II

106TH CONGRESS

1ST SESSION S. 625

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, and Mr. SESSIONS)

introduced the following bill; which was read twice and referred to the

Committee on the Judiciary

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’’.

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

7 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.
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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. Priorities for claims for domestic support obligations.

Sec. 212. Requirements to obtain confirmation and discharge in cases involving

domestic support obligations.

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

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

support.

Sec. 215. Continued liability of property.

Sec. 216. 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. 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. 225. Sense of Congress.

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

TITLE III—DISCOURAGING BANKRUPTCY ABUSE

Sec. 301. Reinforcement of the fresh start.

Sec. 302. Discouraging bad faith repeat filings.

Sec. 303. Curbing abusive filings.

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.
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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.

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. Definition of disinterested person.

Sec. 418. Factors for compensation of professional persons.

Sec. 419. Appointment of elected trustee.

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.

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
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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.

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.
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TITLE XII—TECHNICAL AMENDMENTS

Sec. 1201. Definitions.

Sec. 1202. Adjustment of dollar amounts.

Sec. 1203. Extension of time.

Sec. 1204. Technical amendments.

Sec. 1205. Penalty for persons who negligently or fraudulently prepare bankruptcy petitions.

Sec. 1206. Limitation on compensation of professional persons.

Sec. 1207. Special tax provisions.

Sec. 1208. Effect of conversion.

Sec. 1209. Allowance of administrative expenses.

Sec. 1210. Priorities.

Sec. 1211. Exemptions.

Sec. 1212. Exceptions to discharge.

Sec. 1213. Effect of discharge.

Sec. 1214. Protection against discriminatory treatment.

Sec. 1215. Property of the estate.

Sec. 1216. Preferences.

Sec. 1217. Postpetition transactions.

Sec. 1218. Disposition of property of the estate.

Sec. 1219. General provisions.

Sec. 1220. Abandonment of railroad line.

Sec. 1221. Contents of plan.

Sec. 1222. Discharge under chapter 12.

Sec. 1223. Bankruptcy cases and proceedings.

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

Sec. 1225. Transfers made by nonprofit charitable corporations.

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

Sec. 1227. Extensions.

Sec. 1228. Bankruptcy judgeships.

TITLE XIII—GENERAL EFFECTIVE DATE; APPLICATION OF

AMENDMENTS

Sec. 1301. Effective date; application of amendments.

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—
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1 (1) by striking the section heading and insert2 ing the following:

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

4 under chapter 13’’;

5 and

6 (2) in subsection (b)—

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

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

9 subparagraph (A) of this paragraph—

10 (i) in the first sentence—

11 (I) by striking ‘‘but not at the re12 quest or suggestion’’ and inserting ‘‘,

13 panel trustee or’’;

14 (II) by inserting ‘‘, or, with the

15 debtor’s consent, convert such a case

16 to a case under chapter 13 of this

17 title,’’ after ‘‘consumer debts’’; and

18 (III) by striking ‘‘substantial

19 abuse’’ and inserting ‘‘abuse’’; and

20 (ii) by striking the next to last sen21 tence; and

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

23 ‘‘(2)(A)(i) In considering under paragraph (1) wheth24 er the granting of relief would be an abuse of the provi25 sions of this chapter, the court shall presume abuse exists
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1 if the debtor’s current monthly income reduced by the

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

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

4 ‘‘(I) 25 percent of the debtor’s nonpriority un5 secured claims in the case; or

6 ‘‘(II) $15,000.

7 ‘‘(ii) The debtor’s monthly expenses shall be the ap8 plicable monthly (excluding payments for debts) expenses

9 under standards issued by the Internal Revenue Service

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

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

12 the dependents of the debtor, and the spouse of the debtor

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

14 ‘‘(iii) The debtor’s average monthly payments on ac15 count of secured debts shall be calculated as—

16 ‘‘(I) the total of all amounts scheduled as con17 tractually due to secured creditors in each month of

18 the 60 months following the date of the petition; di19 vided by

20 ‘‘(II) 60.

21 ‘‘(iv) The debtor’s expenses for payment of all pri22 ority claims (including priority child support and alimony

23 claims) shall be calculated as—

24 ‘‘(I) the total amount of debts entitled to pri25 ority; divided by
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1 ‘‘(II) 60.

2 ‘‘(B)(i) In any proceeding brought under this sub3 section, the presumption of abuse may be rebutted by

4 demonstrating special circumstances that justify addi5 tional expenses or adjustments of current monthly total

6 income. In order to establish special circumstances, the

7 debtor shall be required to—

8 ‘‘(I) itemize each additional expense or adjust9 ment of income; and

10 ‘‘(II) provide—

11 ‘‘(aa) documentation for such expenses;

12 and

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

14 circumstances that make such expenses nec15 essary and reasonable.

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

17 the debtor has an attorney, shall attest under oath to the

18 accuracy of any information provided to demonstrate that

19 additional expenses or adjustments to income are required.

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

21 the additional expenses or adjustments to income referred

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

23 monthly income reduced by the amounts determined under

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

25 by 60 to be less than the lesser of—
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1 ‘‘(I) 25 percent of the debtor’s nonpriority un2 secured claims; or

3 ‘‘(II) $15,000.

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

5 expenditures required under section 521, the debtor shall

6 include a statement of the debtor’s current monthly in7 come, and the calculations that determine whether a pre8 sumption arises under subparagraph (A)(i), that shows

9 how each such amount is calculated.

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

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

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

13 on the content of the statement.

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

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

16 this chapter in a case in which the presumption in sub17 paragraph (A)(i) of such paragraph does not apply or has

18 been rebutted, the court shall consider—

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

20 bad faith; or

21 ‘‘(B) the totality of the circumstances (includ22 ing whether the debtor seeks to reject a personal

23 services contract and the financial need for such re24 jection as sought by the debtor) of the debtor’s fi25 nancial situation demonstrates abuse.’’.
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1 (b) DEFINITION.—Title 11, United States Code, is

2 amended—

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

4 (10) the following:

5 ‘‘(10A) ‘current monthly income’—

6 ‘‘(A) means the average monthly income

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

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

9 without regard to whether the income is taxable

10 income, derived during the 180-day period pre11 ceding the date of determination; and

12 ‘‘(B) includes any amount paid by any en13 tity other than the debtor (or, in a joint case,

14 the debtor and the debtor’s spouse), on a reg15 ular basis to the household expenses of the

16 debtor or the debtor’s dependents (and, in a

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

18 a dependent);’’; and

19 (2) in section 704—

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

21 shall—’’; and

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

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

24 this chapter—
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1 ‘‘(A) the United States trustee or bankruptcy

2 administrator shall review all materials filed by the

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

4 meeting of creditors, file with the court a statement

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

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

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

8 statement under subparagraph (A), the court shall

9 provide a copy of the statement to all creditors.

10 ‘‘(2) The United States trustee or bankruptcy admin11 istrator shall not later than 30 days after receiving a

12 statement filed under paragraph (1) file a motion to dis13 miss or convert under section 707(b), or file a statement

14 setting forth the reasons the United States trustee or

15 bankruptcy administrator does not believe that such a mo16 tion would be appropriate. If, based on the filing of such

17 statement with the court, the United States trustee or

18 bankruptcy administrator determines that the debtor’s

19 case should be presumed to be an abuse under section

20 707(b) and the product of the debtor’s current monthly

21 income, multiplied by 12 is not less than—

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

23 median family income reported for a family of equal

24 or lesser size, whichever is greater; or
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1 ‘‘(B) in the case of a household of 1 person, the

2 national or applicable State median household in3 come for 1 earner, whichever is greater.

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

5 debtor to reimburse the panel trustee for all reasonable

6 costs in prosecuting a motion brought under section

7 707(b), including reasonable attorneys’ fees, if—

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

9 586(a)(1) of title 28 brings a motion for dismissal

10 or conversion under this subsection; and

11 ‘‘(ii) the court—

12 ‘‘(I) grants that motion; and

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

14 for the debtor in filing under this chapter was

15 not substantially justified.

16 ‘‘(B) If the court finds that the attorney for the debt17 or violated Rule 9011, at a minimum, the court shall

18 order—

19 ‘‘(i) the assessment of an appropriate civil pen20 alty against the counsel for the debtor; and

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

22 panel trustee or the United States trustee.

23 ‘‘(C) In the case of a petition referred to in subpara24 graph (B), the signature of an attorney shall constitute

25 a certificate that the attorney has—
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1 ‘‘(i) performed a reasonable investigation into

2 the circumstances that gave rise to the petition; and

3 ‘‘(ii) determined that the petition—

4 ‘‘(I) is well grounded in fact; and

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

6 good faith argument for the extension, modi7 fication, or reversal of existing law and does not

8 constitute an abuse under paragraph (1).

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

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

11 all reasonable costs in contesting a motion brought by a

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

13 States trustee) under this subsection (including reasonable

14 attorneys’ fees) if—

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

16 ‘‘(ii) the court finds that—

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

18 the motion was not substantially justified; or

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

20 for the purpose of coercing a debtor into

21 waiving a right guaranteed to the debtor under

22 this title.

23 ‘‘(B) A party in interest that has a claim of an aggre24 gate amount less than $1,000 shall not be subject to sub25 paragraph (A).
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1 ‘‘(5) Only the judge, United States trustee, bank2 ruptcy administrator, or panel trustee may bring a motion

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

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

5 total current monthly income equal to or less than the na6 tional or applicable State median family monthly income

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

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

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

10 by striking the item relating to section 707 and inserting

11 the following:

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

12 SEC. 103. NOTICE OF ALTERNATIVES.

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

14 amended to read as follows:

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

16 this title by an individual whose debts are primarily con17 sumer debts, that individual shall be given or obtain (as

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

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

20 prescribed by the United States trustee for the district in

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

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

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

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

25 of proceeding under each of those chapters.
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1 ‘‘(B) A brief description of services that may be

2 available to that individual from a credit counseling

3 service that is approved by the United States trustee

4 for that district.’’.

5 SEC. 104. DEBTOR FINANCIAL MANAGEMENT TRAINING

6 TEST PROGRAM.

7 (a) DEVELOPMENT OF FINANCIAL MANAGEMENT

8 AND TRAINING CURRICULUM AND MATERIALS.—The Di9 rector of the Executive Office for United States Trustees

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

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

12 are experts in the field of debtor education, includ13 ing trustees who are appointed under chapter 13 of

14 title 11, United States Code, and who operate finan15 cial management education programs for debtors;

16 and

17 (2) develop a financial management training

18 curriculum and materials that may be used to edu19 cate individual debtors concerning how to better

20 manage their finances.

