under

8 subsection (a).

9 (2) AVAILABILITY OF CURRICULUM AND MATE10 RIALS.—For a 1-year period beginning not later

11 than 270 days after the date of enactment of this

12 Act, the curriculum and materials referred to in

13 paragraph (1) shall be made available by the Direc14 tor, directly or indirectly, on request to individual

15 debtors in cases filed during that 1-year period

16 under chapter 7 or 13 of title 11, United States

17 Code.

18 (c) EVALUATION.—

19 (1) IN GENERAL.—During the 1-year period re20 ferred to in subsection (b), the Director shall evalu21 ate the effectiveness of—

22 (A) the financial management training cur23 riculum and materials developed under sub24 section (a); and
17

•S 625 RS

1 (B) a sample of existing consumer edu2 cation programs such as those described in the

3 report of the National Bankruptcy Review Com4 mission issued on October 20, 1997, that are

5 representative of consumer education programs

6 carried out by—

7 (i) the credit industry;

8 (ii) trustees serving under chapter 13

9 of title 11, United States Code; and

10 (iii) consumer counseling groups.

11 (2) REPORT.—Not later than 3 months after

12 concluding the evaluation under paragraph (1), the

13 Director shall submit a report to the Speaker of the

14 House of Representatives and the President pro

15 tempore of the Senate, for referral to the appro16 priate committees of Congress, containing the find17 ings of the Director regarding the effectiveness of

18 such curriculum, such materials, and such programs.

19 SEC. 105. CREDIT COUNSELING.

20 (a) WHO MAY BE A DEBTOR.—Section 109 of title

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

22 the following:

23 ‘‘(h)(1) Subject to paragraphs (2) and (3), and not24 withstanding any other provision of this section, an indi25 vidual may not be a debtor under this title unless that
18

•S 625 RS

1 individual has, during the 90-day period 180-day period

2 preceding the date of filing of the petition of that indi3 vidual, received from an approved nonprofit credit coun4 seling service described in section 111(a) an individual or

5 group briefing that outlined the opportunities for available

6 credit counseling and assisted that individual in per7 forming a related budget analysis.

8 ‘‘(2)(A) Paragraph (1) shall not apply with respect

9 to a debtor who resides in a district for which the United

10 States trustee or bankruptcy administrator of the bank11 ruptcy court of that district determines that the approved

12 nonprofit credit counseling services for that district are

13 not reasonably able to provide adequate services to the ad14 ditional individuals who would otherwise seek credit coun15 seling from those programs by reason of the requirements

16 of paragraph (1).

17 ‘‘(B) Each United States trustee or bankruptcy ad18 ministrator that makes a determination described in sub19 paragraph (A) shall review that determination not later

20 than 1 year after the date of that determination, and not

21 less frequently than every year thereafter.

22 ‘‘(3)(A) Subject to subparagraph (B), the require23 ments of paragraph (1) shall not apply with respect to

24 a debtor who submits to the court a certification that—
19

•S 625 RS

1 ‘‘(i) describes exigent circumstances that merit

2 a waiver of the requirements of paragraph (1);

3 ‘‘(ii) states that the debtor requested credit

4 counseling services from an approved nonprofit cred5 it counseling service, but was unable to obtain the

6 services referred to in paragraph (1) during the 5-

7 day period beginning on the date on which the debt8 or made that request; and

9 ‘‘(iii) is satisfactory to the court.

10 ‘‘(B) With respect to a debtor, an exemption under

11 subparagraph (A) shall cease to apply to that debtor on

12 the date on which the debtor meets the requirements of

13 paragraph (1), but in no case may the exemption apply

14 to that debtor after the date that is 30 days after the debt15 or files a petition.’’.

16 (b) CHAPTER 7 DISCHARGE.—Section 727(a) of title

17 11, United States Code, is amended—

18 (1) in paragraph (9), by striking ‘‘or’’ at the

19 end;

20 (2) in paragraph (10), by striking the period

21 and inserting ‘‘; or’’; and

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

23 ‘‘(11) after the filing of the petition, the debtor

24 failed to complete an instructional course concerning
20

•S 625 RS

1 personal financial management described in section

2 111.’’.

3 (c) CHAPTER 13 DISCHARGE.—Section 1328 of title

4 11, United States Code, is amended by adding at the end

5 the following:

6 ‘‘(g) The court shall not grant a discharge under this

7 section to a debtor, unless after filing a petition the debtor

8 has completed an instructional course concerning personal

9 financial management described in section 111.

10 ‘‘(h) Subsection (g) shall not apply with respect to

11 a debtor who resides in a district for which the United

12 States trustee or bankruptcy administrator of the bank13 ruptcy court of that district determines that the approved

14 instructional courses are not adequate to service the addi15 tional individuals who would be required to complete the

16 instructional course by reason of the requirements of this

17 section.

18 ‘‘(i) Each United States trustee or bankruptcy ad19 ministrator that makes a determination described in sub20 section (h) shall review that determination not later than

21 1 year after the date of that determination, and not less

22 frequently than every year thereafter.’’.

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

24 United States Code, is amended—
21

•S 625 RS

1 (1) by inserting ‘‘(a)’’ before ‘‘The debtor

2 shall—’’; and

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

4 ‘‘(b) In addition to the requirements under subsection

5 (a), an individual debtor shall file with the court—

6 ‘‘(1) a certificate from the credit counseling

7 service that provided the debtor services under sec8 tion 109(h); and

9 ‘‘(2) a copy of the debt repayment plan, if any,

10 developed under section 109(h) through the credit

11 counseling service referred to in paragraph (1).’’.

12 (e) GENERAL PROVISIONS.—

13 (1) IN GENERAL.—Chapter 1 of title 11, United

14 States Code, is amended by adding at the end the

15 following:

16 ‘‘§ 111. Credit counseling services; financial manage17 ment instructional courses

18 ‘‘(a) The clerk of each district shall maintain a list

19 of credit counseling services that provide 1 or more pro20 grams described in section 109(h) and a list of instruc21 tional courses concerning personal financial management

22 that have been approved by—

23 ‘‘(1) the United States trustee; or

24 ‘‘(2) the bankruptcy administrator for the dis25 trict.’’.
22

•S 625 RS

1 (2) CLERICAL AMENDMENT.—The table of sec2 tions for chapter 1 of title 11, United States Code,

3 is amended by adding at the end the following:

‘‘111. Credit counseling services; financial management instructional courses.’’.

4 (f) LIMITATION.—Section 362 of title 11, United

5 States Code, is amended by adding at the end the fol6 lowing:

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

8 of this title is dismissed due to the creation of a debt re9 payment plan, for purposes of subsection (c)(3), any sub10 sequent case commenced by the debtor under any such

11 chapter shall not be presumed to be filed not in good

12 faith.’’.

13 TITLE II—ENHANCED

14 CONSUMER PROTECTION

15 Subtitle A—Penalties for Abusive

16 Creditor Practices

17 SEC. 201. PROMOTION OF ALTERNATIVE DISPUTE RESOLU18 TION.

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

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

21 following:

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

23 after a hearing, may reduce a claim filed under this sec-
23

•S 625 RS

1 tion based in whole on unsecured consumer debts by not

2 more than 20 percent of the claim, if—

3 ‘‘(A) the claim was filed by a creditor who un4 reasonably refused to negotiate a reasonable alter5 native repayment schedule proposed by an approved

6 credit counseling agency acting on behalf of the

7 debtor;

8 ‘‘(B) the offer of the debtor under subpara9 graph (A)—

10 ‘‘(i) was made at least 60 days before the

11 filing of the petition; and

12 ‘‘(ii) provided for payment of at least 60

13 percent of the amount of the debt over a period

14 not to exceed the repayment period of the loan,

15 or a reasonable extension thereof; and

16 ‘‘(C) no part of the debt under the alternative

17 repayment schedule is nondischargeable.

18 ‘‘(2) The debtor shall have the burden of proving, by

19 clear and convincing evidence, that—

20 ‘‘(A) the creditor unreasonably refused to con21 sider the debtor’s proposal; and

22 ‘‘(B) the proposed alternative repayment sched23 ule was made in the 60-day period specified in para24 graph (1)(B)(i).’’.
24

•S 625 RS

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

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

3 end the following:

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

5 transfer was made as a part of an alternative repayment

6 plan between the debtor and any creditor of the debtor

7 created by an approved credit counseling agency.’’.

8 SEC. 202. EFFECT OF DISCHARGE.

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

10 amended by adding at the end the following:

11 ‘‘(i) The willful failure of a creditor to credit pay12 ments received under a plan confirmed under this title (in13 cluding a plan of reorganization confirmed under chapter

14 11 of this title) in the manner required by the plan (in15 cluding crediting the amounts required under the plan)

16 shall constitute a violation of an injunction under sub17 section (a)(2).’’.

18 SEC. 203. VIOLATIONS OF THE AUTOMATIC STAY.

19 Section 362(a) of title 11, United States Code, is

20 amended—

21 (1) in paragraph (7), by striking ‘‘and’’ at the

22 end;

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

24 the end and inserting ‘‘; and’’; and

25 (3) by adding at the end the following:
25

•S 625 RS

1 ‘‘(9) any communication (other than a recita2 tion of the creditor’s legal rights) threatening a

3 debtor (for the purpose of coercing an agreement for

4 the reaffirmation of debt), at any time after the

5 commencement and before the granting of a dis6 charge in a case under this title, of an intention to—

7 ‘‘(A) file a motion to—

8 ‘‘(i) determine the dischargeability of

9 a debt; or

10 ‘‘(ii) under section 707(b), to dismiss

11 or convert a case; or

12 ‘‘(B) repossess collateral from the debtor

13 to which the stay applies.’’.

14 SEC. 204. DISCOURAGING ABUSE OF REAFFIRMATION

15 PRACTICES.

16 (a) IN GENERAL.—Section 524 of title 11, United

17 States Code, as amended by section 202 of this Act, is

18 amended—

19 (1) in subsection (c)—

20 (A) in paragraph (2)—

21 (i) in subparagraph (A), by striking

22 ‘‘and’’ at the end;

23 (ii) in subparagraph (B), by inserting

24 ‘‘and’’ at the end; and
26

•S 625 RS

1 (iii) by adding at the end the fol2 lowing:

3 ‘‘(C)(i) the consideration for such agree4 ment is based on a wholly unsecured consumer

5 debt; and

6 ‘‘(ii) such agreement contains a clear and

7 conspicuous statement that advises the debtor

8 that—

9 ‘‘(I) the debtor is entitled to a hearing

10 before the court at which—

11 ‘‘(aa) the debtor shall appear in

12 person; and

13 ‘‘(bb) the court shall decide

14 whether the agreement constitutes an

15 undue hardship, is not in the debtor’s

16 best interest, or is not the result of a

17 threat by the creditor to take an ac18 tion that, at the time of the threat,

19 that the creditor may not legally take

20 or does not intend to take; and

21 ‘‘(II) if the debtor is represented by

22 counsel, the debtor may waive the debtor’s

23 right to a hearing under subclause (I) by

24 signing a statement—

25 ‘‘(aa) waiving the hearing;
27

•S 625 RS

1 ‘‘(bb) stating that the debtor is

2 represented by counsel; and

3 ‘‘(cc) identifying the counsel. ;’’;

4 and

5 (B) in paragraph (6)(A)—

6 (i) in clause (i), by striking ‘‘and’’ at

7 the end;

8 (ii) in clause (ii), by striking the pe9 riod and inserting ‘‘; and’’; and

10 (iii) by adding at the end the fol11 lowing:

12 ‘‘(iii) not an agreement that the debtor entered

13 into as a result of a threat by the creditor to take

14 an action that, at the time of the threat, the creditor

15 could not legally take or did not intend to take. ; ex16 cept that’’; and

17 (C) in paragraph (6)(B), by striking ‘‘Sub18 paragraph’’ and inserting ‘‘subparagraph’’; and

19 (2) in subsection (d), in the third sentence, by

20 inserting after ‘‘during the course of negotiating an

21 agreement’’ the following: ‘‘(or if the consideration

22 by such agreement is based on a wholly secured con23 sumer debt, and the debtor has not waived the right

24 to a hearing under subsection (c)(2)(C))’’.

25 (b) LAW ENFORCEMENT.—
28

•S 625 RS

1 (1) IN GENERAL.—Chapter 9 of title 18, United

2 States Code, is amended by adding at the end the

3 following:

4 ‘‘§ 158. Designation of United States attorneys and

5 agents of the Federal Bureau of Inves6 tigation to address abusive reaffirma7 tions of debt

8 ‘‘(a) IN GENERAL.—The Attorney General of the

9 United States shall designate the individuals described in

10 subsection (b) to have primary responsibility in carrying

11 out enforcement activities in addressing violations of sec12 tion 152 or 157 relating to abusive reaffirmations of debt.

13 ‘‘(b) UNITED STATES DISTRICT ATTORNEYS AND

14 AGENTS OF THE FEDERAL BUREAU OF INVESTIGATION—

15 The individuals referred to in subsection (a) are—

16 ‘‘(1) a United States attorney for each judicial

17 district of the United States; and

18 ‘‘(2) an agent of the Federal Bureau of Inves19 tigation (within the meaning of section 3107) for

20 each field office of the Federal Bureau of Investiga21 tion.

22 ‘‘(c) BANKRUPTCY INVESTIGATIONS.—Each United

23 States attorney designated under this section shall have

24 primary responsibility for carrying out the duties of a

25 United States attorney under section 3057.’’.
29

•S 625 RS

1 (2) CLERICAL AMENDMENT.—The analysis for

2 chapter 9 of title 18, United States Code, is amend3 ed by adding at the end the following:

‘‘158. Designation of United States attorneys and agents of the Federal Bureau

of Investigation to address abusive reaffirmations of debt.’’.

4 (c) EXCEPTIONS TO DISCHARGE.—Section 523 of

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

6 end the following:

7 ‘‘(f) Nothing in this section or in any other provision

8 of this title shall preempt any State law relating to unfair

9 trade practices that imposes restrictions on creditor con10 duct that would give rise to liability—

11 ‘‘(1) under this section; or

12 ‘‘(2) under section 524, for failure to comply

13 with applicable requirements for seeking a reaffirma14 tion of debt.

15 ‘‘(g) ACTIONS BY STATES.—The attorney general of

16 a State, or an official or agency designated by a State—

17 ‘‘(1) may bring an action on behalf of its resi18 dents to recover damages on their behalf under sub19 section (d) or section 524(c); and

20 ‘‘(2) may bring an action in a State court to

21 enforce a State criminal law that is similar to sec22 tion 152 or 157 of title 18.’’.
30

•S 625 RS

1 Subtitle B—Priority Child Support

2 SEC. 211. DEFINITION OF DOMESTIC SUPPORT OBLIGA3 TION.

4 Section 101 of title 11, United States Code, is

5 amended—

6 (1) by striking paragraph (12A); and

7 (2) by inserting after paragraph (14) the fol8 lowing:

9 ‘‘(14A) ‘domestic support obligation’ means a

10 debt that accrues before or after the entry of an order

11 for relief under this title that is—

12 ‘‘(A) owed to or recoverable by—

13 ‘‘(i) a spouse, former spouse, or child of

14 the debtor or such child’s parent or legal

15 guardian; or

16 ‘‘(ii) a governmental unit;

17 ‘‘(B) in the nature of alimony, mainte18 nance, or support (including assistance provided

19 by a governmental unit) of such spouse, former

20 spouse, or child of the debtor or such child’s par21 ent or legal guardian, without regard to whether

22 such debt is expressly so designated;

23 ‘‘(C) established or subject to establishment

24 before or after entry of an order for relief under

25 this title, by reason of applicable provisions of—
31

•S 625 RS

1 ‘‘(i) a separation agreement, divorce

2 decree, or property settlement agreement;

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

4 ‘‘(iii) a determination made in accord5 ance with applicable nonbankruptcy law by

6 a governmental unit; and

7 ‘‘(D) not assigned to a nongovernmental en8 tity, unless that obligation is assigned volun9 tarily by the spouse, former spouse, child, or par10 ent or legal guardian of the child for the purpose

11 of collecting the debt.’’.

12 SEC. 211. 212. PRIORITIES FOR CLAIMS FOR DOMESTIC SUP13 PORT OBLIGATIONS.

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

15 amended—

16 (1) by striking paragraph (7);

17 (2) by redesignating paragraphs (1) through

18 (6) as paragraphs (2) through (7), respectively;

19 (3) in paragraph (2), as redesignated, by strik20 ing ‘‘First’’ and inserting ‘‘Second’’;

21 (4) in paragraph (3), as redesignated, by strik22 ing ‘‘Second’’ and inserting ‘‘Third’’;

23 (5) in paragraph (4), as redesignated, by strik24 ing ‘‘Third’’ and inserting ‘‘Fourth’’;
32

•S 625 RS

1 (6) in paragraph (5), as redesignated, by strik2 ing ‘‘Fourth’’ and inserting ‘‘Fifth’’;

3 (7) in paragraph (6), as redesignated, by strik4 ing ‘‘Fifth’’ and inserting ‘‘Sixth’’;

5 (8) in paragraph (7), as redesignated, by strik6 ing ‘‘Sixth’’ and inserting ‘‘Seventh’’; and

7 (9) by inserting before paragraph (2), as redes8 ignated, the following:

9 ‘‘(1) First, allowed unsecured claims for domestic

10 support obligations to be paid in the following order on

11 the condition that funds received under this paragraph by

12 a governmental unit in a case under this title be applied

13 and distributed in accordance with applicable nonbank14 ruptcy law:

15 ‘‘(A) Claims that, as of the date of entry of the

16 order for relief, are owed directly to a spouse, former

17 spouse, or child of the debtor, or the parent or legal

18 guardian of such child, without regard to whether

19 the claim is filed by the spouse, former spouse, child,

20 or parent such child’s parent or legal guardian, or is

21 filed by a governmental unit on behalf of that per22 son.

23 ‘‘(B) Claims that, as of the date of entry of the

24 order for relief, are assigned by a spouse, former

25 spouse, child of the debtor, or the parent or legal
33

•S 625 RS

1 guardian of that child to a governmental unit or are

2 owed directly to a governmental unit under applica3 ble nonbankruptcy law.’’.

4 SEC. 212. 213. REQUIREMENTS TO OBTAIN CONFIRMATION

5 AND DISCHARGE IN CASES INVOLVING DO6 MESTIC SUPPORT OBLIGATIONS.

7 Title 11, United States Code, is amended—

8 (1) in section 1129(a), by adding at the end the

9 following:

10 ‘‘(14) If the debtor is required by a judicial or

11 administrative order or statute to pay a domestic

12 support obligation, the debtor has paid all amounts

13 payable under such order or statute for such obliga14 tion that become payable after the date on which the

15 petition is filed.’’;

16 (1) in section 1322(a)—

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

18 the end;

19 (B) in paragraph (3), by striking the period

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

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

22 ‘‘(4) if the debtor is required by judicial or ad23 ministrative order or statute to pay a domestic sup24 port obligation, unless the holder of such claim agrees
34

•S 625 RS

1 to a different treatment of such claim, provide for the

2 full payment of—

3 ‘‘(A) all amounts payable under such order

4 or statute for such obligation that first become

5 payable after the date on which the petition is

6 filed; and

7 ‘‘(B) all amounts payable under such order

8 before the date on which such petition was filed,

9 if such amounts are owed directly to a spouse,

10 former spouse, child of the debtor, or a parent or

11 legal guardian of such child.’’;

12 (2) in section 1225(a)—

13 (A) in paragraph (5), by striking ‘‘and’’ at

14 the end;

15 (B) in paragraph (6), by striking the period

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

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

18 ‘‘(7) if the debtor is required by a judicial or ad19 ministrative order or statute to pay a domestic sup20 port obligation, the plan provides for the full payment

21 of all amounts payable under such order or statute for

22 such obligation that initially become payable after the

23 date on which the petition is filed.’’;

24 (3) in section 1228(a)—
35

•S 625 RS

1 (A) by striking ‘‘(a) As soon as practicable’’

2 and inserting ‘‘(a)(1) Subject to paragraph (2),

3 as soon as practicable’’;

4 (B) by striking ‘‘(1) provided’’ and insert5 ing the following:

6 ‘‘(A) provided’’;

7 (C) by striking ‘‘(2) of the kind’’ and insert8 ing the following:

9 ‘‘(B) of the kind’’; and

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

11 ‘‘(2) With respect to a debtor who is required by a judi12 cial or administrative order or statute to pay a domestic

13 support obligation, the court may not grant the debtor a

14 discharge under paragraph (1) until after the debtor cer15 tifies that—

16 ‘‘(A) all amounts payable under that order or

17 statute that initially became payable after the date on

18 which the petition was filed (through the date of the

19 certification) have been paid; and

20 ‘‘(B) all amounts payable under that order that,

21 as of the date of the certification, are owed directly

22 to a spouse, former spouse, or child of the debtor, or

23 the parent or legal guardian of such child, have been

24 paid, unless the holder of such claim agrees to a dif25 ferent treatment of such claim.’’;
36

•S 625 RS

1 (2) (4) in section 1325(a)—

2 (A) in paragraph (5), by striking ‘‘and’’ at

3 the end;

4 (B) in paragraph (6), by striking the pe5 riod at the end and inserting ‘‘; and’’; and

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

7 ‘‘(7) if the debtor is required by a judicial or

8 administrative order or statute to pay a domestic

9 support obligation, the debtor has paid the plan pro10 vides for full payment of all amounts payable under

11 such order for such obligation that become payable

12 after the date on which the petition is filed.’’; and

13 (3) (5) in section 1328(a), in the matter pre14 ceding paragraph (1), by inserting ‘‘, and with re15 spect to a debtor who is required by a judicial or ad16 ministrative order to pay a domestic support obliga17 tion, and with respect to whom the court certifies

18 that all amounts payable under such order or statute

19 that are due on or before the date statute that ini20 tially became payable after the date on which the pe21 tition was filed through the date of the certification

22 (including amounts due before or after the petition

23 was filed) have been paid’’ after ‘‘completion by the

24 debtor of all payments under the plan’’. certification

25 have been paid, after all amounts payable under that
37

•S 625 RS

1 order that, as of the date of certification, are owed di2 rectly to a spouse, former spouse, or child of the debt3 or, or the parent or legal guardian of such child have

4 been paid (unless the holder of such claim agrees to

5 a different treatment of such claim),’’ after ‘‘comple6 tion by the debtor of all payments under the plan’’.

7 SEC. 213. 214. EXCEPTIONS TO AUTOMATIC STAY IN DOMES8 TIC SUPPORT OBLIGATION PROCEEDINGS.

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

10 amended—

11 (1) by striking paragraph (2) and inserting the

12 following:

13 ‘‘(2) under subsection (a)—

14 ‘‘(A) of the commencement of an action or

15 proceeding for—

16 ‘‘(i) the establishment of paternity as

17 a part of an effort to collect domestic sup18 port obligations; or

19 ‘‘(ii) the establishment or modification

20 of an order for domestic support obliga21 tions; or

22 ‘‘(B) the collection of a domestic support

23 obligation from property that is not property of

24 the estate;’’;
38

•S 625 RS

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

2 end;

3 (3) in paragraph (18), by striking the period at

4 the end and inserting a semicolon; and

5 (4) by inserting after paragraph (18) the fol6 lowing:

7 ‘‘(19) under subsection (a) with respect to the

8 withholding of income under an order as specified in

9 section 466(b) of the Social Security Act (42 U.S.C.

10 666(b)); or

11 ‘‘(20) under subsection (a) with respect to—

12 (2) by inserting after paragraph (4) the fol13 lowing:

14 ‘‘(5) under subsection (a) with respect to the

15 withholding of income—

16 ‘‘(A) for payment of a domestic support ob17 ligation for amounts that initially become pay18 able after the date the petition was filed; and

19 ‘‘(B) for payment of a domestic support ob20 ligation for amounts payable before the date the

21 petition was filed, and owed directly to the

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

23 the parent or guardian of such child;’’;

24 (3) in paragraph (17), by striking ‘‘or’’ at the

25 end;
39

•S 625 RS

1 (4) in paragraph (18), by striking the period at

2 the end and inserting ‘‘; or’’; and

3 (5) by inserting after paragraph (18) the fol4 lowing:

5 ‘‘(19) under subsection (a) with respect to—

6 ‘‘(A) the withholding, suspension, or re7 striction of drivers’ licenses, professional and

8 occupational licenses, and recreational licenses

9 under State law, as specified in section

10 466(a)(16) of the Social Security Act (42

11 U.S.C. 666(a)(16)) or with respect;

12 ‘‘(B) to the reporting of overdue support

13 owed by an absent parent to any consumer re14 porting agency as specified in section 466(a)(7)

15 of the Social Security Act (42 U.S.C.

16 666(a)(7));

17 ‘‘(B) (C) the interception of tax refunds, as

18 specified in sections 464 and 466(a)(3) of the

19 Social Security Act (42 U.S.C. 664 and

20 666(a)(3)), if such tax refund is payable directly

21 to a spouse, former spouse, or child of the debtor,

22 or the parent or legal guardian of such child; or

23 ‘‘(C) (D) the enforcement of medical obli24 gations as specified under title IV of the Social

25 Security Act (42 U.S.C. 601 et seq.).’’.
40

•S 625 RS

1 SEC. 214. 215. NONDISCHARGEABILITY OF CERTAIN DEBTS

2 FOR ALIMONY, MAINTENANCE, AND SUP3 PORT.

4 Section 523 of title 11, United States Code, is

5 amended—

6 (1) in subsection (a), by striking paragraph (5)

7 and inserting the following:

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

9 (1) in subsection (a)—

10 (A) by striking paragraph (5) and inserting

11 the following:

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

13 (B) in paragraph (15)—

14 (i) by inserting ‘‘or’’ after ‘‘court of

15 record’’; and

16 (ii) by striking ‘‘unless—’’ and all that

17 follows through the end of the paragraph

18 and inserting a semicolon; and

19 (2) in subsection (c), by striking ‘‘(6), or (15)’’

20 and inserting ‘‘or (6)’’; and.

21 (3) in paragraph (15), by striking ‘‘govern22 mental unit’’ and all through the end of the para23 graph and inserting a semicolon.

24 SEC. 215. 216. CONTINUED LIABILITY OF PROPERTY.

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

26 amended—
41

•S 625 RS

1 (1) in subsection (c), by striking paragraph (1)

2 and inserting the following:

3 ‘‘(1) a debt of a kind specified in paragraph (1)

4 or (5) of section 523(a) (in which case, notwith5 standing any provision of applicable nonbankruptcy

6 law to the contrary, such property shall be liable for

7 a debt of a kind specified in section 523(a)(5));’’;

8 and

9 (2) in subsection (f)(1)(A), by striking the dash

10 and all that follows through the end of the subpara11 graph and inserting ‘‘of a kind that is specified in

12 section 523(a)(5); or’’.

13 SEC. 216. 217. PROTECTION OF DOMESTIC SUPPORT

14 CLAIMS AGAINST PREFERENTIAL TRANSFER

15 MOTIONS.

16 Section 547(c)(7) of title 11, United States Code, is

17 amended to read as follows:

18 ‘‘(7) to the extent such transfer was a bona fide

19 payment of a debt for a domestic support obligation;

20 or’’.

21 SEC. 217. AMENDMENT TO SECTION 1325 OF TITLE 11,

22 UNITED STATES CODE.

23 Section 1325(b)(2) of title 11, United States Code,

24 is amended by inserting ‘‘(other than child support pay25 ments, foster care payments, or disability payments for
42

•S 625 RS

1 a dependent child made in accordance with applicable non2 bankruptcy law and which is reasonably necessary to be

3 expended)’’ after ‘‘received by the debtor’’.

4 SEC. 218. DEFINITION OF DOMESTIC SUPPORT OBLIGA5 TION.

6 Section 101 of title 11, United States Code, is

7 amended—

8 (1) by striking paragraph (12A); and

9 (2) by inserting after paragraph (14) the fol10 lowing:

11 ‘‘(14A) ‘domestic support obligation’ means a

12 debt that accrues before or after the entry of an

13 order for relief under this title that is—

14 ‘‘(A) owed to or recoverable by—

15 ‘‘(i) a spouse, former spouse, or child

16 of the debtor or that child’s legal guardian;

17 or

18 ‘‘(ii) a governmental unit;

19 ‘‘(B) in the nature of alimony, mainte20 nance, or support (including assistance provided

21 by a governmental unit) of such spouse, former

22 spouse, or child, without regard to whether such

23 debt is expressly so designated;

24 ‘‘(C) established or subject to establish25 ment before or after entry of an order for relief
43

•S 625 RS

1 under this title, by reason of applicable provi2 sions of—

3 ‘‘(i) a separation agreement, divorce

4 decree, or property settlement agreement;

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

6 ‘‘(iii) a determination made in accord7 ance with applicable nonbankruptcy law by

8 a governmental unit; and

9 ‘‘(D) not assigned to a nongovernmental

10 entity, unless that obligation is assigned volun11 tarily by the spouse, former spouse, child, or

12 parent solely for the purpose of collecting the

13 debt.’’.

14 SEC. 218. DISPOSABLE INCOME DEFINED.

15 (a) CONFIRMATION OF PLAN UNDER CHAPTER 12.—

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

17 amended by inserting ‘‘for a child support, foster care, or

18 disability payment for a dependent child made in accord19 ance with applicable nonbankruptcy law’’ after ‘‘dependent

20 of the debtor’’.

21 (b) CONFIRMATION OF PLAN UNDER CHAPTER 13.—

22 Section 1325(b)(2)(A) of title 11, United States Code, is

23 amended by inserting ‘‘or for a child support, foster care,

24 or disability payment for a dependent child made in ac-
44

•S 625 RS

1 cordance with applicable nonbankruptcy law’’ after ‘‘de2 pendent of the debtor’’.

3 SEC. 219. COLLECTION OF CHILD SUPPORT.

4 (a) DUTIES OF TRUSTEE UNDER CHAPTER 7.—Sec5 tion 704 of title 11, United States Code, as amended by

6 section 102(b) of this Act, is amended—

7 (1) in subsection (a)—

8 (A) in paragraph (8), by striking ‘‘and’’ at

9 the end;

10 (B) in paragraph (9), by striking the pe11 riod and inserting ‘‘; and’’; and

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

13 ‘‘(10) if, with respect to an individual debtor,

14 there is a claim for support of a child of the debtor

15 or a custodial parent or legal guardian of such child

16 entitled to receive priority under section 507(a)(1),

17 provide the applicable notification specified in sub18 section (c).’’; and

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

20 ‘‘(c)(1) In any case described in subsection (a)(10),

21 the trustee shall—

22 ‘‘(A)(i) notify in writing the holder of the claim

23 of the right of that holder to use the services of a

24 State child support enforcement agency established

25 under sections 464 and 466 of the Social Security
45

•S 625 RS

1 Act (42 U.S.C. 654 664 and 666, respectively) for

2 the State in which the holder resides for assistance

3 in collecting child support during and after the bank4 ruptcy procedures; and

5 ‘‘(ii) include in the notice under this paragraph

6 the address and telephone number of the child sup7 port enforcement agency; and

8 ‘‘(iii) include in the notice an explanation of the

9 rights of the holder of the claim to payment of the

10 claim under this chapter; and

11 ‘‘(B)(i) notify in writing the State child support

12 agency of the State in which the holder of the claim

13 resides of the claim;

14 ‘‘(ii) include in the notice under this paragraph

15 the name, address, and telephone number of the

16 holder of the claim; and

17 ‘‘(iii) at such time as the debtor is granted a

18 discharge under section 727, notify the holder of

19 that claim and the State child support agency of the

20 State in which that holder resides of—

21 ‘‘(I) the granting of the discharge;

22 ‘‘(II) the last recent known address of the

23 debtor; and

24 ‘‘(III) with respect to the debtor’s case, the

25 name of each creditor that holds a claim that—
46

•S 625 RS

1 ‘‘(aa) that is not discharged under

2 paragraph (2), (4), or (14A) of section

3 523(a); or

4 ‘‘(bb) that was reaffirmed by the debt5 or under section 524(c).

6 ‘‘(2)(A) If, after receiving a notice under paragraph

7 (1)(B)(iii), a holder of a claim or a State child support

8 agency is unable to locate the debtor that is the subject

9 of the notice, that party may request from a creditor de10 scribed in paragraph (1)(B)(iii)(III) (aa) or (bb) the last

11 known address of the debtor.

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

13 creditor that makes a disclosure of a last known address

14 of a debtor in connection with a request made under sub15 paragraph (A) shall not be liable to the debtor or any other

16 person by reason of making that disclosure.’’.

17 (b) DUTIES OF TRUSTEE UNDER CHAPTER 11.—Sec18 tion 1106 of title 11, United States Code, is amended—

19 (1) in subsection (b)—

20 (A) in paragraph (5), by striking ‘‘and’’ at

21 the end;

22 (B) in paragraph (6), by striking the period

23 and inserting ‘‘; and’’; and

24 (C) by adding at the end the following:
47

•S 625 RS

1 ‘‘(7) if, with respect to an individual debtor,

2 there is a claim for support of a child of the debtor

3 or a custodial parent or legal guardian of such child

4 entitled to receive priority under section 507(a)(1),

5 provide the applicable notification specified in sub6 section (c).’’; and

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

8 ‘‘(c)(1) In any case described in subsection (b)(7), the

9 trustee shall—

10 ‘‘(A)(i) notify in writing the holder of the claim

11 of the right of that holder to use the services of a State

12 child support enforcement agency established under

13 sections 464 and 466 of the Social Security Act (42

14 U.S.C. 664 and 666) for the State in which the holder

15 resides; and

16 ‘‘(ii) include in the notice under this paragraph

17 the address and telephone number of the child support

18 enforcement agency; and

19 ‘‘(B)(i) notify, in writing, the State child sup20 port agency (of the State in which the holder of the

21 claim resides) of the claim;

22 ‘‘(ii) include in the notice under this paragraph

23 the name, address, and telephone number of the holder

24 of the claim; and
48

•S 625 RS

1 ‘‘(iii) at such time as the debtor is granted a dis2 charge under section 1141, notify the holder of the

3 claim and the State child support agency of the State

4 in which that holder resides of—

5 ‘‘(I) the granting of the discharge;

6 ‘‘(II) the last recent known address of the

7 debtor; and

8 ‘‘(III) with respect to the debtor’s case, the

9 name of each creditor that holds a claim that—

10 ‘‘(aa) is not discharged under para11 graph (2), (4), or (14A) of section 523(a);

12 or

13 ‘‘(bb) was reaffirmed by the debtor

14 under section 524(c).

15 ‘‘(2)(A) If, after receiving a notice under paragraph

16 (1)(B)(iii), a holder of a claim or a State child support

17 agency is unable to locate the debtor that is the subject of

18 the notice, that party may request from a creditor described

19 in paragraph (1)(B)(iii)(III) (aa) or (bb) the last known

20 address of the debtor.

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

22 creditor that makes a disclosure of a last known address

23 of a debtor in connection with a request made under sub24 paragraph (A) shall not be liable to the debtor or any other

25 person by reason of making that disclosure.’’.
49

•S 625 RS

1 (c) DUTIES OF TRUSTEE UNDER CHAPTER 12.—Sec2 tion 1202 of title 11, United States Code, is amended—

3 (1) in subsection (b)—

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

5 the end;

6 (B) in paragraph (5), by striking the period

7 and inserting ‘‘; and’’; and

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

9 ‘‘(6) if, with respect to an individual debtor,

10 there is a claim for support of a child of the debtor

11 or a custodial parent or legal guardian of such child

12 entitled to receive priority under section 507(a)(1),

13 provide the applicable notification specified in sub14 section (c).’’; and

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

16 ‘‘(c)(1) In any case described in subsection (b)(6), the

17 trustee shall—

18 ‘‘(A)(i) notify in writing the holder of the claim

19 of the right of that holder to use the services of a State

20 child support enforcement agency established under

21 sections 464 and 466 of the Social Security Act (42

22 U.S.C. 664 and 666) for the State in which the holder

23 resides; and
50

•S 625 RS

1 ‘‘(ii) include in the notice under this paragraph

2 the address and telephone number of the child support

3 enforcement agency; and

4 ‘‘(B)(i) notify, in writing, the State child sup5 port agency (of the State in which the holder of the

6 claim resides) of the claim;

7 ‘‘(ii) include in the notice under this paragraph

8 the name, address, and telephone number of the holder

9 of the claim; and

10 ‘‘(iii) at such time as the debtor is granted a dis11 charge under section 1228, notify the holder of the

12 claim and the State child support agency of the State

13 in which that holder resides of—

14 ‘‘(I) the granting of the discharge;

15 ‘‘(II) the last recent known address of the

16 debtor; and

17 ‘‘(III) with respect to the debtor’s case, the

18 name of each creditor that holds a claim that—

19 ‘‘(aa) is not discharged under para20 graph (2), (4), or (14A) of section 523(a);

21 or

22 ‘‘(bb) was reaffirmed by the debtor

23 under section 524(c).

24 ‘‘(2)(A) If, after receiving a notice under paragraph

25 (1)(B)(iii), a holder of a claim or a State child support
51

•S 625 RS

1 agency is unable to locate the debtor that is the subject of

2 the notice, that party may request from a creditor described

3 in paragraph (1)(B)(iii)(III) (aa) or (bb) the last known

4 address of the debtor.

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

6 creditor that makes a disclosure of a last known address

7 of a debtor in connection with a request made under sub8 paragraph (A) shall not be liable to the debtor or any other

9 person by reason of making that disclosure.’’.