21 (b) TEST.—

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

23 judicial districts of the United States in which to

24 test the effectiveness of the financial management
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1 training curriculum and materials developed under

2 subsection (a).

3 (2) AVAILABILITY OF CURRICULUM AND MATE4 RIALS.—For a 1-year period beginning not later

5 than 270 days after the date of enactment of this

6 Act, the curriculum and materials referred to in

7 paragraph (1) shall be made available by the Direc8 tor, directly or indirectly, on request to individual

9 debtors in cases filed during that 1-year period

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

11 Code.

12 (c) EVALUATION.—

13 (1) IN GENERAL.—During the 1-year period re14 ferred to in subsection (b), the Director shall evalu15 ate the effectiveness of—

16 (A) the financial management training cur17 riculum and materials developed under sub18 section (a); and

19 (B) a sample of existing consumer edu20 cation programs such as those described in the

21 report of the National Bankruptcy Review Com22 mission issued on October 20, 1997, that are

23 representative of consumer education programs

24 carried out by—

25 (i) the credit industry;
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1 (ii) trustees serving under chapter 13

2 of title 11, United States Code; and

3 (iii) consumer counseling groups.

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

5 concluding the evaluation under paragraph (1), the

6 Director shall submit a report to the Speaker of the

7 House of Representatives and the President pro

8 tempore of the Senate, for referral to the appro9 priate committees of Congress, containing the find10 ings of the Director regarding the effectiveness of

11 such curriculum, such materials, and such programs.

12 SEC. 105. CREDIT COUNSELING.

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

14 11, United States Code, is amended by adding at the end

15 the following:

16 ‘‘(h)(1) Subject to paragraphs (2) and (3), and not17 withstanding any other provision of this section, an indi18 vidual may not be a debtor under this title unless that

19 individual has, during the 90-day period preceding the

20 date of filing of the petition of that individual, received

21 from an approved nonprofit credit counseling service de22 scribed in section 111(a) an individual or group briefing

23 that outlined the opportunities for available credit coun24 seling and assisted that individual in performing a related

25 budget analysis.
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1 ‘‘(2)(A) Paragraph (1) shall not apply with respect

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

3 States trustee or bankruptcy administrator of the bank4 ruptcy court of that district determines that the approved

5 nonprofit credit counseling services for that district are

6 not reasonably able to provide adequate services to the ad7 ditional individuals who would otherwise seek credit coun8 seling from those programs by reason of the requirements

9 of paragraph (1).

10 ‘‘(B) Each United States trustee or bankruptcy ad11 ministrator that makes a determination described in sub12 paragraph (A) shall review that determination not later

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

14 less frequently than every year thereafter.

15 ‘‘(3)(A) Subject to subparagraph (B), the require16 ments of paragraph (1) shall not apply with respect to

17 a debtor who submits to the court a certification that—

18 ‘‘(i) describes exigent circumstances that merit

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

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

21 counseling services from an approved nonprofit cred22 it counseling service, but was unable to obtain the

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

24 day period beginning on the date on which the debt25 or made that request; and
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1 ‘‘(iii) is satisfactory to the court.

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

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

4 the date on which the debtor meets the requirements of

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

6 to that debtor after the date that is 30 days after the debt7 or files a petition.’’.

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

9 11, United States Code, is amended—

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

11 end;

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

13 and inserting ‘‘; or’’; and

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

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

16 failed to complete an instructional course concerning

17 personal financial management described in section

18 111.’’.

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

20 11, United States Code, is amended by adding at the end

21 the following:

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

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

24 has completed an instructional course concerning personal

25 financial management described in section 111.
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1 ‘‘(h) Subsection (g) shall not apply with respect to

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

3 States trustee or bankruptcy administrator of the bank4 ruptcy court of that district determines that the approved

5 instructional courses are not adequate to service the addi6 tional individuals who would be required to complete the

7 instructional course by reason of the requirements of this

8 section.

9 ‘‘(i) Each United States trustee or bankruptcy ad10 ministrator that makes a determination described in sub11 section (h) shall review that determination not later than

12 1 year after the date of that determination, and not less

13 frequently than every year thereafter.’’.

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

15 United States Code, is amended—

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

17 shall—’’; and

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

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

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

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

22 service that provided the debtor services under sec23 tion 109(h); and
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1 ‘‘(2) a copy of the debt repayment plan, if any,

2 developed under section 109(h) through the credit

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

4 (e) GENERAL PROVISIONS.—

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

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

7 following:

8 ‘‘§ 111. Credit counseling services; financial manage9 ment instructional courses

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

11 of credit counseling services that provide 1 or more pro12 grams described in section 109(h) and a list of instruc13 tional courses concerning personal financial management

14 that have been approved by—

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

16 ‘‘(2) the bankruptcy administrator for the dis17 trict.’’.

18 (2) CLERICAL AMENDMENT.—The table of sec19 tions for chapter 1 of title 11, United States Code,

20 is amended by adding at the end the following:

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

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

22 States Code, is amended by adding at the end the fol23 lowing:
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1 ‘‘(i) If a case commenced under chapter 7, 11, or 13

2 of this title is dismissed due to the creation of a debt re3 payment plan, for purposes of subsection (c)(3), any sub4 sequent case commenced by the debtor under any such

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

6 faith.’’.

7 TITLE II—ENHANCED

8 CONSUMER PROTECTION

9 Subtitle A—Penalties for Abusive

10 Creditor Practices

11 SEC. 201. PROMOTION OF ALTERNATIVE DISPUTE RESOLU12 TION.

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

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

15 following:

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

17 after a hearing, may reduce a claim filed under this sec18 tion based in whole on unsecured consumer debts by not

19 more than 20 percent of the claim, if—

20 ‘‘(A) the claim was filed by a creditor who un21 reasonably refused to negotiate a reasonable alter22 native repayment schedule proposed by an approved

23 credit counseling agency acting on behalf of the

24 debtor;
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1 ‘‘(B) the offer of the debtor under subpara2 graph (A)—

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

4 filing of the petition; and

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

6 percent of the amount of the debt over a period

7 not to exceed the repayment period of the loan,

8 or a reasonable extension thereof; and

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

10 repayment schedule is nondischargeable.

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

12 clear and convincing evidence, that—

13 ‘‘(A) the creditor unreasonably refused to con14 sider the debtor’s proposal; and

15 ‘‘(B) the proposed alternative repayment sched16 ule was made in the 60-day period specified in para17 graph (1)(B)(i).’’.

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

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

20 end the following:

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

22 transfer was made as a part of an alternative repayment

23 plan between the debtor and any creditor of the debtor

24 created by an approved credit counseling agency.’’.
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1 SEC. 202. EFFECT OF DISCHARGE.

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

3 amended by adding at the end the following:

4 ‘‘(i) The willful failure of a creditor to credit pay5 ments received under a plan confirmed under this title (in6 cluding a plan of reorganization confirmed under chapter

7 11 of this title) in the manner required by the plan (in8 cluding crediting the amounts required under the plan)

9 shall constitute a violation of an injunction under sub10 section (a)(2).’’.

11 SEC. 203. VIOLATIONS OF THE AUTOMATIC STAY.

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

13 amended—

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

15 end;

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

17 the end and inserting ‘‘; and’’; and

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

19 ‘‘(9) any communication (other than a recita20 tion of the creditor’s legal rights) threatening a

21 debtor (for the purpose of coercing an agreement for

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

23 commencement and before the granting of a dis24 charge in a case under this title, of an intention to—

25 ‘‘(A) file a motion to—
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1 ‘‘(i) determine the dischargeability of

2 a debt; or

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

4 or convert a case; or

5 ‘‘(B) repossess collateral from the debtor

6 to which the stay applies.’’.

7 SEC. 204. DISCOURAGING ABUSE OF REAFFIRMATION

8 PRACTICES.

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

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

11 amended—

12 (1) in subsection (c)—

13 (A) in paragraph (2)—

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

15 ‘‘and’’ at the end;

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

17 ‘‘and’’ at the end; and

18 (iii) by adding at the end the fol19 lowing:

20 ‘‘(C)(i) the consideration for such agree21 ment is based on a wholly unsecured consumer

22 debt; and

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

24 conspicuous statement that advises the debtor

25 that—
26

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

2 before the court at which—

3 ‘‘(aa) the debtor shall appear in

4 person; and

5 ‘‘(bb) the court shall decide

6 whether the agreement constitutes an

7 undue hardship, is not in the debtor’s

8 best interest, or is not the result of a

9 threat by the creditor to take an ac10 tion that, at the time of the threat,

11 that the creditor may not legally take

12 or does not intend to take; and

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

14 counsel, the debtor may waive the debtor’s

15 right to a hearing under subclause (I) by

16 signing a statement—

17 ‘‘(aa) waiving the hearing;

18 ‘‘(bb) stating that the debtor is

19 represented by counsel; and

20 ‘‘(cc) identifying the counsel.’’;

21 and

22 (B) in paragraph (6)(A)—

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

24 the end;
27

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1 (ii) in clause (ii), by striking the pe2 riod and inserting ‘‘and’’; and

3 (iii) by adding at the end the fol4 lowing:

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

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

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

8 could not legally take or did not intend to take.’’;

9 and

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

11 inserting after ‘‘during the course of negotiating an

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

13 by such agreement is based on a wholly secured con14 sumer debt, and the debtor has not waived the right

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

16 (b) LAW ENFORCEMENT.—

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

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

19 following:

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

21 agents of the Federal Bureau of Inves22 tigation to address abusive reaffirma23 tions of debt

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

25 United States shall designate the individuals described in
28

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1 subsection (b) to have primary responsibility in carrying

2 out enforcement activities in addressing violations of sec3 tion 152 or 157 relating to abusive reaffirmations of debt.

4 ‘‘(b) UNITED STATES DISTRICT ATTORNEYS AND

5 AGENTS OF THE FEDERAL BUREAU OF INVESTIGATION—

6 The individuals referred to in subsection (a) are

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

8 district of the United States; and

9 ‘‘(2) an agent of the Federal Bureau of Inves10 tigation (within the meaning of section 3107) for

11 each field office of the Federal Bureau of Investiga12 tion.