10 (b) (d) DUTIES OF TRUSTEE UNDER CHAPTER 13.—

11 Section 1302 of title 11, United States Code, as amended

12 by section 102(b) of this Act, is amended—

13 (1) in subsection (b)—

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

15 the end;

16 (B) in paragraph (5), by striking the pe17 riod and inserting ‘‘; and’’; and

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

19 ‘‘(6) if, with respect to an individual debtor,

20 there is a claim for support of a child of the debtor

21 or a custodial parent or legal guardian of such child

22 entitled to receive priority under section 507(a)(1),

23 provide the applicable notification specified in sub24 section (d).’’; and

25 (s) (2) by adding at the end the following:
52

•S 625 RS

1 ‘‘(d)(1) In any case described in subsection (b)(6),

2 the trustee shall—

3 ‘‘(A)(i) notify in writing the holder of the claim

4 of the right of that holder to use the services of a

5 State child support enforcement agency established

6 under sections 464 and 466 of the Social Security

7 Act (42 U.S.C. 664 and 666, respectively) for the

8 State in which the holder resides; and

9 ‘‘(ii) include in the notice under this paragraph

10 the address and telephone number of the child sup11 port enforcement agency; and

12 ‘‘(B)(i) notify in writing the State child support

13 agency of the State in which the holder of the claim

14 resides of the claim; and

15 ‘‘(ii) include in the notice under this paragraph

16 the name, address, and telephone number of the

17 holder of the claim; and

18 ‘‘(iii) at such time as the debtor is granted a

19 discharge under section 1328, notify the holder of

20 the claim and the State child support agency of the

21 State in which that holder resides of—

22 ‘‘(I) the granting of the discharge;

23 ‘‘(II) the last recent known address of the

24 debtor; and
53

•S 625 RS

1 ‘‘(III) with respect to the debtor’s case, the

2 name of each creditor that holds a claim that—

3 ‘‘(aa) that is not discharged under

4 paragraph (2), (4), or (14A) of section

5 523(a); or

6 ‘‘(bb) that was reaffirmed by the debt7 or under section 524(c).

8 ‘‘(2)(A) If, after receiving a notice under paragraph

9 (1)(B)(iii), a holder of a claim or a State child support

10 agency is unable to locate the debtor that is the subject

11 of the notice, that party may request from a creditor de12 scribed in paragraph (1)(B)(iii)(III) (aa) or (bb) the last

13 known address of the debtor.

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

15 creditor that makes a disclosure of a last known address

16 of a debtor in connection with a request made under sub17 paragraph (A) shall not be liable to the debtor or any

18 other person by reason of making that disclosure.’’.

19 Subtitle C—Other Consumer

20 Protections

21 SEC. 221. DEFINITIONS.

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

23 States Code, is amended—

24 (1) by inserting after paragraph (3) the fol25 lowing:
54

•S 625 RS

1 ‘‘(3A) ‘assisted person’ means any person whose

2 debts consist primarily of consumer debts and whose

3 nonexempt assets are less than $150,000;’’;

4 (2) by inserting after paragraph (4) the fol5 lowing:

6 ‘‘(4A) ‘bankruptcy assistance’ means any goods

7 or services sold or otherwise provided to an assisted

8 person with the express or implied purpose of pro9 viding information, advice, counsel, document prepa10 ration or filing, or attendance at a creditors’ meeting

11 or appearing in a proceeding on behalf of another or

12 providing legal representation with respect to a pro13 ceeding under this title;’’; and

14 (3) by inserting after paragraph (12A) the fol15 lowing:

16 ‘‘(12B) ‘debt relief agency’ means any person

17 who provides any bankruptcy assistance to an as18 sisted person in return for the payment of money or

19 other valuable consideration, or who is a bankruptcy

20 petition preparer under section 110, but does not in21 clude any person that is any of the following or an

22 officer, director, employee, or agent thereof—

23 ‘‘(A) any nonprofit organization which is

24 exempt from taxation under section 501(c)(3)

25 of the Internal Revenue Code of 1986;
55

•S 625 RS

1 ‘‘(B) any creditor of the person to the ex2 tent the creditor is assisting the person to re3 structure any debt owed by the person to the

4 creditor; or

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

6 in section 3 of the Federal Deposit Insurance

7 Act (12 U.S.C. 1813)) or any Federal credit

8 union or State credit union (as those terms are

9 defined in section 101 of the Federal Credit

10 Union Act (12 U.S.C. 1751)), or any affiliate

11 or subsidiary of such a depository institution or

12 credit union;’’.

13 (b) CONFORMING AMENDMENT.—Section 104(b)(1)

14 of title 11, United States Code, is amended by inserting

15 ‘‘101(3),’’ after ‘‘sections’’.

16 SEC. 222. DISCLOSURES.

17 (a) DISCLOSURES.—Subchapter II of chapter 5 of

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

19 end the following:

20 ‘‘§ 526. Disclosures

21 ‘‘(a) A debt relief agency providing bankruptcy assist22 ance to an assisted person shall provide the following no23 tices to the assisted person:

24 ‘‘(1) The written notice required under section

25 342(b)(1).
56

•S 625 RS

1 ‘‘(2) To the extent not covered in the written

2 notice described in paragraph (1) and not later than

3 3 business days after the first date on which a debt

4 relief agency first offers to provide any bankruptcy

5 assistance services to an assisted person, a clear and

6 conspicuous written notice advising assisted persons

7 that—

8 ‘‘(A) all information the assisted person is

9 required to provide with a petition and there10 after during a case under this title shall be

11 complete, accurate, and truthful;

12 ‘‘(B) all assets and all liabilities shall be

13 completely and accurately disclosed in the docu14 ments filed to commence the case, and the re15 placement value of each asset, as defined in sec16 tion 506, shall be stated in those documents if

17 requested after reasonable inquiry to establish

18 such value;

19 ‘‘(C) total current monthly income, pro20 jected monthly net income and, in a case under

21 chapter 13, monthly net income shall be stated

22 after reasonable inquiry; and

23 ‘‘(D) information an assisted person pro24 vides during the case of that person may be au25 dited under this title and the failure to provide
57

•S 625 RS

1 such information may result in dismissal of the

2 proceeding under this title or other sanction in3 cluding, in some instances, criminal sanctions.

4 ‘‘(b) A debt relief agency providing bankruptcy assist5 ance to an assisted person shall provide each assisted per6 son at the same time as the notices required under sub7 section (a)(1) with the following statement, to the extent

8 applicable, or a substantially similar statement. The state9 ment shall be clear and conspicuous and shall be in a sin10 gle document separate from other documents or notices

11 provided to the assisted person:

12 ‘‘ ‘IMPORTANT INFORMATION ABOUT BANK13 RUPTCY ASSISTANCE SERVICES FROM AN AT14 TORNEY OR BANKRUPTCY PETITION PREPARER

15 ‘‘ ‘If you decide to seek bankruptcy relief, you can

16 represent yourself, you can hire an attorney to represent

17 you, or you can get help in some localities from a bank18 ruptcy petition preparer who is not an attorney. THE

19 LAW REQUIRES AN ATTORNEY OR BANKRUPTCY

20 PETITION PREPARER TO GIVE YOU A WRITTEN

21 CONTRACT SPECIFYING WHAT THE ATTORNEY

22 OR BANKRUPTCY PETITION PREPARER WILL DO

23 FOR YOU AND HOW MUCH IT WILL COST. Ask to

24 see the contract before you hire anyone.
58

•S 625 RS

1 ‘‘ ‘The following information helps you understand

2 what must be done in a routine bankruptcy case to help

3 you evaluate how much service you need. Although bank4 ruptcy can be complex, many cases are routine.

5 ‘‘ ‘Before filing a bankruptcy case, either you or your

6 attorney should analyze your eligibility for different forms

7 of debt relief made available by the Bankruptcy Code and

8 which form of relief is most likely to be beneficial for you.

9 Be sure you understand the relief you can obtain and its

10 limitations. To file a bankruptcy case, documents called

11 a Petition, Schedules and Statement of Financial Affairs,

12 as well as in some cases a Statement of Intention need

13 to be prepared correctly and filed with the bankruptcy

14 court. You will have to pay a filing fee to the bankruptcy

15 court. Once your case starts, you will have to attend the

16 required first meeting of creditors where you may be ques17 tioned by a court official called a ‘‘trustee’’ and by credi18 tors.

19 ‘‘ ‘If you choose to file a chapter 7 case, you may be

20 asked by a creditor to reaffirm a debt. You may want help

21 deciding whether to do so and a creditor is not permitted

22 to coerce you into reaffirming your debts.

23 ‘‘ ‘If you choose to file a chapter 13 case in which

24 you repay your creditors what you can afford over 3 to

25 5 years, you may also want help with preparing your chap-
59

•S 625 RS

1 ter 13 plan and with the confirmation hearing on your

2 plan which will be before a bankruptcy judge.

3 ‘‘ ‘If you select another type of relief under the Bank4 ruptcy Code other than chapter 7 or chapter 13, you will

5 want to find out what needs to be done from someone fa6 miliar with that type of relief.

7 ‘‘ ‘Your bankruptcy case may also involve litigation.

8 You are generally permitted to represent yourself in litiga9 tion in bankruptcy court, but only attorneys, not bank10 ruptcy petition preparers, can give you legal advice.’.

11 ‘‘(c) Except to the extent the debt relief agency pro12 vides the required information itself after reasonably dili13 gent inquiry of the assisted person or others so as to ob14 tain such information reasonably accurately for inclusion

15 on the petition, schedules or statement of financial affairs,

16 a debt relief agency providing bankruptcy assistance to an

17 assisted person, to the extent permitted by nonbankruptcy

18 law, shall provide each assisted person at the time re19 quired for the notice required under subsection (a)(1) rea20 sonably sufficient information (which may be provided

21 orally or in a clear and conspicuous writing) to the as22 sisted person on how to provide all the information the

23 assisted person is required to provide under this title pur24 suant to section 521, including—
60

•S 625 RS

1 ‘‘(1) how to value assets at replacement value,

2 determine total current monthly income, projected

3 monthly income and, in a case under chapter 13, net

4 monthly income, and related calculations;

5 ‘‘(2) how to complete the list of creditors, in6 cluding how to determine what amount is owed and

7 what address for the creditor should be shown; and

8 ‘‘(3) how to—

9 ‘‘(A) determine what property is exempt;

10 and

11 ‘‘(B) value exempt property at replacement

12 value, as defined in section 506.

13 ‘‘(d) A debt relief agency shall maintain a copy of

14 the notices required under subsection (a) of this section

15 for a period of 2 years after the latest date on which the

16 notice is given the assisted person.’’.

17 (b) CONFORMING AMENDMENT.—The table of sec18 tions for chapter 5 of title 11, United States Code, is

19 amended by inserting after the item relating to section

20 525 the following:

‘‘526. Disclosures.’’.

21 SEC. 223. DEBTOR’S BILL OF RIGHTS.

22 (a) DEBTOR’S BILL OF RIGHTS.—Subchapter II of

23 chapter 5 of title 11, United States Code, as amended by

24 section 222 of this Act, is amended by adding at the end

25 the following:
61

•S 625 RS

1 ‘‘§ 527. Debtor’s bill of rights

2 ‘‘(a)(1) A debt relief agency shall—

3 ‘‘(A) not later than 5 business days after the

4 first date on which a debt relief agency provides any

5 bankruptcy assistance services to an assisted person,

6 but before that assisted person’s petition under this

7 title is filed—

8 ‘‘(i) execute a written contract with the as9 sisted person specifying clearly and conspicu10 ously the services the agency will provide the

11 assisted person and the basis on which fees or

12 charges will be made for such services and the

13 terms of payment; and

14 ‘‘(ii) give the assisted person a copy of the

15 fully executed and completed contract in a form

16 the person is able to retain;

17 ‘‘(B) disclose in any advertisement of bank18 ruptcy assistance services or of the benefits of bank19 ruptcy directed to the general public (whether in

20 general media, seminars or specific mailings, tele21 phonic or electronic messages, or otherwise) that the

22 services or benefits are with respect to proceedings

23 under this title, clearly and conspicuously using the

24 statement: ‘We are a debt relief agency. We help

25 people file bankruptcy petitions to obtain relief
62

•S 625 RS

1 under the Bankruptcy Code.’ or a substantially simi2 lar statement; and

3 ‘‘(C) if an advertisement directed to the general

4 public indicates that the debt relief agency provides

5 assistance with respect to credit defaults, mortgage

6 foreclosures, lease eviction proceedings, excessive

7 debt, debt collection pressure, or inability to pay any

8 consumer debt, disclose conspicuously in that adver9 tisement that the assistance is with respect to or

10 may involve proceedings under this title, using the

11 following statement: ‘We are a debt relief agency.

12 We help people file bankruptcy petitions to obtain

13 relief under the Bankruptcy Code.’ or a substantially

14 similar statement.

15 ‘‘(2) For purposes of paragraph (1)(B), an advertise16 ment shall be of bankruptcy assistance services if that ad17 vertisement describes or offers bankruptcy assistance with

18 a plan under chapter 12, without regard to whether chap19 ter 13 is specifically mentioned. A statement such as ‘fed20 erally supervised repayment plan’ or ‘Federal debt restruc21 turing help’ or any other similar statement that would lead

22 a reasonable consumer to believe that help with debts is

23 being offered when in fact in most cases the help available

24 is bankruptcy assistance with a plan under chapter 13 is

25 a statement covered under the preceding sentence.
63

•S 625 RS

1 ‘‘(b) A debt relief agency shall not—

2 ‘‘(1) fail to perform any service that the debt

3 relief agency has told the assisted person or prospec4 tive assisted person the agency would provide that

5 person in connection with the preparation for or ac6 tivities during a proceeding under this title;

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

8 any assisted person to make any statement in any

9 document filed in a proceeding under this title,

10 that—

11 ‘‘(A) is untrue and misleading; or

12 ‘‘(B) upon the exercise of reasonable care,

13 should be known by the debt relief agency to be

14 untrue or misleading;

15 ‘‘(3) misrepresent to any assisted person or pro16 spective assisted person, directly or indirectly, af17 firmatively or by material omission, what services

18 the debt relief agency may reasonably expect to pro19 vide that person, or the benefits an assisted person

20 may obtain or the difficulties the person may experi21 ence if the person seeks relief in a proceeding under

22 this title; or

23 ‘‘(4) advise an assisted person or prospective

24 assisted person to incur more debt in contemplation

25 of that person filing a proceeding under this title or
64

•S 625 RS

1 in order to pay an attorney or bankruptcy petition

2 preparer fee or charge for services performed as part

3 of preparing for or representing a debtor in a pro4 ceeding under this title.’’.

5 (b) CONFORMING AMENDMENT.—The table of sec6 tions for chapter 5 of title 11, United States Code, as

7 amended by section 222 of this Act, is amended by insert8 ing after the item relating to section 526 of title 11,

9 United States Code, the following:

‘‘527. Debtor’s bill of rights.’’.

10 SEC. 224. ENFORCEMENT.

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

12 title 11, United States Code, as amended by section 223

13 of this Act, is amended by adding at the end the following:

14 ‘‘§ 528. Debt relief agency enforcement

15 ‘‘(a) Any waiver by any assisted person of any protec16 tion or right provided by or under section 526 or 527 shall

17 be void and may not be enforced by any Federal or State

18 court or any other person.

19 ‘‘(b)(1) Any contract between a debt relief agency

20 and an assisted person for bankruptcy assistance that does

21 not comply with the material requirements of section 526

22 or 527 shall be treated as void and may not be enforced

23 by any Federal or State court or by any other person.

24 ‘‘(2) Any debt relief agency that has been found, after

25 notice and hearing, to have—
65

•S 625 RS

1 ‘‘(A) negligently failed to comply with any pro2 vision of section 526 or 527 with respect to a bank3 ruptcy case or related proceeding of an assisted per4 son;

5 ‘‘(B) provided bankruptcy assistance to an as6 sisted person in a case or related proceeding which

7 is dismissed or converted because the debt relief

8 agency’s negligent failure to file bankruptcy papers,

9 including papers specified in section 521; or

10 ‘‘(C) negligently or intentionally disregarded the

11 material requirements of this title or the Federal

12 Rules of Bankruptcy Procedure applicable to such

13 debt relief agency shall be liable to the assisted per14 son in the amount of any fees and charges in con15 nection with providing bankruptcy assistance to such

16 person that the debt relief agency has already been

17 paid on account of that proceeding.

18 ‘‘(3) In addition to such other remedies as are pro19 vided under State law, whenever the chief law enforcement

20 officer of a State, or an official or agency designated by

21 a State, has reason to believe that any person has violated

22 or is violating section 526 or 527, the State—

23 ‘‘(A) may bring an action to enjoin such viola24 tion;
66

•S 625 RS

1 ‘‘(B) may bring an action on behalf of its resi2 dents to recover the actual damages of assisted per3 sons arising from such violation, including any liabil4 ity under paragraph (2); and

5 ‘‘(C) in the case of any successful action under

6 subparagraph (A) or (B), shall be awarded the costs

7 of the action and reasonable attorney fees as deter8 mined by the court.

9 ‘‘(4) The United States District Court for any district

10 located in the State shall have concurrent jurisdiction of

11 any action under subparagraph (A) or (B) of paragraph

12 (3).

13 ‘‘(5) Notwithstanding any other provision of Federal

14 law, if the court, on its own motion or on the motion of

15 the United States trustee, finds that a person intentionally

16 violated section 526 or 527, or engaged in a clear and

17 consistent pattern or practice of violating section 526 or

18 527, the court may—

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

20 ‘‘(B) impose an appropriate civil penalty

21 against such person.

22 ‘‘(c) This section and sections 526 and 527 shall not

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

24 sections from complying with any law of any State except
67

•S 625 RS

1 to the extent that such law is inconsistent with those sec2 tions, and then only to the extent of the inconsistency.’’.

3 (b) CONFORMING AMENDMENT.—The table of sec4 tions for chapter 5 of title 11, United States Code, as

5 amended by section 223 of this Act, is amended by insert6 ing after the item relating to section 527 of title 11,

7 United States Code, the following:

‘‘528. Debt relief agency enforcement.’’.

8 SEC. 221. AMENDMENTS TO DISCOURAGE ABUSIVE BANK9 RUPTCY FILINGS.

10 Section 110 of title 11, United States Code, is

11 amended—

12 (1) in subsection (a)(1), by inserting ‘‘, under

13 the direct supervision of an attorney,’’ after ‘‘who’’;

14 (2) in subsection (b)—

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

16 the following: ‘‘If a bankruptcy petition preparer

17 is not an individual, then an officer, principal,

18 responsible person, or partner of the preparer

19 shall be required to—

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

21 ‘‘(B) print on the document the name and ad22 dress of that officer, principal, responsible person or

23 partner.’’;

24 (B) by striking paragraph (2) and inserting

25 the following:
68

•S 625 RS

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

2 accepting any fees from a debtor, the bankruptcy petition

3 preparer shall provide to the debtor a written notice to debt4 ors concerning bankruptcy petition preparers, which shall

5 be on an official form issued by the Judicial Conference

6 of the United States.

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

8 ‘‘(i) shall inform the debtor in simple language

9 that a bankruptcy petition preparer is not an attor10 ney and may not practice law or give legal advice;

11 ‘‘(ii) may contain a description of examples of

12 legal advice that a bankruptcy petition preparer is

13 not authorized to give, in addition to any advice that

14 the preparer may not give by reason of subsection

15 (e)(2); and

16 ‘‘(iii) shall—

17 ‘‘(I) be signed by—

18 ‘‘(aa) the debtor; and

19 ‘‘(bb) the bankruptcy petition preparer,

20 under penalty of perjury; and

21 ‘‘(II) be filed with any document for fil22 ing.’’;

23 (3) in subsection (c)—

24 (A) in paragraph (2)—
69

•S 625 RS

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

2 inserting ‘‘(2)(A) Subject to subparagraph

3 (B), for purposes’’; and

4 (ii) by adding at the end the following:

5 ‘‘(B) If a bankruptcy petition preparer is not an indi6 vidual, the identifying number of the bankruptcy petition

7 preparer shall be the Social Security account number of the

8 officer, principal, responsible person, or partner of the pre9 parer.’’; and

10 (B) by striking paragraph (3);

11 (4) in subsection (d)—

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

13 ‘‘(d)’’; and

14 (B) by striking paragraph (2);

15 (5) in subsection (e)—

16 (A) by striking paragraph (2); and

17 (B) by adding at the end the following:

18 ‘‘(2)(A) A bankruptcy petition preparer may not offer

19 a potential bankruptcy debtor any legal advice, including

20 any legal advice described in subparagraph (B).

21 ‘‘(B) The legal advice referred to in subparagraph (A)

22 includes advising the debtor—

23 ‘‘(i) whether—

24 ‘‘(I) to file a petition under this title; or
70

•S 625 RS

1 ‘‘(II) commencing a case under chapter 7,

2 11, 12, or 13 is appropriate;

3 ‘‘(ii) whether the debtor’s debts will be eliminated

4 or discharged in a case under this title;

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

6 the debtor’s home, car, or other property after com7 mencing a case under this title;

8 ‘‘(iv) concerning—

9 ‘‘(I) the tax consequences of a case brought

10 under this title; or

11 ‘‘(II) the dischargeability of tax claims;

12 ‘‘(v) whether the debtor may or should promise

13 to repay debts to a creditor or enter into a reaffirma14 tion agreement with a creditor to reaffirm a debt;

15 ‘‘(vi) concerning how to characterize the nature

16 of the debtor’s interests in property or the debtor’s

17 debts; or

18 ‘‘(vii) concerning bankruptcy procedures and

19 rights.’’;

20 (6) in subsection (f)—

21 (A) by striking ‘‘(f)(1)’’ and inserting ‘‘(f)’’;

22 and

23 (B) by striking paragraph (2);

24 (7) in subsection (g)—
71

•S 625 RS

1 (A) by striking ‘‘(g)(1)’’ and inserting

2 ‘‘(g)’’; and

3 (B) by striking paragraph (2);

4 (8) in subsection (h)—

5 (A) by redesignating paragraphs (1)

6 through (4) as paragraphs (2) through (5), re7 spectively;

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

9 redesignated, the following:

10 ‘‘(h)(1) The Supreme Court may promulgate rules

11 under section 2075 of title 28, or the Judicial Conference

12 of the United States may prescribe guidelines, for setting

13 a maximum allowable fee chargeable by a bankruptcy peti14 tion preparer. A bankruptcy petition preparer shall notify

15 the debtor of any such maximum amount before preparing

16 any document for filing for a debtor or accepting any fee

17 from the debtor.’’;

18 (C) in paragraph (2), as redesignated by

19 subparagraph (A) of this paragraph—

20 (i) by striking ‘‘Within 10 days after

21 the date of filing a petition, a bankruptcy

22 petition preparer shall file a’’ and inserting

23 ‘‘A’’;
72

•S 625 RS

1 (ii) by inserting ‘‘by the bankruptcy

2 petition preparer shall be filed together with

3 the petition,’’ after ‘‘perjury’’; and

4 (iii) by adding at the end the fol5 lowing: ‘‘If rules or guidelines setting a

6 maximum fee for services have been promul7 gated or prescribed under paragraph (1),

8 the declaration under this paragraph shall

9 include a certification that the bankruptcy

10 petition preparer complied with the notifi11 cation requirement under paragraph (1).’’;

12 (D) by striking paragraph (3), as redesig13 nated by subparagraph (A) of this paragraph,

14 and inserting the following:

15 ‘‘(3)(A) The court shall disallow and order the

16 immediate turnover to the bankruptcy trustee any fee

17 referred to in paragraph (2) found to be in excess of

18 the value of any services—

19 ‘‘(i) rendered by the preparer during the 12-

20 month period immediately preceding the date of

21 filing of the petition; or

22 ‘‘(ii) found to be in violation of any rule or

23 guideline promulgated or prescribed under para24 graph (1).
73

•S 625 RS

1 ‘‘(B) All fees charged by a bankruptcy petition

2 preparer may be forfeited in any case in which the

3 bankruptcy petition preparer fails to comply with

4 this subsection or subsection (b), (c), (d), (e), (f), or

5 (g).

6 ‘‘(C) An individual may exempt any funds re7 covered under this paragraph under section 522(b).’’;

8 and

9 (E) in paragraph (4), as redesignated by

10 subparagraph (A) of this paragraph, by striking

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

12 United States trustee, or the court, on the initia13 tive of the court,’’;

14 (9) in subsection (i)(1), by striking the matter

15 preceding subparagraph (A) and inserting the fol16 lowing:

17 ‘‘(i) If a bankruptcy petition preparer violates this sec18 tion or commits any act that the court finds to be fraudu19 lent, unfair, or deceptive, on motion of the debtor, trustee,

20 or United States trustee, and after the court holds a hearing

21 with respect to that violation or act, the court shall order

22 the bankruptcy petition preparer to pay to the debtor—’’;

23 (10) in subsection (j)—

24 (A) in paragraph (2)—
74

•S 625 RS

1 (i) in subparagraph (A)(i)(I), by strik2 ing ‘‘a violation of which subjects a person

3 to criminal penalty’’;

4 (ii) in subparagraph (B)—

5 (I) by striking ‘‘or has not paid a

6 penalty’’ and inserting ‘‘has not paid

7 a penalty’’; and

8 (II) by inserting ‘‘or failed to dis9 gorge all fees ordered by the court’’

10 after ‘‘a penalty imposed under this

11 section,’’;

12 (B) by redesignating paragraph (3) as

13 paragraph (4); and

14 (C) by inserting after paragraph (2) the fol15 lowing:

16 ‘‘(3) The court, as part of its contempt power, may

17 enjoin a bankruptcy petition preparer that has failed to

18 comply with a previous order issued under this section. The

19 injunction under this paragraph may be issued upon mo20 tion of the court, the trustee, or the United States trustee.’’;

21 and

22 (11) by adding at the end the following:

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

24 comply with any provision of subsection (b), (c), (d), (e),
75

•S 625 RS

1 (f), (g), or (h) may be fined not more than $500 for each

2 such failure.

3 ‘‘(2) The court shall triple the amount of a fine as4 sessed under paragraph (1) in any case in which the court

5 finds that a bankruptcy petition preparer—

6 ‘‘(A) advised the debtor to exclude assets or in7 come that should have been included on applicable

8 schedules;

9 ‘‘(B) advised the debtor to use a false Social Se10 curity account number;

11 ‘‘(C) failed to inform the debtor that the debtor

12 was filing for relief under this title; or

13 ‘‘(D) prepared a document for filing in a man14 ner that failed to disclose the identity of the preparer.

15 ‘‘(3) The debtor, the trustee, a creditor, or the United

16 States trustee may file a motion for an order imposing a

17 fine on the bankruptcy petition preparer for each violation

18 of this section.

19 ‘‘(4) All fines imposed under this section shall be paid

20 to the United States trustee, who shall deposit an amount

21 equal to such fines in a special account of the United States

22 Trustee System Fund referred to in section 586(e)(2) of title

23 28. Amounts deposited under this paragraph shall be avail24 able to fund the enforcement of this section on a national

25 basis.’’.
76

•S 625 RS

1 SEC. 225. 222. SENSE OF CONGRESS.

2 It is the sense of Congress that States should develop

3 curricula relating to the subject of personal finance, de4 signed for use in elementary and secondary schools.

5 SEC. 226. 223. ADDITIONAL AMENDMENTS TO TITLE 11,

6 UNITED STATES CODE.

7 (a) IN GENERAL.—Section 507(a) of title 11, United

8 States Code, as amended by section 211 212 of this Act,

9 is amended by inserting after paragraph (9) the following:

10 ‘‘(10) Tenth, allowed claims for death or per11 sonal injuries resulting from the operation of a

12 motor vehicle or vessel if such operation was unlaw13 ful because the debtor was intoxicated from using al14 cohol, a drug, or another substance.’’.

15 (b) VESSELS.—Section 523(a)(9) of title 11, United

16 States Code, is amended by inserting ‘‘or vessel’’ after

17 ‘‘vehicle’’.

18 SEC. 224. PROTECTION OF RETIREMENT SAVINGS IN BANK19 RUPTCY.

20 (a) IN GENERAL.—Section 522 of title 11, United

21 States Code, as amended by section 215 of this Act, is

22 amended—

23 (1) in subsection (b)—

24 (A) in paragraph (2)—

25 (i) by striking ‘‘(2)(A) any property’’

26 and inserting:
77

•S 625 RS

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

2 ‘‘(A) any property’’;

3 (ii) in subparagraph (A), by striking

4 ‘‘and’’ at the end;

5 (iii) in subparagraph (B), by striking

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

7 and

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

9 ‘‘(C) retirement funds to the extent that those

10 funds are in a fund or account that is exempt from

11 taxation under section 401, 403, 408, 408A, 414, 457,

12 or 501(a) of the Internal Revenue Code of 1986.’’;

13 (B) by striking paragraph (1) and insert14 ing:

15 ‘‘(2) Property listed in this paragraph is property that

16 is specified under subsection (d), unless the State law that

17 is applicable to the debtor under paragraph (3)(A) specifi18 cally does not so authorize.’’;

19 (C) in the matter preceding paragraph

20 (2)—

21 (i) by striking ‘‘(b)’’ and inserting

22 ‘‘(b)(1)’’;

23 (ii) by striking ‘‘paragraph (2)’’ both

24 places it appears and inserting ‘‘paragraph

25 (3)’’;
78

•S 625 RS

1 (iii) by striking ‘‘paragraph (1)’’ each

2 place it appears and inserting ‘‘paragraph

3 (2)’’; and

4 (iv) by striking ‘‘Such property is—’’;

5 and

6 (D) by adding at the end of the subsection

7 the following:

8 ‘‘(4) For purposes of paragraph (3)(C) and subsection

9 (d)(12), the following shall apply:

10 ‘‘(A) If the retirement funds are in a retirement

11 fund that has received a favorable determination pur12 suant to section 7805 of the Internal Revenue Code of

13 1986, and that determination is in effect as of the

14 date of the commencement of the case under section

15 301, 302, or 303 of this title, those funds shall be pre16 sumed to be exempt from the estate.

17 ‘‘(B) If the retirement funds are in a retirement

18 fund that has not received a favorable determination

19 pursuant to such section 7805, those funds are exempt

20 from the estate if the debtor demonstrates that—

21 ‘‘(i) no prior determination to the contrary

22 has been made by a court or the Internal Rev23 enue Service; and
79

•S 625 RS

1 ‘‘(ii)(I) the retirement fund is in substan2 tial compliance with the applicable requirements

3 of the Internal Revenue Code of 1986; or

4 ‘‘(II) the retirement fund fails to be in sub5 stantial compliance with the applicable require6 ments of the Internal Revenue Code of 1986 and

7 the debtor is not materially responsible for that

8 failure.

9 ‘‘(C) A direct transfer of retirement funds from

10 1 fund or account that is exempt from taxation under

11 section 401, 403, 408, 408A, 414, 457, or 501(a) of

12 the Internal Revenue Code of 1986, pursuant to sec13 tion 401(a)(31) of the Internal Revenue Code of 1986,

14 or otherwise, shall not cease to qualify for exemption

15 under paragraph (3)(C) or subsection (d)(12) by rea16 son of that direct transfer.

17 ‘‘(D)(i) Any distribution that qualifies as an eli18 gible rollover distribution within the meaning of sec19 tion 402(c) of the Internal Revenue Code of 1986 or

20 that is described in clause (ii) shall not cease to qual21 ify for exemption under paragraph (3)(C) or sub22 section (d)(12) by reason of that distribution.

23 ‘‘(ii) A distribution described in this clause is an

24 amount that—
80

•S 625 RS

1 ‘‘(I) has been distributed from a fund or ac2 count that is exempt from taxation under section

3 401, 403, 408, 408A, 414, 457, or 501(a) of the

4 Internal Revenue Code of 1986; and

5 ‘‘(II) to the extent allowed by law, is depos6 ited in such a fund or account not later than 60

7 days after the distribution of that amount.’’; and

8 (2) in subsection (d)—

9 (A) in the matter preceding paragraph (1),

10 by striking ‘‘subsection (b)(1)’’ and inserting

11 ‘‘subsection (b)(2)’’; and

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

13 ‘‘(12) Retirement funds to the extent that those funds

14 are in a fund or account that is exempt from taxation under

15 section 401, 403, 408, 408A, 414, 457, or 501(a) of the In16 ternal Revenue Code of 1986.’’.

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

18 United States Code, as amended by section 214 of this Act,

19 is amended—

20 (1) in paragraph (18), by striking ‘‘or’’ at the

21 end;

22 (2) in paragraph (19), by striking the period

23 and inserting ‘‘; or’’;

24 (3) by inserting after paragraph (19) the fol25 lowing:
81

•S 625 RS

1 ‘‘(20) under subsection (a), of withholding of in2 come from a debtor’s wages and collection of amounts

3 withheld, pursuant to the debtor’s agreement author4 izing that withholding and collection for the benefit of

5 a pension, profit-sharing, stock bonus, or other plan

6 established under section 401, 403, 408, 408A, 414,

7 457, or 501(a) of the Internal Revenue Code of 1986

8 that is sponsored by the employer of the debtor, or an

9 affiliate, successor, or predecessor of such employer—

10 ‘‘(A) to the extent that the amounts withheld

11 and collected are used solely for payments relat12 ing to a loan from a plan that satisfies the re13 quirements of section 408(b)(1) of the Employee

14 Retirement Income Security Act of 1974 or is

15 subject to section 72(p) of the Internal Revenue

16 Code of 1986; or

17 ‘‘(B) in the case of a loan from a thrift sav18 ings plan described in subchapter III of title 5,

19 that satisfies the requirements of section 8433(g)

20 of such title;’’; and

21 (4) by adding at the end of the flush material at

22 the end of the subsection, the following: ‘‘Nothing in

23 paragraph (20) may be construed to provide that any

24 loan made under a governmental plan under section

25 414(d), or a contract or account under section 403(b),
82

•S 625 RS

1 of the Internal Revenue Code of 1986 constitutes a

2 claim or a debt under this title.’’.

3 (c) EXCEPTIONS TO DISCHARGE.—Section 523(a) of

4 title 11, United States Code, is amended—

5 (1) by striking ‘‘or’’ at the end of paragraph

6 (17);

7 (2) by striking the period at the end of para8 graph (18) and inserting ‘‘; or’’; and

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

10 ‘‘(19) owed to a pension, profit-sharing, stock

11 bonus, or other plan established under section 401,

12 403, 408, 408A, 414, 457, or 501(c) of the Internal

13 Revenue Code of 1986, pursuant to—

14 ‘‘(A) a loan permitted under section

15 408(b)(1) of the Employee Retirement Income

16 Security Act of 1974, or subject to section 72(p)

17 of the Internal Revenue Code of 1986; or

18 ‘‘(B) a loan from the thrift savings plan de19 scribed in subchapter III of title 5, that satisfies

20 the requirements of section 8433(g) of such title.

21 Nothing in paragraph (19) may be construed to pro22 vide that any loan made under a governmental plan

23 under section 414(d), or a contract or account under

24 section 403(b), of the Internal Revenue Code of 1986

25 constitutes a claim or a debt under this title.’’
83

•S 625 RS

1 (d) PLAN CONTENTS.—Section 1322 of title 11, United

2 States Code, is amended by adding at the end the following:

3 ‘‘(f) A plan may not materially alter the terms of a

4 loan described in section 362(b)(20).’’.

5 TITLE III—DISCOURAGING

6 BANKRUPTCY ABUSE

7 SEC. 301. REINFORCEMENT OF THE FRESH START.

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

9 is amended—

10 (1) by striking ‘‘by a court’’ and inserting ‘‘on

11 a prisoner by any court’’,

12 (2) by striking ‘‘section 1915(b) or (f)’’ and in13 serting ‘‘subsection (b) or (f)(2) of section 1915’’,

14 and

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

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

17 SEC. 302. DISCOURAGING BAD FAITH REPEAT FILINGS.

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

19 amended—

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

21 end;

22 (2) in paragraph (2), by striking the period at

23 the end and inserting a semicolon; and

24 (3) by adding at the end the following:
84

•S 625 RS

1 ‘‘(3) if a single or joint case is filed by or

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

3 13, and if a single or joint case of the debtor was

4 pending within the preceding 1-year period but was

5 dismissed, other than a case refiled under a chapter

6 other than chapter 7 after dismissal under section

7 707(b)—

8 ‘‘(A) the stay under subsection (a) with re9 spect to any action taken with respect to a debt

10 or property securing such debt or with respect

11 to any lease will terminate with respect to the

12 debtor on the 30th day after the filing of the

13 later case;

14 ‘‘(B) upon motion by a party in interest

15 for continuation of the automatic stay and upon

16 notice and a hearing, the court may extend the

17 stay in particular cases as to any or all credi18 tors (subject to such conditions or limitations

19 as the court may then impose) after notice and

20 a hearing completed before the expiration of the

21 30-day period only if the party in interest dem22 onstrates that the filing of the later case is in

23 good faith as to the creditors to be stayed; and

24 ‘‘(C) for purposes of subparagraph (B), a

25 case is presumptively filed not in good faith
85

•S 625 RS

1 (but such presumption may be rebutted by clear

2 and convincing evidence to the contrary)—

3 ‘‘(i) as to all creditors, if—

4 ‘‘(I) more than 1 previous case

5 under any of chapter 7, 11, or 13 in

6 which the individual was a debtor was

7 pending within the preceding 1-year

8 period;

9 ‘‘(II) a previous case under any

10 of chapter 7, 11, or 13 in which the

11 individual was a debtor was dismissed

12 within such 1-year period, after the

13 debtor failed to—

14 ‘‘(aa) file or amend the peti15 tion or other documents as re16 quired by this title or the court

17 without substantial excuse (but

18 mere inadvertence or negligence

19 shall not be a substantial excuse

20 unless the dismissal was caused

21 by the negligence of the debtor’s

22 attorney);

23 ‘‘(bb) provide adequate pro24 tection as ordered by the court;

25 or
86

•S 625 RS

1 ‘‘(cc) perform the terms of a

2 plan confirmed by the court; or

3 ‘‘(III) there has not been a sub4 stantial change in the financial or per5 sonal affairs of the debtor since the

6 dismissal of the next most previous

7 case under chapter 7, 11, or 13 of

8 this title, or any other reason to con9 clude that the later case will be

10 concluded—

11 ‘‘(aa) if a case under chap12 ter 7 of this title, with a dis13 charge; or

14 ‘‘(bb) if a case under chap15 ter 11 or 13 of this title, with a

16 confirmed plan which will be fully

17 performed; and

18 ‘‘(ii) as to any creditor that com19 menced an action under subsection (d) in

20 a previous case in which the individual was

21 a debtor if, as of the date of dismissal of

22 such case, that action was still pending or

23 had been resolved by terminating, condi24 tioning, or limiting the stay as to actions

25 of such creditor; and
87

•S 625 RS

1 ‘‘(4)(A)(i) if a single or joint case is filed by or

2 against an individual debtor under this title, and if

3 2 or more single or joint cases of the debtor were

4 pending within the previous year but were dismissed,

5 other than a case refiled under section 707(b), the

6 stay under subsection (a) shall not go into effect

7 upon the filing of the later case; and

8 ‘‘(ii) on request of a party in interest, the court

9 shall promptly enter an order confirming that no

10 stay is in effect;

11 ‘‘(B) if, within 30 days after the filing of the

12 later case, a party in interest requests the court may

13 order the stay to take effect in the case as to any

14 or all creditors (subject to such conditions or limita15 tions as the court may impose), after notice and

16 hearing, only if the party in interest demonstrates

17 that the filing of the later case is in good faith as

18 to the creditors to be stayed;

19 ‘‘(C) a stay imposed under subparagraph (B)

20 shall be effective on the date of entry of the order

21 allowing the stay to go into effect; and

22 ‘‘(D) for purposes of subparagraph (B), a case

23 is presumptively not filed in good faith (but such

24 presumption may be rebutted by clear and con25 vincing evidence to the contrary)—
88

•S 625 RS

1 ‘‘(i) as to all creditors if—

2 ‘‘(I) 2 or more previous cases under

3 this title in which the individual was a

4 debtor were pending within the 1-year pe5 riod;

6 ‘‘(II) a previous case under this title

7 in which the individual was a debtor was

8 dismissed within the time period stated in

9 this paragraph after the debtor failed to

10 file or amend the petition or other docu11 ments as required by this title or the court

12 without substantial excuse (but mere inad13 vertence or negligence shall not be sub14 stantial excuse unless the dismissal was

15 caused by the negligence of the debtor’s at16 torney), failed to pay adequate protection

17 as ordered by the court, or failed to per18 form the terms of a plan confirmed by the

19 court; or

20 ‘‘(III) there has not been a substan21 tial change in the financial or personal af22 fairs of the debtor since the dismissal of

23 the next most previous case under this

24 title, or any other reason to conclude that

25 the later case will not be concluded, if a
89

•S 625 RS

1 case under chapter 7, with a discharge,

2 and if a case under chapter 11 or 13, with

3 a confirmed plan that will be fully per4 formed; or

5 ‘‘(ii) as to any creditor that commenced an

6 action under subsection (d) in a previous case

7 in which the individual was a debtor if, as of

8 the date of dismissal of such case, such action

9 was still pending or had been resolved by termi10 nating, conditioning, or limiting the stay as to

11 action of such creditor.’’.

12 SEC. 303. CURBING ABUSIVE FILINGS.

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

14 States Code, is amended—

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

16 end;

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

18 the end and inserting ‘‘; or’’; and

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

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

21 real property under subsection (a), by a creditor

22 whose claim is secured by an interest in such real

23 estate, if the court finds that the filing of the bank24 ruptcy petition was part of a scheme to delay,

25 hinder, and defraud creditors that involved either—
90

•S 625 RS

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

2 or other interest in, the real property without

3 the consent of the secured creditor or court ap4 proval; or

5 ‘‘(B) multiple bankruptcy filings affecting

6 the real property.

7 If recorded in compliance with applicable State laws gov8 erning notices of interests or liens in real property, an

9 order entered under this subsection shall be binding in any

10 other case under this title purporting to affect the real

11 property filed not later than 2 years after that recording,

12 except that a debtor in a subsequent case may move for

13 relief from such order based upon changed circumstances

14 or for good cause shown, after notice and a hearing.’’.

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

16 United States Code, as amended by section 213 224 of

17 this Act, is amended—

18 (1) in paragraph (19), by striking ‘‘or’’ at the

19 end;

20 (2) in paragraph (20), by striking the period at

21 the end; and

22 (3) by inserting after paragraph (20) the fol23 lowing:

24 ‘‘(21) under subsection (a), of any act to en25 force any lien against or security interest in real
91

•S 625 RS

1 property following the entry of an order under sec2 tion 362(d)(4) as to that property in any prior bank3 ruptcy case for a period of 2 years after entry of

4 such an order, except that the debtor, in a subse5 quent case, may move the court for relief from such

6 order based upon changed circumstances or for

7 other good cause shown, after notice and a hearing;

8 or

9 ‘‘(22) under subsection (a), of any act to en10 force any lien against or security interest in real

11 property—

12 ‘‘(A) if the debtor is ineligible under sec13 tion 109(g) to be a debtor in a bankruptcy case;

14 or

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

16 violation of a bankruptcy court order in a prior

17 bankruptcy case prohibiting the debtor from

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

19 SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY

20 SECURITY.

21 Title 11, United States Code, is amended—

22 (1) in section 521(a), as so redesignated by sec23 tion 105(d) of this Act—

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

25 the end;
92

•S 625 RS

1 (B) in paragraph (5), by striking the pe2 riod at the end and inserting ‘‘; and’’; and

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

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

5 this title, not retain possession of personal property

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

7 purchase price secured in whole or in part by an in8 terest in that personal property unless, in the case

9 of an individual debtor, the debtor within 45 days

10 after the first meeting of creditors under section

11 341(a)—

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

13 creditor under section 524(c) with respect to

14 the claim secured by such property; or

15 ‘‘(B) redeems such property from the secu16 rity interest under section 722.’’; and

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

18 ‘‘(b) If the debtor For purposes of subsection (a)(6),

19 if the debtor fails to so act within the 45-day period speci20 fied in subsection (a)(6), the personal property affected

21 shall no longer be property of the estate, and the creditor

22 may take whatever action as to such property as is per23 mitted by applicable nonbankruptcy law, unless the court

24 determines on the motion of the trustee, and after notice
93

•S 625 RS

1 and a hearing, that such property is of consequential value

2 or benefit to the estate.’’; and

3 (2) in section 722, by inserting ‘‘in full at the

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

5 SEC. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE

6 DEBTOR DOES NOT COMPLETE INTENDED

7 SURRENDER OF CONSUMER DEBT COLLAT8 ERAL.

9 Title 11, United States Code, is amended—

10 (1) in section 362—

11 (A) in subsection (c), by striking ‘‘(e), and

12 (f)’’ and inserting ‘‘(e), (f), and (h)’’; and

13 (B) by redesignating subsection (h), as

14 amended by section 227 of this Act, as sub15 section (j) and by inserting after subsection (g)

16 the following:

17 ‘‘(h)(1) Subject to paragraph (2), in an individual

18 case under chapter 7, 11, or 13 the stay provided by sub19 section (a) is terminated with respect to property of the

20 estate securing in whole or in part a claim, or subject to

21 an unexpired lease, if the debtor fails within the applicable

22 period of time set by section 521(a)(2) to—

23 ‘‘(A) file timely any statement of intention re24 quired under section 521(a)(2) with respect to that

25 property or to indicate therein that the debtor—
94

•S 625 RS

1 ‘‘(i) will either surrender the property or

2 retain the property; and

3 ‘‘(ii) if retaining the property, will, as

4 applicable—

5 ‘‘(I) redeem the property under sec6 tion 722;

7 ‘‘(II) reaffirm the debt the property

8 secures under section 524(c); or

9 ‘‘(III) assume the unexpired lease

10 under section 365(p) if the trustee does

11 not do so; or

12 ‘‘(B) take timely the action specified in that

13 statement of intention, as the statement may be

14 amended before expiration of the period for taking

15 action, unless the statement of intention specifies re16 affirmation and the creditor refuses to reaffirm on

17 the original contract terms.

18 ‘‘(2) Paragraph (1) shall not apply if the court deter19 mines on the motion of the trustee, and after notice and

20 a hearing, that such property is of consequential value or

21 benefit to the estate.’’; and

22 (2) in section 521, as amended by section 304

23 of this Act—

24 (A) in subsection (a)(2), as redesignated

25 by section 105(d) of this Act—
95

•S 625 RS

1 (i) by striking ‘‘consumer’’;

2 (ii) in subparagraph (B)—

3 (I) by striking ‘‘forty-five days

4 after the filing of a notice of intent

5 under this section’’ and inserting ‘‘30

6 days after the first date set for the

7 meeting of creditors under section

8 341(a)’’; and

9 (II) by striking ‘‘forty-five day

10 period’’ and inserting ‘‘30-day pe11 riod’’; and

12 (iii) in subparagraph (C), by inserting

13 ‘‘except as provided in section 362(h)’’ be14 fore the semicolon; and

15 (B) by adding at the end the following:

16 ‘‘(c) If the debtor fails timely to take the action speci17 fied in subsection (a)(6), or in paragraph (1) or (2) of

18 section 362(h), with respect to property which a lessor or

19 bailor owns and has leased, rented, or bailed to the debtor

20 or as to which a creditor holds a security interest not oth21 erwise voidable under section 522(f), 544, 545, 547, 548,

22 or 549, nothing in this title shall prevent or limit the oper23 ation of a provision in the underlying lease or agreement

24 that has the effect of placing the debtor in default under

25 that lease or agreement by reason of the occurrence, pend-
96

•S 625 RS

1 ency, or existence of a proceeding under this title or the

2 insolvency of the debtor. Nothing in this subsection shall

3 be deemed to justify limiting such a provision in any other

4 circumstance.’’.

5 SEC. 306. GIVING SECURED CREDITORS FAIR TREATMENT

6 IN CHAPTER 13.

7 (a) IN GENERAL.—Section 1325(a)(5)(B)(i) of title

8 11, United States Code, is amended to read as follows:

9 ‘‘(i) the plan provides that—

10 ‘‘(I) the holder of such claim retain

11 the lien securing such claim until the ear12 lier of—

13 ‘‘(aa) the payment of the under14 lying debt determined under nonbank15 ruptcy law; or

16 ‘‘(bb) discharge under section

17 1328; and

18 ‘‘(II) if the case under this chapter is

19 dismissed or converted without completion

20 of the plan, such lien shall also be retained

21 by such holder to the extent recognized by

22 applicable nonbankruptcy law; and’’.

23 (b) RESTORING THE FOUNDATION FOR SECURED

24 CREDIT.—Section 1325(a) of title 11, United States Code,
97

•S 625 RS

1 is amended by adding at the end the following flush sen2 tence:

3 ‘‘For purposes of paragraph (5), section 506 shall not

4 apply to a claim described in that paragraph if the debt

5 that is the subject of the claim was incurred within the

6 5-year period preceding the filing of the petition and the

7 collateral for that debt consists of a motor vehicle (as de8 fined in section 30102 of title 49) acquired for the per9 sonal use of the debtor, or if collateral for that debt con10 sists of any other thing of value, if the debt was incurred

11 during the 6-month period preceding that filing.’’.

12 (c) DEFINITIONS.—Section 101 of title 11, United

13 States Code, as amended by section 221 211 of this Act,

14 is amended—

15 (1) by inserting after paragraph (13) the fol16 lowing:

17 ‘‘(13A) ‘debtor’s principal residence’—

18 ‘‘(A) means a residential structure, includ19 ing incidental property, without regard to

20 whether that structure is attached to real prop21 erty; and

22 ‘‘(B) includes an individual condominium

23 or cooperative unit;’’; and

24 (2) by inserting after paragraph (27), the fol25 lowing:
98

•S 625 RS

1 ‘‘(27A) ‘incidental property’ means, with re2 spect to a debtor’s principal residence—

3 ‘‘(A) property commonly conveyed with a

4 principal residence in the area where the real

5 estate is located;

6 ‘‘(B) all easements, rights, appurtenances,

7 fixtures, rents, royalties, mineral rights, oil or

8 gas rights or profits, water rights, escrow

9 funds, or insurance proceeds; and

10 ‘‘(C) all replacements or additions;’’.

11 SEC. 307. EXEMPTIONS.

12 Section 522(b)(2)(A) 522(b)(3)(A) of title 11, United

13 States Code, as so designated by section 224 of this Act,

14 is amended—

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

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

17 such 180-day period than in any other place’’.

18 SEC. 308. RESIDENCY REQUIREMENT FOR HOMESTEAD EX19 EMPTION.

20 Section 522 of title 11, United States Code, as

21 amended by section 307 of this Act, is amended—

22 (1) in subsection (b)(2)(A) (b)(3)(A), by insert23 ing ‘‘subject to subsection (n),’’ before ‘‘any prop24 erty’’; and

25 (2) by adding at the end the following:
99

•S 625 RS

1 ‘‘(n) For purposes of subsection (b)(2)(A) (b)(3)(A),

2 and notwithstanding subsection (a), the value of an inter3 est in—

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

5 or a dependent of the debtor uses as a residence;

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

7 debtor or a dependent of the debtor uses as a resi8 dence; or

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

10 of the debtor;

11 shall be reduced to the extent such value is attributable

12 to any portion of any property that the debtor disposed

13 of in the 730-day period ending on the date of the filing

14 of the petition, with the intent to hinder, delay, or defraud

15 a creditor and that the debtor could not exempt, or that

16 portion that the debtor could not exempt, under subsection

17 (b) if on such date the debtor had held the property so

18 disposed of.’’.

19 SEC. 309. PROTECTING SECURED CREDITORS IN CHAPTER

20 13 CASES.

21 (a) STOPPING ABUSIVE CONVERSIONS FROM CHAP22 TER 13.—Section 348(f)(1) of title 11, United States

23 Code, is amended—

24 (1) in subparagraph (A), by striking ‘‘and’’ at

25 the end;
100

•S 625 RS

1 (2) in subparagraph (B)—

2 (A) by striking ‘‘in the converted case,

3 with allowed secured claims’’ and inserting

4 ‘‘only in a case converted to chapter 11 or 12

5 but not in a case converted to chapter 7, with

6 allowed secured claims in cases under chapters

7 11 and 12’’; and

8 (B) by striking the period and inserting ‘‘;

9 and’’; and

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

11 ‘‘(C) with respect to cases converted from chap12 ter 13—

13 ‘‘(i) the claim of any creditor holding secu14 rity as of the date of the petition shall continue

15 to be secured by that security unless the full

16 amount of such claim determined under appli17 cable nonbankruptcy law has been paid in full

18 as of the date of conversion, notwithstanding

19 any valuation or determination of the amount

20 of an allowed secured claim made for the pur21 poses of the chapter 13 proceeding; and

22 ‘‘(ii) unless a prebankruptcy default has

23 been fully cured under the plan at the time of

24 conversion, in any proceeding under this title or
101

•S 625 RS

1 otherwise, the default shall have the effect given

2 under applicable nonbankruptcy law.’’.

3 (b) GIVING DEBTORS THE ABILITY TO KEEP

4 LEASED PERSONAL PROPERTY BY ASSUMPTION.—Section

5 365 of title 11, United States Code, is amended by adding

6 at the end the following:

7 ‘‘(p)(1) If a lease of personal property is rejected or

8 not timely assumed by the trustee under subsection (d),

9 the leased property is no longer property of the estate and

10 the stay under section 362(a) is automatically terminated.

11 ‘‘(2)(A) In the case of an individual under chapter

12 7, the debtor may notify the creditor in writing that the

13 debtor desires to assume the lease. Upon being so notified,

14 the creditor may, at its option, notify the debtor that it

15 is willing to have the lease assumed by the debtor and

16 may condition such assumption on cure of any outstanding

17 default on terms set by the contract.

18 ‘‘(B) If within 30 days after notice is provided under

19 subparagraph (A), the debtor notifies the lessor in writing

20 that the lease is assumed, the liability under the lease will

21 be assumed by the debtor and not by the estate.

22 ‘‘(C) The stay under section 362 and the injunction

23 under section 524(a)(2) shall not be violated by notifica24 tion of the debtor and negotiation of cure under this sub25 section.
102

•S 625 RS

1 ‘‘(3) In a case under chapter 11 of this title in which

2 the debtor is an individual and in a case under chapter

3 13 of this title, if the debtor is the lessee with respect

4 to personal property and the lease is not assumed in the

5 plan confirmed by the court, the lease is deemed rejected

6 as of the conclusion of the hearing on confirmation. If the

7 lease is rejected, the stay under section 362 and any stay

8 under section 1301 is automatically terminated with re9 spect to the property subject to the lease.’’.

10 (c) ADEQUATE PROTECTION OF LESSORS AND PUR11 CHASE MONEY SECURED CREDITORS.—

12 (1) IN GENERAL.—Subchapter I of chapter 13

13 of title 11, United States Code, is amended by in14 serting after section 1307 the following:

15 ‘‘§ 1308. Adequate protection in chapter 13 cases

16 ‘‘(a)(1)(A) On or before the date that is 30 days after

17 the filing of a case under this chapter, the debtor shall

18 make cash payments in an amount determined under

19 paragraph (2), to—

20 ‘‘(i) any lessor of personal property; and

21 ‘‘(ii) any creditor holding a claim secured by

22 personal property to the extent that the claim is at23 tributable to the purchase of that property by the

24 debtor.
103

•S 625 RS

1 ‘‘(B) The debtor or the plan shall continue making

2 the adequate protection payments until the earlier of the

3 date on which—

4 ‘‘(i) the creditor begins to receive actual pay5 ments under the plan; or

6 ‘‘(ii) the debtor relinquishes possession of the

7 property referred to in subparagraph (A) to—

8 ‘‘(I) the lessor or creditor; or

9 ‘‘(II) any third party acting under claim of

10 right.

11 ‘‘(2) The payments referred to in paragraph (1)(A)

12 shall be the contract amount.

13 ‘‘(b)(1) Subject to the limitations under paragraph

14 (2), the court may, after notice and hearing, change the

15 amount, and timing of the dates of payment, of payments

16 made under subsection (a).

17 ‘‘(2)(A) The payments referred to in paragraph (1)

18 shall be payable not less frequently than monthly.

19 ‘‘(B) The amount of payments referred to in para20 graph (1) shall not be less than the amount of any weekly,

21 biweekly, monthly, or other periodic payment schedules as

22 payable under the contract between the debtor and cred23 itor.

24 ‘‘(c) Notwithstanding section 1326(b), the payments

25 referred to in subsection (a)(1)(A) shall be continued in
104

•S 625 RS

1 addition to plan payments under a confirmed plan until

2 actual payments to the creditor begin under that plan, if

3 the confirmed plan provides for—

4 ‘‘(1) payments to a creditor or lessor described

5 in subsection (a)(1); and

6 ‘‘(2) the deferral of payments to such creditor

7 or lessor under the plan until the payment of

8 amounts described in section 1326(b).

9 ‘‘(d) Notwithstanding sections 362, 542, and 543, a

10 lessor or creditor described in subsection (a) may retain

11 possession of property described in that subsection that

12 was obtained in accordance with applicable law before the

13 date of filing of the petition until the first payment under

14 subsection (a)(1)(A) is received by the lessor or creditor.

15 ‘‘(e) On or before the date that is 60 days after the

16 filing of a case under this chapter, a debtor retaining pos17 session of personal property subject to a lease or securing

18 a claim attributable in whole or in part to the purchase

19 price of such property shall provide each creditor or lessor

20 reasonable evidence of the maintenance of any required

21 insurance coverage with respect to the use or ownership

22 of such property and continue to do so for so long as the

23 debtor retains possession of such property.’’.

24 (2) CLERICAL AMENDMENT.—The table of sec25 tions for chapter 13 of title 11, United States Code,
105

•S 625 RS

1 is amended, in the matter relating to subchapter I,

2 by inserting after the item relating to section 1307

3 the following:

‘‘1308. Adequate protection in chapter 13 cases.’’.

4 (1) CONFIRMATION OF PLAN.—Section

5 1325(a)(5)(B) of title 11, United States Code, is

6 amended—

7 (A) in clause (i), by striking ‘‘and’’ at the

8 end;

9 (B) in clause (ii), by striking ‘‘or’’ at the

10 end and inserting ‘‘and’’; and

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

12 ‘‘(iii) if—

13 ‘‘(I) property to be distributed

14 pursuant to this subsection is in the

15 form of periodic payments, such pay16 ments shall be in equal monthly

17 amounts; and

18 ‘‘(II) the holder of the claim is se19 cured by personal property the amount

20 of such payments shall not be less than

21 an amount sufficient to provide to the

22 holder of such claim adequate protec23 tion during the period of the plan; or’’.

24 (2) PAYMENTS.—Section 1326(a) of title 11,

25 United States Code, is amended to read as follows:
106

•S 625 RS

1 ‘‘(a)(1) Unless the court orders otherwise, the debtor

2 shall—

3 ‘‘(A) commence making the payments proposed

4 by a plan within 30 days after the plan is filed; or

5 ‘‘(B) if no plan is filed then as specified in the

6 proof of claim, within 30 days after the order for re7 lief or within 15 days after the plan is filed, which8 ever is earlier.

9 ‘‘(2) A payment made under this section shall be re10 tained by the trustee until confirmation, denial of con11 firmation, or paid by the trustee as adequate protection

12 payments in accordance with paragraph (3). If a plan is

13 confirmed, the trustee shall distribute any such payment in

14 accordance with the plan as soon as is practicable. If a plan

15 is not confirmed, the trustee shall return any such payments

16 not previously paid to creditors pursuant to paragraph (3)

17 to the debtor, after deducting any unpaid claim allowed

18 under section 503(b).

19 ‘‘(3)(A) As soon as is practicable, and not later than

20 40 days after the filing of the case, the trustee shall—

21 ‘‘(i) pay from payments made under this section

22 the adequate protection payments proposed in the

23 plan; or

24 ‘‘(ii) if no plan is filed then, according to the

25 terms of the proof of claim.
107

•S 625 RS

1 ‘‘(B) The court may, upon notice and a hearing, mod2 ify, increase, or reduce the payments required under this

3 paragraph pending confirmation of a plan.’’.

4 SEC. 310. LIMITATION ON LUXURY GOODS.

5 Section 523(a)(2)(C) of title 11, United States Code,

6 is amended to read as follows:

7 ‘‘(C)(i) for purposes of subparagraph (A)—

8 ‘‘(I) consumer debts owed to a single cred9 itor and aggregating more than $250 for luxury

10 goods or services incurred by an individual

11 debtor on or within 90 days before the order for

12 relief under this title are presumed to be non13 dischargeable; and

14 ‘‘(II) cash advances aggregating more than

15 $750 that are extensions of consumer credit

16 under an open end credit plan obtained by an

17 individual debtor on or within 70 days before

18 the order for relief under this title, are pre19 sumed to be nondischargeable; and

20 ‘‘(ii) for purposes of this subparagraph—

21 ‘‘(I) the term ‘extension of credit under an

22 open end credit plan’ means an extension of

23 credit under an open end credit plan, within the

24 meaning of the Consumer Credit Protection Act

25 (15 U.S.C. 1601 et seq.);
108

•S 625 RS

1 ‘‘(II) the term ‘open end credit plan’ has

2 the meaning given that term under section 103

3 of Consumer Credit Protection Act (15 U.S.C.

4 1602); and

5 ‘‘(III) the term ‘luxury goods or services’

6 does not include goods or services reasonably

7 necessary for the support or maintenance of the

8 debtor or a dependent of the debtor.’’.

9 SEC. 311. AUTOMATIC STAY.

10 Section 362(b) of title 11, United States Code, as

11 amended by section 303(b) of this Act, is amended—

12 (1) in paragraph (21), by striking ‘‘or’’ at the

13 end;

14 (2) in paragraph (22), by striking the period at

15 the end and inserting a semicolon; and

16 (3) by inserting after paragraph (22) the fol17 lowing:

18 ‘‘(23) under subsection (a)(3), of the continu19 ation of any eviction, unlawful detainer action, or

20 similar proceeding by a lessor against a debtor in21 volving residential real property in which the debtor

22 resides as a tenant under a rental agreement;

23 ‘‘(24) under subsection (a)(3), of the com24 mencement of any eviction, unlawful detainer action,

25 or similar proceeding by a lessor against a debtor in-
109

•S 625 RS

1 volving residential real property in which the debtor

2 resides as a tenant under a rental agreement that

3 has terminated under the lease agreement or appli4 cable State law; or

5 ‘‘(25) under subsection (a)(3), of eviction ac6 tions based on endangerment to property or person

7 or the use of illegal drugs.’’.

8 SEC. 312. EXTENSION OF PERIOD BETWEEN BANKRUPTCY

9 DISCHARGES.

10 Title 11, United States Code, is amended—

11 (1) in section 727(a)(8), by striking ‘‘six’’ and

12 inserting ‘‘8’’; and

13 (2) in section 1328, by adding at the end the

14 following:

15 ‘‘(f) Notwithstanding subsections (a) and (b), the

16 court shall not grant a discharge of all debts provided for

17 by the plan or disallowed under section 502 if the debtor

18 has received a discharge in any case filed under this title

19 within 5 years before the order for relief under this chap20 ter.’’.

21 SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND AN22 TIQUES.

23 Section 522(f) of title 11, United States Code, is

24 amended by adding at the end the following:
110

•S 625 RS

1 ‘‘(4)(A) Subject to subparagraph (B), for pur2 poses of paragraph (1)(B), the term ‘household

3 goods’ means—

4 ‘‘(i) clothing;

5 ‘‘(ii) furniture;

6 ‘‘(iii) appliances;

7 ‘‘(iv) 1 radio;

8 ‘‘(v) 1 television;

9 ‘‘(vi) 1 VCR;

10 ‘‘(vii) linens;

11 ‘‘(viii) china;

12 ‘‘(ix) crockery;

13 ‘‘(x) kitchenware;

14 ‘‘(xi) educational materials and educational

15 equipment primarily for the use of minor de16 pendent children of the debtor, but only 1 per17 sonal computer only if used primarily for the

18 education or entertainment of such minor chil19 dren;

20 ‘‘(xii) medical equipment and supplies;

21 ‘‘(xiii) furniture exclusively for the use of

22 minor children, or elderly or disabled depend23 ents of the debtor; and

24 ‘‘(xiv) personal effects (including wedding

25 rings and the toys and hobby equipment of
111

•S 625 RS

1 minor dependent children) of the debtor and the

2 dependents of the debtor.

3 ‘‘(B) The term ‘household goods’ does not

4 include—

5 ‘‘(i) works of art (unless by or of the debt6 or or the dependents of the debtor);

7 ‘‘(ii) electronic entertainment equipment

8 (except 1 television, 1 radio, and 1 VCR);

9 ‘‘(iii) items acquired as antiques;

10 ‘‘(iv) jewelry (except wedding rings); and

11 ‘‘(v) a computer (except as otherwise pro12 vided for in this section), motor vehicle (includ13 ing a tractor or lawn tractor), boat, or a motor14 ized recreational device, conveyance, vehicle,

15 watercraft, or aircraft.’’.

16 SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE

17 DEBTS.

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

19 amended by inserting after paragraph (14) the following:

20 ‘‘(14A)(A) incurred to pay a debt that is non21 dischargeable by reason of section 727, 1141,

22 1228(a), 1228(b), or 1328(b), or any other provision

23 of this subsection, if the debtor incurred the debt to

24 pay such a nondischargeable debt with the intent to
112

•S 625 RS

1 discharge in bankruptcy the newly created debt; ex2 cept that

3 ‘‘(B) except that all debts incurred to pay non4 dischargeable debts shall be presumed to be non5 dischargeable debts if incurred within 70 days before

6 the filing of the petition (except that, in any case in

7 which there is an allowed claim under section 502

8 for child support or spousal support entitled to pri9 ority under section 507(a)(1) and that was filed in

10 a timely manner, debts that would otherwise be pre11 sumed to be nondischargeable debts by reason of

12 this subparagraph shall be treated as dischargeable

13 debts);’’.

14 (b) DISCHARGE UNDER CHAPTER 13.

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

16 amended by striking paragraphs (1) through (3) and in17 serting the following:

18 ‘‘(1) provided for under section 1322(b)(5);

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

20 (3)(B), (5), (8), or (9) of section 523(a);

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

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

23 or

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

25 civil action against the debtor as a result of willful
113

•S 625 RS

1 or malicious injury by the debtor that caused per2 sonal injury to an individual or the death of an indi3 vidual.’’.

4 SEC. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7

5 AND 13 CASES.

6 (a) NOTICE.—Section 342 of title 11, United States

7 Code, is amended—

8 (1) in subsection (c)—

9 (A) by inserting ‘‘(1)’’ after ‘‘(c)’’; and

10 (B) by striking ‘‘, but the failure of such

11 notice to contain such information shall not in12 validate the legal effect of such notice’’; and

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

14 ‘‘(d) At any time, a creditor, in a case of an individual

15 debtor under chapter 7 or 13, may file with the court and

16 serve on the debtor a notice of the address to be used to

17 notify the creditor in that case. Five days after receipt

18 of such notice, if the court or the debtor is required to

19 give the creditor notice, such notice shall be given at that

20 address.

21 ‘‘(e) An entity may file with the court a notice stating

22 its address for notice in cases under chapters 7 and 13.

23 After 30 days following the filing of such notice, any notice

24 in any case filed under chapter 7 or 13 given by the court
114

•S 625 RS

1 shall be to that address unless specific notice is given

2 under subsection (d) with respect to a particular case.

3 ‘‘(f)(1) Notice given to a creditor other than as pro4 vided in this section shall not be effective notice until that

5 notice has been brought to the attention of the creditor.

6 If the creditor designates a person or department to be

7 responsible for receiving notices concerning bankruptcy

8 cases and establishes reasonable procedures so that bank9 ruptcy notices received by the creditor are to be delivered

10 to such department or person, notice shall not be consid11 ered to have been brought to the attention of the creditor

12 until received by such person or department.

13 ‘‘(2) No sanction under section 362(h) or any other

14 sanction that a court may impose on account of violations

15 of the stay under section 362(a) or failure to comply with

16 section 542 or 543 may be imposed on any action of the

17 creditor unless the action takes place after the creditor

18 has received notice of the commencement of the case effec19 tive under this section.’’.

20 (b) DEBTOR’S DUTIES.—Section 521 of title 11,

21 United States Code, as amended by section 305 of this

22 Act, is amended—

23 (1) in subsection (a), by striking paragraph (1)

24 and inserting the following:

25 ‘‘(1) file—
115

•S 625 RS

1 ‘‘(A) a list of creditors; and

2 ‘‘(B) unless the court orders otherwise—

3 ‘‘(i) a schedule of assets and liabil4 ities;

5 ‘‘(ii) a schedule of current income and

6 current expenditures;

7 ‘‘(iii) a statement of the debtor’s fi8 nancial affairs and, if applicable, a

9 certificate—

10 ‘‘(I) of an attorney whose name

11 is on the petition as the attorney for

12 the debtor or any bankruptcy petition

13 preparer signing the petition under

14 section 110(b)(1) indicating that such

15 attorney or bankruptcy petition pre16 parer delivered to the debtor any no17 tice required by section 342(b); or

18 ‘‘(II) if no attorney for the debt19 or is indicated and no bankruptcy pe20 tition preparer signed the petition, of

21 the debtor that such notice was ob22 tained and read by the debtor;

23 ‘‘(iv) copies of any Federal tax re24 turns, including any schedules or attach-
116

•S 625 RS

1 ments, filed by the debtor for the 3-year

2 period preceding the order for relief;

3 ‘‘(v) copies of all payment advices or

4 other evidence of payment, if any, received

5 by the debtor from any employer of the

6 debtor in the period 60 days before the fil7 ing of the petition;

8 ‘‘(vi) a statement of the amount of

9 projected monthly net income, itemized to

10 show how the amount is calculated; and

11 ‘‘(vii) a statement disclosing any rea12 sonably anticipated increase in income or

13 expenditures over the 12-month period fol14 lowing the date of filing;’’; and

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

16 ‘‘(d)(1) At any time, a creditor, in the case of an indi17 vidual under chapter 7 or 13, may file with the court no18 tice that the creditor requests the petition, schedules, and

19 a statement of affairs filed by the debtor in the case and

20 the court shall make those documents available to the

21 creditor who requests those documents.

22 ‘‘(2)(A) At any time, a creditor in a case under chap23 ter 13 may file with the court notice that the creditor re24 quests the plan filed by the debtor in the case.
117

•S 625 RS

1 ‘‘(B) The court shall make such plan available to the

2 creditor who requests such plan—

3 ‘‘(i) at a reasonable cost; and

4 ‘‘(ii) not later than 5 days after such request.

5 ‘‘(e) An individual debtor in a case under chapter 7

6 or 13 shall file with the court—

7 ‘‘(1) at the time filed with the taxing authority,

8 all tax returns, including any schedules or attach9 ments, with respect to the period from the com10 mencement of the case until such time as the case

11 is closed;

12 ‘‘(2) at the time filed with the taxing authority,

13 all tax returns, including any schedules or attach14 ments, that were not filed with the taxing authority

15 when the schedules under subsection (a)(1) were

16 filed with respect to the period that is 3 years before

17 the order for relief;

18 ‘‘(3) any amendments to any of the tax returns,

19 including schedules or attachments, described in

20 paragraph (1) or (2); and

21 ‘‘(4) in a case under chapter 13, a statement

22 subject to the penalties of perjury by the debtor of

23 the debtor’s income and expenditures in the pre24 ceding tax year and monthly income, that shows how

25 the amounts are calculated—
118

•S 625 RS

1 ‘‘(A) beginning on the date that is the

2 later of 90 days after the close of the debtor’s

3 tax year or 1 year after the order for relief, un4 less a plan has been confirmed; and

5 ‘‘(B) thereafter, on or before the date that

6 is 45 days before each anniversary of the con7 firmation of the plan until the case is closed.

8 ‘‘(f)(1) A statement referred to in subsection (e)(4)

9 shall disclose—

10 ‘‘(A) the amount and sources of income of the

11 debtor;

12 ‘‘(B) the identity of any person responsible with

13 the debtor for the support of any dependent of the

14 debtor; and

15 ‘‘(C) the identity of any person who contrib16 uted, and the amount contributed, to the household

17 in which the debtor resides.

18 ‘‘(2) The tax returns, amendments, and statement of

19 income and expenditures described in paragraph (1) shall

20 be available to the United States trustee, any bankruptcy

21 administrator, any trustee, and any party in interest for

22 inspection and copying, subject to the requirements of

23 subsection (f) (g).

24 ‘‘(g)(1) Not later than 30 days after the date of en25 actment of the Bankruptcy Reform Act of 1999, the Di-
119

•S 625 RS

1 rector of the Administrative Office of the United States

2 Courts shall establish procedures for safeguarding the con3 fidentiality of any tax information required to be provided

4 under this section.

5 ‘‘(2) The procedures under paragraph (1) shall in6 clude restrictions on creditor access to tax information

7 that is required to be provided under this section.

8 ‘‘(3) Not later than 1 year after the date of enact9 ment of the Bankruptcy Reform Act of 1999, the Director

10 of the Administrative Office of the United States Courts

11 shall prepare and submit to Congress a report that—

12 ‘‘(A) assesses the effectiveness of the proce13 dures under paragraph (1); and

14 ‘‘(B) if appropriate, includes proposed legisla15 tion to—

16 ‘‘(i) further protect the confidentiality of

17 tax information; and

18 ‘‘(ii) provide penalties for the improper use

19 by any person of the tax information required

20 to be provided under this section.

21 ‘‘(h) If requested by the United States trustee or a

22 trustee serving in the case, the debtor shall provide—

23 ‘‘(1) a document that establishes the identity of

24 the debtor, including a driver’s license, passport, or
120

•S 625 RS

1 other document that contains a photograph of the

2 debtor; and

3 ‘‘(2) such other personal identifying information

4 relating to the debtor that establishes the identity of

5 the debtor.’’.

6 SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHED7 ULES OR PROVIDE REQUIRED INFORMATION.

8 Section 521 of title 11, United States Code, as

9 amended by section 315 of this Act, is amended by adding

10 at the end the following:

11 ‘‘(i)(1) Notwithstanding section 707(a), and subject

12 to paragraph (2), if an individual debtor in a voluntary

13 case under chapter 7 or 13 fails to file all of the informa14 tion required under subsection (a)(1) within 45 days after

15 the filing of the petition commencing the case, the case

16 shall be automatically dismissed effective on the 46th day

17 after the filing of the petition.

18 ‘‘(2) With respect to a case described in paragraph

19 (1), any party in interest may request the court to enter

20 an order dismissing the case. If requested, the court shall

21 enter an order of dismissal not later than 5 days after

22 such request.

23 ‘‘(3) Upon request of the debtor made within 45 days

24 after the filing of the petition commencing a case de25 scribed in paragraph (1), the court may allow the debtor
121

•S 625 RS

1 an additional period of not to exceed 45 days to file the

2 information required under subsection (a)(1) if the court

3 finds justification for extending the period for the filing.’’.

4 SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON

5 CONFIRMATION OF THE PLAN.

6 (a) HEARING.—Section 1324 of title 11, United

7 States Code, is amended—

8 (1) by striking ‘‘After’’ and inserting the fol9 lowing:

10 ‘‘(a) Except as provided in subsection (b) and after’’;

11 and

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

13 ‘‘(b) The hearing on confirmation of the plan may

14 be held not later than 45 days after the meeting of credi15 tors under section 341(a).’’.

16 (b) FILING OF PLAN.—Section 1321 of title 11,

17 United States Code, is amended to read as follows:

18 ‘‘§ 1321. Filing of plan

19 ‘‘Not later than 90 days after the order for relief

20 under this chapter, the debtor shall file a plan, except that

21 the court may extend such period if the need for an exten22 sion is attributable to circumstances for which the debtor

23 should not justly be held accountable.’’.
122

•S 625 RS

1 SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION

2 IN CERTAIN CASES.

3 Section 1322(d) of title 11, United States Code, is

4 amended to read as follows:

5 ‘‘(d)(1) Except as provided in paragraph (2), the plan

6 may not provide for payments over a period that is longer

7 than 3 years.