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

14 States attorney designated under this section shall have

15 primary responsibility for carrying out the duties of a

16 United States attorney under section 3057.’’.

17 (2) CLERICAL AMENDMENT.—The analysis for

18 chapter 9 of title 18, United States Code, is amend19 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.’’.

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

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

22 end the following:

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

24 of this title shall preempt any State law relating to unfair
29

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1 trade practices that imposes restrictions on creditor con2 duct that would give rise to liability—

3 ‘‘(1) under this section; or

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

5 with applicable requirements for seeking a reaffirma6 tion of debt.

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

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

9 ‘‘(1) may bring an action on behalf of its resi10 dents to recover damages on their behalf under sub11 section (d) or section 524(c); and

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

13 enforce a State criminal law that is similar to sec14 tion 152 or 157 of title 18.’’.

15 Subtitle B—Priority Child Support

16 SEC. 211. PRIORITIES FOR CLAIMS FOR DOMESTIC SUP17 PORT OBLIGATIONS.

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

19 amended—

20 (1) by striking paragraph (7);

21 (2) by redesignating paragraphs (1) through

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

23 (3) in paragraph (2), as redesignated, by strik24 ing ‘‘First’’ and inserting ‘‘Second’’;
30

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1 (4) in paragraph (3), as redesignated, by strik2 ing ‘‘Second’’ and inserting ‘‘Third’’;

3 (5) in paragraph (4), as redesignated, by strik4 ing ‘‘Third’’ and inserting ‘‘Fourth’’;

5 (6) in paragraph (5), as redesignated, by strik6 ing ‘‘Fourth’’ and inserting ‘‘Fifth’’;

7 (7) in paragraph (6), as redesignated, by strik8 ing ‘‘Fifth’’ and inserting ‘‘Sixth’’;

9 (8) in paragraph (7), as redesignated, by strik10 ing ‘‘Sixth’’ and inserting ‘‘Seventh’’; and

11 (9) by inserting before paragraph (2), as redes12 ignated, the following:

13 ‘‘(1) First, allowed claims for domestic support obli14 gations to be paid in the following order on the condition

15 that funds received under this paragraph by a govern16 mental unit in a case under this title be applied:

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

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

19 spouse, or child of the debtor, or the parent of such

20 child, without regard to whether the claim is filed by

21 the spouse, former spouse, child, or parent, or is

22 filed by a governmental unit on behalf of that per23 son.

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

25 order for relief, are assigned by a spouse, former
31

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1 spouse, child of the debtor, or the parent of that

2 child to a governmental unit or are owed directly to

3 a governmental unit under applicable nonbankruptcy

4 law.’’.

5 SEC. 212. REQUIREMENTS TO OBTAIN CONFIRMATION AND

6 DISCHARGE IN CASES INVOLVING DOMESTIC

7 SUPPORT OBLIGATIONS.

8 Title 11, United States Code, is amended—

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

10 following:

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

12 administrative order or statute to pay a domestic

13 support obligation, the debtor has paid all amounts

14 payable under such order or statute for such obliga15 tion that become payable after the date on which the

16 petition is filed.’’;

17 (2) in section 1325(a)—

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

19 the end;

20 (B) in paragraph (6), by striking the pe21 riod at the end and inserting ‘‘; and’’; and

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

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

24 administrative order or statute to pay a domestic

25 support obligation, the debtor has paid all amounts
32

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1 payable under such order for such obligation that

2 become payable after the date on which the petition

3 is filed.’’; and

4 (3) in section 1328(a), in the matter preceding

5 paragraph (1), by inserting ‘‘, and with respect to a

6 debtor who is required by a judicial or administra7 tive order to pay a domestic support obligation, cer8 tifies that all amounts payable under such order or

9 statute that are due on or before the date of the cer10 tification (including amounts due before or after the

11 petition was filed) have been paid’’ after ‘‘completion

12 by the debtor of all payments under the plan’’.

13 SEC. 213. EXCEPTIONS TO AUTOMATIC STAY IN DOMESTIC

14 SUPPORT OBLIGATION PROCEEDINGS.

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

16 amended—

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

18 following:

19 ‘‘(2) under subsection (a)—

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

21 proceeding for—

22 ‘‘(i) the establishment of paternity as

23 a part of an effort to collect domestic sup24 port obligations; or
33

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1 ‘‘(ii) the establishment or modification

2 of an order for domestic support obliga3 tions; or

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

5 obligation from property that is not property of

6 the estate;’’;

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

8 end;

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

10 the end and inserting a semicolon; and

11 (4) by inserting after paragraph (18) the fol12 lowing:

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

14 withholding of income under an order as specified in

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

16 666(b)); or

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

18 ‘‘(A) the withholding, suspension, or re19 striction of drivers’ licenses, professional and

20 occupational licenses, and recreational licenses

21 under State law, as specified in section

22 466(a)(16) of the Social Security Act (42

23 U.S.C. 666(a)(16)) or with respect to the re24 porting of overdue support owed by an absent

25 parent to any consumer reporting agency as
34

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1 specified in section 466(a)(7) of the Social Se2 curity Act (42 U.S.C. 666(a)(7));

3 ‘‘(B) the interception of tax refunds, as

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

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

6 666(a)(3)); or

7 ‘‘(C) the enforcement of medical obliga8 tions as specified under title IV of the Social

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

10 SEC. 214. NONDISCHARGEABILITY OF CERTAIN DEBTS FOR

11 ALIMONY, MAINTENANCE, AND SUPPORT.

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

13 amended—

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

15 and inserting the following:

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

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

18 and inserting ‘‘or (6)’’; and

19 (3) in paragraph (15), by striking ‘‘govern20 mental unit’’ and all through the end of the para21 graph and inserting a semicolon.

22 SEC. 215. CONTINUED LIABILITY OF PROPERTY.

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

24 amended—
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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. PROTECTION OF DOMESTIC SUPPORT CLAIMS

14 AGAINST PREFERENTIAL TRANSFER MO15 TIONS.

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
36

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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
37

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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. 219. COLLECTION OF CHILD SUPPORT.

15 (a) DUTIES OF TRUSTEE UNDER CHAPTER 7.—Sec16 tion 704 of title 11, United States Code, as amended by

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

18 (1) in subsection (a)—

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

20 the end;

21 (B) in paragraph (9), by striking the pe22 riod and inserting ‘‘; and’’; and

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

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

25 there is a claim for support of a child of the debtor
38

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1 or a custodial parent of such child entitled to receive

2 priority under section 507(a)(1), provide the applica3 ble notification specified in subsection (c).’’; and

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

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

6 the trustee shall—

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

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

9 State child support enforcement agency established

10 under sections 464 and 466 of the Social Security

11 Act (42 U.S.C. 654 and 666, respectively) for the

12 State in which the holder resides; and

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

14 the address and telephone number of the child sup15 port enforcement agency; and

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

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

18 resides of the claim;

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

20 the name, address, and telephone number of the

21 holder of the claim; and

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

23 discharge under section 727, notify the holder of

24 that claim and the State child support agency of the

25 State in which that holder resides of—
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1 ‘‘(I) the granting of the discharge;

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

3 debtor; and

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

5 name of each creditor that holds a claim—

6 ‘‘(aa) that is not discharged under

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

8 523(a); or

9 ‘‘(bb) that was reaffirmed by the debt10 or under section 524(c).

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

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

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

14 of the notice, that party may request from a creditor de15 scribed in paragraph (1)(B)(iii)(III) (aa) or (bb) the last

16 known address of the debtor.

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

18 creditor that makes a disclosure of a last known address

19 of a debtor in connection with a request made under sub20 paragraph (A) shall not be liable to the debtor or any

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

22 (b) DUTIES OF TRUSTEE UNDER CHAPTER 13.—

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

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

25 (1) in subsection (b)—
40

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

2 the end;

3 (B) in paragraph (5), by striking the pe4 riod and inserting ‘‘; and’’; and

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

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

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

8 or a custodial parent of such child entitled to receive

9 priority under section 507(a)(1), provide the applica10 ble notification specified in subsection (d).’’; and

11 (s) by adding at the end the following:

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

13 the trustee shall—

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

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

16 State child support enforcement agency established

17 under sections 464 and 466 of the Social Security

18 Act (42 U.S.C. 654 and 666, respectively) for the

19 State in which the holder resides; and

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

21 the address and telephone number of the child sup22 port enforcement agency; and

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

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

25 resides of the claim; and
41

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

2 the name, address, and telephone number of the

3 holder of the claim;

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

5 discharge under section 1328, notify the holder of

6 the claim and the State child support agency of the

7 State in which that holder resides of—

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

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

10 debtor; and

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

12 name of each creditor that holds a claim—

13 ‘‘(aa) that is not discharged under

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

15 523(a); or

16 ‘‘(bb) that was reaffirmed by the debt17 or under section 524(c).

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

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

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

21 of the notice, that party may request from a creditor de22 scribed in paragraph (1)(B)(iii)(III) (aa) or (bb) the last

23 known address of the debtor.

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

25 creditor that makes a disclosure of a last known address
42

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1 of a debtor in connection with a request made under sub2 paragraph (A) shall not be liable to the debtor or any

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

4 Subtitle C—Other Consumer

5 Protections

6 SEC. 221. DEFINITIONS.

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

8 States Code, is amended—

9 (1) by inserting after paragraph (3) the fol10 lowing:

11 ‘‘(3A) ‘assisted person’ means any person whose

12 debts consist primarily of consumer debts and whose

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

14 (2) by inserting after paragraph (4) the fol15 lowing:

16 ‘‘(4A) ‘bankruptcy assistance’ means any goods

17 or services sold or otherwise provided to an assisted

18 person with the express or implied purpose of pro19 viding information, advice, counsel, document prepa20 ration or filing, or attendance at a creditors’ meeting

21 or appearing in a proceeding on behalf of another or

22 providing legal representation with respect to a pro23 ceeding under this title;’’; and

24 (3) by inserting after paragraph (12A) the fol25 lowing:
43

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1 ‘‘(12B) ‘debt relief agency’ means any person

2 who provides any bankruptcy assistance to an as3 sisted person in return for the payment of money or

4 other valuable consideration, or who is a bankruptcy

5 petition preparer under section 110, but does not in6 clude any person that is any of the following or an

7 officer, director, employee, or agent thereof—

8 ‘‘(A) any nonprofit organization which is

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

10 of the Internal Revenue Code of 1986;

11 ‘‘(B) any creditor of the person to the ex12 tent the creditor is assisting the person to re13 structure any debt owed by the person to the

14 creditor; or

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

16 in section 3 of the Federal Deposit Insurance

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

18 union or State credit union (as those terms are

19 defined in section 101 of the Federal Credit

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

21 or subsidiary of such a depository institution or

22 credit union;’’.