8 ‘‘(2) The plan may provide for payments over a pe9 riod that is longer than 3 years if—

10 ‘‘(A) the plan is for a case that was converted

11 to a case under this chapter from a case under chap12 ter 7, or the plan is for a debtor who has been dis13 missed from chapter 7 by reason of section 707(b), in

14 which case the plan shall provide for payments over

15 a period of 5 years; or

16 ‘‘(B) the plan is for a case that is not described

17 in subparagraph (A), and the court, for cause, ap18 proves a period longer than 3 years, but not to ex19 ceed 5 years.’’.

20 SEC. 319. SENSE OF THE CONGRESS REGARDING EXPAN21 SION OF RULE 9011 OF THE FEDERAL RULES

22 OF BANKRUPTCY PROCEDURE.

23 It is the sense of Congress that Rule 9011 of the Fed24 eral Rules of Bankruptcy Procedure (11 U.S.C. App.)

25 should be modified to include a requirement that all docu26 ments (including schedules), signed and unsigned, sub-
123

•S 625 RS

1 mitted to the court or to a trustee by debtors who rep2 resent themselves and debtors who are represented by an

3 attorney be submitted only after the debtor or the debtor’s

4 attorney has made reasonable inquiry to verify that the

5 information contained in such documents is—

6 (1) well grounded in fact; and

7 (2) warranted by existing law or a good-faith

8 argument for the extension, modification, or reversal

9 of existing law.

10 SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL

11 CASES.

12 Section 362(e) of title 11, United States Code, is

13 amended—

14 (1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and

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

16 ‘‘(2) Notwithstanding paragraph (1), in the case of

17 an individual filing under chapter 7, 11, or 13, the stay

18 under subsection (a) shall terminate on the date that is

19 60 days after a request is made by a party in interest

20 under subsection (d), unless—

21 ‘‘(A) a final decision is rendered by the court

22 during the 60-day period beginning on the date of

23 the request; or

24 ‘‘(B) that 60-day period is extended—
124

•S 625 RS

1 ‘‘(i) by agreement of all parties in interest;

2 or

3 ‘‘(ii) by the court for such specific period

4 of time as the court finds is required for good

5 cause, as described in findings made by the

6 court.’’.

7 SEC. 321. TREATMENT OF CERTAIN EARNINGS OF AN INDI8 VIDUAL DEBTOR WHO FILES A VOLUNTARY

9 CASE UNDER CHAPTER 11.

10 Section 541(a)(6) of title 11, United States Code, is

11 amended by inserting ‘‘(other than an individual debtor

12 who, in accordance with section 301, files a petition to com13 mence a voluntary case under chapter 11)’’ after ‘‘indi14 vidual debtor’’.

15 TITLE IV—GENERAL AND SMALL

16 BUSINESS BANKRUPTCY PRO17 VISIONS

18 Subtitle A—General Business

19 Bankruptcy Provisions

20 SEC. 401. ROLLING STOCK EQUIPMENT.

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

22 States Code, is amended to read as follows:

23 ‘‘§ 1168. Rolling stock equipment

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

25 interest in or of a lessor or conditional vendor of equip-
125

•S 625 RS

1 ment described in paragraph (2) to take possession of such

2 equipment in compliance with an equipment security

3 agreement, lease, or conditional sale contract, and to en4 force any of its other rights or remedies under such secu5 rity agreement, lease, or conditional sale contract, to sell,

6 lease, or otherwise retain or dispose of such equipment,

7 is not limited or otherwise affected by any other provision

8 of this title or by any power of the court, except that the

9 right to take possession and enforce those other rights and

10 remedies shall be subject to section 362, if—

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

12 date of commencement of a case under this chapter,

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

14 perform all obligations of the debtor under such se15 curity agreement, lease, or conditional sale contract;

16 and

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

18 described in section 365(b)(2), under such security

19 agreement, lease, or conditional sale contract that—

20 ‘‘(i) occurs before the date of commence21 ment of the case and is an event of default

22 therewith is cured before the expiration of such

23 60-day period;

24 ‘‘(ii) occurs or becomes an event of default

25 after the date of commencement of the case and
126

•S 625 RS

1 before the expiration of such 60-day period is

2 cured before the later of—

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

4 date of the default or event of the default;

5 or

6 ‘‘(II) the expiration of such 60-day

7 period; and

8 ‘‘(iii) occurs on or after the expiration of

9 such 60-day period is cured in accordance with

10 the terms of such security agreement, lease, or

11 conditional sale contract, if cure is permitted

12 under that agreement, lease, or conditional sale

13 contract.

14 ‘‘(2) The equipment described in this paragraph—

15 ‘‘(A) is rolling stock equipment or accessories

16 used on rolling stock equipment, including super17 structures or racks, that is subject to a security in18 terest granted by, leased to, or conditionally sold to

19 a debtor; and

20 ‘‘(B) includes all records and documents relat21 ing to such equipment that are required, under the

22 terms of the security agreement, lease, or conditional

23 sale contract, to be surrendered or returned by the

24 debtor in connection with the surrender or return of

25 such equipment.
127

•S 625 RS

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

2 or conditional vendor acting in its own behalf or acting

3 as trustee or otherwise in behalf of another party.

4 ‘‘(b) The trustee and the secured party, lessor, or

5 conditional vendor whose right to take possession is pro6 tected under subsection (a) may agree, subject to the

7 court’s approval, to extend the 60-day period specified in

8 subsection (a)(1).

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

10 shall immediately surrender and return to a secured party,

11 lessor, or conditional vendor, described in subsection

12 (a)(1), equipment described in subsection (a)(2), if at any

13 time after the date of commencement of the case under

14 this chapter such secured party, lessor, or conditional ven15 dor is entitled under subsection (a)(1) to take possession

16 of such equipment and makes a written demand for such

17 possession of the trustee.

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

19 paragraph (1) to surrender and return equipment de20 scribed in subsection (a)(2), any lease of such equipment,

21 and any security agreement or conditional sale contract

22 relating to such equipment, if such security agreement or

23 conditional sale contract is an executory contract, shall be

24 deemed rejected.
128

•S 625 RS

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

2 on or before October 22, 1994, for purposes of this

3 section—

4 ‘‘(1) the term ‘lease’ includes any written agree5 ment with respect to which the lessor and the debt6 or, as lessee, have expressed in the agreement or in

7 a substantially contemporaneous writing that the

8 agreement is to be treated as a lease for Federal in9 come tax purposes; and

10 ‘‘(2) the term ‘security interest’ means a pur11 chase-money equipment security interest.

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

13 after October 22, 1994, for purposes of this section, the

14 term ‘rolling stock equipment’ includes rolling stock equip15 ment that is substantially rebuilt and accessories used on

16 such equipment.’’.

17 (b) AIRCRAFT EQUIPMENT AND VESSELS.—Section

18 1110 of title 11, United States Code, is amended to read

19 as follows:

20 ‘‘§ 1110. Aircraft equipment and vessels

21 ‘‘(a)(1) Except as provided in paragraph (2) and sub22 ject to subsection (b), the right of a secured party with

23 a security interest in equipment described in paragraph

24 (3), or of a lessor or conditional vendor of such equipment,

25 to take possession of such equipment in compliance with
129

•S 625 RS

1 a security agreement, lease, or conditional sale contract,

2 and to enforce any of its other rights or remedies, under

3 such security agreement, lease, or conditional sale con4 tract, to sell, lease, or otherwise retain or dispose of such

5 equipment, is not limited or otherwise affected by any

6 other provision of this title or by any power of the court.

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

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

9 be subject to section 362 if—

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

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

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

13 to perform all obligations of the debtor under such

14 security agreement, lease, or conditional sale con15 tract; and

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

17 specified in section 365(b)(2), under such security

18 agreement, lease, or conditional sale contract that

19 occurs—

20 ‘‘(i) before the date of the order is cured

21 before the expiration of such 60-day period;

22 ‘‘(ii) after the date of the order and before

23 the expiration of such 60-day period is cured

24 before the later of—
130

•S 625 RS

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

2 date of the default; or

3 ‘‘(II) the expiration of such 60-day

4 period; and

5 ‘‘(iii) on or after the expiration of such 60-

6 day period is cured in compliance with the

7 terms of such security agreement, lease, or con8 ditional sale contract, if a cure is permitted

9 under that agreement, lease, or contract.

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

11 ‘‘(A) is—

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

13 appliance, or spare part (as defined in section

14 40102 of title 49) that is subject to a security

15 interest granted by, leased to, or conditionally

16 sold to a debtor that, at the time such trans17 action is entered into, holds an air carrier oper18 ating certificate issued under chapter 447 of

19 title 49 for aircraft capable of carrying 10 or

20 more individuals or 6,000 pounds or more of

21 cargo; or

22 ‘‘(ii) a documented vessel (as defined in

23 section 30101(1) of title 46) that is subject to

24 a security interest granted by, leased to, or con25 ditionally sold to a debtor that is a water car-
131

•S 625 RS

1 rier that, at the time such transaction is en2 tered into, holds a certificate of public conven3 ience and necessity or permit issued by the De4 partment of Transportation; and

5 ‘‘(B) includes all records and documents relat6 ing to such equipment that are required, under the

7 terms of the security agreement, lease, or conditional

8 sale contract, to be surrendered or returned by the

9 debtor in connection with the surrender or return of

10 such equipment.

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

12 or conditional vendor acting in its own behalf or acting

13 as trustee or otherwise in behalf of another party.

14 ‘‘(b) The trustee and the secured party, lessor, or

15 conditional vendor whose right to take possession is pro16 tected under subsection (a) may agree, subject to the ap17 proval of the court, to extend the 60-day period specified

18 in subsection (a)(1).

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

20 shall immediately surrender and return to a secured party,

21 lessor, or conditional vendor, described in subsection

22 (a)(1), equipment described in subsection (a)(3), if at any

23 time after the date of the order for relief under this chap24 ter such secured party, lessor, or conditional vendor is en25 titled under subsection (a)(1) to take possession of such
132

•S 625 RS

1 equipment and makes a written demand for such posses2 sion to the trustee.

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

4 paragraph (1) to surrender and return equipment de5 scribed in subsection (a)(3), any lease of such equipment,

6 and any security agreement or conditional sale contract

7 relating to such equipment, if such security agreement or

8 conditional sale contract is an executory contract, shall be

9 deemed rejected.

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

11 on or before October 22, 1994, for purposes of this

12 section—

13 ‘‘(1) the term ‘lease’ includes any written agree14 ment with respect to which the lessor and the debt15 or, as lessee, have expressed in the agreement or in

16 a substantially contemporaneous writing that the

17 agreement is to be treated as a lease for Federal in18 come tax purposes; and

19 ‘‘(2) the term ‘security interest’ means a pur20 chase-money equipment security interest.’’.

21 SEC. 402. ADEQUATE PROTECTION FOR INVESTORS.

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

23 States Code, as amended by section 306(c) of this Act, is

24 amended by inserting after paragraph (48) the following:
133

•S 625 RS

1 ‘‘(48A) ‘securities self regulatory organization’

2 means either a securities association registered with

3 the Securities and Exchange Commission under sec4 tion 15A of the Securities Exchange Act of 1934 (15

5 U.S.C. 78o–3) or a national securities exchange reg6 istered with the Securities and Exchange Commis7 sion under section 6 of the Securities Exchange Act

8 of 1934 (15 U.S.C. 78f);’’.

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

10 United States Code, as amended by section 311 of this

11 Act, is amended—

12 (1) in paragraph (24), by striking ‘‘or’’ at the

13 end;

14 (2) in paragraph (25), by striking the period at

15 the end and inserting ‘‘; or’’; and

16 (3) by inserting after paragraph (25) the fol17 lowing:

18 ‘‘(26) under subsection (a), of—

19 ‘‘(A) the commencement or continuation of

20 an investigation or action by a securities self

21 regulatory organization to enforce such organi22 zation’s regulatory power;

23 ‘‘(B) the enforcement of an order or deci24 sion, other than for monetary sanctions, ob25 tained in an action by the securities self regu-
134

•S 625 RS

1 latory organization to enforce such organiza2 tion’s regulatory power; or

3 ‘‘(C) any act taken by the securities self

4 regulatory organization to delist, delete, or

5 refuse to permit quotation of any stock that

6 does not meet applicable regulatory require7 ments.’’.

8 SEC. 403. MEETINGS OF CREDITORS AND EQUITY SECURITY

9 HOLDERS.

10 Section 341 of title 11, United States Code, is

11 amended by adding at the end the following:

12 ‘‘(e) Notwithstanding subsections (a) and (b), the

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

14 and a hearing, for cause may order that the United States

15 trustee not convene a meeting of creditors or equity secu16 rity holders if the debtor has filed a plan as to which the

17 debtor solicited acceptances prior to the commencement

18 of the case.’’.

19 SEC. 404. PROTECTION OF REFINANCE OF SECURITY IN20 TEREST.

21 Subparagraphs (A), (B), and (C) of section 547(e)(2)

22 of title 11, United States Code, are each amended by strik23 ing ‘‘10’’ each place it appears and inserting ‘‘30’’.
135

•S 625 RS

1 SEC. 405. EXECUTORY CONTRACTS AND UNEXPIRED

2 LEASES.

3 Section 365(d)(4) of title 11, United States Code, is

4 amended to read as follows:

5 ‘‘(4)(A) Subject to subparagraph (B), in any case

6 under any chapter of this title, an unexpired lease of non7 residential real property under which the debtor is the les8 see shall be deemed rejected and the trustee shall imme9 diately surrender that nonresidential real property to the

10 lessor if the trustee does not assume or reject the unex11 pired lease by the earlier of—

12 ‘‘(i) the date that is 120 days after the date of

13 the order for relief; or

14 ‘‘(ii) the date of the entry of an order con15 firming a plan.

16 ‘‘(B) The court may extend the period determined

17 under subparagraph (A) only upon a motion of the les18 sor.’’.

19 SEC. 406. CREDITORS AND EQUITY SECURITY HOLDERS

20 COMMITTEES.

21 Section 1102(a)(2) of title 11, United States Code,

22 is amended by inserting before the first sentence the fol23 lowing: ‘‘On its own motion or on request of a party in

24 interest, and after notice and hearing, the court may order

25 a change in the membership of a committee appointed

26 under this subsection, if the court determines that the
136

•S 625 RS

1 change is necessary to ensure adequate representation of

2 creditors or equity security holders.’’.

3 SEC. 407. AMENDMENT TO SECTION 546 OF TITLE 11,

4 UNITED STATES CODE.

5 Section 546 of title 11, United States Code, is

6 amended—

7 (1) by redesignating the second subsection des8 ignated as subsection (g) (as added by section

9 222(a) of Public Law 103–394) as subsection (i);

10 and

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

12 ‘‘(j)(1) Notwithstanding section 545 (2) and (3), the

13 trustee may not avoid a warehouseman’s lien for storage,

14 transportation or other costs incidental to the storage and

15 handling of goods.

16 ‘‘(2) The prohibition under paragraph (1) shall be ap17 plied in a manner consistent with any applicable State

18 statute that is similar to section 7–209 of the Uniform

19 Commercial Code.’’.

20 SEC. 408. LIMITATION.

21 Section 546(c)(1)(B) of title 11, United States Code,

22 is amended by striking ‘‘20’’ and inserting ‘‘45’’.
137

•S 625 RS

1 SEC. 409. AMENDMENT TO SECTION 330(a) OF TITLE 11,

2 UNITED STATES CODE.

3 Section 330(a)(3) of title 11, United States Code, is

4 amended—

5 (1) by striking ‘‘(A) the; and inserting ‘‘(i)

6 the’’;

7 (2) by striking ‘‘(B)’’ and inserting ‘‘(ii)’’;

8 (3) by striking ‘‘(C)’’ and inserting ‘‘(iii)’’;

9 (4) by striking ‘‘(D)’’ and inserting ‘‘(iv)’’;

10 (5) by striking ‘‘(E)’’ and inserting ‘‘(v)’’;

11 (6) in subparagraph (A), by inserting ‘‘to an

12 examiner, trustee under chapter 11, or professional

13 person’’ after ‘‘awarded’’; and

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

15 ‘‘(B) In determining the amount of reasonable com16 pensation to be awarded a trustee, the court shall treat

17 such compensation as a commission based on the results

18 achieved.’’.

19 SEC. 410. POSTPETITION DISCLOSURE AND SOLICITATION.

20 Section 1125 of title 11, United States Code, is

21 amended by adding at the end the following:

22 ‘‘(g) Notwithstanding subsection (b), an acceptance

23 or rejection of the plan may be solicited from a holder

24 of a claim or interest if such solicitation complies with ap25 plicable nonbankruptcy law and if such holder was solic-
138

•S 625 RS

1 ited before the commencement of the case in a manner

2 complying with applicable nonbankruptcy law.’’.

3 SEC. 411. PREFERENCES.

4 Section 547(c) of title 11, United States Code, is

5 amended—

6 (1) by striking paragraph (2) and inserting the

7 following:

8 ‘‘(2) to the extent that such transfer was in

9 payment of a debt incurred by the debtor in the or10 dinary course of business or financial affairs of the

11 debtor and the transferee, and such transfer was—

12 ‘‘(A) made in the ordinary course of busi13 ness or financial affairs of the debtor and the

14 transferee; or

15 ‘‘(B) made according to ordinary business

16 terms;’’;

17 (2) in paragraph (7) by striking ‘‘or’’ at the

18 end;

19 (3) in paragraph (8) by striking the period at

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

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

22 ‘‘(9) if, in a case filed by a debtor whose debts

23 are not primarily consumer debts, the aggregate

24 value of all property that constitutes or is affected

25 by such transfer is less than $5,000.’’.
139

•S 625 RS

1 SEC. 412. VENUE OF CERTAIN PROCEEDINGS.

2 Section 1409(b) of title 28, United States Code, is

3 amended by inserting ‘‘, or a nonconsumer debt against

4 a noninsider of less than $10,000,’’ after ‘‘$5,000’’.

5 SEC. 413. PERIOD FOR FILING PLAN UNDER CHAPTER 11.

6 Section 1121(d) of title 11, United States Code, is

7 amended—

8 (1) by striking ‘‘On’’ and inserting ‘‘(1) Subject

9 to paragraph (1), on’’; and

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

11 ‘‘(2)(A) The 120-day period specified in paragraph

12 (1) may not be extended beyond a date that is 18 months

13 after the date of the order for relief under this chapter.

14 ‘‘(B) The 180-day period specified in paragraph (1)

15 may not be extended beyond a date that is 20 months after

16 the date of the order for relief under this chapter.’’.

17 SEC. 414. FEES ARISING FROM CERTAIN OWNERSHIP IN18 TERESTS.

19 Section 523(a)(16) of title 11, United States Code,

20 is amended—

21 (1) by striking ‘‘dwelling’’ the first place it ap22 pears;

23 (2) by striking ‘‘ownership or’’ and inserting

24 ‘‘ownership,’’;

25 (3) by striking ‘‘housing’’ the first place it ap26 pears; and
140

•S 625 RS

1 (4) by striking ‘‘but only’’ and all that follows

2 through ‘‘but nothing in this paragraph’’ and insert3 ing ‘‘or a lot in a homeowners association, for as

4 long as the debtor or the trustee has a legal, equi5 table, or possessory ownership interest in such unit,

6 such corporation, or such lot, and until such time as

7 the debtor or trustee has surrendered any legal, eq8 uitable or possessory interest in such unit, such cor9 poration, or such lot, but nothing in this para10 graph’’.

11 SEC. 415. CREDITOR REPRESENTATION AT FIRST MEETING

12 OF CREDITORS.

13 Section 341(c) of title 11, United States Code, is

14 amended by inserting after the first sentence the fol15 lowing: ‘‘Notwithstanding any local court rule, provision

16 of a State constitution, any other Federal or State law

17 that is not a bankruptcy law, or other requirement that

18 representation at the meeting of creditors under sub19 section (a) be by an attorney, a creditor holding a con20 sumer debt or any representative of the creditor (which

21 may include an entity or an employee of an entity and

22 may be a representative for more than 1 creditor) shall

23 be permitted to appear at and participate in the meeting

24 of creditors in a case under chapter 7 or 13, either alone

25 or in conjunction with an attorney for the creditor. Noth-
141

•S 625 RS

1 ing in this subsection shall be construed to require any

2 creditor to be represented by an attorney at any meeting

3 of creditors.’’.

4 SEC. 416. ELIMINATION OF CERTAIN FEES PAYABLE IN

5 CHAPTER 11 BANKRUPTCY CASES.

6 (a) AMENDMENTS.—Section 1930(a)(6) of title 28,

7 United States Code, is amended—

8 (1) in the first sentence by striking ‘‘until the

9 case is converted or dismissed, whichever occurs

10 first’’; and

11 (2) in the second sentence—

12 (A) by striking ‘‘The’’ and inserting ‘‘Until

13 the plan is confirmed or the case is converted

14 (whichever occurs first) the’’; and

15 (B) by striking ‘‘less than $300,000;’’ and

16 inserting ‘‘less than $300,000. Until the case is

17 converted, dismissed, or closed (whichever oc18 curs first and without regard to confirmation of

19 the plan) the fee shall be’’.

20 (b) DELAYED EFFECTIVE DATE.—The amendments

21 made by subsection (a) shall take effect on October 1,

22 1999.

23 SEC. 417. 416. DEFINITION OF DISINTERESTED PERSON.

24 Section 101(14) of title 11, United States Code, is

25 amended to read as follows:
142

•S 625 RS

1 ‘‘(14) ‘disinterested person’ means a person

2 that—

3 ‘‘(A) is not a creditor, an equity security

4 holder, or an insider;

5 ‘‘(B) is not and was not, within 2 years be6 fore the date of the filing of the petition, a di7 rector, officer, or employee of the debtor; and

8 ‘‘(C) does not have an interest materially

9 adverse to the interest of the estate or of any

10 class of creditors or equity security holders, by

11 reason of any direct or indirect relationship to,

12 connection with, or interest in, the debtor, or

13 for any other reason;’’.

14 SEC. 418. 417. FACTORS FOR COMPENSATION OF PROFES15 SIONAL PERSONS.

16 Section 330(a)(3)(A) of title 11, United States Code,

17 as amended by section 409 of this Act, is amended—

18 (1) in subparagraph (D) clause (i), by striking

19 ‘‘and’’ at the end;

20 (2) by redesignating subparagraph (E) clause

21 (v) as subparagraph (F) clause (vi); and

22 (3) by inserting after subparagraph (D) clause

23 (iv) the following:

24 ‘‘(E) (v) with respect to a professional person,

25 whether the person is board certified or otherwise
143

•S 625 RS

1 has demonstrated skill and experience in the bank2 ruptcy field;’’.

3 SEC. 419. 418. APPOINTMENT OF ELECTED TRUSTEE.

4 Section 1104(b) of title 11, United States Code, is

5 amended—

6 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and

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

8 ‘‘(2)(A) If an eligible, disinterested trustee is elected

9 at a meeting of creditors under paragraph (1), the United

10 States trustee shall file a report certifying that election.

11 ‘‘(B) Upon the filing of a report under subparagraph

12 (A)—

13 ‘‘(i) the trustee elected under paragraph (1)

14 shall be considered to have been selected and ap15 pointed for purposes of this section; and

16 ‘‘(ii) the service of any trustee appointed under

17 subsection (d) shall terminate.

18 ‘‘(C) In the case of any dispute arising out of an elec19 tion described in subparagraph (A), the court shall resolve

20 the dispute.’’.

21 SEC. 419. UTILITY SERVICE.

22 Section 366 of title 11, United States Code, is

23 amended—

24 (1) in subsection (a), by striking ‘‘subsection (b)’’

25 and inserting ‘‘subsections (b) and (c)’’; and
144

•S 625 RS

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

2 ‘‘(c)(1)(A) For purposes of this subsection, the term

3 ‘assurance of payment’ means—

4 ‘‘(i) a cash deposit;

5 ‘‘(ii) a letter of credit;

6 ‘‘(iii) a certificate of deposit;

7 ‘‘(iv) a surety bond;

8 ‘‘(v) a prepayment of utility consumption; or

9 ‘‘(vi) another form of security that is mutually

10 agreed on between the utility and the debtor or the

11 trustee.

12 ‘‘(B) For purposes of this subsection an administrative

13 expense priority shall not constitute an assurance of pay14 ment.

15 ‘‘(2) Subject to paragraphs (3) through (5), with re16 spect to a case filed under chapter 11, a utility referred

17 to in subsection (a) may alter, refuse, or discontinue utility

18 service, if during the 20-day period beginning on the date

19 of filing of the petition, the utility does not receive from

20 the debtor or the trustee adequate assurance of payment for

21 utility service that is satisfactory to the utility.

22 ‘‘(3)(A) On request of a party in interest and after

23 notice and a hearing, the court may order modification of

24 the amount of an assurance of payment under paragraph

25 (2).
145

•S 625 RS

1 ‘‘(B) In making a determination under this paragraph

2 whether an assurance of payment is adequate, the court

3 may not consider—

4 ‘‘(i) the absence of security before the date of fil5 ing of the petition;

6 ‘‘(ii) the payment by the debtor of charges for

7 utility service in a timely manner before the date of

8 filing of the petition; or

9 ‘‘(iii) the availability of an administrative ex10 pense priority.

11 ‘‘(4) Notwithstanding any other provision of law, with

12 respect to a case subject to this subsection, a utility may

13 recover or set off against a security deposit provided to the

14 utility by the debtor before the date of filing of the petition

15 without notice or order of the court.’’.

16 Subtitle B—Small Business

17 Bankruptcy Provisions

18 SEC. 421. FLEXIBLE RULES FOR DISCLOSURE STATEMENT

19 AND PLAN.

20 Section 1125 of title 11, United States Code, is

21 amended by striking subsection (f) and inserting the fol22 lowing:

23 ‘‘(f) Notwithstanding subsection (b), in a small busi24 ness case—
146

•S 625 RS

1 ‘‘(1) in determining whether a disclosure state2 ment provides adequate information, the court shall

3 consider the complexity of the case, the benefit of

4 additional information to creditors and other parties

5 in interest, and the cost of providing additional in6 formation;

7 ‘‘(2) the court may determine that the plan

8 itself provides adequate information and that a sepa9 rate disclosure statement is not necessary;

10 ‘‘(3) the court may approve a disclosure state11 ment submitted on standard forms approved by the

12 court or adopted under section 2075 of title 28; and

13 ‘‘(4)(A) the court may conditionally approve a

14 disclosure statement subject to final approval after

15 notice and a hearing;

16 ‘‘(B) acceptances and rejections of a plan may

17 be solicited based on a conditionally approved disclo18 sure statement if the debtor provides adequate infor19 mation to each holder of a claim or interest that is

20 solicited, but a conditionally approved disclosure

21 statement shall be mailed not later than 20 days be22 fore the date of the hearing on confirmation of the

23 plan; and
147

•S 625 RS

1 ‘‘(C) the hearing on the disclosure statement

2 may be combined with the hearing on confirmation

3 of a plan.’’.

4 SEC. 422. DEFINITIONS; EFFECT OF DISCHARGE.

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

6 States Code, as amended by section 402 of this Act, is

7 amended by striking paragraph (51C) and inserting the

8 following:

9 ‘‘(51C) ‘small business case’ means a case filed

10 under chapter 11 of this title in which the debtor is

11 a small business debtor;

12 ‘‘(51D) ‘small business debtor’—

13 ‘‘(A) subject to subparagraph (B), means a

14 person (including any affiliate of such person

15 that is also a debtor under this title) that has

16 aggregate noncontingent, liquidated secured

17 and unsecured debts as of the date of the peti18 tion or the order for relief in an amount not

19 more than $4,000,000 (excluding debts owed to

20 1 or more affiliates or insiders) for a case in

21 which the United States trustee has appointed

22 under section 1102(a)(1) a committee of unse23 cured creditors that the court has determined is

24 sufficiently active and representative to provide

25 effective oversight of the debtor; and
148

•S 625 RS

1 ‘‘(B) does not include any member of a

2 group of affiliated debtors that has aggregate

3 noncontingent liquidated secured and unsecured

4 debts in an amount greater than $4,000,000

5 (excluding debt owed to 1 or more affiliates or

6 insiders);’’.

7 (b) EFFECT OF DISCHARGE.—Section 524 of title 11,

8 United States Code, as amended by section 204 of this

9 Act, is amended by adding at the end the following:

10 ‘‘(j)(1) An individual who is injured by the willful fail11 ure of a creditor to substantially comply with the require12 ments specified in subsections (c) and (d), or by any will13 ful violation of the injunction operating under subsection

14 (a)(2), shall be entitled to recover—

15 ‘‘(A) the greater of—

16 ‘‘(i) the amount of actual damages; or

17 ‘‘(ii) $1,000; and

18 ‘‘(B) costs and attorneys’ fees.

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

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

21 (c) (b) CONFORMING AMENDMENT.—Section

22 1102(a)(3) of title 11, United States Code, is amended

23 by inserting ‘‘debtor’’ after ‘‘small business’’.
149

•S 625 RS

1 SEC. 423. STANDARD FORM DISCLOSURE STATEMENT AND

2 PLAN.

3 Within a reasonable period of time after the date of

4 the enactment of this Act, the Advisory Committee on

5 Bankruptcy Rules of the Judicial Conference of the

6 United States shall propose for adoption standard form

7 disclosure statements and plans of reorganization for

8 small business debtors (as defined in section 101 of title

9 11, United States Code, as amended by this Act), designed

10 to achieve a practical balance between—

11 (1) the reasonable needs of the courts, the

12 United States trustee, creditors, and other parties in

13 interest for reasonably complete information; and

14 (2) economy and simplicity for debtors.

15 SEC. 424. UNIFORM NATIONAL REPORTING REQUIRE16 MENTS.

17 (a) REPORTING REQUIRED.—

18 (1) IN GENERAL.—Chapter 3 of title 11, United

19 States Code, is amended by inserting after section

20 307 the following:

21 ‘‘§ 308. Debtor reporting requirements

22 ‘‘(1) For purposes of this section, the term ‘profit23 ability’ means, with respect to a debtor, the amount of

24 money that the debtor has earned or lost during current

25 and recent fiscal periods.
150

•S 625 RS

1 ‘‘(2) A small business debtor shall file periodic finan2 cial and other reports containing information including—

3 ‘‘(A) the debtor’s profitability;

4 ‘‘(B) reasonable approximations of the debtor’s

5 projected cash receipts and cash disbursements over

6 a reasonable period;

7 ‘‘(C) comparisons of actual cash receipts and

8 disbursements with projections in prior reports;

9 ‘‘(D)(i) whether the debtor is—

10 ‘‘(I) in compliance in all material respects

11 with postpetition requirements imposed by this

12 title and the Federal Rules of Bankruptcy Pro13 cedure; and

14 ‘‘(II) timely filing tax returns and paying

15 taxes and other administrative claims when due;

16 and

17 ‘‘(ii) if the debtor is not in compliance with the

18 requirements referred to in clause (i)(I) or filing tax

19 returns and making the payments referred to in

20 clause (i)(II), what the failures are and how, at what

21 cost, and when the debtor intends to remedy such

22 failures; and

23 ‘‘(iii) such other matters as are in the best in24 terests of the debtor and creditors, and in the public
151

•S 625 RS

1 interest in fair and efficient procedures under chap2 ter 11 of this title.’’.

3 (2) CLERICAL AMENDMENT.—The table of sec4 tions for chapter 3 of title 11, United States Code,

5 is amended by inserting after the item relating to

6 section 307 the following:

‘‘308. Debtor reporting requirements.’’.

7 (b) EFFECTIVE DATE.—The amendments made by

8 subsection (a) shall take effect 60 days after the date on

9 which rules are prescribed under section 2075 of title 28,

10 United States Code, to establish forms to be used to com11 ply with section 308 of title 11, United States Code, as

12 added by subsection (a).

13 SEC. 425. UNIFORM REPORTING RULES AND FORMS FOR

14 SMALL BUSINESS CASES.

15 (a) PROPOSAL OF RULES AND FORMS.—The Advi16 sory Committee on Bankruptcy Rules of the Judicial Con17 ference of the United States shall propose for adoption

18 amended Federal Rules of Bankruptcy Procedure and Of19 ficial Bankruptcy Forms to be used by small business

20 debtors to file periodic financial and other reports con21 taining information, including information relating to—

22 (1) the debtor’s profitability;

23 (2) the debtor’s cash receipts and disburse24 ments; and
152

•S 625 RS

1 (3) whether the debtor is timely filing tax re2 turns and paying taxes and other administrative

3 claims when due.

4 (b) PURPOSE.—The rules and forms proposed under

5 subsection (a) shall be designed to achieve a practical bal6 ance among—

7 (1) the reasonable needs of the bankruptcy

8 court, the United States trustee, creditors, and other

9 parties in interest for reasonably complete informa10 tion;

11 (2) the small business debtor’s interest that re12 quired reports be easy and inexpensive to complete;

13 and

14 (3) the interest of all parties that the required

15 reports help the small business debtor to understand

16 the small business debtor’s financial condition and

17 plan the small business debtor’s future.

18 SEC. 426. DUTIES IN SMALL BUSINESS CASES.

19 (a) DUTIES IN CHAPTER 11 CASES.—Title 11,

20 United States Code, is amended by inserting after section

21 1114 the following:
153

•S 625 RS

1 ‘‘§ 1115. Duties of trustee or debtor in possession in

2 small business cases

3 ‘‘In a small business case, a trustee or the debtor in

4 possession, in addition to the duties provided in this title

5 and as otherwise required by law, shall—

6 ‘‘(1) append to the voluntary petition or, in an

7 involuntary case, file within 3 days after the date of

8 the order for relief—

9 ‘‘(A) its most recent balance sheet, state10 ment of operations, cash-flow statement, Fed11 eral income tax return; or

12 ‘‘(B) a statement made under penalty of

13 perjury that no balance sheet, statement of op14 erations, or cash-flow statement has been pre15 pared and no Federal tax return has been filed;

16 ‘‘(2) attend, through its senior management

17 personnel and counsel, meetings scheduled by the

18 court or the United States trustee, including initial

19 debtor interviews, scheduling conferences, and meet20 ings of creditors convened under section 341 unless

21 the court waives that requirement after notice and

22 hearing, upon a finding of extraordinary and com23 pelling circumstances;

24 ‘‘(3) timely file all schedules and statements of

25 financial affairs, unless the court, after notice and a

26 hearing, grants an extension, which shall not extend
154

•S 625 RS

1 such time period to a date later than 30 days after

2 the date of the order for relief, absent extraordinary

3 and compelling circumstances;

4 ‘‘(4) file all postpetition financial and other re5 ports required by the Federal Rules of Bankruptcy

6 Procedure or by local rule of the district court;

7 ‘‘(5) subject to section 363(c)(2), maintain in8 surance customary and appropriate to the industry;

9 ‘‘(6)(A) timely file tax returns;

10 ‘‘(B) subject to section 363(c)(2), timely pay all

11 administrative expense tax claims, except those

12 being contested by appropriate proceedings being

13 diligently prosecuted; and

14 ‘‘(C) subject to section 363(c)(2), establish 1 or

15 more separate deposit accounts not later than 10

16 business days after the date of order for relief (or

17 as soon thereafter as possible if all banks contacted

18 decline the business) and deposit therein, not later

19 than 1 business day after receipt thereof, all taxes

20 payable for periods beginning after the date the case

21 is commenced that are collected or withheld by the

22 debtor for governmental units, unless the court

23 waives that requirement after notice and hearing,

24 upon a finding of extraordinary and compelling cir25 cumstances; and
155

•S 625 RS

1 ‘‘(7) allow the United States trustee, or a des2 ignated representative of the United States trustee,

3 to inspect the debtor’s business premises, books, and

4 records at reasonable times, after reasonable prior

5 written notice, unless notice is waived by the debt6 or.’’.

7 (b) TECHNICAL AMENDMENT.—The table of sections

8 for chapter 11, United States Code, is amended by insert9 ing after the item relating to section 1114 the following:

‘‘1115. Duties of trustee or debtor in possession in small business cases.’’.

10 SEC. 427. PLAN FILING AND CONFIRMATION DEADLINES.

11 Section 1121 of title 11, United States Code, is

12 amended by striking subsection (e) and inserting the fol13 lowing:

14 ‘‘(e) In a small business case—

15 ‘‘(1) only the debtor may file a plan until after

16 90 days after the date of the order for relief, unless

17 that period is —

18 ‘‘(A) shortened on request of a party in in19 terest made during the 90-day period;

20 ‘‘(B) extended as provided by this sub21 section, after notice and hearing; or

22 ‘‘(C) the court, for cause, orders otherwise;

23 ‘‘(2) the plan, and any necessary disclosure

24 statement, shall be filed not later than 90 days after

25 the date of the order for relief; and
156

•S 625 RS

1 ‘‘(3) the time periods specified in paragraphs

2 (1) and (2), and the time fixed in section 1129(e),

3 within which the plan shall be confirmed, may be ex4 tended only if—

5 ‘‘(A) the debtor, after providing notice to

6 parties in interest (including the United States

7 trustee), demonstrates by a preponderance of

8 the evidence that it is more likely than not that

9 the court will confirm a plan within a reason10 able period of time;

11 ‘‘(B) a new deadline is imposed at the time

12 the extension is granted; and

13 ‘‘(C) the order extending time is signed be14 fore the existing deadline has expired.’’.

15 SEC. 428. PLAN CONFIRMATION DEADLINE.

16 Section 1129 of title 11, United States Code, is

17 amended by adding at the end the following:

18 ‘‘(e) In a small business case, the plan shall be con19 firmed not later than 150 days after the date of the order

20 for relief, unless such 150-day period is extended as pro21 vided in section 1121(e)(3).’’.

22 SEC. 429. PROHIBITION AGAINST EXTENSION OF TIME.

23 Section 105(d) of title 11, United States Code, is

24 amended—
157

•S 625 RS

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

2 end;

3 (2) in paragraph (2)(B)(vi), by striking the pe4 riod at the end and inserting ‘‘; and’’; and

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

6 ‘‘(3) in a small business case, not extend the

7 time periods specified in sections 1121(e) and

8 1129(e), except as provided in section 1121(e)(3).’’.

9 SEC. 430. DUTIES OF THE UNITED STATES TRUSTEE.

10 Section 586(a) of title 28, United States Code, is

11 amended—

12 (1) in paragraph (3)—

13 (A) in subparagraph (G), by striking

14 ‘‘and’’ at the end;

15 (B) by redesignating subparagraph (H) as

16 subparagraph (I); and

17 (C) by inserting after subparagraph (G)

18 the following:

19 ‘‘(H) in small business cases (as defined in

20 section 101 of title 11), performing the addi21 tional duties specified in title 11 pertaining to

22 such cases;’’;

23 (2) in paragraph (5), by striking ‘‘and’’ at the

24 end;
158

•S 625 RS

1 (3) in paragraph (6), by striking the period at

2 the end and inserting ‘‘; and’’; and

3 (4) by inserting after paragraph (6) the fol4 lowing:

5 ‘‘(7) in each of such small business cases—

6 ‘‘(A) conduct an initial debtor interview as

7 soon as practicable after the entry of order for

8 relief but before the first meeting scheduled

9 under section 341(a) of title 11, at which time

10 the United States trustee shall—

11 ‘‘(i) begin to investigate the debtor’s

12 viability;

13 ‘‘(ii) inquire about the debtor’s busi14 ness plan;

15 ‘‘(iii) explain the debtor’s obligations

16 to file monthly operating reports and other

17 required reports;

18 ‘‘(iv) attempt to develop an agreed

19 scheduling order; and

20 ‘‘(v) inform the debtor of other obliga21 tions;

22 ‘‘(B) if determined to be appropriate and

23 advisable, visit the appropriate business prem24 ises of the debtor and ascertain the state of the
159

•S 625 RS

1 debtor’s books and records and verify that the

2 debtor has filed its tax returns; and

3 ‘‘(C) review and monitor diligently the

4 debtor’s activities, to identify as promptly as

5 possible whether the debtor will be unable to

6 confirm a plan; and

7 ‘‘(8) in any case in which the United States

8 trustee finds material grounds for any relief under

9 section 1112 of title 11, the United States trustee

10 shall apply promptly after making that finding to

11 the court for relief.’’.

12 SEC. 431. SCHEDULING CONFERENCES.

13 Section 105(d) of title 11, United States Code, as

14 amended by section 429 of this Act, is amended—

15 (1) in the matter preceding paragraph (1), by

16 striking ‘‘, may’’;

17 (2) by striking paragraph (1) and inserting the

18 following:

19 ‘‘(1) shall hold such status conferences as are

20 necessary to further the expeditious and economical

21 resolution of the case; and’’; and

22 (3) in paragraph (2), by striking ‘‘unless incon23 sistent with another provision of this title or with

24 applicable Federal Rules of Bankruptcy Procedure,’’

25 and inserting ‘‘may’’.
160

•S 625 RS

1 SEC. 432. SERIAL FILER PROVISIONS.

2 Section 362 of title 11, United States Code, is

3 amended—

4 (1) in subsection (j), as redesignated by section

5 305(1) of this Act—

6 (A) by striking ‘‘An’’ and inserting ‘‘(1)

7 Except as provided in paragraph (2), an’’; and

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

9 ‘‘(2) If such violation is based on an action taken by

10 an entity in the good faith belief that subsection (h) ap11 plies to the debtor, the recovery under paragraph (1)

12 against such entity shall be limited to actual damages.’’;

13 and

14 (2) by inserting after subsection (j), as added

15 by section 419 of this Act, the following:

16 ‘‘(k)(1) Except as provided in paragraph (2), the fil17 ing of a petition under chapter 11 of this title operates

18 as a stay of the acts described in subsection (a) only in

19 an involuntary case involving no collusion by the debtor

20 with creditors and in which the debtor—

21 ‘‘(A) is a debtor in a small business case pend22 ing at the time the petition is filed;

23 ‘‘(B) was a debtor in a small business case that

24 was dismissed for any reason by an order that be25 came final in the 2-year period ending on the date
161

•S 625 RS

1 of the order for relief entered with respect to the pe2 tition;

3 ‘‘(C) was a debtor in a small business case in

4 which a plan was confirmed in the 2-year period

5 ending on the date of the order for relief entered

6 with respect to the petition; or

7 ‘‘(D) is an entity that has succeeded to sub8 stantially all of the assets or business of a small

9 business debtor described in subparagraph (A), (B),

10 or (C).

11 ‘‘(2) Paragraph (1) does not apply to the filing of

12 a petition if the debtor proves by a preponderance of the

13 evidence that—

14 ‘‘(A) the filing of that petition resulted from

15 circumstances beyond the control of the debtor not

16 foreseeable at the time the case then pending was

17 filed; and

18 ‘‘(B) it is more likely than not that the court

19 will confirm a feasible plan, but not a liquidating

20 plan, within a reasonable period of time.’’.

21 SEC. 433. EXPANDED GROUNDS FOR DISMISSAL OR CON22 VERSION AND APPOINTMENT OF TRUSTEE.

23 (a) EXPANDED GROUNDS FOR DISMISSAL OR CON24 VERSION.—Section 1112 of title 11, United States Code,
162

•S 625 RS

1 is amended by striking subsection (b) and inserting the

2 following:

3 ‘‘(b)(1) Except as provided in paragraph (2), in sub4 section (c), and section 1104(a)(3), on request of a party

5 in interest, and after notice and a hearing, the court shall

6 convert a case under this chapter to a case under chapter

7 7 or dismiss a case under this chapter, whichever is in

8 the best interest of creditors and the estate, if the movant

9 establishes cause.

10 ‘‘(2) The relief provided in paragraph (1) shall not

11 be granted if the debtor or another party in interest ob12 jects and establishes by a preponderance of the evidence

13 that—

14 ‘‘(A) it is more likely than not that a plan will

15 be confirmed within—

16 ‘‘(i) a period of time fixed under this title

17 or by order of the court entered under section

18 1121(e)(3); or

19 ‘‘(ii) a reasonable period of time if no pe20 riod of time has been fixed; and

21 ‘‘(B) if the reason is an act or omission of the

22 debtor that—

23 ‘‘(i) there exists a reasonable justification

24 for the act or omission; and
163

•S 625 RS

1 ‘‘(ii)(I) the act or omission will be cured

2 within a reasonable period of time fixed by the

3 court, but not to exceed 30 days after the court

4 decides the motion, unless the movant expressly

5 consents to a continuance for a specific period

6 of time; or

7 ‘‘(II) compelling circumstances beyond the

8 control of the debtor justify an extension.

9 ‘‘(3) The court shall commence the hearing on any

10 motion under this subsection not later than 30 days after

11 filing of the motion, and shall decide the motion within

12 15 days after commencement of the hearing, unless the

13 movant expressly consents to a continuance for a specific

14 period of time or compelling circumstances prevent the

15 court from meeting the time limits established by this

16 paragraph.

17 ‘‘(4) For purposes of this subsection, cause

18 includes—

19 ‘‘(A) substantial or continuing loss to or dimi20 nution of the estate;

21 ‘‘(B) gross mismanagement of the estate;

22 ‘‘(C) failure to maintain appropriate insurance;

23 ‘‘(D) unauthorized use of cash collateral harm24 ful to 1 or more creditors;
164

•S 625 RS

1 ‘‘(E) failure to comply with an order of the

2 court;

3 ‘‘(F) failure timely to satisfy any filing or re4 porting requirement established by this title or by

5 any rule applicable to a case under this chapter;

6 ‘‘(G) failure to attend the meeting of creditors

7 convened under section 341(a) or an examination or8 dered under Rule 2004 of the Federal Rules of

9 Bankruptcy Procedure;

10 ‘‘(H) failure timely to provide information or

11 attend meetings reasonably requested by the United

12 States trustee;

13 ‘‘(I) failure timely to pay taxes due after the

14 date of the order for relief or to file tax returns due

15 after the order for relief;

16 ‘‘(J) failure to file a disclosure statement, or to

17 file or confirm a plan, within the time fixed by this

18 title or by order of the court;

19 ‘‘(K) failure to pay any fees or charges required

20 under chapter 123 of title 28;

21 ‘‘(L) revocation of an order of confirmation

22 under section 1144;

23 ‘‘(M) inability to effectuate substantial con24 summation of a confirmed plan;
165

•S 625 RS

1 ‘‘(N) material default by the debtor with re2 spect to a confirmed plan; and

3 ‘‘(O) termination of a plan by reason of the oc4 currence of a condition specified in the plan.

5 ‘‘(5) The court shall commence the hearing on any

6 motion under this subsection not later than 30 days after

7 filing of the motion, and shall decide the motion within

8 15 days after commencement of the hearing, unless the

9 movant expressly consents to a continuance for a specific

10 period of time or compelling circumstances prevent the

11 court from meeting the time limits established by this

12 paragraph.’’.

13 (b) ADDITIONAL GROUNDS FOR APPOINTMENT OF

14 TRUSTEE.—Section 1104(a) of title 11, United States

15 Code, is amended—

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

17 end;

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

19 the end and inserting ‘‘; or’’; and

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

21 ‘‘(3) if grounds exist to convert or dismiss the

22 case under section 1112, but the court determines

23 that the appointment of a trustee is in the best in24 terests of creditors and the estate.’’.
166

•S 625 RS

1 SEC. 434. STUDY OF OPERATION OF TITLE 11, UNITED

2 STATES CODE, WITH RESPECT TO SMALL

3 BUSINESSES.

4 Not later than 2 years after the date of the enact5 ment of this Act, the Administrator of the Small Business

6 Administration, in consultation with the Attorney General

7 of the United States, the Director of the Administrative

8 Office of United States Trustees, and the Director of the

9 Administrative Office of the United States Courts, shall—

10 (1) conduct a study to determine—

11 (A) the internal and external factors that

12 cause small businesses, especially sole propri13 etorships, to become debtors in cases under title

14 11, United States Code, and that cause certain

15 small businesses to successfully complete cases

16 under chapter 11 of such title; and

17 (B) how Federal laws relating to bank18 ruptcy may be made more effective and efficient

19 in assisting small businesses to remain viable;

20 and

21 (2) submit to the President pro tempore of the

22 Senate and the Speaker of the House of Representa23 tives a report summarizing that study.

24 SEC. 435. PAYMENT OF INTEREST.

25 Section 362(d)(3) of title 11, United States Code, is

26 amended—
167

•S 625 RS

1 (1) by inserting ‘‘or 30 days after the court de2 termines that the debtor is subject to this para3 graph, whichever is later’’ after ‘‘90-day period)’’;

4 and

5 (2) by striking subparagraph (B) and inserting

6 the following:

7 ‘‘(B) the debtor has commenced monthly

8 payments that—

9 ‘‘(i) may, in the debtor’s sole discre10 tion, notwithstanding section 363(c)(2), be

11 made from rents or other income generated

12 before or after the commencement of the

13 case by or from the property to each cred14 itor whose claim is secured by such real es15 tate (other than a claim secured by a judg16 ment lien or by an unmatured statutory

17 lien); and

18 ‘‘(ii) are in an amount equal to inter19 est at the then applicable nondefault con20 tract rate of interest on the value of the

21 creditor’s interest in the real estate; or’’.
168

•S 625 RS

1 TITLE V—MUNICIPAL

2 BANKRUPTCY PROVISIONS

3 SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETI4 TION.

5 (a) TECHNICAL AMENDMENT RELATING TO MUNICI6 PALITIES.—Section 921(d) of title 11, United States

7 Code, is amended by inserting ‘‘, notwithstanding section

8 301(b)’’ before the period at the end.

9 (b) CONFORMING AMENDMENT.—Section 301 of title

10 11, United States Code, is amended—

11 (1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’;

12 and

13 (2) by striking the last sentence; and inserting

14 the following:

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

16 ‘‘(b) The commencement of a voluntary case under

17 a chapter of this title constitutes an order for relief under

18 such chapter.’’.

19 SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAP20 TER 9.

21 Section 901 901(a) of title 11, United States Code,

22 is amended—

23 (1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and

24 (2) by inserting ‘‘559, 560,’’ after ‘‘557,’’.
169

•S 625 RS

1 TITLE VI—IMPROVED BANK2 RUPTCY STATISTICS AND

3 DATA

4 SEC. 601. AUDIT PROCEDURES.

5 (a) AMENDMENTS.—Section 586 of title 28, United

6 States Code, is amended—

7 (1) in subsection (a), by striking paragraph (6)

8 and inserting the following:

9 ‘‘(6) make such reports as the Attorney General

10 directs, including the results of audits performed

11 under subsection (f); and’’; and

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

13 ‘‘(f)(1)(A) The Attorney General shall establish pro14 cedures to determine the accuracy, veracity, and complete15 ness of petitions, schedules, and other information which

16 the debtor is required to provide under sections 521 and

17 1322 of title 11, and, if applicable, section 111 of title

18 11, in individual cases filed under chapter 7 or 13 of such

19 title.

20 ‘‘(B) Those procedures shall—

21 ‘‘(i) establish a method of selecting appropriate

22 qualified persons to contract to perform those au23 dits;

24 ‘‘(ii) establish a method of randomly selecting

25 cases to be audited, except that not less than 1 out
170

•S 625 RS

1 of every 250 cases in each Federal judicial district

2 shall be selected for audit;

3 ‘‘(iii) require audits for schedules of income and

4 expenses which reflect greater than average

5 variances from the statistical norm of the district in

6 which the schedules were filed if those variances

7 occur by reason of higher income or higher expenses

8 than the statistical norm of the disctrict district in

9 which the schedules were filed; and

10 ‘‘(iv) include procedures for providing, not less

11 frequently than annually, public information con12 cerning the aggregate results of the audits referred

13 to in this subparagraph, including the percentage of

14 cases, by district, in which a material misstatement

15 of income or expenditures is reported.

16 ‘‘(2) The United States trustee for each district may

17 contract with auditors to perform audits in cases des18 ignated by the United States trustee according to the pro19 cedures established under paragraph (1).

20 ‘‘(3)(A) The report of each audit conducted under

21 this subsection shall be filed with the court and trans22 mitted to the United States trustee. Each report shall

23 clearly and conspicuously specify any material

24 misstatement of income or expenditures or of assets iden25 tified by the person performing the audit. In any case
171

•S 625 RS

1 where a material misstatement of income or expenditures

2 or of assets has been reported, the clerk of the bankruptcy

3 court shall give notice of the misstatement to the creditors

4 in the case.

5 ‘‘(B) If a material misstatement of income or expend6 itures or of assets is reported, the United States trustee

7 shall—

8 ‘‘(i) report the material misstatement, if appro9 priate, to the United States Attorney under section

10 3057 of title 18; and

11 ‘‘(ii) if advisable, take appropriate action, in12 cluding commencing an adversary proceeding to re13 voke the debtor’s discharge under section 727(d) of

14 title 11.’’.

15 (b) AMENDMENTS TO SECTION 521 OF TITLE 11,

16 UNITED STATES CODE.—Paragraphs (3) and (4) of sec17 tion 521(a) of title 11, United States Code, as amended

18 by section 315 of this Act, are each amended by inserting

19 ‘‘or an auditor appointed under section 586 of title 28’’

20 after ‘‘serving in the case’’ each place that term appears.

21 (c) AMENDMENTS TO SECTION 727 OF TITLE 11,

22 UNITED STATES CODE.—Section 727(d) of title 11,

23 United States Code, is amended—

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

25 end;
172

•S 625 RS

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

2 the end and inserting ‘‘; or’’; and

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

4 ‘‘(4) the debtor has failed to explain

5 satisfactorily—

6 ‘‘(A) a material misstatement in an audit

7 performed under section 586(f) of title 28; or

8 ‘‘(B) a failure to make available for inspec9 tion all necessary accounts, papers, documents,

10 financial records, files, and any other papers,

11 things, or property belonging to the debtor that

12 are requested for an audit conducted under sec13 tion 586(f).’’.

14 (d) EFFECTIVE DATE.—The amendments made by

15 this section shall take effect 18 months after the date of

16 enactment of this Act.

17 SEC. 602. IMPROVED BANKRUPTCY STATISTICS.

18 (a) AMENDMENT.—Chapter 6 of title 28, United

19 States Code, is amended by adding at the end the fol20 lowing:

21 ‘‘§ 159. Bankruptcy statistics

22 ‘‘(a) The clerk of each district court shall compile sta23 tistics regarding individual debtors with primarily con24 sumer debts seeking relief under chapters 7, 11, and 13

25 of title 11. Those statistics shall be in a form prescribed
173

•S 625 RS

1 by the Director of the Administrative Office of the United

2 States Courts (referred to in this section as the ‘Office’).

3 ‘‘(b) The Director shall—

4 ‘‘(1) compile the statistics referred to in sub5 section (a);

6 ‘‘(2) make the statistics available to the public;

7 and

8 ‘‘(3) not later than October 31, 1999, and an9 nually thereafter, prepare, and submit to Congress a

10 report concerning the information collected under

11 subsection (a) that contains an analysis of the infor12 mation.

13 ‘‘(c) The compilation required under subsection (b)

14 shall—

15 ‘‘(1) be itemized, by chapter, with respect to

16 title 11;

17 ‘‘(2) be presented in the aggregate and for each

18 district; and

19 ‘‘(3) include information concerning—

20 ‘‘(A) the total assets and total liabilities of

21 the debtors described in subsection (a), and in

22 each category of assets and liabilities, as re23 ported in the schedules prescribed under section

24 2075 and filed by those debtors;
174

•S 625 RS

1 ‘‘(B) the total current monthly income,

2 projected monthly net income, and average in3 come, and average expenses of those debtors as

4 reported on the schedules and statements that

5 each such debtor files under sections 111, 521,

6 and 1322 of title 11;

7 ‘‘(C) the aggregate amount of debt dis8 charged in the reporting period, determined as

9 the difference between the total amount of debt

10 and obligations of a debtor reported on the

11 schedules and the amount of such debt reported

12 in categories which are predominantly non13 dischargeable;

14 ‘‘(D) the average period of time between

15 the filing of the petition and the closing of the

16 case;

17 ‘‘(E) for the reporting period—

18 ‘‘(i) the number of cases in which a

19 reaffirmation was filed; and

20 ‘‘(ii)(I) the total number of reaffirma21 tions filed;

22 ‘‘(II) of those cases in which a reaffir23 mation was filed, the number in which the

24 debtor was not represented by an attorney;

25 and
175

•S 625 RS

1 ‘‘(III) of the cases under each of sub2 clauses (I) and (II), the number of cases in

3 which the reaffirmation was approved by

4 the court;

5 ‘‘(F) with respect to cases filed under

6 chapter 13 of title 11, for the reporting

7 period—

8 ‘‘(i)(I) the number of cases in which a

9 final order was entered determining the

10 value of property securing a claim in an

11 amount less than the amount of the claim;

12 and

13 ‘‘(II) the number of final orders deter14 mining the value of property securing a

15 claim issued;

16 ‘‘(ii) the number of cases dismissed

17 for failure to make payments under the

18 plan; and

19 ‘‘(iii) the number of cases in which

20 the debtor filed another case during the 6-

21 year period preceding the date of filing;

22 ‘‘(G) the number of cases in which credi23 tors were fined for misconduct and any amount

24 of punitive damages awarded by the court for

25 creditor misconduct; and
176

•S 625 RS

1 ‘‘(H) the number of cases in which sanc2 tions under Rule 9011 of the Federal Rules of

3 Bankruptcy Procedure were imposed against

4 debtor’s counsel and damages awarded under

5 such rule.’’.

6 (b) CLERICAL AMENDMENT.—The table of sections

7 for chapter 6 of title 28, United States Code, is amended

8 by adding at the end the following:

‘‘159. Bankruptcy statistics.’’.

9 (c) EFFECTIVE DATE.—The amendments made by

10 this section shall take effect 18 months after the date of

11 enactment of this Act.

12 SEC. 603. UNIFORM RULES FOR THE COLLECTION OF BANK13 RUPTCY DATA.

14 (a) AMENDMENT.—Chapter 39 of title 28, United

15 States Code, is amended by inserting after section 589a

16 the following:

17 ‘‘§ 589b. Bankruptcy data

18 ‘‘(a) Within a reasonable period of time after the ef19 fective date of this section, the Attorney General of the

20 United States shall issue rules requiring uniform forms

21 for (and from time to time thereafter to appropriately

22 modify and approve)—

23 ‘‘(1) final reports by trustees in cases under

24 chapters 7, 12, and 13 of title 11; and
177

•S 625 RS

1 ‘‘(2) periodic reports by debtors in possession or

2 trustees, as the case may be, in cases under chapter

3 11 of title 11.

4 ‘‘(b) Each report referred to in subsection (a) shall

5 be designed (and the requirements as to place and manner

6 of filing shall be established) so as to facilitate compilation

7 of data and maximum practicable access of the public,

8 by—

9 ‘‘(1) physical inspection at 1 or more central fil10 ing locations; and

11 ‘‘(2) electronic access through the Internet or

12 other appropriate media.

13 ‘‘(c)(1) The information required to be filed in the

14 reports referred to in subsection (b) shall be information

15 that is—

16 ‘‘(A) in the best interests of debtors and credi17 tors, and in the public interest; and

18 ‘‘(B) reasonable and adequate information to

19 evaluate the efficiency and practicality of the Fed20 eral bankruptcy system.

21 ‘‘(2) In issuing rules proposing the forms referred to

22 in subsection (a), the Attorney General shall strike the

23 best achievable practical balance between—
178

•S 625 RS

1 ‘‘(A) the reasonable needs of the public for in2 formation about the operational results of the Fed3 eral bankruptcy system; and

4 ‘‘(B) economy, simplicity, and lack of undue

5 burden on persons with a duty to file reports.

6 ‘‘(d)(1) Final reports proposed for adoption by trust7 ees under chapters 7, 12, and 13 of title 11 shall include

8 with respect to a case under such title, by appropriate

9 category—

10 ‘‘(A) information about the length of time the

11 case was pending;

12 ‘‘(B) assets abandoned;

13 ‘‘(C) assets exempted;

14 ‘‘(D) receipts and disbursements of the estate;

15 ‘‘(E) expenses of administration;

16 ‘‘(F) claims asserted;

17 ‘‘(G) claims allowed; and

18 ‘‘(H) distributions to claimants and claims dis19 charged without payment.

20 ‘‘(2) In cases under chapters 12 and 13 of title 11,

21 final reports proposed for adoption by trustees shall

22 include—

23 ‘‘(A) the date of confirmation of the plan;

24 ‘‘(B) each modification to the plan; and
179

•S 625 RS

1 ‘‘(C) defaults by the debtor in performance

2 under the plan.

3 ‘‘(3) The information described in paragraphs (1)

4 and (2) shall be in addition to such other matters as are

5 required by law for a final report or as the Attorney Gen6 eral, in the discretion of the Attorney General, may pro7 pose for a final report.

8 ‘‘(e)(1) Periodic reports proposed for adoption by

9 trustees or debtors in possession under chapter 11 of title

10 11 shall include—

11 ‘‘(A) information about the standard industry

12 classification, published by the Department of Com13 merce, for the businesses conducted by the debtor;

14 ‘‘(B) the length of time the case has been pend15 ing;

16 ‘‘(C) the number of full-time employees—

17 ‘‘(i) as of the date of the order for relief;

18 and

19 ‘‘(ii) at the end of each reporting period

20 since the case was filed;

21 ‘‘(D) cash receipts, cash disbursements, and

22 profitability of the debtor for the most recent period

23 and cumulatively since the date of the order for re24 lief;
180

•S 625 RS

1 ‘‘(E) compliance with title 11, whether or not

2 tax returns and tax payments since the date of the

3 order for relief have been timely filed and made;

4 ‘‘(F) all professional fees approved by the court

5 in the case for the most recent period and cumula6 tively since the date of the order for relief (sepa7 rately reported, for the professional fees incurred by

8 or on behalf of the debtor, between those that would

9 have been incurred absent a bankruptcy case and

10 those that would not have been so incurred); and

11 ‘‘(G) plans of reorganization filed and con12 firmed and, with respect thereto, by class, the recov13 eries of the holders, expressed in aggregate dollar

14 values and, in the case of claims, as a percentage of

15 total claims of the class allowed.

16 ‘‘(2) The information described in paragraph (1)

17 shall be in addition to such other matters as are required

18 by law for a periodic report or as the Attorney General,

19 in the discretion of the Attorney General, may propose for

20 a periodic report.’’.

21 (b) TECHNICAL AMENDMENT.—The table of sections

22 for chapter 39 of title 28, United States Code, is amended

23 by adding at the end the following:

‘‘589b. Bankruptcy data.’’.
181

•S 625 RS

1 SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY

2 OF BANKRUPTCY DATA.

3 It is the sense of Congress that—

4 (1) it should be the national policy of the

5 United States that all data held by bankruptcy

6 clerks in electronic form, to the extent such data re7 flects only public records (as defined in section 107

8 of title 11, United States Code), should be released

9 in a usable electronic form in bulk to the public sub10 ject to such appropriate privacy concerns and safe11 guards as the Judicial Conference of the United

12 States may determine; and

13 (2) there should be established a bankruptcy

14 data system in which—

15 (A) a single set of data definitions and

16 forms are used to collect data nationwide; and

17 (B) data for any particular bankruptcy

18 case are aggregated in the same electronic

19 record.

20 TITLE VII—BANKRUPTCY TAX

21 PROVISIONS

22 SEC. 701. TREATMENT OF CERTAIN LIENS.

23 (a) TREATMENT OF CERTAIN LIENS.—Section 724

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

25 (1) in subsection (b), in the matter preceding

26 paragraph (1), by inserting ‘‘(other than to the ex-
182

•S 625 RS

1 tent that there is a properly perfected unavoidable

2 tax lien arising in connection with an ad valorem tax

3 on real or personal property of the estate)’’ after

4 ‘‘under this title’’;

5 (2) in subsection (b)(2), by inserting ‘‘(except

6 that such expenses, other than claims for wages, sal7 aries, or commissions which arise after the filing of

8 a petition, shall be limited to expenses incurred

9 under chapter 7 of this title and shall not include ex10 penses incurred under chapter 11 of this title)’’ after

11 ‘‘507(a)(1)’’; and

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

13 ‘‘(e) Before subordinating a tax lien on real or per14 sonal property of the estate, the trustee shall—

15 ‘‘(1) exhaust the unencumbered assets of the

16 estate; and

17 ‘‘(2) in a manner consistent with section

18 506(c), recover from property securing an allowed

19 secured claim the reasonable, necessary costs, and

20 expenses of preserving or disposing of that property.

21 ‘‘(f) Notwithstanding the exclusion of ad valorem tax

22 liens under this section and subject to the requirements

23 of subsection (e), the following may be paid from property

24 of the estate which secures a tax lien, or the proceeds of

25 such property:
183

•S 625 RS

1 ‘‘(1) Claims for wages, salaries, and commis2 sions that are entitled to priority under section

3 507(a)(3).

4 ‘‘(2) Claims for contributions to an employee

5 benefit plan entitled to priority under section

6 507(a)(4).’’.

7 (b) DETERMINATION OF TAX LIABILITY.—Section

8 505(a)(2) of title 11, United States Code, is amended—

9 (1) in subparagraph (A), by striking ‘‘or’’ at

10 the end;

11 (2) in subparagraph (B), by striking the period

12 at the end and inserting ‘‘; or’’; and

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

14 ‘‘(C) the amount or legality of any amount aris15 ing in connection with an ad valorem tax on real or

16 personal property of the estate, if the applicable pe17 riod for contesting or redetermining that amount

18 under any law (other than a bankruptcy law) has ex19 pired.’’.

20 SEC. 702. EFFECTIVE NOTICE TO GOVERNMENT.

21 (a) EFFECTIVE NOTICE TO GOVERNMENTAL

22 UNITS.—Section 342 of title 11, United States Code, as

23 amended by section 315(a) of this Act, is amended by add24 ing at the end the following:
184

•S 625 RS

1 ‘‘(g)(1) If a debtor lists a governmental unit as a

2 creditor in a list or schedule, any notice required to be

3 given by the debtor under this title, applicable rule, other

4 provision of law, or order of the court, shall identify the

5 department, agency, or instrumentality through which the

6 debtor is indebted.

7 ‘‘(2) The debtor shall identify (with information such

8 as a taxpayer identification number, loan, account or con9 tract number, or real estate parcel number, if applicable),

10 and describe the underlying basis for the claim of the gov11 ernmental unit.

12 ‘‘(3) If the liability of the debtor to a governmental

13 unit arises from a debt or obligation owed or incurred by

14 another individual, entity, or organization, or under a dif15 ferent name, the debtor shall identify that individual, enti16 ty, organization, or name.

17 ‘‘(h) The clerk shall keep and update on a quarterly

18 basis, in such form and manner as the Director of the

19 Administrative Office of the United States Courts pre20 scribes, a register in which a governmental unit may des21 ignate or redesignate a mailing address for service of no22 tice in cases pending in the district. The clerk shall make

23 such register available to debtors.’’.

24 (b) ADOPTION OF RULES PROVIDING NOTICE.—
185

•S 625 RS

1 (1) IN GENERAL.—Within a reasonable period

2 of time after the date of enactment of this Act, the

3 Advisory Committee on Bankruptcy Rules of the Ju4 dicial Conference shall propose for adoption en5 hanced rules for providing notice to Federal, State,

6 and local government units that have regulatory au7 thority over the debtor or that may be creditors in

8 the debtor’s case.

9 (2) PERSONS NOTIFIED.—The rules proposed

10 under paragraph (1) shall be reasonably calculated

11 to ensure that notice will reach the representatives

12 of the governmental unit (or subdivision thereof)

13 who will be the appropriate persons authorized to

14 act upon the notice.

15 (3) RULES REQUIRED.—At a minimum, the

16 rules under paragraph (1) should require that the

17 debtor—

18 (A) identify in the schedules and the no19 tice, the subdivision, agency, or entity with re20 spect to which such notice should be received;

21 (B) provide sufficient information (such as

22 case captions, permit numbers, taxpayer identi23 fication numbers, or similar identifying infor24 mation) to permit the governmental unit (or

25 subdivision thereof) entitled to receive such no-
186

•S 625 RS

1 tice to identify the debtor or the person or enti2 ty on behalf of which the debtor is providing

3 notice in any case in which—

4 (i) the debtor may be a successor in

5 interest; or

6 (ii) may not be the same entity as the

7 entity that incurred the debt or obligation;

8 and

9 (C) identify, in appropriate schedules,

10 served together with the notice—

11 (i) the property with respect to which

12 the claim or regulatory obligation may

13 have arisen, if applicable;

14 (ii) the nature of such claim or regu15 latory obligation; and

16 (iii) the purpose for which notice is

17 being given.

18 (c) EFFECT OF FAILURE OF NOTICE.—Section 342

19 of title 11, United States Code, as amended by subsection

20 (a), is amended by adding at the end the following:

21 ‘‘(i) A notice that does not comply with subsections

22 (d) and (e) shall not be effective unless the debtor dem23 onstrates by clear and convincing evidence that—
187

•S 625 RS

1 ‘‘(1) timely notice was given in a manner rea2 sonably calculated to satisfy the requirements of this

3 section; and

4 ‘‘(2) either—

5 ‘‘(A) the notice was timely sent to the ad6 dress provided in the register maintained by the

7 clerk of the district in which the case was pend8 ing for such purposes; or

9 ‘‘(B) no address was provided in such list

10 for the governmental unit and that an officer of

11 the governmental unit who is responsible for the

12 matter or claim had actual knowledge of the

13 case in sufficient time to act.’’.

14 SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF

15 TAXES.

16 The second sentence of section 505(b) of title 11,

17 United States Code, is amended by striking ‘‘Unless’’ and

18 inserting ‘‘If the request is made substantially in the man19 ner designated by the governmental unit and unless’’.

20 SEC. 704. RATE OF INTEREST ON TAX CLAIMS.

21 (a) IN GENERAL.—Subchapter I of chapter 5 of title

22 11, United States Code, is amended by adding at the end

23 the following:
188

•S 625 RS

1 ‘‘§ 511. Rate of interest on tax claims

2 ‘‘If any provision of this title requires the payment

3 of interest on a tax claim or the payment of interest to

4 enable a creditor to receive the present value of the al5 lowed amount of a tax claim, the rate of interest shall be

6 as follows:

7 ‘‘(1) In the case of secured tax claims, unse8 cured ad valorem tax claims, other unsecured tax

9 claims in which interest is required to be paid under

10 section 726(a)(5), and administrative tax claims

11 paid under section 503(b)(1), the rate shall be deter12 mined under applicable nonbankruptcy law.

13 ‘‘(2)(A) In the case of any tax claim other than

14 a claim described in paragraph (1), the minimum

15 rate of interest shall be a percentage equal to the

16 sum of—

17 ‘‘(i) 3; plus

18 ‘‘(ii) the Federal short-term rate rounded

19 to the nearest full percent, determined under

20 section 1274(d) of the Internal Revenue Code

21 of 1986.

22 ‘‘(B) In the case of any claim for Federal in23 come taxes, the minimum rate of interest shall be

24 subject to any adjustment that may be required

25 under section 6621(d) of the Internal Revenue Code

26 of 1986.
189

•S 625 RS

1 ‘‘(C) In the case of taxes paid under a con2 firmed plan or reorganization under this title, the

3 minimum rate of interest shall be determined as of

4 the calendar month in which the plan is confirmed.’’.

5 (b) CLERICAL AMENDMENT.—The table of sections

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

7 by inserting after the item relating to section 510 the fol8 lowing:

‘‘511. Rate of interest on tax claims.’’.

9 SEC. 705. TOLLING OF PRIORITY OF TAX CLAIM TIME PERI10 ODS.

11 Section 507(a)(8)(A) of title 11, United States Code,

12 as redesignated by section 212 of this Act, is amended—

13 (1) in clause (i), by inserting before the semi14 colon at the end, the following: ‘‘, plus any time dur15 ing which the stay of proceedings was in effect in a

16 prior case under this title, plus 6 months’’; and

17 (2) by striking clause (ii) and inserting the fol18 lowing:

19 ‘‘(ii) assessed within 240 days before

20 the date of the filing of the petition, exclu21 sive of—

22 ‘‘(I) any time during which an

23 offer in compromise with respect to

24 that tax, was pending or in effect dur25 ing that 240-day period, plus 30 days;
190

•S 625 RS

1 ‘‘(II) the lesser of—

2 ‘‘(aa) any time during which

3 an installment agreement with

4 respect to that tax was pending

5 or in effect during that 240-day

6 period, plus 30 days; or

7 ‘‘(bb) 1 year; and

8 ‘‘(III) any time during which a

9 stay of proceedings against collections

10 was in effect in a prior case under

11 this title during that 240-day period;

12 plus 6 months.’’.

13 SEC. 706. PRIORITY PROPERTY TAXES INCURRED.

14 Section 507(a)(9)(B) of title 11, United States Code,

15 as redesignated by section 221 of this Act, is amended

16 by striking ‘‘assessed’’ and inserting ‘‘incurred’’.

17 SEC. 707. CHAPTER 13 DISCHARGE OF FRAUDULENT AND

18 OTHER TAXES.

19 Section 1328(a)(2) of title 11, United States Code,

20 as amended by section 228 314 of this Act, is amended

21 by inserting ‘‘(1),’’ after ‘‘paragraph’’.

22 SEC. 708. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.

23 Section 1141(d) of title 11, United States Code, is

24 amended by adding at the end the following:
191

•S 625 RS

1 ‘‘(5) Notwithstanding paragraph (1), the confirma2 tion of a plan does not discharge a debtor that is a cor3 poration from any debt for a tax or customs duty with

4 respect to which the debtor—

5 ‘‘(A) made a fraudulent return; or

6 ‘‘(B) willfully attempted in any manner to

7 evade or defeat that tax or duty.’’.

8 SEC. 709. STAY OF TAX PROCEEDINGS.

9 (a) SECTION 362 STAY LIMITED TO PREPETITION

10 TAXES.—Section 362(a)(8) of title 11, United States

11 Code, is amended by inserting before the semicolon at the

12 end the following: ‘‘, with respect to a tax liability for a

13 taxable period ending before the order for relief under sec14 tion 301, 302, or 303’’.

15 (b) APPEAL OF TAX COURT DECISIONS PER16 MITTED.—Section 362(b)(9) of title 11, United States

17 Code, is amended—

18 (1) in subparagraph (C), by striking ‘‘or’’ at

19 the end;

20 (2) in subparagraph (D), by striking the period

21 at the end and inserting ‘‘; or’’; and

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

23 ‘‘(E) the appeal of a decision by a court or

24 administrative tribunal which determines a tax

25 liability of the debtor (without regard to wheth-
192

•S 625 RS

1 er such determination was made prepetition or

2 postpetition).’’.

3 SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11

4 CASES.

5 Section 1129(a)(9) of title 11, United States Code,

6 is amended—

7 (1) in subparagraph (B), by striking ‘‘and’’ at

8 the end; and

9 (2) in subparagraph (C), by striking ‘‘deferred

10 cash payments, over a period not exceeding six years

11 after the date of assessment of such claim,’’ and all

12 that follows through the end of the subparagraph,

13 and inserting ‘‘regular installment payments—

14 ‘‘(i) of a total value, as of the effective

15 date of the claim, equal to the allowed

16 amount of such claim in cash, but in no

17 case with a balloon payment; and

18 ‘‘(ii) beginning not later than the ef19 fective date of the plan and ending on the

20 earlier of—

21 ‘‘(I) the date that is 5 years after

22 the date of the filing of the petition;

23 or
193

•S 625 RS

1 ‘‘(II) the last date payments are

2 to be made under the plan to unse3 cured creditors; and’’; and

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

5 ‘‘(D) with respect to a secured claim which

6 would otherwise meet the description on an un7 secured claim of a governmental unit under sec8 tion 507(a)(8), but for the secured status of

9 that claim, the holder of that claim will receive

10 on account of that claim, cash payments, in the

11 same manner and over the same period, as pre12 scribed in subparagraph (C).’’.