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

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

25 ‘‘101(3),’’ after ‘‘sections’’.
44

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1 SEC. 222. DISCLOSURES.

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

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

4 end the following:

5 ‘‘§ 526. Disclosures

6 ‘‘(a) A debt relief agency providing bankruptcy assist7 ance to an assisted person shall provide the following no8 tices to the assisted person:

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

10 342(b)(1).

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

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

13 3 business days after the first date on which a debt

14 relief agency first offers to provide any bankruptcy

15 assistance services to an assisted person, a clear and

16 conspicuous written notice advising assisted persons

17 that—

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

19 required to provide with a petition and there20 after during a case under this title shall be

21 complete, accurate, and truthful;

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

23 completely and accurately disclosed in the docu24 ments filed to commence the case, and the re25 placement value of each asset, as defined in sec26 tion 506, shall be stated in those documents if
45

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1 requested after reasonable inquiry to establish

2 such value;

3 ‘‘(C) total current monthly income, pro4 jected monthly net income and, in a case under

5 chapter 13, monthly net income shall be stated

6 after reasonable inquiry; and

7 ‘‘(D) information an assisted person pro8 vides during the case of that person may be au9 dited under this title and the failure to provide

10 such information may result in dismissal of the

11 proceeding under this title or other sanction in12 cluding, in some instances, criminal sanctions.

13 ‘‘(b) A debt relief agency providing bankruptcy assist14 ance to an assisted person shall provide each assisted per15 son at the same time as the notices required under sub16 section (a)(1) with the following statement, to the extent

17 applicable, or a substantially similar statement. The state18 ment shall be clear and conspicuous and shall be in a sin19 gle document separate from other documents or notices

20 provided to the assisted person:

21 ‘‘ ‘IMPORTANT INFORMATION ABOUT BANK22 RUPTCY ASSISTANCE SERVICES FROM AN AT23 TORNEY OR BANKRUPTCY PETITION PREPARER

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

25 represent yourself, you can hire an attorney to represent
46

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1 you, or you can get help in some localities from a bank2 ruptcy petition preparer who is not an attorney. THE

3 LAW REQUIRES AN ATTORNEY OR BANKRUPTCY

4 PETITION PREPARER TO GIVE YOU A WRITTEN

5 CONTRACT SPECIFYING WHAT THE ATTORNEY

6 OR BANKRUPTCY PETITION PREPARER WILL DO

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

8 see the contract before you hire anyone.

9 ‘‘ ‘The following information helps you understand

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

11 you evaluate how much service you need. Although bank12 ruptcy can be complex, many cases are routine.

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

14 attorney should analyze your eligibility for different forms

15 of debt relief made available by the Bankruptcy Code and

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

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

18 limitations. To file a bankruptcy case, documents called

19 a Petition, Schedules and Statement of Financial Affairs,

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

21 to be prepared correctly and filed with the bankruptcy

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

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

24 required first meeting of creditors where you may be ques-
47

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1 tioned by a court official called a ‘‘trustee’’ and by credi2 tors.

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

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

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

6 to coerce you into reaffirming your debts.

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

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

9 5 years, you may also want help with preparing your chap10 ter 13 plan and with the confirmation hearing on your

11 plan which will be before a bankruptcy judge.

12 ‘‘ ‘If you select another type of relief under the Bank13 ruptcy Code other than chapter 7 or chapter 13, you will

14 want to find out what needs to be done from someone fa15 miliar with that type of relief.

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

17 You are generally permitted to represent yourself in litiga18 tion in bankruptcy court, but only attorneys, not bank19 ruptcy petition preparers, can give you legal advice.’.

20 ‘‘(c) Except to the extent the debt relief agency pro21 vides the required information itself after reasonably dili22 gent inquiry of the assisted person or others so as to ob23 tain such information reasonably accurately for inclusion

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

25 a debt relief agency providing bankruptcy assistance to an
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1 assisted person, to the extent permitted by nonbankruptcy

2 law, shall provide each assisted person at the time re3 quired for the notice required under subsection (a)(1) rea4 sonably sufficient information (which may be provided

5 orally or in a clear and conspicuous writing) to the as6 sisted person on how to provide all the information the

7 assisted person is required to provide under this title pur8 suant to section 521, including—

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

10 determine total current monthly income, projected

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

12 monthly income, and related calculations;

13 ‘‘(2) how to complete the list of creditors, in14 cluding how to determine what amount is owed and

15 what address for the creditor should be shown; and

16 ‘‘(3) how to—

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

18 and

19 ‘‘(B) value exempt property at replacement

20 value, as defined in section 506.

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

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

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

24 notice is given the assisted person.’’.
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1 (b) CONFORMING AMENDMENT.—The table of sec2 tions for chapter 5 of title 11, United States Code, is

3 amended by inserting after the item relating to section

4 525 the following:

‘‘526. Disclosures.’’.

5 SEC. 223. DEBTOR’S BILL OF RIGHTS.

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

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

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

9 the following:

10 ‘‘§ 527. Debtor’s bill of rights

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

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

13 first date on which a debt relief agency provides any

14 bankruptcy assistance services to an assisted person,

15 but before that assisted person’s petition under this

16 title is filed—

17 ‘‘(i) execute a written contract with the as18 sisted person specifying clearly and conspicu19 ously the services the agency will provide the

20 assisted person and the basis on which fees or

21 charges will be made for such services and the

22 terms of payment; and

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

24 fully executed and completed contract in a form

25 the person is able to retain;
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•S 625 IS

1 ‘‘(B) disclose in any advertisement of bank2 ruptcy assistance services or of the benefits of bank3 ruptcy directed to the general public (whether in

4 general media, seminars or specific mailings, tele5 phonic or electronic messages, or otherwise) that the

6 services or benefits are with respect to proceedings

7 under this title, clearly and conspicuously using the

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

9 people file bankruptcy petitions to obtain relief

10 under the Bankruptcy Code.’ or a substantially simi11 lar statement; and

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

13 public indicates that the debt relief agency provides

14 assistance with respect to credit defaults, mortgage

15 foreclosures, lease eviction proceedings, excessive

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

17 consumer debt, disclose conspicuously in that adver18 tisement that the assistance is with respect to or

19 may involve proceedings under this title, using the

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

21 We help people file bankruptcy petitions to obtain

22 relief under the Bankruptcy Code.’ or a substantially

23 similar statement.

24 ‘‘(2) For purposes of paragraph (1)(B), an advertise25 ment shall be of bankruptcy assistance services if that ad-
51

•S 625 IS

1 vertisement describes or offers bankruptcy assistance with

2 a plan under chapter 12, without regard to whether chap3 ter 13 is specifically mentioned. A statement such as ‘fed4 erally supervised repayment plan’ or ‘Federal debt restruc5 turing help’ or any other similar statement that would lead

6 a reasonable consumer to believe that help with debts is

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

8 is bankruptcy assistance with a plan under chapter 13 is

9 a statement covered under the preceding sentence.

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

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

12 relief agency has told the assisted person or prospec13 tive assisted person the agency would provide that

14 person in connection with the preparation for or ac15 tivities during a proceeding under this title;

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

17 any assisted person to make any statement in any

18 document filed in a proceeding under this title,

19 that—

20 ‘‘(A) is untrue and misleading; or

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

22 should be known by the debt relief agency to be

23 untrue or misleading;

24 ‘‘(3) misrepresent to any assisted person or pro25 spective assisted person, directly or indirectly, af-
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•S 625 IS

1 firmatively or by material omission, what services

2 the debt relief agency may reasonably expect to pro3 vide that person, or the benefits an assisted person

4 may obtain or the difficulties the person may experi5 ence if the person seeks relief in a proceeding under

6 this title; or

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

8 assisted person to incur more debt in contemplation

9 of that person filing a proceeding under this title or

10 in order to pay an attorney or bankruptcy petition

11 preparer fee or charge for services performed as part

12 of preparing for or representing a debtor in a pro13 ceeding under this title.’’.

14 (b) CONFORMING AMENDMENT.—The table of sec15 tions for chapter 5 of title 11, United States Code, as

16 amended by section 222 of this Act, is amended by insert17 ing after the item relating to section 526 of title 11,

18 United States Code, the following:

‘‘527. Debtor’s bill of rights.’’.

19 SEC. 224. ENFORCEMENT.

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

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

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

23 ‘‘§ 528. Debt relief agency enforcement

24 ‘‘(a) Any waiver by any assisted person of any protec25 tion or right provided by or under section 526 or 527 shall
53

•S 625 IS

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

2 court or any other person.

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

4 and an assisted person for bankruptcy assistance that does

5 not comply with the material requirements of section 526

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

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

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

9 notice and hearing, to have—

10 ‘‘(A) negligently failed to comply with any pro11 vision of section 526 or 527 with respect to a bank12 ruptcy case or related proceeding of an assisted per13 son;

14 ‘‘(B) provided bankruptcy assistance to an as15 sisted person in a case or related proceeding which

16 is dismissed or converted because the debt relief

17 agency’s negligent failure to file bankruptcy papers,

18 including papers specified in section 521; or

19 ‘‘(C) negligently or intentionally disregarded the

20 material requirements of this title or the Federal

21 Rules of Bankruptcy Procedure applicable to such

22 debt relief agency shall be liable to the assisted per23 son in the amount of any fees and charges in con24 nection with providing bankruptcy assistance to such
54

•S 625 IS

1 person that the debt relief agency has already been

2 paid on account of that proceeding.

3 ‘‘(3) In addition to such other remedies as are pro4 vided under State law, whenever the chief law enforcement

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

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

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

8 ‘‘(A) may bring an action to enjoin such viola9 tion;

10 ‘‘(B) may bring an action on behalf of its resi11 dents to recover the actual damages of assisted per12 sons arising from such violation, including any liabil13 ity under paragraph (2); and

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

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

16 of the action and reasonable attorney fees as deter17 mined by the court.

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

19 located in the State shall have concurrent jurisdiction of

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

21 (3).

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

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

24 the United States trustee, finds that a person intentionally

25 violated section 526 or 527, or engaged in a clear and
55

•S 625 IS

1 consistent pattern or practice of violating section 526 or

2 527, the court may—

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

4 ‘‘(B) impose an appropriate civil penalty

5 against such person.

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

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

8 sections from complying with any law of any State except

9 to the extent that such law is inconsistent with those sec10 tions, and then only to the extent of the inconsistency.’’.

11 (b) CONFORMING AMENDMENT.—The table of sec12 tions for chapter 5 of title 11, United States Code, as

13 amended by section 223 of this Act, is amended by insert14 ing after the item relating to section 527 of title 11,

15 United States Code, the following:

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

16 SEC. 225. SENSE OF CONGRESS.

17 It is the sense of Congress that States should develop

18 curricula relating to the subject of personal finance, de19 signed for use in elementary and secondary schools.

20 SEC. 226. ADDITIONAL AMENDMENTS TO TITLE 11, UNITED

21 STATES CODE.

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

23 as amended by section 211 of this Act, is amended by in24 serting after paragraph (9) the following:
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•S 625 IS

1 ‘‘(10) Tenth, allowed claims for death or per2 sonal injuries resulting from the operation of a

3 motor vehicle or vessel if such operation was unlaw4 ful because the debtor was intoxicated from using al5 cohol, a drug, or another substance.’’.

6 (b) Section 523(a)(9) of title 11, United States Code,

7 is amended by inserting ‘‘or vessel’’ after ‘‘vehicle’’.

8 TITLE III—DISCOURAGING

9 BANKRUPTCY ABUSE

10 SEC. 301. REINFORCEMENT OF THE FRESH START.

11 Section 523(a)(17) of title 11, United States Code,

12 is amended—

13 (1) by striking ‘‘by a court’’ and inserting ‘‘on

14 a prisoner by any court’’,

15 (2) by striking ‘‘section 1915(b) or (f)’’ and in16 serting ‘‘subsection (b) or (f)(2) of section 1915’’,

17 and

18 (3) by inserting ‘‘(or a similar non-Federal

19 law)’’ after ‘‘title 28’’ each place it appears.

20 SEC. 302. DISCOURAGING BAD FAITH REPEAT FILINGS.

21 Section 362(c) of title 11, United States Code, is

22 amended—

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

24 end;
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•S 625 IS

1 (2) in paragraph (2) by striking the period at

2 the end and inserting a semicolon; and

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

4 ‘‘(3) if a single or joint case is filed by or

5 against an individual debtor under chapter 7, 11, or

6 13, and if a single or joint case of the debtor was

7 pending within the preceding 1-year period but was

8 dismissed, other than a case refiled under a chapter

9 other than chapter 7 after dismissal under section

10 707(b)—

11 ‘‘(A) the stay under subsection (a) with re12 spect to any action taken with respect to a debt

13 or property securing such debt or with respect

14 to any lease will terminate with respect to the

15 debtor on the 30th day after the filing of the

16 later case;

17 ‘‘(B) upon motion by a party in interest

18 for continuation of the automatic stay and upon

19 notice and a hearing, the court may extend the

20 stay in particular cases as to any or all credi21 tors (subject to such conditions or limitations

22 as the court may then impose) after notice and

23 a hearing completed before the expiration of the

24 30-day period only if the party in interest dem-
58

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1 onstrates that the filing of the later case is in

2 good faith as to the creditors to be stayed; and

3 ‘‘(C) for purposes of subparagraph (B), a

4 case is presumptively filed not in good faith

5 (but such presumption may be rebutted by clear

6 and convincing evidence to the contrary)—

7 ‘‘(i) as to all creditors, if—

8 ‘‘(I) more than 1 previous case

9 under any of chapter 7, 11, or 13 in

10 which the individual was a debtor was

11 pending within the preceding 1-year

12 period;

13 ‘‘(II) a previous case under any

14 of chapter 7, 11, or 13 in which the

15 individual was a debtor was dismissed

16 within such 1-year period, after the

17 debtor failed to—

18 ‘‘(aa) file or amend the peti19 tion or other documents as re20 quired by this title or the court

21 without substantial excuse (but

22 mere inadvertence or negligence

23 shall not be a substantial excuse

24 unless the dismissal was caused
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1 by the negligence of the debtor’s

2 attorney);

3 ‘‘(bb) provide adequate pro4 tection as ordered by the court;

5 or

6 ‘‘(cc) perform the terms of a

7 plan confirmed by the court; or

8 ‘‘(III) there has not been a sub9 stantial change in the financial or per10 sonal affairs of the debtor since the

11 dismissal of the next most previous

12 case under chapter 7, 11, or 13 of

13 this title, or any other reason to con14 clude that the later case will be

15 concluded—

16 ‘‘(aa) if a case under chap17 ter 7 of this title, with a dis18 charge; or

19 ‘‘(bb) if a case under chap20 ter 11 or 13 of this title, with a

21 confirmed plan which will be fully

22 performed; and

23 ‘‘(ii) as to any creditor that com24 menced an action under subsection (d) in

25 a previous case in which the individual was
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1 a debtor if, as of the date of dismissal of

2 such case, that action was still pending or

3 had been resolved by terminating, condi4 tioning, or limiting the stay as to actions

5 of such creditor; and

6 ‘‘(4)(A)(i) if a single or joint case is filed by or

7 against an individual debtor under this title, and if

8 2 or more single or joint cases of the debtor were

9 pending within the previous year but were dismissed,

10 other than a case refiled under section 707(b), the

11 stay under subsection (a) shall not go into effect

12 upon the filing of the later case; and

13 ‘‘(ii) on request of a party in interest, the court

14 shall promptly enter an order confirming that no

15 stay is in effect;

16 ‘‘(B) if, within 30 days after the filing of the

17 later case, a party in interest requests the court may

18 order the stay to take effect in the case as to any

19 or all creditors (subject to such conditions or limita20 tions as the court may impose), after notice and

21 hearing, only if the party in interest demonstrates

22 that the filing of the later case is in good faith as

23 to the creditors to be stayed;
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1 ‘‘(C) a stay imposed under subparagraph (B)

2 shall be effective on the date of entry of the order

3 allowing the stay to go into effect; and

4 ‘‘(D) for purposes of subparagraph (B), a case

5 is presumptively not filed in good faith (but such

6 presumption may be rebutted by clear and con7 vincing evidence to the contrary)—

8 ‘‘(i) as to all creditors if—

9 ‘‘(I) 2 or more previous cases under

10 this title in which the individual was a

11 debtor were pending within the 1-year pe12 riod;

13 ‘‘(II) a previous case under this title

14 in which the individual was a debtor was

15 dismissed within the time period stated in

16 this paragraph after the debtor failed to

17 file or amend the petition or other docu18 ments as required by this title or the court

19 without substantial excuse (but mere inad20 vertence or negligence shall not be sub21 stantial excuse unless the dismissal was

22 caused by the negligence of the debtor’s at23 torney), failed to pay adequate protection

24 as ordered by the court, or failed to per-
62

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1 form the terms of a plan confirmed by the

2 court; or

3 ‘‘(III) there has not been a substan4 tial change in the financial or personal af5 fairs of the debtor since the dismissal of

6 the next most previous case under this

7 title, or any other reason to conclude that

8 the later case will not be concluded, if a

9 case under chapter 7, with a discharge,

10 and if a case under chapter 11 or 13, with

11 a confirmed plan that will be fully per12 formed; or

13 ‘‘(ii) as to any creditor that commenced an

14 action under subsection (d) in a previous case

15 in which the individual was a debtor if, as of

16 the date of dismissal of such case, such action

17 was still pending or had been resolved by termi18 nating, conditioning, or limiting the stay as to

19 action of such creditor.’’.

20 SEC. 303. CURBING ABUSIVE FILINGS.

21 (a) IN GENERAL.—Section 362(d) of title 11, United

22 States Code, is amended—

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

24 end;
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•S 625 IS

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) with respect to a stay of an act against

5 real property under subsection (a), by a creditor

6 whose claim is secured by an interest in such real

7 estate, if the court finds that the filing of the bank8 ruptcy petition was part of a scheme to delay,

9 hinder, and defraud creditors that involved either—

10 ‘‘(A) transfer of all or part ownership of,

11 or other interest in, the real property without

12 the consent of the secured creditor or court ap13 proval; or

14 ‘‘(B) multiple bankruptcy filings affecting

15 the real property.

16 If recorded in compliance with applicable State laws gov17 erning notices of interests or liens in real property, an

18 order entered under this subsection shall be binding in any

19 other case under this title purporting to affect the real

20 property filed not later than 2 years after that recording,

21 except that a debtor in a subsequent case may move for

22 relief from such order based upon changed circumstances

23 or for good cause shown, after notice and a hearing.’’.
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1 (b) AUTOMATIC STAY.—Section 362(b) of title 11,

2 United States Code, as amended by section 213 of this

3 Act, is amended—

4 (1) in paragraph (19), by striking ‘‘or’’ at the

5 end;

6 (2) in paragraph (20), by striking the period at

7 the end; and

8 (3) by inserting after paragraph (20) the fol9 lowing:

10 ‘‘(21) under subsection (a), of any act to en11 force any lien against or security interest in real

12 property following the entry of an order under sec13 tion 362(d)(4) as to that property in any prior bank14 ruptcy case for a period of 2 years after entry of

15 such an order, except that the debtor, in a subse16 quent case, may move the court for relief from such

17 order based upon changed circumstances or for

18 other good cause shown, after notice and a hearing;

19 or

20 ‘‘(22) under subsection (a), of any act to en21 force any lien against or security interest in real

22 property—

23 ‘‘(A) if the debtor is ineligible under sec24 tion 109(g) to be a debtor in a bankruptcy case;

25 or
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1 ‘‘(B) if the bankruptcy case was filed in

2 violation of a bankruptcy court order in a prior

3 bankruptcy case prohibiting the debtor from

4 being a debtor in another bankruptcy case.’’.