13 SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIB14 ITED.

15 Section 545(2) of title 11, United States Code, is

16 amended by striking the semicolon at the end and insert17 ing ‘‘, except in any case in which a purchaser is a pur18 chaser described in section 6323 of the Internal Revenue

19 Code of 1986, or in any other similar provision of State

20 or local law;’’.

21 SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSI22 NESS.

23 (a) PAYMENT OF TAXES REQUIRED.—Section 960 of

24 title 28, United States Code, is amended—

25 (1) by inserting ‘‘(a)’’ before ‘‘Any’’; and
194

•S 625 RS

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

2 ‘‘(b) A tax under subsection (a) shall be paid when

3 due in the conduct of business unless—

4 ‘‘(1) the tax is a property tax secured by a lien

5 against property that is abandoned within a reason6 able period of time after the lien attaches, by the

7 trustee of a bankruptcy estate, under section 554 of

8 title 11; or

9 ‘‘(2) payment of the tax is excused under a spe10 cific provision of title 11.

11 ‘‘(c) In a case pending under chapter 7 of title 11,

12 payment of a tax may be deferred until final distribution

13 is made under section 726 of title 11, if—

14 ‘‘(1) the tax was not incurred by a trustee duly

15 appointed under chapter 7 of title 11; or

16 ‘‘(2) before the due date of the tax, the court

17 makes a finding of probable insufficiency of funds of

18 the estate to pay in full the administrative expenses

19 allowed under section 503(b) of title 11 that have

20 the same priority in distribution under section

21 726(b) of title 11 as the priority of that tax.’’.

22 (b) PAYMENT OF AD VALOREM TAXES REQUIRED.—

23 Section 503(b)(1)(B)(i) of title 11, United States Code,

24 is amended by inserting ‘‘whether secured or unsecured,
195

•S 625 RS

1 including property taxes for which liability is in rem, in

2 personam, or both,’’ before ‘‘except’’.

3 (c) REQUEST FOR PAYMENT OF ADMINISTRATIVE

4 EXPENSE TAXES ELIMINATED.—Section 503(b)(1) of

5 title 11, United States Code, is amended—

6 (1) in subparagraph (B), by striking ‘‘and’’ at

7 the end;

8 (2) in subparagraph (C), by adding ‘‘and’’ at

9 the end; and

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

11 ‘‘(D) notwithstanding the requirements of sub12 section (a), a governmental unit shall not be re13 quired to file a request for the payment of a claim

14 described in subparagraph (B) or (C);’’.

15 (d) PAYMENT OF TAXES AND FEES AS SECURED

16 CLAIMS.—Section 506 of title 11, United States Code, is

17 amended—

18 (1) in subsection (b), by inserting ‘‘or State

19 statute’’ after ‘‘agreement’’; and

20 (2) in subsection (c), by inserting ‘‘, including

21 the payment of all ad valorem property taxes with

22 respect to the property’’ before the period at the

23 end.
196

•S 625 RS

1 SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS.

2 Section 726(a)(1) of title 11, United States Code, is

3 amended by striking ‘‘before the date on which the trustee

4 commences distribution under this section;’’ and inserting

5 the following: ‘‘on or before the earlier of—

6 ‘‘(A) the date that is 10 days after the

7 mailing to creditors of the summary of the

8 trustee’s final report; or

9 ‘‘(B) the date on which the trustee com10 mences final distribution under this section;’’.

11 SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AU12 THORITIES.

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

14 amended—

15 (1) in paragraph (1)(B)—

16 (A) by inserting ‘‘or equivalent report or

17 notice,’’ after ‘‘a return,’’;

18 (B) in clause (i)—

19 (i) by inserting ‘‘or given’’ after

20 ‘‘filed’’; and

21 (ii) by striking ‘‘or’’ at the end; and

22 (C) in clause (ii)—

23 (i) by inserting ‘‘or given’’ after

24 ‘‘filed’’; and

25 (ii) by inserting ‘‘, report, or notice’’

26 after ‘‘return’’; and
197

•S 625 RS

1 (2) by adding at the end the following flush

2 sentences:

3 ‘‘For purposes of this subsection, the term ‘return’ means

4 a return that satisfies the requirements of applicable non5 bankruptcy law (including applicable filing requirements).

6 Such term includes a return prepared pursuant to section

7 6020(a) of the Internal Revenue Code of 1986, or similar

8 State or local law, or a written stipulation to a judgment

9 entered by a nonbankruptcy tribunal, but does not include

10 a return made pursuant to section 6020(b) of the Internal

11 Revenue Code of 1986, or a similar State or local law.’’.

12 SEC. 715. DISCHARGE OF THE ESTATE’S LIABILITY FOR UN13 PAID TAXES.

14 The second sentence of section 505(b) of title 11,

15 United States Code, as amended by section 703 of this

16 Act, is amended by inserting ‘‘the estate,’’ after ‘‘mis17 representation,’’.

18 SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CON19 FIRM CHAPTER 13 PLANS.

20 (a) FILING OF PREPETITION TAX RETURNS RE21 QUIRED FOR PLAN CONFIRMATION.—Section 1325(a) of

22 title 11, United States Code, as amended by section 212

23 213 and 306 of this Act, is amended—

24 (1) in paragraph (6), by striking ‘‘and’’ at the

25 end;
198

•S 625 RS

1 (2) in paragraph (7), by striking the period at

2 the end and inserting ‘‘; and’’; and

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

4 after paragraph (7) the following:

5 ‘‘(8) if the debtor has filed all applicable Fed6 eral, State, and local tax returns as required by sec7 tion 1309.’’.

8 (b) ADDITIONAL TIME PERMITTED FOR FILING TAX

9 RETURNS.—

10 (1) IN GENERAL.—Chapter 13 of title 11,

11 United States Code, as amended by section 309(c)

12 of this Act, is amended by adding at the end the fol13 lowing:

14 ‘‘§ 1309. Filing of prepetition tax returns

15 ‘‘(a) Not later than the day before the day on which

16 the first meeting of the creditors is convened under section

17 341(a), the debtor shall file with appropriate tax authori18 ties all tax returns for all taxable periods ending during

19 the 3-year period ending on the date of the filing of the

20 petition.

21 ‘‘(b)(1) Subject to paragraph (2), if the tax returns

22 required by subsection (a) have not been filed by the date

23 on which the first meeting of creditors is convened under

24 section 341(a), the trustee may continue that meeting for

25 a reasonable period of time to allow the debtor an addi-
199

•S 625 RS

1 tional period of time to file any unfiled returns, but such

2 additional period of time shall not extend beyond—

3 ‘‘(A) for any return that is past due as of the

4 date of the filing of the petition, the date that is 120

5 days after the date of that first meeting; or

6 ‘‘(B) for any return that is not past due as of

7 the date of the filing of the petition, the later of—

8 ‘‘(i) the date that is 120 days after the

9 date of that first meeting; or

10 ‘‘(ii) the date on which the return is due

11 under the last automatic extension of time for

12 filing that return to which the debtor is enti13 tled, and for which request has been timely

14 made, according to applicable nonbankruptcy

15 law.

16 ‘‘(2) Upon notice and hearing, and order entered be17 fore the tolling of any applicable filing period determined

18 under this subsection, if the debtor demonstrates by clear

19 and convincing evidence that the failure to file a return

20 as required under this subsection is attributable to cir21 cumstances beyond the control of the debtor, the court

22 may extend the filing period established by the trustee

23 under this subsection for—

24 ‘‘(A) a period of not more than 30 days for re25 turns described in paragraph (1); and
200

•S 625 RS

1 ‘‘(B) a period not to extend after the applicable

2 extended due date for a return described in para3 graph (2).

4 ‘‘(c) For purposes of this section, the term ‘return’

5 includes a return prepared pursuant to section 6020 (a)

6 or (b) of the Internal Revenue Code of 1986, or a similar

7 State or local law, or written stipulation to a judgment

8 entered by a nonbankruptcy tribunal.’’.

9 (2) CONFORMING AMENDMENT.—The table of sec10 tions for chapter 13 of title 11, United States Code, is

11 amended by inserting after the item relating to section

12 1308 the following:

‘‘1309. Filing of prepetition tax returns.’’.

13 (c) DISMISSAL OR CONVERSION ON FAILURE TO

14 COMPLY.—Section 1307 of title 11, United States Code,

15 is amended—

16 (1) by redesignating subsections (e) and (f) as

17 subsections (f) and (g), respectively; and

18 (2) by inserting after subsection (d), the fol19 lowing:

20 ‘‘(e) Upon the failure of the debtor to file a tax return

21 under section 1309, on request of a party in interest or

22 the United States trustee and after notice and a hearing,

23 the court shall dismiss the case.’’.
201

•S 625 RS

1 (d) TIMELY FILED CLAIMS.—Section 502(b)(9) of

2 title 11, United States Code, is amended by inserting be3 fore the period at the end the following ‘‘, and except that

4 in a case under chapter 13 of this title, a claim of a gov5 ernmental unit for a tax with respect to a return filed

6 under section 1309 shall be timely if the claim is filed on

7 or before the date that is 60 days after that return was

8 filed in accordance with applicable requirements’’.

9 (e) RULES FOR OBJECTIONS TO CLAIMS AND TO

10 CONFIRMATION.—It is the sense of Congress that the Ad11 visory Committee on Bankruptcy Rules of the Judicial

12 Conference should, within a reasonable period of time

13 after the date of enactment of this Act, propose for adop14 tion amended Federal Rules of Bankruptcy Procedure

15 which provide that—

16 (1) notwithstanding the provisions of Rule

17 3015(f), in cases under chapter 13 of title 11,

18 United States Code, a governmental unit may object

19 to the confirmation of a plan on or before the date

20 that is 60 days after the date on which the debtor

21 files all tax returns required under sections 1309

22 and 1325(a)(7) of title 11, United States Code; and

23 (2) in addition to the provisions of Rule 3007,

24 in a case under chapter 13 of title 11, United States

25 Code, no objection to a tax with respect to which a
202

•S 625 RS

1 return is required to be filed under section 1309 of

2 title 11, United States Code, shall be filed until such

3 return has been filed as required.

4 SEC. 717. STANDARDS FOR TAX DISCLOSURE.

5 Section 1125(a)(1) of title 11, United States Code,

6 is amended—

7 (1) by inserting ‘‘including a full discussion of

8 the potential material, Federal, State, and local tax

9 consequences of the plan to the debtor, any suc10 cessor to the debtor, and a hypothetical investor

11 domiciled in the State in which the debtor resides or

12 has its principal place of business typical of the

13 holders of claims or interests in the case,’’ after

14 ‘‘records’’; and

15 (2) by striking ‘‘a hypothetical reasonable inves16 tor typical of holders of claims or interests’’ and in17 serting ‘‘such a hypothetical investor’’.

18 SEC. 718. SETOFF OF TAX REFUNDS.

19 Section 362(b) of title 11, United States Code, as

20 amended by section 402 of this Act, is amended—

21 (1) in paragraph (25), by striking ‘‘or’’ at the

22 end;

23 (2) in paragraph (26), by striking the period at

24 the end and inserting ‘‘; or’’; and
203

•S 625 RS

1 (3) by inserting after paragraph (26) the fol2 lowing:

3 ‘‘(27) under subsection (a), of the setoff of an

4 income tax refund, by a governmental unit, with re5 spect to a taxable period that ended before the order

6 for relief against an income tax liability for a taxable

7 period that also ended before the order for relief,

8 unless—

9 ‘‘(A) before that setoff, an action to deter10 mine the amount or legality of that tax liability

11 under section 505(a) was commenced; or

12 ‘‘(B) in any case in which the setoff of an

13 income tax refund is not permitted because of

14 a pending action to determine the amount or

15 legality of a tax liability, in which case the gov16 ernmental unit may hold the refund pending

17 the resolution of the action.’’.

18 TITLE VIII—ANCILLARY AND

19 OTHER CROSS-BORDER CASES

20 SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11,

21 UNITED STATES CODE.

22 (a) IN GENERAL.—Title 11, United States Code, is

23 amended by inserting after chapter 13 the following:
204

•S 625 RS

1 ‘‘CHAPTER 15—ANCILLARY AND OTHER

2 CROSS-BORDER CASES

‘‘Sec.

‘‘1501. Purpose and scope of application.

‘‘SUBCHAPTER I—GENERAL PROVISIONS

‘‘1502. Definitions.

‘‘1503. International obligations of the United States.

‘‘1504. Commencement of ancillary case.

‘‘1505. Authorization to act in a foreign country.

‘‘1506. Public policy exception.

‘‘1507. Additional assistance.

‘‘1508. Interpretation.

‘‘SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES AND

CREDITORS TO THE COURT

‘‘1509. Right of direct access.

‘‘1510. Limited jurisdiction.

‘‘1511. Commencement of case under section 301 or 303.

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

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

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

‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING

AND RELIEF

‘‘1515. Application for recognition of a foreign proceeding.

‘‘1516. Presumptions concerning recognition.

‘‘1517. Order recognizing a foreign proceeding.

‘‘1518. Subsequent information.

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

proceeding.

‘‘1520. Effects of recognition of a foreign main proceeding.

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

‘‘1522. Protection of creditors and other interested persons.

‘‘1523. Actions to avoid acts detrimental to creditors.

‘‘1524. Intervention by a foreign representative.

‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND

FOREIGN REPRESENTATIVES

‘‘1525. Cooperation and direct communication between the court and foreign

courts or foreign representatives.

‘‘1526. Cooperation and direct communication between the trustee and foreign

courts or foreign representatives.

‘‘1527. Forms of cooperation.

‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

‘‘1528. Commencement of a case under this title after recognition of a foreign

main proceeding.

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

‘‘1530. Coordination of more than 1 foreign proceeding.
205

•S 625 RS

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

‘‘1532. Rule of payment in concurrent proceedings.

1 ‘‘§ 1501. Purpose and scope of application

2 ‘‘(a) The purpose of this chapter is to incorporate the

3 Model Law on Cross-Border Insolvency so as to provide

4 effective mechanisms for dealing with cases of cross-bor5 der insolvency with the objectives of—

6 ‘‘(1) cooperation between—

7 ‘‘(A) United States courts, United States

8 Trustees, trustees, examiners, debtors, and

9 debtors in possession; and

10 ‘‘(B) the courts and other competent au11 thorities of foreign countries involved in cross12 border insolvency cases;

13 ‘‘(2) greater legal certainty for trade and in14 vestment;

15 ‘‘(3) fair and efficient administration of cross16 border insolvencies that protects the interests of all

17 creditors, and other interested entities, including the

18 debtor;

19 ‘‘(4) protection and maximization of the value

20 of the debtor’s assets; and

21 ‘‘(5) facilitation of the rescue of financially

22 troubled businesses, thereby protecting investment

23 and preserving employment.

24 ‘‘(b) This chapter applies if—
206

•S 625 RS

1 ‘‘(1) assistance is sought in the United States

2 by a foreign court or a foreign representative in con3 nection with a foreign proceeding;

4 ‘‘(2) assistance is sought in a foreign country in

5 connection with a case under this title;

6 ‘‘(3) a foreign proceeding and a case under this

7 title with respect to the same debtor are taking place

8 concurrently; or

9 ‘‘(4) creditors or other interested persons in a

10 foreign country have an interest in requesting the

11 commencement of, or participating in, a case or pro12 ceeding under this title.

13 ‘‘(c) This chapter does not apply to—

14 ‘‘(1) a proceeding concerning an entity identi15 fied by exclusion in subsection 109(b);

16 ‘‘(2) an individual, or to an individual and such

17 individual’s spouse, who have debts within the limits

18 specified in section 109(e) and who are citizens of

19 the United States or aliens lawfully admitted for

20 permanent residence in the United States; or

21 ‘‘(3) an entity subject to a proceeding under the

22 Securities Investor Protection Act of 1970 (84 Stat.

23 1636 et seq.), a stockbroker subject to subchapter

24 III of chapter 7 of this title, or a commodity broker

25 subject to subchapter IV of chapter 7 of this title.
207

•S 625 RS

1 ‘‘SUBCHAPTER I—GENERAL PROVISIONS

2 ‘‘§ 1502. Definitions

3 ‘‘For the purposes of this chapter, the term—

4 ‘‘(1) ‘debtor’ means an entity that is the subject

5 of a foreign proceeding;

6 ‘‘(2) ‘establishment’ means any place of oper7 ations where the debtor carries out a nontransitory

8 economic activity;

9 ‘‘(3) ‘foreign court’ means a judicial or other

10 authority competent to control or supervise a foreign

11 proceeding;

12 ‘‘(4) ‘foreign main proceeding’ means a foreign

13 proceeding taking place in the country where the

14 debtor has the center of its main interests;

15 ‘‘(5) ‘foreign nonmain proceeding’ means a for16 eign proceeding, other than a foreign main pro17 ceeding, taking place in a country where the debtor

18 has an establishment;

19 ‘‘(6) ‘trustee’ includes a trustee, a debtor in

20 possession in a case under any chapter of this title,

21 or a debtor under chapter 9 of this title; and

22 ‘‘(7) ‘within the territorial jurisdiction of the

23 United States’ when used with reference to property

24 of a debtor refers to tangible property located within

25 the territory of the United States and intangible
208

•S 625 RS

1 property deemed under applicable nonbankruptcy

2 law to be located within that territory, including any

3 property subject to attachment or garnishment that

4 may properly be seized or garnished by an action in

5 a Federal or State court in the United States.

6 ‘‘§ 1503. International obligations of the United States

7 ‘‘To the extent that this chapter conflicts with an ob8 ligation of the United States arising out of any treaty or

9 other form of agreement to which it is a party with 1 or

10 more other countries, the requirements of the treaty or

11 agreement prevail.

12 ‘‘§ 1504. Commencement of ancillary case

13 ‘‘A case under this chapter is commenced by the filing

14 of a petition for recognition of a foreign proceeding under

15 section 1515.

16 ‘‘§ 1505. Authorization to act in a foreign country

17 ‘‘A trustee or another entity, including an examiner,

18 may be authorized by the court to act in a foreign country

19 on behalf of an estate created under section 541. An entity

20 authorized to act under this section may act in any way

21 permitted by the applicable foreign law.

22 ‘‘§ 1506. Public policy exception

23 ‘‘Nothing in this chapter prevents the court from re24 fusing to take an action governed by this chapter if the
209

•S 625 RS

1 action would be manifestly contrary to the public policy

2 of the United States.

3 ‘‘§ 1507. Additional assistance

4 ‘‘(a) Subject to the specific limitations under other

5 provisions of this chapter, the court, upon recognition of

6 a foreign proceeding, may provide additional assistance to

7 a foreign representative under this title or under other

8 laws of the United States.

9 ‘‘(b) In determining whether to provide additional as10 sistance under this title or under other laws of the United

11 States, the court shall consider whether such additional

12 assistance, consistent with the principles of comity, will

13 reasonably assure—

14 ‘‘(1) just treatment of all holders of claims

15 against or interests in the debtor’s property;

16 ‘‘(2) protection of claim holders in the United

17 States against prejudice and inconvenience in the

18 processing of claims in such foreign proceeding;

19 ‘‘(3) prevention of preferential or fraudulent

20 dispositions of property of the debtor;

21 ‘‘(4) distribution of proceeds of the debtor’s

22 property substantially in accordance with the order

23 prescribed by this title; and
210

•S 625 RS

1 ‘‘(5) if appropriate, the provision of an oppor2 tunity for a fresh start for the individual that such

3 foreign proceeding concerns.

4 ‘‘§ 1508. Interpretation

5 ‘‘In interpreting this chapter, the court shall consider

6 its international origin, and the need to promote an appli7 cation of this chapter that is consistent with the applica8 tion of similar statutes adopted by foreign jurisdictions.

9 ‘‘SUBCHAPTER II—ACCESS OF FOREIGN REP10 RESENTATIVES AND CREDITORS TO THE

11 COURT

12 ‘‘§ 1509. Right of direct access

13 ‘‘(a) A foreign representative is entitled to commence

14 a case under section 1504 by filing a petition for recogni15 tion under section 1515, and upon recognition, to apply

16 directly to other Federal and State courts for appropriate

17 relief in those courts.

18 ‘‘(b) Upon recognition, and subject to section 1510,

19 a foreign representative shall have the capacity to sue and

20 be sued, and shall be subject to the laws of the United

21 States of general applicability.

22 ‘‘(c) Subject to section 1510, a foreign representative

23 is subject to laws of general application.

24 ‘‘(d) Recognition under this chapter is prerequisite to

25 the granting of comity or cooperation to a foreign rep-
211

•S 625 RS

1 resentative in any Federal or State court in the United

2 States. Any request for comity or cooperation by a foreign

3 representative in any court shall be accompanied by a

4 sworn statement setting forth whether recognition under

5 section 1515 has been sought and the status of any such

6 petition.

7 ‘‘(e) Upon denial of recognition under this chapter,

8 the court may issue appropriate orders necessary to pre9 vent an attempt to obtain comity or cooperation from

10 courts in the United States without such recognition.

11 ‘‘§ 1510. Limited jurisdiction

12 ‘‘The sole fact that a foreign representative files a

13 petition under section 1515 does not subject the foreign

14 representative to the jurisdiction of any court in the

15 United States for any other purpose.

16 ‘‘§ 1511. Commencement of case under section 301 or

17 303

18 ‘‘(a) Upon recognition, a foreign representative may

19 commence—

20 ‘‘(1) an involuntary case under section 303; or

21 ‘‘(2) a voluntary case under section 301 or 302,

22 if the foreign proceeding is a foreign main pro23 ceeding.

24 ‘‘(b) The petition commencing a case under sub25 section (a) must be accompanied by a statement describ-
212

•S 625 RS

1 ing the petition for recognition and its current status. The

2 court where the petition for recognition has been filed

3 must be advised of the foreign representative’s intent to

4 commence a case under subsection (a) prior to such com5 mencement.

6 ‘‘§ 1512. Participation of a foreign representative in a

7 case under this title

8 ‘‘Upon recognition of a foreign proceeding, the for9 eign representative in that proceeding is entitled to par10 ticipate as a party in interest in a case regarding the debt11 or under this title.

12 ‘‘§ 1513. Access of foreign creditors to a case under

13 this title

14 ‘‘(a) Foreign creditors have the same rights regarding

15 the commencement of, and participation in, a case under

16 this title as domestic creditors.

17 ‘‘(b)(1) Subsection (a) does not change or codify law

18 in effect on the date of enactment of this chapter as to

19 the priority of claims under section 507 or 726, except

20 that the claim of a foreign creditor under section 507 or

21 726 shall not be given a lower priority than that of general

22 unsecured claims without priority solely because the holder

23 of such claim is a foreign creditor.

24 ‘‘(2)(A) Subsection (a) and paragraph (1) do not

25 change or codify law in effect on the date of enactment
213

•S 625 RS

1 of this chapter as to the allowability of foreign revenue

2 claims or other foreign public law claims in a proceeding

3 under this title.

4 ‘‘(B) Allowance and priority as to a foreign tax claim

5 or other foreign public law claim shall be governed by any

6 applicable tax treaty of the United States, under the con7 ditions and circumstances specified therein.

8 ‘‘§ 1514. Notification to foreign creditors concerning a

9 case under this title

10 ‘‘(a) Whenever in a case under this title notice is to

11 be given to creditors generally or to any class or category

12 of creditors, such notice shall also be given to the known

13 creditors generally, or to creditors in the notified class or

14 category, that do not have addresses in the United States.

15 The court may order that appropriate steps be taken with

16 a view to notifying any creditor whose address is not yet

17 known.

18 ‘‘(b) Such notification to creditors with foreign ad19 dresses described in subsection (a) shall be given individ20 ually, unless the court considers that, under the cir21 cumstances, some other form of notification would be

22 more appropriate. No letters rogatory or other similar for23 mality is required.

24 ‘‘(c) When a notification of commencement of a case

25 is to be given to foreign creditors, the notification shall—
214

•S 625 RS

1 ‘‘(1) indicate the time period for filing proofs of

2 claim and specify the place for their filing;

3 ‘‘(2) indicate whether secured creditors need to

4 file their proofs of claim; and

5 ‘‘(3) contain any other information required to

6 be included in such a notification to creditors pursu7 ant to this title and the orders of the court.

8 ‘‘(d) Any rule of procedure or order of the court as

9 to notice or the filing of a claim shall provide such addi10 tional time to creditors with foreign addresses as is rea11 sonable under the circumstances.

12 ‘‘SUBCHAPTER III—RECOGNITION OF A

13 FOREIGN PROCEEDING AND RELIEF

14 ‘‘§ 1515. Application for recognition of a foreign pro15 ceeding

16 ‘‘(a) A foreign representative applies to the court for

17 recognition of the foreign proceeding in which the foreign

18 representative has been appointed by filing a petition for

19 recognition.

20 ‘‘(b) A petition for recognition shall be accompanied

21 by—

22 ‘‘(1) a certified copy of the decision com23 mencing the foreign proceeding and appointing the

24 foreign representative;
215

•S 625 RS

1 ‘‘(2) a certificate from the foreign court affirm2 ing the existence of the foreign proceeding and of

3 the appointment of the foreign representative; or

4 ‘‘(3) in the absence of evidence referred to in

5 paragraphs (1) and (2), any other evidence accept6 able to the court of the existence of the foreign pro7 ceeding and of the appointment of the foreign rep8 resentative.

9 ‘‘(c) A petition for recognition shall also be accom10 panied by a statement identifying all foreign proceedings

11 with respect to the debtor that are known to the foreign

12 representative.

13 ‘‘(d) The documents referred to in paragraphs (1)

14 and (2) of subsection (b) must be translated into English.

15 The court may require a translation into English of addi16 tional documents.

17 ‘‘§ 1516. Presumptions concerning recognition

18 ‘‘(a) If the decision or certificate referred to in section

19 1515(b) indicates that the foreign proceeding is a foreign

20 proceeding as defined in section 101 and that the person

21 or body is a foreign representative as defined in section

22 101, the court is entitled to so presume.

23 ‘‘(b) The court is entitled to presume that documents

24 submitted in support of the petition for recognition are

25 authentic, whether or not they have been legalized.
216

•S 625 RS

1 ‘‘(c) In the absence of evidence to the contrary, the

2 debtor’s registered office, or habitual residence in the case

3 of an individual, is presumed to be the center of the debt4 or’s main interests.

5 ‘‘§ 1517. Order recognizing a foreign proceeding

6 ‘‘(a) Subject to section 1506, after notice and a hear7 ing an order recognizing a foreign proceeding shall be en8 tered if—

9 ‘‘(1) the foreign proceeding is a foreign main

10 proceeding or foreign nonmain proceeding within the

11 meaning of section 1502;

12 ‘‘(2) the foreign representative applying for rec13 ognition is a person or body as defined in section

14 101; and

15 ‘‘(3) the petition meets the requirements of sec16 tion 1515.

17 ‘‘(b) The foreign proceeding shall be recognized—

18 ‘‘(1) as a foreign main proceeding if it is taking

19 place in the country where the debtor has the center

20 of its main interests; or

21 ‘‘(2) as a foreign nonmain proceeding if the

22 debtor has an establishment within the meaning of

23 section 1502 in the foreign country where the pro24 ceeding is pending.
217

•S 625 RS

1 ‘‘(c) A petition for recognition of a foreign proceeding

2 shall be decided upon at the earliest possible time. Entry

3 of an order recognizing a foreign proceeding shall con4 stitute recognition under this chapter.

5 ‘‘(d) The provisions of this subchapter do not prevent

6 modification or termination of recognition if it is shown

7 that the grounds for granting it were fully or partially

8 lacking or have ceased to exist, but in considering such

9 action the court shall give due weight to possible prejudice

10 to parties that have relied upon the granting of recogni11 tion. The case under this chapter may be closed in the

12 manner prescribed for a case under section 350.

13 ‘‘§ 1518. Subsequent information

14 ‘‘After the the petition for recognition of the foreign

15 proceeding is filed, the foreign representative shall file

16 with the court promptly a notice of change of status

17 concerning—

18 ‘‘(1) any substantial change in the status of the

19 foreign proceeding or the status of the foreign rep20 resentative’s appointment; and

21 ‘‘(2) any other foreign proceeding regarding the

22 debtor that becomes known to the foreign represent23 ative.
218

•S 625 RS

1 ‘‘§ 1519. Relief that may be granted upon petition for

2 recognition of a foreign proceeding

3 ‘‘(a) Beginning on the date on which a petition for

4 recognition is filed and ending on the date on which the

5 petition is decided upon, the court may, at the request of

6 the foreign representative, where relief is urgently needed

7 to protect the assets of the debtor or the interests of the

8 creditors, grant relief of a provisional nature, including—

9 ‘‘(1) staying execution against the debtor’s as10 sets;

11 ‘‘(2) entrusting the administration or realiza12 tion of all or part of the debtor’s assets located in

13 the United States to the foreign representative or

14 another person authorized by the court, including an

15 examiner, in order to protect and preserve the value

16 of assets that, by their nature or because of other

17 circumstances, are perishable, susceptible to devalu18 ation, or otherwise in jeopardy; and

19 ‘‘(3) any relief referred to in paragraph (3),

20 (4), or (7) of section 1521(a).

21 ‘‘(b) Unless extended under section 1521(a)(6), the

22 relief granted under this section terminates when the peti23 tion for recognition is decided upon.

24 ‘‘(c) It is a ground for denial of relief under this sec25 tion that such relief would interfere with the administra26 tion of a foreign main proceeding.
219

•S 625 RS

1 ‘‘(d) The court may not enjoin a police or regulatory

2 act of a governmental unit, including a criminal action or

3 proceeding, under this section.

4 ‘‘(e) The standards, procedures, and limitations ap5 plicable to an injunction shall apply to relief under this

6 section.

7 ‘‘§ 1520. Effects of recognition of a foreign main pro8 ceeding

9 ‘‘(a) Upon recognition of a foreign proceeding that

10 is a foreign main proceeding—

11 ‘‘(1) section 362 applies with respect to the

12 debtor and that property of the debtor that is within

13 the territorial jurisdiction of the United States;

14 ‘‘(2) a transfer, an encumbrance, or any other

15 disposition of an interest of the debtor in property

16 within the territorial jurisdiction of the United

17 States is restrained as and to the extent that is pro18 vided for property of an estate under sections 363,

19 549, and 552; and

20 ‘‘(3) unless the court orders otherwise, the for21 eign representative may operate the debtor’s busi22 ness and may exercise the powers of a trustee under

23 section 549, subject to sections 363 and 552.

24 ‘‘(b) The scope, and the modification or termination,

25 of the stay and restraints referred to in subsection (a) are
220

•S 625 RS

1 subject to the exceptions and limitations provided in sub2 sections (b), (c), and (d) of section 362, subsections (b)

3 and (c) of section 363, and sections 552, 555 through 557,

4 559, and 560.

5 ‘‘(c) Subsection (a) does not affect the right to com6 mence individual actions or proceedings in a foreign coun7 try to the extent necessary to preserve a claim against the

8 debtor.

9 ‘‘(d) Subsection (a) does not affect the right of a for10 eign representative or an entity to file a petition com11 mencing a case under this title or the right of any party

12 to file claims or take other proper actions in such a case.

13 ‘‘§ 1521. Relief that may be granted upon recognition

14 of a foreign proceeding

15 ‘‘(a) Upon recognition of a foreign proceeding, wheth16 er main or nonmain, where necessary to effectuate the

17 purpose of this chapter and to protect the assets of the

18 debtor or the interests of the creditors, the court may, at

19 the request of the foreign representative, grant any appro20 priate relief, including—

21 ‘‘(1) staying the commencement or continuation

22 of individual actions or individual proceedings con23 cerning the debtor’s assets, rights, obligations or li24 abilities to the extent the actions or proceedings

25 have not been stayed under section 1520(a);
221

•S 625 RS

1 ‘‘(2) staying execution against the debtor’s as2 sets to the extent the execution has not been stayed

3 under section 1520(a);

4 ‘‘(3) suspending the right to transfer, encumber

5 or otherwise dispose of any assets of the debtor to

6 the extent that right has not been suspended under

7 section 1520(a);

8 ‘‘(4) providing for the examination of witnesses,

9 the taking of evidence or the delivery of information

10 concerning the debtor’s assets, affairs, rights, obliga11 tions or liabilities;

12 ‘‘(5) entrusting the administration or realiza13 tion of all or part of the debtor’s assets within the

14 territorial jurisdiction of the United States to the

15 foreign representative or another person, including

16 an examiner, authorized by the court;

17 ‘‘(6) extending relief granted under section

18 1519(a); and

19 ‘‘(7) granting any additional relief that may be

20 available to a trustee, except for relief available

21 under sections 522, 544, 545, 547, 548, 550, and

22 724(a).

23 ‘‘(b) Upon recognition of a foreign proceeding, wheth24 er main or nonmain, the court may, at the request of the

25 foreign representative, entrust the distribution of all or
222

•S 625 RS

1 part of the debtor’s assets located in the United States

2 to the foreign representative or another person, including

3 an examiner, authorized by the court, if the court is satis4 fied that the interests of creditors in the United States

5 are sufficiently protected.

6 ‘‘(c) In granting relief under this section to a rep7 resentative of a foreign nonmain proceeding, the court

8 must be satisfied that the relief relates to assets that,

9 under the law of the United States, should be adminis10 tered in the foreign nonmain proceeding or concerns infor11 mation required in that proceeding.

12 ‘‘(d) The court may not enjoin a police or regulatory

13 act of a governmental unit, including a criminal action or

14 proceeding, under this section.

15 ‘‘(e) The standards, procedures, and limitations ap16 plicable to an injunction shall apply to relief under para17 graphs (1), (2), (3), and (6) of subsection (a).

18 ‘‘§ 1522. Protection of creditors and other interested

19 persons

20 ‘‘(a) The court may grant relief under section 1519

21 or 1521, or may modify or terminate relief under sub22 section (c), only if the interests of the creditors and other

23 interested entities, including the debtor, are sufficiently

24 protected.
223

•S 625 RS

1 ‘‘(b) The court may subject relief granted under sec2 tion 1519 or 1521, or the operation of the debtor’s busi3 ness under section 1520(a)(2), to conditions that the court

4 considers to be appropriate, including the giving of secu5 rity or the filing of a bond.

6 ‘‘(c) The court may, at the request of the foreign rep7 resentative or an entity affected by relief granted under

8 section 1519 or 1521, or at its own motion, modify or

9 terminate the relief referred to in subsection (b).

10 ‘‘(d) Section 1104(d) shall apply to the appointment

11 of an examiner under this chapter. Any examiner shall

12 comply with the qualification requirements imposed on a

13 trustee by section 322.

14 ‘‘§ 1523. Actions to avoid acts detrimental to creditors

15 ‘‘(a) Upon recognition of a foreign proceeding, the

16 foreign representative has standing in a case concerning

17 the debtor pending under another chapter of this title to

18 initiate actions under sections 522, 544, 545, 547, 548,

19 550, and 724(a).

20 ‘‘(b) In any case in which the foreign proceeding is

21 a foreign nonmain proceeding, the court must be satisfied

22 that an action under subsection (a) relates to assets that,

23 under United States law, should be administered in the

24 foreign nonmain proceeding.
224

•S 625 RS

1 ‘‘§ 1524. Intervention by a foreign representative

2 ‘‘Upon recognition of a foreign proceeding, the for3 eign representative may intervene in any proceedings in

4 a State or Federal court in the United States in which

5 the debtor is a party.

6 ‘‘SUBCHAPTER IV—COOPERATION WITH FOR7 EIGN COURTS AND FOREIGN REPRESENTA8 TIVES

9 ‘‘§ 1525. Cooperation and direct communication be10 tween the court and foreign courts or for11 eign representatives

12 ‘‘(a) Consistent with section 1501, the court shall co13 operate to the maximum extent possible with foreign

14 courts or foreign representatives, either directly or

15 through the trustee.

16 ‘‘(b) The court is entitled to communicate directly

17 with, or to request information or assistance directly from,

18 foreign courts or foreign representatives, subject to the

19 rights of parties in interest to notice and participation.

20 ‘‘§ 1526. Cooperation and direct communication be21 tween the trustee and foreign courts or

22 foreign representatives

23 ‘‘(a) Consistent with section 1501, the trustee or

24 other person, including an examiner, authorized by the

25 court, shall, subject to the supervision of the court, cooper-
225

•S 625 RS

1 ate to the maximum extent possible with foreign courts

2 or foreign representatives.

3 ‘‘(b) The trustee or other person, including an exam4 iner, authorized by the court is entitled, subject to the su5 pervision of the court, to communicate directly with for6 eign courts or foreign representatives.

7 ‘‘§ 1527. Forms of cooperation

8 ‘‘Cooperation referred to in sections 1525 and 1526

9 may be implemented by any appropriate means,

10 including—

11 ‘‘(1) appointment of a person or body, including

12 an examiner, to act at the direction of the court;

13 ‘‘(2) communication of information by any

14 means considered appropriate by the court;

15 ‘‘(3) coordination of the administration and su16 pervision of the debtor’s assets and affairs;

17 ‘‘(4) approval or implementation of agreements

18 concerning the coordination of proceedings; and

19 ‘‘(5) coordination of concurrent proceedings re20 garding the same debtor.
226

•S 625 RS

1 ‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

2 ‘‘§ 1528. Commencement of a case under this title

3 after recognition of a foreign main pro4 ceeding

5 ‘‘After recognition of a foreign main proceeding, a

6 case under another chapter of this title may be commenced

7 only if the debtor has assets in the United States. The

8 effects of such case shall be restricted to the assets of the

9 debtor that are within the territorial jurisdiction of the

10 United States and, to the extent necessary to implement

11 cooperation and coordination under sections 1525, 1526,

12 and 1527, to other assets of the debtor that are within

13 the jurisdiction of the court under sections 541(a), and

14 1334(e) of title 28, to the extent that such other assets

15 are not subject to the jurisdiction and control of a foreign

16 proceeding that has been recognized under this chapter.