5 SEC. 304. DEBTOR RETENTION OF PERSONAL PROPERTY

6 SECURITY.

7 Title 11, United States Code, is amended—

8 (1) in section 521(a), as so redesignated—

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

10 the end;

11 (B) in paragraph (5), by striking the pe12 riod at the end and inserting ‘‘; and’’; and

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

14 ‘‘(6) in an individual case under chapter 7 of

15 this title, not retain possession of personal property

16 as to which a creditor has an allowed claim for the

17 purchase price secured in whole or in part by an in18 terest in that personal property unless, in the case

19 of an individual debtor, the debtor within 45 days

20 after the first meeting of creditors under section

21 341(a)—

22 ‘‘(A) enters into an agreement with the

23 creditor under section 524(c) with respect to

24 the claim secured by such property; or
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1 ‘‘(B) redeems such property from the secu2 rity interest under section 722.’’; and

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

4 ‘‘(b) If the debtor fails to so act within the 45-day

5 period specified in subsection (a)(6), the personal property

6 affected shall no longer be property of the estate, and the

7 creditor may take whatever action as to such property as

8 is permitted by applicable nonbankruptcy law, unless the

9 court determines on the motion of the trustee, and after

10 notice and a hearing, that such property is of consequen11 tial value or benefit to the estate.’’; and

12 (2) in section 722, by inserting ‘‘in full at the

13 time of redemption’’ before the period at the end.

14 SEC. 305. RELIEF FROM THE AUTOMATIC STAY WHEN THE

15 DEBTOR DOES NOT COMPLETE INTENDED

16 SURRENDER OF CONSUMER DEBT COLLAT17 ERAL.

18 Title 11, United States Code, is amended—

19 (1) in section 362—

20 (A) in subsection (c), by striking ‘‘(e), and

21 (f)’’ and inserting ‘‘(e), (f), and (h)’’; and

22 (B) by redesignating subsection (h), as

23 amended by section 227 of this Act, as sub24 section (j) and by inserting after subsection (g)

25 the following:
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1 ‘‘(h)(1) Subject to paragraph (2), in an individual

2 case under chapter 7, 11, or 13 the stay provided by sub3 section (a) is terminated with respect to property of the

4 estate securing in whole or in part a claim, or subject to

5 an unexpired lease, if the debtor fails within the applicable

6 period of time set by section 521(a)(2) to—

7 ‘‘(A) file timely any statement of intention re8 quired under section 521(a)(2) with respect to that

9 property or to indicate therein that the debtor—

10 ‘‘(i) will either surrender the property or

11 retain the property; and

12 ‘‘(ii) if retaining the property, will, as

13 applicable—

14 ‘‘(I) redeem the property under sec15 tion 722;

16 ‘‘(II) reaffirm the debt the property

17 secures under section 524(c); or

18 ‘‘(III) assume the unexpired lease

19 under section 365(p) if the trustee does

20 not do so; or

21 ‘‘(B) take timely the action specified in that

22 statement of intention, as the statement may be

23 amended before expiration of the period for taking

24 action, unless the statement of intention specifies re-
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•S 625 IS

1 affirmation and the creditor refuses to reaffirm on

2 the original contract terms.

3 ‘‘(2) Paragraph (1) shall not apply if the court deter4 mines on the motion of the trustee, and after notice and

5 a hearing, that such property is of consequential value or

6 benefit to the estate.’’; and

7 (2) in section 521, as amended by section 304

8 of this Act—

9 (A) in subsection (a)(2), as redesignated—

10 (i) by striking ‘‘consumer’’;

11 (ii) in subparagraph (B)—

12 (I) by striking ‘‘forty-five days

13 after the filing of a notice of intent

14 under this section’’ and inserting ‘‘30

15 days after the first date set for the

16 meeting of creditors under section

17 341(a)’’; and

18 (II) by striking ‘‘forty-five day

19 period’’ and inserting ‘‘30-day pe20 riod’’; and

21 (iii) in subparagraph (C), by inserting

22 ‘‘except as provided in section 362(h)’’ be23 fore the semicolon; and

24 (B) by adding at the end the following:
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1 ‘‘(c) If the debtor fails timely to take the action speci2 fied in subsection (a)(6), or in paragraph (1) or (2) of

3 section 362(h), with respect to property which a lessor or

4 bailor owns and has leased, rented, or bailed to the debtor

5 or as to which a creditor holds a security interest not oth6 erwise voidable under section 522(f), 544, 545, 547, 548,

7 or 549, nothing in this title shall prevent or limit the oper8 ation of a provision in the underlying lease or agreement

9 that has the effect of placing the debtor in default under

10 that lease or agreement by reason of the occurrence, pend11 ency, or existence of a proceeding under this title or the

12 insolvency of the debtor. Nothing in this subsection shall

13 be deemed to justify limiting such a provision in any other

14 circumstance.’’.

15 SEC. 306. GIVING SECURED CREDITORS FAIR TREATMENT

16 IN CHAPTER 13.

17 (a) IN GENERAL.—Section 1325(a)(5)(B)(i) of title

18 11, United States Code, is amended to read as follows:

19 ‘‘(i) the plan provides that—

20 ‘‘(I) the holder of such claim retain

21 the lien securing such claim until the ear22 lier of—

23 ‘‘(aa) the payment of the under24 lying debt determined under nonbank25 ruptcy law; or
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1 ‘‘(bb) discharge under section

2 1328; and

3 ‘‘(II) if the case under this chapter is

4 dismissed or converted without completion

5 of the plan, such lien shall also be retained

6 by such holder to the extent recognized by

7 applicable nonbankruptcy law; and’’.

8 (b) RESTORING THE FOUNDATION FOR SECURED

9 CREDIT.—Section 1325(a) of title 11, United States Code,

10 is amended by adding at the end the following flush sen11 tence:

12 ‘‘For purposes of paragraph (5), section 506 shall not

13 apply to a claim described in that paragraph if the debt

14 that is the subject of the claim was incurred within the

15 5-year period preceding the filing of the petition and the

16 collateral for that debt consists of a motor vehicle (as de17 fined in section 30102 of title 49) acquired for the per18 sonal use of the debtor, or if collateral for that debt con19 sists of any other thing of value, if the debt was incurred

20 during the 6-month period preceding that filing.’’.

21 (c) DEFINITIONS.—Section 101 of title 11, United

22 States Code, as amended by section 221 of this Act, is

23 amended—

24 (1) by inserting after paragraph (13) the fol25 lowing:
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1 ‘‘(13A) ‘debtor’s principal residence’—

2 ‘‘(A) means a residential structure, includ3 ing incidental property, without regard to

4 whether that structure is attached to real prop5 erty; and

6 ‘‘(B) includes an individual condominium

7 or cooperative unit;’’; and

8 (2) by inserting after paragraph (27), the fol9 lowing:

10 ‘‘(27A) ‘incidental property’ means, with re11 spect to a debtor’s principal residence—

12 ‘‘(A) property commonly conveyed with a

13 principal residence in the area where the real

14 estate is located;

15 ‘‘(B) all easements, rights, appurtenances,

16 fixtures, rents, royalties, mineral rights, oil or

17 gas rights or profits, water rights, escrow

18 funds, or insurance proceeds; and

19 ‘‘(C) all replacements or additions;’’.

20 SEC. 307. EXEMPTIONS.

21 Section 522(b)(2)(A) of title 11, United States Code,

22 is amended—

23 (1) by striking ‘‘180’’ and inserting ‘‘730’’; and

24 (2) by striking ‘‘, or for a longer portion of

25 such 180-day period than in any other place’’.
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1 SEC. 308. RESIDENCY REQUIREMENT FOR HOMESTEAD EX2 EMPTION.

3 Section 522 of title 11, United States Code, as

4 amended by section 307 of this Act, is amended—

5 (1) in subsection (b)(2)(A), by inserting ‘‘sub6 ject to subsection (n),’’ before ‘‘any property’’; and

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

8 ‘‘(n) For purposes of subsection (b)(2)(A), and not9 withstanding subsection (a), the value of an interest in—

10 ‘‘(1) real or personal property that the debtor

11 or a dependent of the debtor uses as a residence;

12 ‘‘(2) a cooperative that owns property that the

13 debtor or a dependent of the debtor uses as a resi14 dence; or

15 ‘‘(3) a burial plot for the debtor or a dependent

16 of the debtor;

17 shall be reduced to the extent such value is attributable

18 to any portion of any property that the debtor disposed

19 of in the 730-day period ending on the date of the filing

20 of the petition, with the intent to hinder, delay, or defraud

21 a creditor and that the debtor could not exempt, or that

22 portion that the debtor could not exempt, under subsection

23 (b) if on such date the debtor had held the property so

24 disposed of.’’.
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1 SEC. 309. PROTECTING SECURED CREDITORS IN CHAPTER

2 13 CASES.

3 (a) STOPPING ABUSIVE CONVERSIONS FROM CHAP4 TER 13.—Section 348(f)(1) of title 11, United States

5 Code, is amended—

6 (1) in subparagraph (A), by striking ‘‘and’’ at

7 the end;

8 (2) in subparagraph (B)—

9 (A) by striking ‘‘in the converted case,

10 with allowed secured claims’’ and inserting

11 ‘‘only in a case converted to chapter 11 or 12

12 but not in a case converted to chapter 7, with

13 allowed secured claims in cases under chapters

14 11 and 12’’; and

15 (B) by striking the period and inserting ‘‘;

16 and’’; and

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

18 ‘‘(C) with respect to cases converted from chap19 ter 13—

20 ‘‘(i) the claim of any creditor holding secu21 rity as of the date of the petition shall continue

22 to be secured by that security unless the full

23 amount of such claim determined under appli24 cable nonbankruptcy law has been paid in full

25 as of the date of conversion, notwithstanding

26 any valuation or determination of the amount
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1 of an allowed secured claim made for the pur2 poses of the chapter 13 proceeding; and

3 ‘‘(ii) unless a prebankruptcy default has

4 been fully cured under the plan at the time of

5 conversion, in any proceeding under this title or

6 otherwise, the default shall have the effect given

7 under applicable nonbankruptcy law.’’.

8 (b) GIVING DEBTORS THE ABILITY TO KEEP

9 LEASED PERSONAL PROPERTY BY ASSUMPTION.—Section

10 365 of title 11, United States Code, is amended by adding

11 at the end the following:

12 ‘‘(p)(1) If a lease of personal property is rejected or

13 not timely assumed by the trustee under subsection (d),

14 the leased property is no longer property of the estate and

15 the stay under section 362(a) is automatically terminated.

16 ‘‘(2)(A) In the case of an individual under chapter

17 7, the debtor may notify the creditor in writing that the

18 debtor desires to assume the lease. Upon being so notified,

19 the creditor may, at its option, notify the debtor that it

20 is willing to have the lease assumed by the debtor and

21 may condition such assumption on cure of any outstanding

22 default on terms set by the contract.

23 ‘‘(B) If within 30 days after notice is provided under

24 subparagraph (A), the debtor notifies the lessor in writing
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1 that the lease is assumed, the liability under the lease will

2 be assumed by the debtor and not by the estate.

3 ‘‘(C) The stay under section 362 and the injunction

4 under section 524(a)(2) shall not be violated by notifica5 tion of the debtor and negotiation of cure under this sub6 section.

7 ‘‘(3) In a case under chapter 11 of this title in which

8 the debtor is an individual and in a case under chapter

9 13 of this title, if the debtor is the lessee with respect

10 to personal property and the lease is not assumed in the

11 plan confirmed by the court, the lease is deemed rejected

12 as of the conclusion of the hearing on confirmation. If the

13 lease is rejected, the stay under section 362 and any stay

14 under section 1301 is automatically terminated with re15 spect to the property subject to the lease.’’.

16 (c) ADEQUATE PROTECTION OF LESSORS AND PUR17 CHASE MONEY SECURED CREDITORS.—

18 (1) IN GENERAL.—Subchapter I of chapter 13

19 of title 11, United States Code, is amended by in20 serting after section 1307 the following:

21 ‘‘§ 1308. Adequate protection in chapter 13 cases

22 ‘‘(a)(1)(A) On or before the date that is 30 days after

23 the filing of a case under this chapter, the debtor shall

24 make cash payments in an amount determined under

25 paragraph (2), to—
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1 ‘‘(i) any lessor of personal property; and

2 ‘‘(ii) any creditor holding a claim secured by

3 personal property to the extent that the claim is at4 tributable to the purchase of that property by the

5 debtor.

6 ‘‘(B) The debtor or the plan shall continue making

7 the adequate protection payments until the earlier of the

8 date on which—

9 ‘‘(i) the creditor begins to receive actual pay10 ments under the plan; or

11 ‘‘(ii) the debtor relinquishes possession of the

12 property referred to in subparagraph (A) to—

13 ‘‘(I) the lessor or creditor; or

14 ‘‘(II) any third party acting under claim of

15 right.

16 ‘‘(2) The payments referred to in paragraph (1)(A)

17 shall be the contract amount.

18 ‘‘(b)(1) Subject to the limitations under paragraph

19 (2), the court may, after notice and hearing, change the

20 amount, and timing of the dates of payment, of payments

21 made under subsection (a).

22 ‘‘(2)(A) The payments referred to in paragraph (1)

23 shall be payable not less frequently than monthly.

24 ‘‘(B) The amount of payments referred to in para25 graph (1) shall not be less than the amount of any weekly,
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1 biweekly, monthly, or other periodic payment schedules as

2 payable under the contract between the debtor and cred3 itor.

4 ‘‘(c) Notwithstanding section 1326(b), the payments

5 referred to in subsection (a)(1)(A) shall be continued in

6 addition to plan payments under a confirmed plan until

7 actual payments to the creditor begin under that plan, if

8 the confirmed plan provides for—

9 ‘‘(1) payments to a creditor or lessor described

10 in subsection (a)(1); and

11 ‘‘(2) the deferral of payments to such creditor

12 or lessor under the plan until the payment of

13 amounts described in section 1326(b).

14 ‘‘(d) Notwithstanding sections 362, 542, and 543, a

15 lessor or creditor described in subsection (a) may retain

16 possession of property described in that subsection that

17 was obtained in accordance with applicable law before the

18 date of filing of the petition until the first payment under

19 subsection (a)(1)(A) is received by the lessor or creditor.

20 ‘‘(e) On or before the date that is 60 days after the

21 filing of a case under this chapter, a debtor retaining pos22 session of personal property subject to a lease or securing

23 a claim attributable in whole or in part to the purchase

24 price of such property shall provide each creditor or lessor

25 reasonable evidence of the maintenance of any required
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1 insurance coverage with respect to the use or ownership

2 of such property and continue to do so for so long as the

3 debtor retains possession of such property.’’.

4 (2) CLERICAL AMENDMENT.—The table of sec5 tions for chapter 13 of title 11, United States Code,

6 is amended, in the matter relating to subchapter I,

7 by inserting after the item relating to section 1307

8 the following:

‘‘1308. Adequate protection in chapter 13 cases.’’.

9 SEC. 310. LIMITATION ON LUXURY GOODS.

10 Section 523(a)(2)(C) of title 11, United States Code,

11 is amended to read as follows:

12 ‘‘(C)(i) for purposes of subparagraph (A)—

13 ‘‘(I) consumer debts owed to a single cred14 itor and aggregating more than $250 for luxury

15 goods or services incurred by an individual

16 debtor on or within 90 days before the order for

17 relief under this title are presumed to be non18 dischargeable; and

19 ‘‘(II) cash advances aggregating more than

20 $750 that are extensions of consumer credit

21 under an open end credit plan obtained by an

22 individual debtor on or within 70 days before

23 the order for relief under this title, are pre24 sumed to be nondischargeable; and

25 ‘‘(ii) for purposes of this subparagraph—
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1 ‘‘(I) the term ‘extension of credit under an

2 open end credit plan’ means an extension of

3 credit under an open end credit plan, within the

4 meaning of the Consumer Credit Protection Act

5 (15 U.S.C. 1601 et seq.);

6 ‘‘(II) the term ‘open end credit plan’ has

7 the meaning given that term under section 103

8 of Consumer Credit Protection Act (15 U.S.C.

9 1602); and

10 ‘‘(III) the term ‘luxury goods or services’

11 does not include goods or services reasonably

12 necessary for the support or maintenance of the

13 debtor or a dependent of the debtor.’’.

14 SEC. 311. AUTOMATIC STAY.

15 Section 362(b) of title 11, United States Code, as

16 amended by section 303(b) of this Act, is amended—

17 (1) in paragraph (21), by striking ‘‘or’’ at the

18 end;

19 (2) in paragraph (22), by striking the period at

20 the end and inserting a semicolon; and

21 (3) by inserting after paragraph (22) the fol22 lowing:

23 ‘‘(23) under subsection (a)(3), of the continu24 ation of any eviction, unlawful detainer action, or

25 similar proceeding by a lessor against a debtor in-
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1 volving residential real property in which the debtor

2 resides as a tenant under a rental agreement;

3 ‘‘(24) under subsection (a)(3), of the com4 mencement of any eviction, unlawful detainer action,

5 or similar proceeding by a lessor against a debtor in6 volving residential real property in which the debtor

7 resides as a tenant under a rental agreement that

8 has terminated under the lease agreement or appli9 cable State law; or

10 ‘‘(25) under subsection (a)(3), of eviction ac11 tions based on endangerment to property or person

12 or the use of illegal drugs.’’.

13 SEC. 312. EXTENSION OF PERIOD BETWEEN BANKRUPTCY

14 DISCHARGES.

15 Title 11, United States Code, is amended—

16 (1) in section 727(a)(8), by striking ‘‘six’’ and

17 inserting ‘‘8’’; and

18 (2) in section 1328, by adding at the end the

19 following:

20 ‘‘(f) Notwithstanding subsections (a) and (b), the

21 court shall not grant a discharge of all debts provided for

22 by the plan or disallowed under section 502 if the debtor

23 has received a discharge in any case filed under this title

24 within 5 years before the order for relief under this chap25 ter.’’.
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1 SEC. 313. DEFINITION OF HOUSEHOLD GOODS AND AN2 TIQUES.

3 Section 522(f) of title 11, United States Code, is

4 amended by adding at the end the following:

5 ‘‘(4)(A) Subject to subparagraph (B), for pur6 poses of paragraph (1)(B), the term ‘household

7 goods’ means—

8 ‘‘(i) clothing;

9 ‘‘(ii) furniture;

10 ‘‘(iii) appliances;

11 ‘‘(iv) 1 radio;

12 ‘‘(v) 1 television;

13 ‘‘(vi) 1 VCR;

14 ‘‘(vii) linens;

15 ‘‘(viii) china;

16 ‘‘(ix) crockery;

17 ‘‘(x) kitchenware;

18 ‘‘(xi) educational materials and educational

19 equipment primarily for the use of minor de20 pendent children of the debtor, but only 1 per21 sonal computer only if used primarily for the

22 education or entertainment of such minor chil23 dren;

24 ‘‘(xii) medical equipment and supplies;
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1 ‘‘(xiii) furniture exclusively for the use of

2 minor children, or elderly or disabled depend3 ents of the debtor; and

4 ‘‘(xiv) personal effects (including wedding

5 rings and the toys and hobby equipment of

6 minor dependent children) of the debtor and the

7 dependents of the debtor.

8 ‘‘(B) The term ‘household goods’ does not

9 include—

10 ‘‘(i) works of art (unless by or of the debt11 or or the dependents of the debtor);

12 ‘‘(ii) electronic entertainment equipment

13 (except 1 television, 1 radio, and 1 VCR);

14 ‘‘(iii) items acquired as antiques;

15 ‘‘(iv) jewelry (except wedding rings); and

16 ‘‘(v) a computer (except as otherwise pro17 vided for in this section), motor vehicle (includ18 ing a tractor or lawn tractor), boat, or a motor19 ized recreational device, conveyance, vehicle,

20 watercraft, or aircraft.’’.

21 SEC. 314. DEBT INCURRED TO PAY NONDISCHARGEABLE

22 DEBTS.

23 Section 523(a) of title 11, United States Code, is

24 amended by inserting after paragraph (14) the following:
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1 ‘‘(14A)(A) incurred to pay a debt that is non2 dischargeable by reason of section 727, 1141,

3 1228(a), 1228(b), or 1328(b), or any other provision

4 of this subsection, if the debtor incurred the debt to

5 pay such a nondischargeable debt with the intent to

6 discharge in bankruptcy the newly created debt;

7 ‘‘(B) except that all debts incurred to pay non8 dischargeable debts shall be presumed to be non9 dischargeable debts if incurred within 70 days before

10 the filing of the petition (except that, in any case in

11 which there is an allowed claim under section 502

12 for child support or spousal support entitled to pri13 ority under section 507(a)(1) and that was filed in

14 a timely manner, debts that would otherwise be pre15 sumed to be nondischargeable debts by reason of

16 this subparagraph shall be treated as dischargeable

17 debts);’’.

18 (b) DISCHARGE UNDER CHAPTER 13.