17 ‘‘§ 1529. Coordination of a case under this title and a

18 foreign proceeding

19 ‘‘In any case in which a foreign proceeding and a case

20 under another chapter of this title are taking place concur21 rently regarding the same debtor, the court shall seek co22 operation and coordination under sections 1525, 1526,

23 and 1527, and the following shall apply:
227

•S 625 RS

1 ‘‘(1) If the case in the United States is taking

2 place at the time the petition for recognition of the

3 foreign proceeding is filed—

4 ‘‘(A) any relief granted under sections

5 1519 or 1521 must be consistent with the relief

6 granted in the case in the United States; and

7 ‘‘(B) even if the foreign proceeding is rec8 ognized as a foreign main proceeding, section

9 1520 does not apply.

10 ‘‘(2) If a case in the United States under this

11 title commences after recognition, or after the filing

12 of the petition for recognition, of the foreign

13 proceeding—

14 ‘‘(A) any relief in effect under sections

15 1519 or 1521 shall be reviewed by the court

16 and shall be modified or terminated if incon17 sistent with the case in the United States; and

18 ‘‘(B) if the foreign proceeding is a foreign

19 main proceeding, the stay and suspension re20 ferred to in section 1520(a) shall be modified or

21 terminated if inconsistent with the relief grant22 ed in the case in the United States.

23 ‘‘(3) In granting, extending, or modifying relief

24 granted to a representative of a foreign nonmain

25 proceeding, the court must be satisfied that the re-
228

•S 625 RS

1 lief relates to assets that, under the law of the

2 United States, should be administered in the foreign

3 nonmain proceeding or concerns information re4 quired in that proceeding.

5 ‘‘(4) In achieving cooperation and coordination

6 under sections 1528 and 1529, the court may grant

7 any of the relief authorized under section 305.

8 ‘‘§ 1530. Coordination of more than 1 foreign pro9 ceeding

10 ‘‘In matters referred to in section 1501, with respect

11 to more than 1 foreign proceeding regarding the debtor,

12 the court shall seek cooperation and coordination under

13 sections 1525, 1526, and 1527, and the following shall

14 apply:

15 ‘‘(1) Any relief granted under section 1519 or

16 1521 to a representative of a foreign nonmain pro17 ceeding after recognition of a foreign main pro18 ceeding must be consistent with the foreign main

19 proceeding.

20 ‘‘(2) If a foreign main proceeding is recognized

21 after recognition, or after the filing of a petition for

22 recognition, of a foreign nonmain proceeding, any

23 relief in effect under section 1519 or 1521 shall be

24 reviewed by the court and shall be modified or termi-
229

•S 625 RS

1 nated if inconsistent with the foreign main pro2 ceeding.

3 ‘‘(3) If, after recognition of a foreign nonmain

4 proceeding, another foreign nonmain proceeding is

5 recognized, the court shall grant, modify, or termi6 nate relief for the purpose of facilitating coordina7 tion of the proceedings.

8 ‘‘§ 1531. Presumption of insolvency based on recogni9 tion of a foreign main proceeding

10 ‘‘In the absence of evidence to the contrary, recogni11 tion of a foreign main proceeding is for the purpose of

12 commencing a proceeding under section 303, proof that

13 the debtor is generally not paying its debts as such debts

14 become due.

15 ‘‘§ 1532. Rule of payment in concurrent proceedings

16 ‘‘Without prejudice to secured claims or rights in

17 rem, a creditor who has received payment with respect to

18 its claim in a foreign proceeding pursuant to a law relating

19 to insolvency may not receive a payment for the same

20 claim in a case under any other chapter of this title re21 garding the debtor, so long as the payment to other credi22 tors of the same class is proportionately less than the pay23 ment the creditor has already received.’’.
230

•S 625 RS

1 (b) CLERICAL AMENDMENT.—The table of chapters

2 for title 11, United States Code, is amended by inserting

3 after the item relating to chapter 13 the following:

‘‘15. Ancillary and Other Cross-Border Cases ........................ 1501’’.

4 SEC. 802. AMENDMENTS TO OTHER CHAPTERS IN TITLE 11,

5 UNITED STATES CODE.

6 (a) APPLICABILITY OF CHAPTERS.—Section 103 of

7 title 11, United States Code, is amended—

8 (1) in subsection (a), by inserting before the pe9 riod the following: ‘‘, and this chapter, sections 307,

10 304, 555 through 557, 559, and 560 apply in a case

11 under chapter 15’’; and

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

13 ‘‘(j) Chapter 15 applies only in a case under such

14 chapter, except that—

15 ‘‘(1) sections 1513 and 1514 apply in all cases

16 under this title; and

17 ‘‘(2) section 1505 applies to trustees and to any

18 other entity (including an examiner) authorized by

19 the court under chapter 7, 11, or 12, to debtors in

20 possession under chapter 11 or 12, and to debtors

21 under chapter 9 who are authorized to act under

22 section 1505.’’.

23 (b) DEFINITIONS.—Paragraphs (23) and (24) of sec24 tion 101 of title 11, United States Code, are amended to

25 read as follows:
231

•S 625 RS

1 ‘‘(23) ‘foreign proceeding’ means a collective ju2 dicial or administrative proceeding in a foreign coun3 try, including an interim proceeding, pursuant to a

4 law relating to insolvency in which proceeding the

5 assets and affairs of the debtor are subject to con6 trol or supervision by a foreign court, for the pur7 pose of reorganization or liquidation;

8 ‘‘(24) ‘foreign representative’ means a person

9 or body, including a person or body appointed on an

10 interim basis, authorized in a foreign proceeding to

11 administer the reorganization or the liquidation of

12 the debtor’s assets or affairs or to act as a rep13 resentative of the foreign proceeding;’’.

14 (c) AMENDMENTS TO TITLE 28, UNITED STATES

15 CODE.—

16 (1) PROCEDURES.—Section 157(b)(2) of title

17 28, United States Code, is amended—

18 (A) in subparagraph (N), by striking

19 ‘‘and’’ at the end;

20 (B) in subparagraph (O), by striking the

21 period at the end and inserting ‘‘; and’’; and

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

23 ‘‘(P) recognition of foreign proceedings and

24 other matters under chapter 15 of title 11.’’.
232

•S 625 RS

1 (2) BANKRUPTCY CASES AND PROCEEDINGS.—

2 Section 1334(c)(1) of title 28, United States Code,

3 is amended by striking ‘‘Nothing in’’ and inserting

4 ‘‘Except with respect to a case under chapter 15 of

5 title 11, nothing in’’.

6 (3) DUTIES OF TRUSTEES.—Section 586(a)(3)

7 of title 28, United States Code, is amended by in8 serting ‘‘15,’’ after ‘‘chapter’’.

9 SEC. 803. CLAIMS RELATING TO INSURANCE DEPOSITS IN

10 CASES ANCILLARY TO FOREIGN PRO11 CEEDINGS.

12 Section 304 of title 11, United States Code, is

13 amended to read as follows:

14 ‘‘§ 304. Cases ancillary to foreign proceedings

15 ‘‘(a) For purposes of this section—

16 ‘‘(1) the term ‘domestic insurance company’

17 means a domestic insurance company, as such term

18 is used in section 109(b)(2);

19 ‘‘(2) the term ‘foreign insurance company’

20 means a foreign insurance company, as such term is

21 used in section 109(b)(3);

22 ‘‘(3) the term ‘United States claimant’ means a

23 beneficiary of any deposit referred to in subsection

24 (b) or any multibeneficiary trust referred to in sub25 section (b);
233

•S 625 RS

1 ‘‘(4) the term ‘United States creditor’ means,

2 with respect to a foreign insurance company—

3 ‘‘(i) a United States claimant; or

4 ‘‘(ii) any business entity that operates in

5 the United States and that is a creditor; and

6 ‘‘(5) the term ‘United States policyholder’

7 means a holder of an insurance policy issued in the

8 United States.

9 ‘‘(b) The court may not grant relief under chapter

10 15 of this title with respect to any deposit, escrow, trust

11 fund, or other security required or permitted under any

12 applicable State insurance law or regulation for the benefit

13 of claim holders in the United States.’’.

14 TITLE IX—FINANCIAL

15 CONTRACT PROVISIONS

16 SEC. 901. BANKRUPTCY CODE AMENDMENTS.

17 (a) DEFINITIONS OF FORWARD CONTRACT, REPUR18 CHASE AGREEMENT, SECURITIES CLEARING AGENCY,

19 SWAP AGREEMENT, COMMODITY CONTRACT, AND SECU20 RITIES CONTRACT.—Title 11, United States Code, is

21 amended—

22 (1) in section 101—

23 (A) in paragraph (25)—

24 (i) by striking ‘‘means a contract’’

25 and inserting ‘‘means—
234

•S 625 RS

1 ‘‘(A) a contract’’;

2 (ii) by striking ‘‘, or any combination

3 thereof or option thereon;’’ and inserting

4 ‘‘, or any other similar agreement;’’; and

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

7 ‘‘(B) a combination of agreements or

8 transactions referred to in subparagraphs (A)

9 and (C);

10 ‘‘(C) an option to enter into an agreement

11 or transaction referred to in subparagraph (A)

12 or (B);

13 ‘‘(D) a master netting agreement that pro14 vides for an agreement or transaction referred

15 to in subparagraph (A), (B), or (C), together

16 with all supplements to such master netting

17 agreement, without regard to whether such

18 master netting agreement provides for an

19 agreement or transaction that is not a forward

20 contract under this paragraph, except that such

21 master netting agreement shall be considered to

22 be a forward contract under this paragraph

23 only with respect to each agreement or trans24 action under such master netting agreement
235

•S 625 RS

1 that is referred to in subparagraph (A), (B) or

2 (C); or

3 ‘‘(E) a security agreement or arrangement,

4 or other credit enhancement, directly pertaining

5 to a contract, option, agreement, or transaction

6 referred to in subparagraph (A), (B), (C), or

7 (D), but not to exceed the actual value of such

8 contract, option, agreement, or transaction on

9 the date of the filing of the petition;’’;

10 (B) by striking paragraph (47) and insert11 ing the following:

12 ‘‘(47) ‘repurchase agreement’ and ‘reverse re13 purchase agreement’—

14 ‘‘(A) mean—

15 ‘‘(i) an agreement, including related

16 terms, which provides for the transfer of—

17 ‘‘(I) a certificate of deposit,

18 mortgage related security (as defined

19 in section 3 of the Securities Ex20 change Act of 1934), mortgage loan,

21 interest in a mortgage related security

22 or mortgage loan, eligible bankers’ ac23 ceptance, or qualified foreign govern24 ment security (defined for purposes of

25 this paragraph to mean a security
236

•S 625 RS

1 that is a direct obligation of, or that

2 is fully guaranteed by, the central

3 government of a member of the Orga4 nization for Economic Cooperation

5 and Development); or

6 ‘‘(II) a security that is a direct

7 obligation of, or that is fully guaran8 teed by, the United States or an agen9 cy of the United States against the

10 transfer of funds by the transferee of

11 such certificate of deposit, eligible

12 bankers’ acceptance, security, loan, or

13 interest;

14 with a simultaneous agreement by such

15 transferee to transfer to the transferor

16 thereof a certificate of deposit, eligible

17 bankers’ acceptance, security, loan, or in18 terest of the kind described in subclause

19 (I) or (II), at a date certain that is not

20 later than 1 year after the date of the

21 transferor’s transfer or on demand, against

22 the transfer of funds;

23 ‘‘(ii) a combination of agreements or

24 transactions referred to in clauses (i) and

25 (iii);
237

•S 625 RS

1 ‘‘(iii) an option to enter into an agree2 ment or transaction referred to in clause

3 (i) or (ii); or

4 ‘‘(iv) a master netting agreement that

5 provides for an agreement or transaction

6 referred to in clause (i), (ii), or (iii), to7 gether with all supplements to such master

8 netting agreement, without regard to

9 whether such master netting agreement

10 provides for an agreement or transaction

11 that is not a repurchase agreement under

12 this subparagraph, except that such master

13 netting agreement shall be considered to be

14 a repurchase agreement under this sub15 paragraph only with respect to each agree16 ment or transaction under such master

17 netting agreement that is referred to in

18 clause (i), (ii), or (iii); or

19 ‘‘(v) a security agreement or arrange20 ment, or other credit enhancement, directly

21 pertaining to a contract referred to in

22 clause (i), (ii), (iii), or (iv), but not to ex23 ceed the actual value of such contract on

24 the date of the filing of the petition; and
238

•S 625 RS

1 ‘‘(B) do not include a repurchase obliga2 tion under a participation in a commercial

3 mortgage loan;’’;

4 (C) in paragraph (48) by inserting ‘‘, or

5 exempt from such registration under such sec6 tion pursuant to an order of the Securities and

7 Exchange Commission’’ after ‘‘1934’’; and

8 (D) by striking paragraph (53B) and in9 serting the following:

10 ‘‘(53B) ‘swap agreement’—

11 ‘‘(A) means—

12 ‘‘(i) an agreement, including the

13 terms and conditions incorporated by ref14 erence in such agreement, that is—

15 ‘‘(I) an interest rate swap, op16 tion, future, or forward agreement, in17 cluding a rate floor, rate cap, rate col18 lar, cross-currency rate swap, and

19 basis swap;

20 ‘‘(II) a spot, same day-tomorrow,

21 tomorrow-next, forward, or other for22 eign exchange or precious metals

23 agreement;

24 ‘‘(III) a currency swap, option,

25 future, or forward agreement;
239

•S 625 RS

1 ‘‘(IV) an equity index or an eq2 uity swap, option, future, or forward

3 agreement;

4 ‘‘(V) a debt index or a debt swap,

5 option, future, or forward agreement;

6 ‘‘(VI) a credit spread or a credit

7 swap, option, future, or forward

8 agreement; or

9 ‘‘(VII) a commodity index or a

10 commodity swap, option, future, or

11 forward agreement;

12 ‘‘(ii) an agreement or transaction that

13 is similar to an agreement or transaction

14 referred to in clause (i) that—

15 ‘‘(I) is currently, or in the future

16 becomes, regularly entered into in the

17 swap market (including terms and

18 conditions incorporated by reference

19 therein); and

20 ‘‘(II) is a forward, swap, future,

21 or option on a rate, currency, com22 modity, equity security, or other eq23 uity instrument, on a debt security or

24 other debt instrument, or on an eco-
240

•S 625 RS

1 nomic index or measure of economic

2 risk or value;

3 ‘‘(iii) a combination of agreements or

4 transactions referred to in clauses (i) and

5 (ii);

6 ‘‘(iv) an option to enter into an agree7 ment or transaction referred to in this sub8 paragraph;

9 ‘‘(v) a master netting agreement that

10 provides for an agreement or transaction

11 referred to in clause (i), (ii), (iii), or (iv),

12 together with all supplements to such mas13 ter netting agreement and without regard

14 to whether such master netting agreement

15 contains an agreement or transaction de16 scribed in any such clause, but only with

17 respect to each agreement or transaction

18 referred to in any such clause that is under

19 such master netting agreement; except that

20 ‘‘(B) the definition under subparagraph

21 (A) is applicable for purposes of this title only,

22 and shall not be construed or applied so as to

23 challenge or affect the characterization, defini24 tion, or treatment of any swap agreement under

25 any other statute, regulation, or rule, including
241

•S 625 RS

1 the Securities Act of 1933, the Securities Ex2 change Act of 1934, the Public Utility Holding

3 Company Act of 1935, the Trust Indenture Act

4 of 1939, the Investment Company Act of 1940,

5 the Investment Advisers Act of 1940, the Secu6 rities Investor Protection Act of 1970, the Com7 modity Exchange Act, and the regulations pre8 scribed by the Securities and Exchange Com9 mission or the Commodity Futures Trading

10 Commission.’’;

11 (2) in section 741, by striking paragraph (7)

12 and inserting the following:

13 ‘‘(7) ‘securities contract’—

14 ‘‘(A) means—

15 ‘‘(i) a contract for the purchase, sale,

16 or loan of a security, a mortgage loan or

17 an interest in a mortgage loan, a group or

18 index of securities, or mortgage loans or

19 interests therein (including an interest

20 therein or based on the value thereof), or

21 option on any of the foregoing, including

22 an option to purchase or sell any of the

23 foregoing;
242

•S 625 RS

1 ‘‘(ii) an option entered into on a na2 tional securities exchange relating to for3 eign currencies;

4 ‘‘(iii) the guarantee by or to a securi5 ties clearing agency of a settlement of

6 cash, securities, mortgage loans or inter7 ests therein, group or index of securities,

8 or mortgage loans or interests therein (in9 cluding any interest therein or based on

10 the value thereof), or option on any of the

11 foregoing, including an option to purchase

12 or sell any of the foregoing;

13 ‘‘(iv) a margin loan;

14 ‘‘(v) any other agreement or trans15 action that is similar to an agreement or

16 transaction referred to in this subpara17 graph;

18 ‘‘(vi) a combination of the agreements

19 or transactions referred to in this subpara20 graph;

21 ‘‘(vii) an option to enter into an

22 agreement or transaction referred to in

23 this subparagraph;

24 ‘‘(viii) a master netting agreement

25 that provides for an agreement or trans-
243

•S 625 RS

1 action referred to in clause (i), (ii), (iii),

2 (iv), (v), (vi), or (vii), together with all

3 supplements to such master netting agree4 ment, without regard to whether such mas5 ter netting agreement provides for an

6 agreement or transaction that is not a se7 curities contract under this subparagraph,

8 except that such master netting agreement

9 shall be considered to be a securities con10 tract under this subparagraph only with

11 respect to each agreement or transaction

12 under such master netting agreement that

13 is referred to in clause (i), (ii), (iii), (iv),

14 (v), (vi), or (vii); or

15 ‘‘(ix) a security agreement or arrange16 ment, or other credit enhancement, directly

17 pertaining to a contract referred to in this

18 subparagraph, but not to exceed the actual

19 value of such contract on the date of the

20 filing of the petition; and

21 ‘‘(B) does not include a purchase, sale, or

22 repurchase obligation under a participation in a

23 commercial mortgage loan;’’; and

24 (3) in section 761(4)—
244

•S 625 RS

1 (A) by striking ‘‘or’’ at the end of subpara2 graph (D); and

3 (B) in subparagraph (E), by striking the

4 period at the end and inserting ‘‘; and’’; and

5 (C) (B) by adding at the end the following:

6 ‘‘(F) any other agreement or transaction

7 that is similar to an agreement or transaction

8 referred to in this paragraph;

9 ‘‘(G) a combination of the agreements or

10 transactions referred to in this paragraph;

11 ‘‘(H) an option to enter into an agreement

12 or transaction referred to in this paragraph;

13 ‘‘(I) a master netting agreement that pro14 vides for an agreement or transaction referred

15 to in subparagraph (A), (B), (C), (D), (E), (F),

16 (G), or (H), together with all supplements to

17 such master netting agreement, without regard

18 to whether such master netting agreement pro19 vides for an agreement or transaction that is

20 not a commodity contract under this paragraph,

21 except that such master netting agreement shall

22 be considered to be a commodity contract under

23 this paragraph only with respect to each agree24 ment or transaction under such master netting
245

•S 625 RS

1 agreement that is referred to in subparagraph

2 (A), (B), (C), (D), (E), (F), (G), or (H); or

3 ‘‘(J) a security agreement or arrangement,

4 or other credit enhancement, directly pertaining

5 to a contract referred to in this paragraph, but

6 not to exceed the actual value of such contract

7 on the date of the filing of the petition.’’.

8 (b) DEFINITIONS OF FINANCIAL INSTITUTION, FI9 NANCIAL PARTICIPANT, AND FORWARD CONTRACT MER10 CHANT.—Section 101 of title 11, United States Code, as

11 amended by section 802(b) of this Act, is amended—

12 (1) by striking paragraph (22) and inserting

13 the following:

14 ‘‘(22) ‘financial institution’ means—

15 ‘‘(A)(i) a Federal reserve bank, or an enti16 ty that is a commercial or savings bank, indus17 trial savings bank, savings and loan association,

18 trust company, or receiver or conservator for

19 such entity; and

20 ‘‘(ii) if such Federal reserve bank, receiver,

21 or conservator or entity is acting as agent or

22 custodian for a customer in connection with a

23 securities contract, as defined in section 741,

24 such customer; or
246

•S 625 RS

1 ‘‘(B) in connection with a securities con2 tract, as defined in section 741 of this title, an

3 investment company registered under the In4 vestment Company Act of 1940;’’;

5 (2) by inserting after paragraph (22) the fol6 lowing:

7 ‘‘(22A) ‘financial participant’ means an entity

8 that is a party to a securities contract, commodity

9 contract or forward contract, or on the date of the

10 filing of the petition, has a commodity contract (as

11 defined in section 761) with the debtor or any other

12 entity (other than an affiliate) of a total gross dollar

13 value of not less than $1,000,000,000 in notional or

14 actual principal amount outstanding on any day dur15 ing the previous 15-month period, or has gross

16 mark-to-market positions of not less than

17 $100,000,000 (aggregated across counterparties) in

18 any such agreement or transaction with the debtor

19 or any other entity (other than an affiliate) on any

20 day during the previous 15-month period;’’; and

21 (3) by striking paragraph (26) and inserting

22 the following:

23 ‘‘(26) ‘forward contract merchant’ means a

24 Federal reserve bank, or an entity, the business of

25 which consists in whole or in part of entering into
247

•S 625 RS

1 forward contracts as or with merchants or in a com2 modity, as defined or in section 761, or any similar

3 good, article, service, right, or interest that is pres4 ently or in the future becomes the subject of dealing

5 or in the forward contract trade;’’.

6 (c) DEFINITION OF MASTER NETTING AGREEMENT

7 AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec8 tion 101 of title 11, United States Code, as amended by

9 subsection (b) of this section, is amended by inserting after

10 paragraph (38) the following new paragraphs:

11 ‘‘(38A) the term ‘master netting agreement’—

12 ‘‘(A) means an agreement providing for

13 the exercise of rights, including rights of net14 ting, setoff, liquidation, termination, accelera15 tion, or closeout, under or in connection with 1

16 or more contracts that are described in any 1

17 or more of paragraphs (1) through (5) of sec18 tion 561(a), or any security agreement or ar19 rangement or other credit enhancement related

20 to 1 or more of the foregoing; except that

21 ‘‘(B) if a master netting agreement con22 tains provisions relating to agreements or trans23 actions that are not contracts described in para24 graphs (1) through (5) of section 561(a), the

25 master netting agreement shall be deemed to be
248

•S 625 RS

1 a master netting agreement only with respect to

2 those agreements or transactions that are de3 scribed in any 1 or more of the paragraphs (1)

4 through (5) of section 561(a);

5 ‘‘(38B) the term ‘master netting agreement

6 participant’ means an entity that, at any time before

7 the filing of the petition, is a party to an out8 standing master netting agreement with the debt9 or;’’.

10 (d) SWAP AGREEMENTS, SECURITIES CONTRACTS,

11 COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR12 CHASE AGREEMENTS, AND MASTER NETTING AGREE13 MENTS UNDER THE AUTOMATIC STAY.—

14 (1) IN GENERAL.—Section 362(b) of title 11,

15 United States Code, as amended by section 718 of

16 this Act, is amended—

17 (A) in paragraph (6), by inserting ‘‘,

18 pledged to, and under the control of,’’ after

19 ‘‘held by’’;

20 (B) in paragraph (7), by inserting ‘‘,

21 pledged to, and under the control of,’’ after

22 ‘‘held by’’;

23 (C) by striking paragraph (17) and insert24 ing the following:
249

•S 625 RS

1 ‘‘(17) under subsection (a), of the setoff by a

2 swap participant of a mutual debt and claim under

3 or in connection with a swap agreement that con4 stitutes the setoff of a claim against the debtor for

5 a payment or transfer due from the debtor under or

6 in connection with a swap agreement against a pay7 ment due to the debtor from the swap participant

8 under or in connection with a swap agreement or

9 against cash, securities, or other property held by,

10 pledged to, and under the control of, or due from

11 such swap participant to guarantee, secure, or settle

12 a swap agreement;’’;

13 (D) in paragraph (26), by striking ‘‘or’’ at

14 the end;

15 (E) in paragraph (27), by striking the pe16 riod at the end and inserting ‘‘; or’’; and

17 (F) by inserting after paragraph (27) the

18 following:

19 ‘‘(28) under subsection (a), of the setoff by a

20 master netting agreement participant of a mutual

21 debt and claim under or in connection with 1 or

22 more master netting agreements or any contract or

23 agreement subject to such agreements that con24 stitutes the setoff of a claim against the debtor for

25 any payment or other transfer of property due from
250

•S 625 RS

1 the debtor under or in connection with such agree2 ments or any contract or agreement subject to such

3 agreements against any payment due to the debtor

4 from such master netting agreement participant

5 under or in connection with such agreements or any

6 contract or agreement subject to such agreements or

7 against cash, securities, or other property held by,

8 pledged or and under the control of, or due from

9 such master netting agreement participant to mar10 gin, guarantee, secure, or settle such agreements or

11 any contract or agreement subject to such agree12 ments, to the extent such participant is eligible to

13 exercise such offset rights under paragraph (6), (7),

14 or (17) for each individual contract covered by the

15 master netting agreement in issue.’’.

16 (2) LIMITATION.—Section 362 of title 11,

17 United States Code, as amended by section 432(2)

18 of this Act, is amended by adding at the end the fol19 lowing:

20 ‘‘(l) LIMITATION.—The exercise of rights not subject

21 to the stay arising under subsection (a) pursuant to para22 graph (6), (7), or (17) of subsection (b) shall not be stayed

23 by an order of a court or administrative agency in any

24 proceeding under this title.’’.
251

•S 625 RS

1 (e) LIMITATION OF AVOIDANCE POWERS UNDER

2 MASTER NETTING AGREEMENT.—Section 546 of title 11,

3 United States Code, is amended—

4 (1) in subsection (g) (as added by section 103

5 of Public Law 101–311 (104 Stat. 267 et seq.))—

6 (A) by striking ‘‘under a swap agreement’’;

7 and

8 (B) by striking ‘‘in connection with a swap

9 agreement’’ and inserting ‘‘under or in connec10 tion with any swap agreement’’; and

11 (2) by inserting before subsection (i) (as redes12 ignated by section 407 of this Act) the following new

13 subsection:

14 ‘‘(h) Notwithstanding sections 544, 545, 547,

15 548(a)(2)(B), and 548(b), the trustee may not avoid a

16 transfer made by or to a master netting agreement partici17 pant under or in connection with any master netting

18 agreement or any individual contract covered thereby that

19 is made before the commencement of the case, and except

20 to the extent that the trustee could otherwise avoid such

21 a transfer made under an individual contract covered by

22 such master netting agreement (except under section

23 548(a)(1)(A)).’’.
252

•S 625 RS

1 (f) FRAUDULENT TRANSFERS OF MASTER NETTING

2 AGREEMENTS.—Section 548(d)(2) of title 11, United

3 States Code, is amended—

4 (1) in subparagraph (C), by striking ‘‘and’’;

5 (2) in subparagraph (D), by striking the period

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

7 (3) by adding at the end the following new sub8 paragraph:

9 ‘‘(E) a master netting agreement partici10 pant that receives a transfer in connection with

11 a master netting agreement or any individual

12 contract covered thereby takes for value to the

13 extent of such transfer, except, with respect to

14 a transfer under any individual contract covered

15 thereby, to the extent that such master netting

16 agreement participant otherwise did not take

17 (or is otherwise not deemed to have taken) such

18 transfer for value.’’.

19 (g) TERMINATION OR ACCELERATION OF SECURITIES

20 CONTRACTS.—Section 555 of title 11, United States Code,

21 is amended—

22 (1) by striking the section heading and insert23 ing the following:
253

•S 625 RS

1 ‘‘§ 555. Contractual right to liquidate, terminate, or

2 accelerate a securities contract’’;

3 and

4 (2) in the first sentence, by striking ‘‘liquida5 tion’’ and inserting ‘‘liquidation, termination, or ac6 celeration’’.

7 (h) TERMINATION OR ACCELERATION OF COMMOD8 ITIES OR FORWARD CONTRACTS.—Section 556 of title 11,

9 United States Code, is amended—

10 (1) by striking the section heading and insert11 ing the following:

12 ‘‘§ 556. Contractual right to liquidate, terminate, or

13 accelerate a commodities contract or for14 ward contract’’;

15 and

16 (2) in the first sentence, by striking ‘‘liquida17 tion’’ and inserting ‘‘liquidation, termination, or ac18 celeration’’.

19 (i) TERMINATION OR ACCELERATION OF REPUR20 CHASE AGREEMENTS.—Section 559 of title 11, United

21 States Code, is amended—

22 (1) by striking the section heading and insert23 ing the following:

24 ‘‘§ 559. Contractual right to liquidate, terminate, or

25 accelerate a repurchase agreement’’;

26 and
254

•S 625 RS

1 (2) in the first sentence, by striking ‘‘liquida2 tion’’ and inserting ‘‘liquidation, termination, or ac3 celeration’’.

4 (j) LIQUIDATION, TERMINATION, OR ACCELERATION

5 OF SWAP AGREEMENTS.—Section 560 of title 11, United

6 States Code, is amended—

7 (1) by striking the section heading and insert8 ing following:

9 ‘‘§ 560. Contractual right to liquidate, terminate, or

10 accelerate a swap agreement’’;

11 (2) in the first sentence, by striking ‘‘termi12 nation of a swap agreement’’ and inserting ‘‘liquida13 tion, termination, or acceleration of a swap agree14 ment’’; and

15 (3) by striking ‘‘in connection with any swap

16 agreement’’ and inserting ‘‘in connection with the

17 termination, liquidation, or acceleration of a swap

18 agreement’’.

19 (k) LIQUIDATION, TERMINATION, ACCELERATION, OR

20 OFFSET UNDER A MASTER NETTING AGREEMENT AND

21 ACROSS CONTRACTS.—Title 11, United States Code, is

22 amended by inserting after section 560 the following new

23 section:
255

•S 625 RS

1 ‘‘§ 561. Contractual right to terminate, liquidate, ac2 celerate, or offset under a master netting

3 agreement and across contracts

4 ‘‘(a) Subject to subsection (b), the exercise of any

5 contractual right, because of a condition of the kind speci6 fied in section 365(e)(1), to cause the termination, liquida7 tion, or acceleration of or to offset or net termination val8 ues, payment amounts or other transfer obligations arising

9 under or in connection with 1 or more (or the termination,

10 liquidation, or acceleration of 1 or more)—

11 ‘‘(1) securities contracts, as defined in section

12 741(7);

13 ‘‘(2) commodity contracts, as defined in section

14 761(4);

15 ‘‘(3) forward contracts;

16 ‘‘(4) repurchase agreements;

17 ‘‘(5) swap agreements; or

18 ‘‘(6) master netting agreements,

19 shall not be stayed, avoided, or otherwise limited by oper20 ation of any provision of this title or by any order of a

21 court or administrative agency in any proceeding under

22 this title.

23 ‘‘(b)(1) A party may exercise a contractual right de24 scribed in subsection (a) to terminate, liquidate, or accel25 erate only to the extent that such party could exercise such

26 a right under section 555, 556, 559, or 560 for each indi-
256

•S 625 RS

1 vidual contract covered by the master netting agreement

2 in issue.

3 ‘‘(2) If a debtor is a commodity broker subject to sub4 chapter IV of chapter 7 of this title—

5 ‘‘(A) a party may not net or offset an obligation

6 to the debtor arising under, or in connection with,

7 a commodity contract against any claim arising

8 under, or in connection with, other instruments, con9 tracts, or agreements listed in subsection (a), except

10 to the extent that the party has no positive net eq11 uity in the commodity accounts at the debtor, as cal12 culated under such subchapter IV; and

13 ‘‘(B) another commodity broker may not net or

14 offset an obligation to the debtor arising under, or

15 in connection with, a commodity contract entered

16 into or held on behalf of a customer of the debtor

17 against any claim arising under, or in connection

18 with, other instruments, contracts, or agreements re19 ferred to in subsection (a).

20 ‘‘(c) As used in this section, the term ‘contractual

21 right’ includes a right set forth in a rule or bylaw of a

22 national securities exchange, a national securities associa23 tion, or a securities clearing agency, a right set forth in

24 a bylaw of a clearing organization or contract market or

25 in a resolution of the governing board thereof, and a right,
257

•S 625 RS

1 whether or not evidenced in writing, arising under com2 mon law, under law merchant, or by reason of normal

3 business practice.’’.

4 (l) ANCILLARY PROCEEDINGS.—Section 304 of title

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

6 the following:

7 ‘‘(d) Any provisions of this title relating to securities

8 contracts, commodity contracts, forward contracts, repur9 chase agreements, swap agreements, or master netting

10 agreements shall apply in a case ancillary to a foreign pro11 ceeding under this section or any other section of this title,

12 so that enforcement of contractual provisions of such con13 tracts and agreements in accordance with their terms—

14 ‘‘(1) shall not be stayed or otherwise limited

15 by—

16 ‘‘(A) operation of any provision of this

17 title; or

18 ‘‘(B) order of a court in any case under

19 this title;

20 ‘‘(2) shall limit avoidance powers to the same

21 extent as in a proceeding under chapter 7 or 11; and

22 ‘‘(3) shall not be limited based on the presence

23 or absence of assets of the debtor in the United

24 States.’’.
258

•S 625 RS

1 (m) COMMODITY BROKER LIQUIDATIONS.—Title 11,

2 United States Code, is amended by inserting after section

3 766 the following:

4 ‘‘§ 767. Commodity broker liquidation and forward

5 contract merchants, commodity brokers,

6 stockbrokers, financial institutions, secu7 rities clearing agencies, swap partici8 pants, repo participants, and master net9 ting agreement participants

10 ‘‘Notwithstanding any other provision of this title,

11 the exercise of rights by a forward contract merchant,

12 commodity broker, stockbroker, financial institution, secu13 rities clearing agency, swap participant, repo participant,

14 or master netting agreement participant under this title

15 shall not affect the priority of any unsecured claim it may

16 have after the exercise of such rights.’’.

17 (n) STOCKBROKER LIQUIDATIONS.—Title 11, United

18 States Code, is amended by inserting after section 752 the

19 following:
259

•S 625 RS

1 ‘‘§ 753. Stockbroker liquidation and forward contract

2 merchants, commodity brokers, stock3 brokers, financial institutions, securities

4 clearing agencies, swap participants,

5 repo participants, and master netting

6 agreement participants

7 ‘‘Notwithstanding any other provision of this title,

8 the exercise of rights by a forward contract merchant,

9 commodity broker, stockbroker, financial institution, secu10 rities clearing agency, swap participant, repo participant,

11 financial participant, or master netting agreement partici12 pant under this title shall not affect the priority of any

13 unsecured claim it may have after the exercise of such

14 rights.’’.

15 (o) SETOFF.—Section 553 of title 11, United States

16 Code, is amended—

17 (1) in subsection (a)(3)(C), by inserting ‘‘(ex18 cept for a setoff of a kind described in section

19 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(19) (28),

20 555, 556, 559, or 560)’’ before the period; and

21 (2) in subsection (b)(1), by striking

22 ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17),

23 362(b)(19) 362(b)(28), 555, 556, 559, 560,’’.

24 (p) SECURITIES CONTRACTS, COMMODITY CON25 TRACTS, AND FORWARD CONTRACTS.—Title 11, United

26 States Code, is amended—
260

•S 625 RS

1 (1) in section 362(b)(6), by striking ‘‘financial

2 institutions,’’ each place such term appears and in3 serting ‘‘financial institution, financial participant’’;

4 (2) in section 546(e), by inserting ‘‘financial

5 participant’’ after ‘‘financial institution,’’;

6 (3) in section 548(d)(2)(B), by inserting ‘‘fi7 nancial participant’’ after ‘‘financial institution,’’;

8 (4) in section 555—

9 (A) by inserting ‘‘financial participant’’

10 after ‘‘financial institution,’’; and

11 (B) by inserting before the period ‘‘, a

12 right set forth in a bylaw of a clearing organi13 zation or contract market or in a resolution of

14 the governing board thereof, and a right,

15 whether or not in writing, arising under com16 mon law, under law merchant, or by reason of

17 normal business practice’’; and

18 (5) in section 556, by inserting ‘‘, financial par19 ticipant’’ after ‘‘commodity broker’’.

20 (q) CONFORMING AMENDMENTS.—Title 11 of the

21 United States Code, United States Code, is amended—

22 (1) in the table of sections for chapter 5—

23 (A) by striking the items relating to sec24 tions 555 and 556 and inserting the following:

‘‘555. Contractual right to liquidate, terminate, or accelerate a securities contract.
261

•S 625 RS

‘‘556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract.’’;

1 (B) by striking the items relating to sec2 tions 559 and 560 and inserting the following:

‘‘559. Contractual right to liquidate, terminate, or accelerate a repurchase

agreement.

‘‘560. Contractual right to liquidate, terminate, or accelerate a swap agreement.’’;

3 and

4 (C) by adding after the item relating to

5 section 560 the following:

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a

master netting agreement and across contracts.’’;

6 and

7 (2) in the table of sections for chapter 7—

8 (A) by inserting after the item relating to

9 section 766 the following:

‘‘767. Commodity broker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, securities

clearing agencies, swap participants, repo participants, and

master netting agreement participants.’’;

10 and

11 (B) by inserting after the item relating to

12 section 752 the following:

‘‘753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, securities clearing

agencies, swap participants, repo participants, and master netting agreement participants.’’.

13 SEC. 902. DAMAGE MEASURE.

14 (a) IN GENERAL.—Title 11, United States Code, is

15 amended—

16 (1) by inserting after section 561 the following:
262

•S 625 RS

1 ‘‘§ 562. Damage measure in connection with swap

2 agreements, securities contracts, forward

3 contracts, commodity contracts, repur4 chase agreements, or master netting

5 agreements

6 ‘‘If the trustee rejects a swap agreement, securities

7 contract (as defined in section 741), forward contract,

8 commodity contract (as defined in section 761) repurchase

9 agreement, or master netting agreement under section

10 365(a), or if a forward contract merchant, stockbroker,

11 financial institution, securities clearing agency, repo par12 ticipant, financial participant, master netting agreement

13 participant, or swap participant liquidates, terminates, or

14 accelerates such contract or agreement, damages shall be

15 measured as of the earlier of—

16 ‘‘(1) the date of such rejection; or

17 ‘‘(2) the date of such liquidation, termination,

18 or acceleration.’’; and

19 (2) in the table of sections for chapter 5 by in20 serting after the item relating to section 561 the fol21 lowing:

‘‘562. Damage measure in connection with swap agreements, securities contracts, forward contracts, commodity contracts, repurchase

agreements, or master netting agreements.’’.

22 (b) CLAIMS ARISING FROM REJECTION.—Section

23 502(g) of title 11, United States Code, is amended—

24 (1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and
263

•S 625 RS

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

2 ‘‘(2) A claim for damages calculated in accordance

3 with section 561 shall be allowed under subsection (a), (b),

4 or (c) of this section, or disallowed under subsection (d)

5 or (e) of this section, as if such claim had arisen before

6 the date of the filing of the petition.’’.

7 SEC. 903. ASSET-BACKED SECURITIZATIONS.

8 Section 541 of title 11, United States Code, is

9 amended—

10 (1) in subsection (b), by striking ‘‘or’’ at the

11 end of paragraph (4);

12 (2) by redesignating paragraph (5) of sub13 section (b) as paragraph (6);

14 (3) by inserting after paragraph (4) of sub15 section (b) the following new paragraph:

16 ‘‘(5) any eligible asset (or proceeds thereof), to

17 the extent that such eligible asset was transferred by

18 the debtor, before the date of commencement of the

19 case, to an eligible entity in connection with an

20 asset-backed securitization, except to the extent that

21 such asset (or proceeds or value thereof) may be re22 covered by the trustee under section 550 by virtue

23 of avoidance under section 548(a); or’’; and

24 (4) by adding at the end the following new sub25 section:
264

•S 625 RS

1 ‘‘(e) For purposes of this section, the following defini2 tions shall apply:

3 ‘‘(1) The term ‘asset-backed securitization’

4 means a transaction in which eligible assets trans5 ferred to an eligible entity are used as the source of

6 payment on securities, the most senior of which are

7 rated investment grade by 1 or more nationally rec8 ognized securities rating organizations, issued by an

9 issuer.

10 ‘‘(2) The term ‘eligible asset’ means—

11 ‘‘(A) financial assets (including interests

12 therein and proceeds thereof), either fixed or re13 volving, including residential and commercial

14 mortgage loans, consumer receivables, trade re15 ceivables, and lease receivables, that, by their

16 terms, convert into cash within a finite time pe17 riod, plus any rights or other assets designed to

18 assure the servicing or timely distribution of

19 proceeds to security holders;

20 ‘‘(B) cash; and

21 ‘‘(C) securities.

22 ‘‘(3) The term ‘eligible entity’ means—

23 ‘‘(A) an issuer; or

24 ‘‘(B) a trust, corporation, partnership, or

25 other entity engaged exclusively in the business
265

•S 625 RS

1 of acquiring and transferring eligible assets di2 rectly or indirectly to an issuer and taking ac3 tions ancillary thereto.

4 ‘‘(4) The term ‘issuer’ means a trust, corpora5 tion, partnership, or other entity engaged exclusively

6 in the business of acquiring and holding eligible as7 sets, issuing securities backed by eligible assets, and

8 taking actions ancillary thereto.

9 ‘‘(5) The term ‘transferred’ means the debtor,

10 under a written agreement, represented and war11 ranted that eligible assets were sold, contributed, or

12 otherwise conveyed with the intention of removing

13 them from the estate of the debtor pursuant to sub14 section (b)(5), irrespective, without limitation of—

15 ‘‘(A) whether the debtor directly or indi16 rectly obtained or held an interest in the issuer

17 or in any securities issued by the issuer;

18 ‘‘(B) whether the debtor had an obligation

19 to repurchase or to service or supervise the

20 servicing of all or any portion of such eligible

21 assets; or

22 ‘‘(C) the characterization of such sale, con23 tribution, or other conveyance for tax, account24 ing, regulatory reporting, or other purposes.’’.
266

•S 625 RS

1 SEC. 904. EFFECTIVE DATE; APPLICATION OF AMEND2 MENTS.

3 (a) EFFECTIVE DATE.—This title shall take effect on

4 the date of enactment of this Act.

5 (b) APPLICATION OF AMENDMENTS.—The amend6 ments made by this title shall apply with respect to cases

7 commenced or appointments made under any Federal or

8 State law after the date of enactment of this Act, but shall

9 not apply with respect to cases commenced or appoint10 ments made under any Federal or State law before the

11 date of enactment of this Act.

12 TITLE X—PROTECTION OF

13 FAMILY FARMERS

14 SEC. 1001. REENACTMENT OF CHAPTER 12.

15 (a) REENACTMENT.—

16 (1) IN GENERAL.—Chapter 12 of title 11,

17 United States Code, as reenacted by section 149 of

18 division C of the Omnibus Consolidated and Emer19 gency Supplemental Appropriations Act, 1999 (Pub20 lic Law 105–277), and amended by this Act, is reen21 acted.

22 (2) EFFECTIVE DATE.—Subsection (a) shall

23 take effect on April 1, 1999 October 1, 1999.

24 (b) CONFORMING AMENDMENT.—Section 302 of the

25 Bankruptcy, Judges, United States Trustees, and Family
267

•S 625 RS

1 Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note) is

2 amended by striking subsection (f).

3 SEC. 1002. DEBT LIMIT INCREASE.

4 Section 104(b) of title 11, United States Code, is

5 amended by adding at the end the following:

6 ‘‘(4) The dollar amount in section 101(18) shall be

7 adjusted at the same times and in the same manner as

8 the dollar amounts in paragraph (1) of this subsection,

9 beginning with the adjustment to be made on April 1,

10 2001.’’.

11 SEC. 1003. ELIMINATION OF REQUIREMENT THAT FAMILY

12 FARMER AND SPOUSE RECEIVE OVER 50 PER13 CENT OF INCOME FROM FARMING OPER14 ATION IN YEAR PRIOR TO BANKRUPTCY.

15 Section 101(18)(A) of title 11, United States Code,

16 is amended by striking ‘‘the taxable year preceding the

17 taxable year’’ and inserting ‘‘at least 1 of the 3 calendar

18 years preceding the year’’.

19 SEC. 1004. CERTAIN CLAIMS OWED TO GOVERNMENTAL

20 UNITS.

21 (a) CONTENTS OF PLAN.—Section 1222(a)(2) of title

22 11, United States Code, is amended to read as follows:

23 ‘‘(2) provide for the full payment, in deferred

24 cash payments, of all claims entitled to priority

25 under section 507, unless—
268

•S 625 RS

1 ‘‘(A) the claim is a claim owed to a govern2 mental unit that arises as a result of the sale,

3 transfer, exchange, or other disposition of any

4 farm asset used in the debtor’s farming oper5 ation, in which case the claim shall be treated

6 as an unsecured claim that is not entitled to

7 priority under section 507, but the debt shall be

8 treated in such manner only if the debtor re9 ceives a discharge; or

10 ‘‘(B) the holder of a particular claim

11 agrees to a different treatment of that claim;

12 and’’.

13 (b) SPECIAL NOTICE PROVISIONS.—Section 1231(d)

14 of title 11, United States Code, is amended by striking

15 ‘‘a State or local governmental unit’’ and inserting ‘‘any

16 governmental unit’’.

17 TITLE XI—HEALTH CARE AND

18 EMPLOYEE BENEFITS

19 SEC. 1101. DEFINITIONS.

20 (a) HEALTH CARE BUSINESS DEFINED.—Section

21 101 of title 11, United States Code, as amended by section

22 1004(a) of this Act, is amended—

23 (1) by redesignating paragraph (27A) as para24 graph (27C); and

25 (2) inserting after paragraph (27) the following:
269

•S 625 RS

1 ‘‘(27A) ‘health care business’—

2 ‘‘(A) means any public or private entity

3 (without regard to whether that entity is orga4 nized for profit or not for profit) that is pri5 marily engaged in offering to the general public

6 facilities and services for—

7 ‘‘(i) the diagnosis or treatment of in8 jury, deformity, or disease; and

9 ‘‘(ii) surgical, drug treatment, psy10 chiatric or obstetric care; and

11 ‘‘(B) includes—

12 ‘‘(i) any—

13 ‘‘(I) general or specialized hos14 pital;

15 ‘‘(II) ancillary ambulatory, emer16 gency, or surgical treatment facility;

17 ‘‘(III) hospice;

18 ‘‘(IV) health maintenance organi19 zation;

20 ‘‘(V) home health agency; and

21 ‘‘(VI) other health care institu22 tion that is similar to an entity re23 ferred to in subclause (I), (II), (III),

24 (IV), or (V); and
270

•S 625 RS

1 ‘‘(ii) any long-term care facility, in2 cluding any—

3 ‘‘(I) skilled nursing facility;

4 ‘‘(II) intermediate care facility;

5 ‘‘(III) assisted living facility;

6 ‘‘(IV) home for the aged;

7 ‘‘(V) domicilary care facility; and

8 ‘‘(VI) health care institution that

9 is related to a facility referred to in

10 subclause (I), (II), (III), (IV), or (V),

11 if that institution is primarily engaged

12 in offering room, board, laundry, or

13 personal assistance with activities of

14 daily living and incidentals to activi15 ties of daily living;’’.

16 (b) HEALTH MAINTENANCE ORGANIZATION DE17 FINED.—Section 101 of title 11, United States Code, as

18 amended by subsection (a), is amended by inserting after

19 paragraph (27A) the following:

20 ‘‘(27B) ‘health maintenance organization’

21 means any person that undertakes to provide or ar22 range for basic health care services through an orga23 nized system that—

24 ‘‘(A)(i) combines the delivery and financing

25 of health care to enrollees; and
271

•S 625 RS

1 ‘‘(ii)(I) provides—

2 ‘‘(aa) physician services directly

3 through physicians or 1 or more groups of

4 physicians; and

5 ‘‘(bb) basic health care services di6 rectly or under a contractual arrangement;

7 and

8 ‘‘(II) if reasonable and appropriate, pro9 vides physician services and basic health care

10 services through arrangements other than the

11 arrangements referred to in clause (i); and

12 ‘‘(B) includes any organization described

13 in subparagraph (A) that provides, or arranges

14 for, health care services on a prepayment or

15 other financial basis;’’.

16 (c) PATIENT.—Section 101 of title 11, United States

17 Code, as amended by subsection (b), is amended by insert18 ing after paragraph (40) the following:

19 ‘‘(40A) ‘patient’ means any person who obtains

20 or receives services from a health care business;’’.

21 (d) PATIENT RECORDS.—Section 101 of title 11,

22 United States Code, as amended by subsection (c), is

23 amended by inserting after paragraph (40A) the following:

24 ‘‘(40B) ‘patient records’ means any written doc25 ument relating to a patient or record recorded in a
272

•S 625 RS

1 magnetic, optical, or other form of electronic me2 dium;’’.

3 SEC. 1102. DISPOSAL OF PATIENT RECORDS.

4 (a) IN GENERAL.—Subchapter III of chapter 3 of

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

6 end the following:

7 ‘‘§ 351. Disposal of patient records

8 ‘‘If a health care business commences a case under

9 chapter 7, 9, or 11, and the trustee does not have a suffi10 cient amount of funds to pay for the storage of patient

11 records in the manner required under applicable Federal

12 or State law, the following requirements shall apply:

13 ‘‘(1) The trustee shall mail, by certified mail, a

14 written request to each appropriate Federal or State

15 agency to request permission from that agency to

16 deposit the patient records with that agency.

17 ‘‘(2) If no appropriate Federal or State agency

18 agrees to permit the deposit of patient records re19 ferred to in paragraph (1) by the date that is 60

20 days after the trustee mails a written request under

21 that paragraph, the trustee shall—

22 ‘‘(A) publish notice, in 1 or more appro23 priate newspapers, that if those patient records

24 are not claimed by the patient or an insurance

25 provider (if applicable law permits the insur-
273

•S 625 RS

1 ance provider to make that claim) by the date

2 that is 60 days after the date of that notifica3 tion, the trustee will destroy the patient

4 records; and

5 ‘‘(B) during the 60-day period described in

6 subparagraph (A), the trustee shall attempt to

7 notify directly each patient that is the subject

8 of the patient records concerning the patient

9 records by mailing to the last known address of

10 that patient an appropriate notice regarding the

11 claiming or disposing of patient records.

12 ‘‘(3) If, after providing the notification under

13 paragraph (2), patient records are not claimed dur14 ing the 60-day period described in paragraph (2)(A)

15 or in any case in which a notice is mailed under

16 paragraph (2)(B), during the 90-day period begin17 ning on the date on which the notice is mailed, by

18 a patient or insurance provider in accordance with

19 that paragraph, the trustee shall destroy those

20 records by—

21 ‘‘(A) if the records are written, shredding

22 or burning the records; or

23 ‘‘(B) if the records are magnetic, optical,

24 or other electronic records, by otherwise de-
274

•S 625 RS

1 stroying those records so that those records

2 cannot be retrieved.’’.

3 (b) CLERICAL AMENDMENT.—The chapter analysis

4 for chapter 3 of title 11, United States Code, is amended

5 by inserting after the item relating to section 350 the fol6 lowing:

‘‘351. Disposal of patient records.’’.

7 SEC. 1103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS

8 OF CLOSING A HEALTH CARE BUSINESS.

9 Section 503(b) of title 11, United States Code, is

10 amended—

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

12 end;

13 (2) in paragraph (6), by striking the period at

14 the end and inserting ‘‘; and’’; and

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

16 ‘‘(7) the actual, necessary costs and expenses of

17 closing a health care business incurred by a trustee,

18 including any cost or expense incurred—

19 ‘‘(A) in disposing of patient records in ac20 cordance with section 351; or

21 ‘‘(B) in connection with transferring pa22 tients from the health care business that is in

23 the process of being closed to another health

24 care business.’’.
275

•S 625 RS

1 SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PA2 TIENT ADVOCATE.

3 (a) IN GENERAL.—

4 (1) APPOINTMENT OF OMBUDSMAN.—Sub5 chapter II of chapter 3 of title 11, United States

6 Code, is amended by inserting after section 331 the

7 following:

8 ‘‘§ 332. Appointment of ombudsman

9 ‘‘(a) Not later than 30 days after a case is com10 menced by a health care business under chapter 7, 9, or

11 11, the court shall appoint an ombudsman to represent

12 the interests of the patients of the health care business.

13 ‘‘(b) An ombudsman appointed under subsection (a)

14 shall—

15 ‘‘(1) monitor the quality of patient care, to the

16 extent necessary under the circumstances, including

17 reviewing records and interviewing patients and phy18 sicians;

19 ‘‘(2) not later than 60 days after the date of

20 appointment, and not less frequently than every 60

21 days thereafter, report to the court, at a hearing or

22 in writing, regarding the quality of patient care at

23 the health care business involved; and

24 ‘‘(3) if the ombudsman determines that the

25 quality of patient care is declining significantly or is

26 otherwise being materially compromised, notify the
276

•S 625 RS

1 court by motion or written report, with notice to ap2 propriate parties in interest, immediately upon mak3 ing that determination.

4 ‘‘(c) An ombudsman shall maintain any information

5 obtained by the ombudsman under this section that relates

6 to patients (including information relating to patient

7 records) as confidential information.’’.

8 (2) CLERICAL AMENDMENT.—The chapter anal9 ysis for chapter 3 of title 11, United States Code,

10 is amended by inserting after the item relating to

11 section 331 the following:

‘‘332. Appointment of ombudsman.’’.

12 (b) COMPENSATION OF OMBUDSMAN.—Section

13 330(a)(1) of title 11, United States Code, is amended—

14 (1) in the matter proceeding subparagraph (A),

15 by inserting ‘‘an ombudsman appointed under sec16 tion 331, or’’ before ‘‘a professional person’’; and

17 (2) in subparagraph (A), by inserting ‘‘ombuds18 man,’’ before ‘‘professional person’’.

19 SEC. 1105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO

20 TRANSFER PATIENTS.

21 (a) IN GENERAL.—Section 704(a) of title 11, United

22 States Code, as amended by section 219 of this Act, is

23 amended—

24 (1) in paragraph (9), by striking ‘‘and’’ at the

25 end;
277

•S 625 RS

1 (2) in paragraph (10), by striking the period

2 and inserting ‘‘; and’’; and

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

4 ‘‘(11) use all reasonable and best efforts to

5 transfer patients from a health care business that is

6 in the process of being closed to an appropriate

7 health care business that—

8 ‘‘(A) is in the vicinity of the health care

9 business that is closing;

10 ‘‘(B) provides the patient with services

11 that are substantially similar to those provided

12 by the health care business that is in the proc13 ess of being closed; and

14 ‘‘(C) maintains a reasonable quality of

15 care.’’.

16 (b) CONFORMING AMENDMENT.—Section 1106(a)(1)

17 of title 11, United States Code, is amended by striking

18 ‘‘and 704(9)’’ and inserting ‘‘704(9), and 704(10)’’.

19 TITLE XII XI—TECHNICAL

20 AMENDMENTS

21 SEC. 1201. 1101. DEFINITIONS.

22 Section 101 of title 11, United States Code, as

23 amended by section 1101 1003 of this Act, is amended—

24 (1) by striking ‘‘In this title—’’ and inserting

25 ‘‘In this title:’’;
278

•S 625 RS

1 (2) in each paragraph, by inserting ‘‘The term’’

2 after the paragraph designation;

3 (3) in paragraph (35)(B), by striking ‘‘para4 graphs (21B) and (33)(A)’’ and inserting ‘‘para5 graphs (23) and (35)’’;

6 (4) in each of paragraphs (35A) and (38), by

7 striking ‘‘; and’’ at the end and inserting a period;

8 (5) in paragraph (51B)—

9 (A) by inserting ‘‘who is not a family farm10 er’’ after ‘‘debtor’’ the first place it appears;

11 and

12 (B) by striking ‘‘thereto having aggregate’’

13 and all that follows through the end of the

14 paragraph;

15 (6) by striking paragraph (54) and inserting

16 the following:

17 ‘‘(54) The term ‘transfer’ means—

18 ‘‘(A) the creation of a lien;

19 ‘‘(B) the retention of title as a security in20 terest;

21 ‘‘(C) the foreclosure of a debtor’s equity of

22 redemption; or

23 ‘‘(D) each mode, direct or indirect, abso24 lute or conditional, voluntary or involuntary, of

25 disposing of or parting with—
279

•S 625 RS

1 ‘‘(i) property; or

2 ‘‘(ii) an interest in property;’’;

3 (7) in each of paragraphs (1) through (35), in

4 each of paragraphs (36) and (37), and in each of

5 paragraphs (40) through (55) (including paragraph

6 (54), as amended by paragraph (6) of this section),

7 by striking the semicolon at the end and inserting a

8 period; and

9 (8) by redesignating paragraphs (4) through

10 (55), including paragraph (54), as amended by para11 graph (6) of this section, in entirely numerical se12 quence.

13 SEC. 1202. 1102. ADJUSTMENT OF DOLLAR AMOUNTS.

14 Section 104 of title 11, United States Code, is

15 amended by inserting ‘‘522(f)(3), 707(b)(5),’’ after

16 ‘‘522(d),’’ each place it appears.

17 SEC. 1203. 1103. EXTENSION OF TIME.

18 Section 108(c)(2) of title 11, United States Code, is

19 amended by striking ‘‘922’’ and all that follows through

20 ‘‘or’’, and inserting ‘‘922, 1201, or’’.

21 SEC. 1204. 1104. TECHNICAL AMENDMENTS.

22 Title 11, of the United States Code, is amended—

23 (1) in section 109(b)(2), by striking ‘‘subsection

24 (c) or (d) of’’; and
280

•S 625 RS

1 (2) in section 541(b)(4), by adding ‘‘or’’ at the

2 end; and

3 (3) (2) in section 552(b)(1), by striking ‘‘prod4 uct’’ each place it appears and inserting ‘‘products’’.

5 SEC. 1205. 1105. PENALTY FOR PERSONS WHO NEG6 LIGENTLY OR FRAUDULENTLY PREPARE

7 BANKRUPTCY PETITIONS.

8 Section 110(j)(3) of title 11, United States Code, is

9 amended by striking ‘‘attorney’s’’ and inserting ‘‘attor10 neys’ ’’.

11 SEC. 1206. 1106. LIMITATION ON COMPENSATION OF PRO12 FESSIONAL PERSONS.

13 Section 328(a) of title 11, United States Code, is

14 amended by inserting ‘‘on a fixed or percentage fee basis,’’

15 after ‘‘hourly basis,’’.

16 SEC. 1207. 1107. SPECIAL TAX PROVISIONS.

17 Section 346(g)(1)(C) of title 11, United States Code,

18 is amended by striking ‘‘, except’’ and all that follows

19 through ‘‘1986’’.

20 SEC. 1208. 1108. EFFECT OF CONVERSION.

21 Section 348(f)(2) of title 11, United States Code, is

22 amended by inserting ‘‘of the estate’’ after ‘‘property’’ the

23 first place it appears.
281

•S 625 RS

1 SEC. 1209. 1109. ALLOWANCE OF ADMINISTRATIVE EX2 PENSES.

3 Section 503(b)(4) of title 11, United States Code, is

4 amended by inserting ‘‘subparagraph (A), (B), (C), (D),

5 or (E) of’’ before ‘‘paragraph (3)’’.

6 SEC. 1210. PRIORITIES.

7 Section 507(a) of title 11, United States Code, as

8 amended by sections 211 and 229 of this Act, is

9 amended—

10 (1) in paragraph (4)(B), by striking the semi11 colon at the end and inserting a period; and

12 (2) in paragraph (8), by inserting ‘‘unsecured’’

13 after ‘‘allowed’’.

14 SEC. 1211. EXEMPTIONS.

15 Section 522(g)(2) of title 11, United States Code, as

16 amended by section 311 of this Act, is amended by strik17 ing ‘‘subsection (f)(2)’’ and inserting ‘‘subsection

18 (f)(1)(B)’’.

19 SEC. 1212. 1110. EXCEPTIONS TO DISCHARGE.

20 Section 523 of title 11, United States Code, as

21 amended by section 229 714 of this Act, is amended—

22 (1) as amended by section 304(e) of Public Law

23 103–394 (108 Stat. 4133), in paragraph (15), by

24 transferring such paragraph so as to insert it such

25 paragraph after paragraph (14) of subsection (a);

26 (2) in subsection (a)—
282

•S 625 RS

1 (A) in paragraph (3), by striking ‘‘or (6)’’

2 each place it appears and inserting ‘‘(6), or

3 (15)’’;

4 (B) in paragraph (9), by striking ‘‘motor

5 vehicle or vessel’’ and inserting ‘‘motor vehicle,

6 vessel, or aircraft’’; and

7 (C) in paragraph (15), as so redesignated

8 by paragraph (1) of this subsection, by insert9 ing ‘‘to a spouse, former spouse, or child of the

10 debtor and’’ after ‘‘(15)’’; and

11 (2) in subsection (a)(9), by striking ‘‘motor vehi12 cle or vessel’’ and inserting ‘‘motor vehicle, vessel, or

13 aircraft’’; and

14 (3) in subsection (e), by striking ‘‘a insured’’

15 and inserting ‘‘an insured’’.

16 SEC. 1213. 1111. EFFECT OF DISCHARGE.

17 Section 524(a)(3) of title 11, United States Code, is

18 amended by striking ‘‘section 523’’ and all that follows

19 through ‘‘or that’’ and inserting ‘‘section 523, 1228(a)(1),

20 or 1328(a)(1), or that’’.

21 SEC. 1214. 1112. PROTECTION AGAINST DISCRIMINATORY

22 TREATMENT.

23 Section 525(c) of title 11, United States Code, is

24 amended—
283

•S 625 RS

1 (1) in paragraph (1), by inserting ‘‘student’’ be2 fore ‘‘grant’’ the second place it appears; and

3 (2) in paragraph (2), by striking ‘‘the program

4 operated under part B, D, or E of’’ and inserting

5 ‘‘any program operated under’’.

6 SEC. 1215. 1113. PROPERTY OF THE ESTATE.

7 Section 541(b)(4)(B)(ii) of title 11, United States

8 Code, is amended by inserting ‘‘365 or’’ before ‘‘542’’.

9 SEC. 1216. 1114. PREFERENCES.

10 (a) IN GENERAL.—Section 547 of title 11, United

11 States Code, as amended by section 201(b) of this Act, is

12 amended—

13 (1) in subsection (b), by striking ‘‘subsection

14 (c)’’ and inserting ‘‘subsections (c) and (i)’’; and

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

16 ‘‘(i) If the trustee avoids under subsection (b) a secu17 rity interest given between 90 days and 1 year before the

18 date of the filing of the petition, by the debtor to an entity

19 that is not an insider for the benefit of a creditor that

20 is an insider, such security interest shall be considered to

21 be avoided under this section only with respect to the cred22 itor that is an insider.’’.

23 (b) APPLICABILITY.—The amendments made by this

24 section shall apply to any case that pending or commenced

25 on or after the date of enactment of this Act.
284

•S 625 RS

1 SEC. 1217. 1115. POSTPETITION TRANSACTIONS.

2 Section 549(c) of title 11, United States Code, is

3 amended—

4 (1) by inserting ‘‘an interest in’’ after ‘‘transfer

5 of’’;

6 (2) by striking ‘‘such property’’ and inserting

7 ‘‘such real property’’; and

8 (3) by striking ‘‘the interest’’ and inserting

9 ‘‘such interest’’.

10 SEC. 1218. 1116. DISPOSITION OF PROPERTY OF THE ES11 TATE.

12 Section 726(b) of title 11, United States Code, is

13 amended by striking ‘‘1009,’’.

14 SEC. 1219. 1117. GENERAL PROVISIONS.

15 Section 901(a) of title 11, United States Code, as

16 amended by section 901(k) 502 of this Act, is amended

17 by inserting ‘‘1123(d),’’ after ‘‘1123(b),’’.

18 SEC. 1220. 1118. ABANDONMENT OF RAILROAD LINE.

19 Section 1170(e)(1) of title 11, United States Code,

20 is amended by striking ‘‘section 11347’’ and inserting

21 ‘‘section 11326(a)’’.

22 SEC. 1221. 1119. CONTENTS OF PLAN.

23 Section 1172(c)(1) of title 11, United States Code,

24 is amended by striking ‘‘section 11347’’ and inserting

25 ‘‘section 11326(a)’’.
285

•S 625 RS

1 SEC. 1222. 1120. DISCHARGE UNDER CHAPTER 12.

2 Subsections (a) and (c) of section 1228 of title 11,

3 United States Code, are amended by striking

4 ‘‘1222(b)(10)’’ each place it appears and inserting

5 ‘‘1222(b)(9)’’.

6 SEC. 1223. 1121. BANKRUPTCY CASES AND PROCEEDINGS.

7 Section 1334(d) of title 28, United States Code, is

8 amended—

9 (1) by striking ‘‘made under this subsection’’

10 and inserting ‘‘made under subsection (c)’’; and

11 (2) by striking ‘‘This subsection’’ and inserting

12 ‘‘Subsection (c) and this subsection’’.

13 SEC. 1224. 1122. KNOWING DISREGARD OF BANKRUPTCY

14 LAW OR RULE.

15 Section 156(a) of title 18, United States Code, is

16 amended—

17 (1) in the first undesignated paragraph—

18 (A) by inserting ‘‘(1) the term’’ before

19 ‘‘ ‘bankruptcy’’; and

20 (B) by striking the period at the end and

21 inserting ‘‘; and’’; and

22 (2) in the second undesignated paragraph—

23 (A) by inserting ‘‘(2) the term’’ before

24 ‘‘ ‘document’’; and

25 (B) by striking ‘‘this title’’ and inserting

26 ‘‘title 11’’.
286

•S 625 RS

1 SEC. 1225. 1123. TRANSFERS MADE BY NONPROFIT CHARI2 TABLE CORPORATIONS.

3 (a) SALE OF PROPERTY OF ESTATE.—Section 363(d)

4 of title 11, United States Code, is amended by striking

5 ‘‘only’’ and all that follows through the end of the sub6 section and inserting ‘‘only—

7 ‘‘(1) in accordance with applicable nonbank8 ruptcy law that governs the transfer of property by

9 a corporation or trust that is not a moneyed, busi10 ness, or commercial corporation or trust; and

11 ‘‘(2) to the extent not inconsistent with any re12 lief granted under subsection (c), (d), (e), or (f) of

13 section 362.’’.

14 (b) CONFIRMATION OF PLAN FOR REORGANIZA15 TION.—Section 1129(a) of title 11, United States Code,

16 as amended by section 212 of this Act, is amended by add17 ing at the end the following:

18 ‘‘(15) All transfers of property of the plan shall

19 be made in accordance with any applicable provi20 sions of nonbankruptcy law that govern the transfer

21 of property by a corporation or trust that is not a

22 moneyed, business, or commercial corporation or

23 trust.’’.

24 (c) TRANSFER OF PROPERTY.—Section 541 of title

25 11, United States Code, is amended by adding at the end

26 the following:
287

•S 625 RS

1 ‘‘(f) Notwithstanding any other provision of this title,

2 property that is held by a debtor that is a corporation de3 scribed in section 501(c)(3) of the Internal Revenue Code

4 of 1986 and exempt from tax under section 501(a) of such

5 Code may be transferred to an entity that is not such a

6 corporation, but only under the same conditions as would

7 apply if the debtor had not filed a case under this title.’’.

8 (d) APPLICABILITY.—The amendments made by this

9 section shall apply to a case pending under title 11, United

10 States Code, on the date of enactment of this Act, except

11 that the court shall not confirm a plan under chapter 11

12 of this title without considering whether this section would

13 substantially affect the rights of a party in interest who

14 first acquired rights with respect to the debtor after the

15 date of the petition. The parties who may appear and be

16 heard in a proceeding under this section include the attor17 ney general of the State in which the debtor is incor18 porated, was formed, or does business.

19 (e) RULE OF CONSTRUCTION.—Nothing in this sec20 tion shall be construed to require the court in which a

21 case under chapter 11 is pending to remand or refer any

22 proceeding, issue, or controversy to any other court or to

23 require the approval of any other court for the transfer

24 of property.
288

•S 625 RS

1 SEC. 1226. 1124. PROTECTION OF VALID PURCHASE MONEY

2 SECURITY INTERESTS.

3 Section 547(c)(3)(B) of title 11, United States Code,

4 is amended by striking ‘‘20’’ and inserting ‘‘30’’.

5 SEC. 1227. 1125. EXTENSIONS.

6 Section 302(d)(3) of the Bankruptcy, Judges, United

7 States Trustees, and Family Farmer Bankruptcy Act of

8 1986 (28 U.S.C. 581 note) is amended—

9 (1) in subparagraph (A), in the matter fol10 lowing clause (ii), by striking ‘‘or October 1, 2002,

11 whichever occurs first’’; and

12 (2) in subparagraph (F)—

13 (A) in clause (i)—

14 (i) in subclause (II), by striking ‘‘or

15 October 1, 2002, whichever occurs first’’;

16 and

17 (ii) in the matter following subclause

18 (II), by striking ‘‘October 1, 2003, or’’;

19 and

20 (B) in clause (ii), in the matter following

21 subclause (II)—

22 (i) by striking ‘‘before October 1,

23 2003, or’’; and

24 (ii) by striking ‘‘, whichever occurs

25 first’’.
289

•S 625 RS

1 SEC. 1228. 1126. BANKRUPTCY JUDGESHIPS.

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

3 ‘‘Bankruptcy Judgeship Act of 1999’’.

4 (b) TEMPORARY JUDGESHIPS.—

5 (1) APPOINTMENTS.—The following judgeship

6 positions shall be filled in the manner prescribed in

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

8 the appointment of bankruptcy judges provided for

9 in section 152(a)(2) of such title:

10 (A) One additional bankruptcy judgeship

11 for the eastern district of California.

12 (B) Four additional bankruptcy judgeships

13 for the central district of California.

14 (C) One additional bankruptcy judgeship

15 for the southern district of Florida.

16 (D) Two additional bankruptcy judgeships

17 for the district of Maryland.

18 (E) One additional bankruptcy judgeship

19 for the eastern district of Michigan.

20 (F) One additional bankruptcy judgeship

21 for the southern district of Mississippi.

22 (G) One additional bankruptcy judgeship

23 for the district of New Jersey.

24 (H) One additional bankruptcy judgeship

25 for the eastern district of New York.
290

•S 625 RS

1 (I) One additional bankruptcy judgeship

2 for the northern district of New York.

3 (J) One additional bankruptcy judgeship

4 for the southern district of New York.

5 (K) One additional bankruptcy judgeship

6 for the eastern district of Pennsylvania.

7 (L) One additional bankruptcy judgeship

8 for the middle district of Pennsylvania.

9 (M) One additional bankruptcy judgeship

10 for the western district of Tennessee.

11 (N) One additional bankruptcy judgeship

12 for the eastern district of Virginia.

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

14 the office of a bankruptcy judge in each of the judi15 cial districts set forth in paragraph (1) that—

16 (A) results from the death, retirement, res17 ignation, or removal of a bankruptcy judge; and

18 (B) occurs 5 years or more after the ap19 pointment date of a bankruptcy judge ap20 pointed under paragraph (1);

21 shall not be filled.

22 (c) EXTENSIONS.—

23 (1) IN GENERAL.—The temporary bankruptcy

24 judgeship positions authorized for the northern dis25 trict of Alabama, the district of Delaware, the dis-
291

•S 625 RS

1 trict of Puerto Rico, the district of South Carolina,

2 and the eastern district of Tennessee under section

3 3(a) (1), (3), (7), (8), and (9) of the Bankruptcy

4 Judgeship Act of 1992 (28 U.S.C. 152 note) are ex5 tended until the first vacancy occurring in the office

6 of a bankruptcy judge in the applicable district re7 sulting from the death, retirement, resignation, or

8 removal of a bankruptcy judge and occurring—

9 (A) 8 years or more after November 8,

10 1993, with respect to the northern district of

11 Alabama;

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

13 1993, with respect to the district of Delaware;

14 (C) 8 years or more after August 29,

15 1994, with respect to the district of Puerto

16 Rico;

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

18 with respect to the district of South Carolina;

19 and

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

21 1993, with respect to the eastern district of

22 Tennessee.

23 (2) APPLICABILITY OF OTHER PROVISIONS.—

24 All other provisions of section 3 of the Bankruptcy
292

•S 625 RS

1 Judgeship Act of 1992 remain applicable to such

2 temporary judgeship positions.

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

4 section 152(a)(1) of title 28, United States Code, is

5 amended to read as follows: ‘‘Each bankruptcy judge to

6 be appointed for a judicial district as provided in para7 graph (2) shall be appointed by the United States court

8 of appeals for the circuit in which such district is lo9 cated.’’.

10 (e) TRAVEL EXPENSES OF BANKRUPTCY JUDGES.—

11 Section 156 of title 28, United States Code, is amended

12 by adding at the end the following:

13 ‘‘(g)(1) In this subsection, the term ‘travel

14 expenses’—

15 ‘‘(A) means the expenses incurred by a bank16 ruptcy judge for travel that is not directly related to

17 any case assigned to such bankruptcy judge; and

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

19 bankruptcy judge if—

20 ‘‘(i) the payment for the travel expenses is

21 paid by such bankruptcy judge from the per22 sonal funds of such bankruptcy judge; and

23 ‘‘(ii) such bankruptcy judge does not re24 ceive funds (including reimbursement) from the
293

•S 625 RS

1 United States or any other person or entity for

2 the payment of such travel expenses.

3 ‘‘(2) Each bankruptcy judge shall annually submit

4 the information required under paragraph (3) to the chief

5 bankruptcy judge for the district in which the bankruptcy

6 judge is assigned.

7 ‘‘(3)(A) Each chief bankruptcy judge shall submit an

8 annual report to the Director of the Administrative Office

9 of the United States Courts on the travel expenses of each

10 bankruptcy judge assigned to the applicable district (in11 cluding the travel expenses of the chief bankruptcy judge

12 of such district).

13 ‘‘(B) The annual report under this paragraph shall

14 include—

15 ‘‘(i) the travel expenses of each bankruptcy

16 judge, with the name of the bankruptcy judge to

17 whom the travel expenses apply;

18 ‘‘(ii) a description of the subject matter and

19 purpose of the travel relating to each travel expense

20 identified under clause (i), with the name of the

21 bankruptcy judge to whom the travel applies; and

22 ‘‘(iii) the number of days of each travel de23 scribed under clause (ii), with the name of the bank24 ruptcy judge to whom the travel applies.
294

•S 625 RS

1 ‘‘(4)(A) The Director of the Administrative Office of

2 the United States Courts shall—

3 ‘‘(i) consolidate the reports submitted under

4 paragraph (3) into a single report; and

5 ‘‘(ii) annually submit such consolidated report

6 to Congress.

7 ‘‘(B) The consolidated report submitted under this

8 paragraph shall include the specific information required

9 under paragraph (3)(B), including the name of each bank10 ruptcy judge with respect to clauses (i), (ii), and (iii) of

11 paragraph (3)(B).’’.

12 TITLE XIII XII—GENERAL EFFEC13 TIVE DATE; APPLICATION OF

14 AMENDMENTS

15 SEC. 1301. 1201. EFFECTIVE DATE; APPLICATION OF AMEND16 MENTS.

17 (a) EFFECTIVE DATE.—Except as provided otherwise

18 in this Act, this Act and the amendments made by this

19 Act shall take effect 180 days after the date of enactment

20 of this Act.

21 (b) APPLICATION OF AMENDMENTS.—The amend22 ments made by this Act shall not apply with respect to

23 cases commenced under title 11, United States Code, be24 fore the effective date of this Act.