19 Section 1328(a) of title 11, United States Code, is

20 amended by striking paragraphs (1) through (3) and in21 serting the following:

22 ‘‘(1) provided for under section 1322(b)(5);

23 ‘‘(2) of the kind specified in paragraph (2), (4),

24 (3)(B), (5), (8), or (9) of section 523(a);
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1 ‘‘(3) for restitution, or a criminal fine, included

2 in a sentence on the debtor’s conviction of a crime;

3 or

4 ‘‘(4) for restitution, or damages, awarded in a

5 civil action against the debtor as a result of willful

6 or malicious injury by the debtor that caused per7 sonal injury to an individual or the death of an indi8 vidual.’’.

9 SEC. 315. GIVING CREDITORS FAIR NOTICE IN CHAPTERS 7

10 AND 13 CASES.

11 (a) NOTICE.—Section 342 of title 11, United States

12 Code, is amended—

13 (1) in subsection (c)—

14 (A) by inserting ‘‘(1)’’ after ‘‘(c)’’; and

15 (B) by striking ‘‘, but the failure of such

16 notice to contain such information shall not in17 validate the legal effect of such notice’’; and

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

19 ‘‘(d) At any time, a creditor, in a case of an individual

20 debtor under chapter 7 or 13, may file with the court and

21 serve on the debtor a notice of the address to be used to

22 notify the creditor in that case. Five days after receipt

23 of such notice, if the court or the debtor is required to

24 give the creditor notice, such notice shall be given at that

25 address.
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1 ‘‘(e) An entity may file with the court a notice stating

2 its address for notice in cases under chapters 7 and 13.

3 After 30 days following the filing of such notice, any notice

4 in any case filed under chapter 7 or 13 given by the court

5 shall be to that address unless specific notice is given

6 under subsection (d) with respect to a particular case.

7 ‘‘(f)(1) Notice given to a creditor other than as pro8 vided in this section shall not be effective notice until that

9 notice has been brought to the attention of the creditor.

10 If the creditor designates a person or department to be

11 responsible for receiving notices concerning bankruptcy

12 cases and establishes reasonable procedures so that bank13 ruptcy notices received by the creditor are to be delivered

14 to such department or person, notice shall not be consid15 ered to have been brought to the attention of the creditor

16 until received by such person or department.

17 ‘‘(2) No sanction under section 362(h) or any other

18 sanction that a court may impose on account of violations

19 of the stay under section 362(a) or failure to comply with

20 section 542 or 543 may be imposed on any action of the

21 creditor unless the action takes place after the creditor

22 has received notice of the commencement of the case effec23 tive under this section.’’.
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1 (b) DEBTOR’S DUTIES.—Section 521 of title 11,

2 United States Code, as amended by section 305 of this

3 Act, is amended—

4 (1) in subsection (a), by striking paragraph (1)

5 and inserting the following:

6 ‘‘(1) file—

7 ‘‘(A) a list of creditors; and

8 ‘‘(B) unless the court orders otherwise—

9 ‘‘(i) a schedule of assets and liabil10 ities;

11 ‘‘(ii) a schedule of current income and

12 current expenditures;

13 ‘‘(iii) a statement of the debtor’s fi14 nancial affairs and, if applicable, a

15 certificate—

16 ‘‘(I) of an attorney whose name

17 is on the petition as the attorney for

18 the debtor or any bankruptcy petition

19 preparer signing the petition under

20 section 110(b)(1) indicating that such

21 attorney or bankruptcy petition pre22 parer delivered to the debtor any no23 tice required by section 342(b); or

24 ‘‘(II) if no attorney for the debt25 or is indicated and no bankruptcy pe-
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1 tition preparer signed the petition, of

2 the debtor that such notice was ob3 tained and read by the debtor;

4 ‘‘(iv) copies of any Federal tax re5 turns, including any schedules or attach6 ments, filed by the debtor for the 3-year

7 period preceding the order for relief;

8 ‘‘(v) copies of all payment advices or

9 other evidence of payment, if any, received

10 by the debtor from any employer of the

11 debtor in the period 60 days before the fil12 ing of the petition;

13 ‘‘(vi) a statement of the amount of

14 projected monthly net income, itemized to

15 show how the amount is calculated; and

16 ‘‘(vii) a statement disclosing any rea17 sonably anticipated increase in income or

18 expenditures over the 12-month period fol19 lowing the date of filing;’’; and

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

21 ‘‘(d)(1) At any time, a creditor, in the case of an indi22 vidual under chapter 7 or 13, may file with the court no23 tice that the creditor requests the petition, schedules, and

24 a statement of affairs filed by the debtor in the case and
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1 the court shall make those documents available to the

2 creditor who requests those documents.

3 ‘‘(2)(A) At any time, a creditor in a case under chap4 ter 13 may file with the court notice that the creditor re5 quests the plan filed by the debtor in the case.

6 ‘‘(B) The court shall make such plan available to the

7 creditor who requests such plan—

8 ‘‘(i) at a reasonable cost; and

9 ‘‘(ii) not later than 5 days after such request.

10 ‘‘(e) An individual debtor in a case under chapter 7

11 or 13 shall file with the court—

12 ‘‘(1) at the time filed with the taxing authority,

13 all tax returns, including any schedules or attach14 ments, with respect to the period from the com15 mencement of the case until such time as the case

16 is closed;

17 ‘‘(2) at the time filed with the taxing authority,

18 all tax returns, including any schedules or attach19 ments, that were not filed with the taxing authority

20 when the schedules under subsection (a)(1) were

21 filed with respect to the period that is 3 years before

22 the order for relief;

23 ‘‘(3) any amendments to any of the tax returns,

24 including schedules or attachments, described in

25 paragraph (1) or (2); and
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1 ‘‘(4) in a case under chapter 13, a statement

2 subject to the penalties of perjury by the debtor of

3 the debtor’s income and expenditures in the pre4 ceding tax year and monthly income, that shows how

5 the amounts are calculated—

6 ‘‘(A) beginning on the date that is the

7 later of 90 days after the close of the debtor’s

8 tax year or 1 year after the order for relief, un9 less a plan has been confirmed; and

10 ‘‘(B) thereafter, on or before the date that

11 is 45 days before each anniversary of the con12 firmation of the plan until the case is closed.

13 ‘‘(f)(1) A statement referred to in subsection (e)(4)

14 shall disclose—

15 ‘‘(A) the amount and sources of income of the

16 debtor;

17 ‘‘(B) the identity of any person responsible with

18 the debtor for the support of any dependent of the

19 debtor; and

20 ‘‘(C) the identity of any person who contrib21 uted, and the amount contributed, to the household

22 in which the debtor resides.

23 ‘‘(2) The tax returns, amendments, and statement of

24 income and expenditures described in paragraph (1) shall

25 be available to the United States trustee, any bankruptcy
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1 administrator, any trustee, and any party in interest for

2 inspection and copying, subject to the requirements of

3 subsection (f).

4 ‘‘(g)(1) Not later than 30 days after the date of en5 actment of the Bankruptcy Reform Act of 1999, the Di6 rector of the Administrative Office of the United States

7 Courts shall establish procedures for safeguarding the con8 fidentiality of any tax information required to be provided

9 under this section.

10 ‘‘(2) The procedures under paragraph (1) shall in11 clude restrictions on creditor access to tax information

12 that is required to be provided under this section.

13 ‘‘(3) Not later than 1 year after the date of enact14 ment of the Bankruptcy Reform Act of 1999, the Director

15 of the Administrative Office of the United States Courts

16 shall prepare and submit to Congress a report that—

17 ‘‘(A) assesses the effectiveness of the proce18 dures under paragraph (1); and

19 ‘‘(B) if appropriate, includes proposed legisla20 tion to—

21 ‘‘(i) further protect the confidentiality of

22 tax information; and

23 ‘‘(ii) provide penalties for the improper use

24 by any person of the tax information required

25 to be provided under this section.
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1 ‘‘(h) If requested by the United States trustee or a

2 trustee serving in the case, the debtor shall provide—

3 ‘‘(1) a document that establishes the identity of

4 the debtor, including a driver’s license, passport, or

5 other document that contains a photograph of the

6 debtor; and

7 ‘‘(2) such other personal identifying information

8 relating to the debtor that establishes the identity of

9 the debtor.’’.

10 SEC. 316. DISMISSAL FOR FAILURE TO TIMELY FILE SCHED11 ULES OR PROVIDE REQUIRED INFORMATION.

12 Section 521 of title 11, United States Code, as

13 amended by section 315 of this Act, is amended by adding

14 at the end the following:

15 ‘‘(i)(1) Notwithstanding section 707(a), and subject

16 to paragraph (2), if an individual debtor in a voluntary

17 case under chapter 7 or 13 fails to file all of the informa18 tion required under subsection (a)(1) within 45 days after

19 the filing of the petition commencing the case, the case

20 shall be automatically dismissed effective on the 46th day

21 after the filing of the petition.

22 ‘‘(2) With respect to a case described in paragraph

23 (1), any party in interest may request the court to enter

24 an order dismissing the case. If requested, the court shall
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1 enter an order of dismissal not later than 5 days after

2 such request.

3 ‘‘(3) Upon request of the debtor made within 45 days

4 after the filing of the petition commencing a case de5 scribed in paragraph (1), the court may allow the debtor

6 an additional period of not to exceed 45 days to file the

7 information required under subsection (a)(1) if the court

8 finds justification for extending the period for the filing.’’.

9 SEC. 317. ADEQUATE TIME TO PREPARE FOR HEARING ON

10 CONFIRMATION OF THE PLAN.

11 (a) HEARING.—Section 1324 of title 11, United

12 States Code, is amended—

13 (1) by striking ‘‘After’’ and inserting the fol14 lowing:

15 ‘‘(a) Except as provided in subsection (b) and after’’;

16 and

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

18 ‘‘(b) The hearing on confirmation of the plan may

19 be held not later than 45 days after the meeting of credi20 tors under section 341(a).’’.

21 (b) FILING OF PLAN.—Section 1321 of title 11,

22 United States Code, is amended to read as follows:

23 ‘‘§ 1321. Filing of plan

24 ‘‘Not later than 90 days after the order for relief

25 under this chapter, the debtor shall file a plan, except that
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1 the court may extend such period if the need for an exten2 sion is attributable to circumstances for which the debtor

3 should not justly be held accountable.’’.

4 SEC. 318. CHAPTER 13 PLANS TO HAVE A 5-YEAR DURATION

5 IN CERTAIN CASES.

6 Section 1322(d) of title 11, United States Code, is

7 amended to read as follows:

8 ‘‘(d)(1) Except as provided in paragraph (2), the plan

9 may not provide for payments over a period that is longer

10 than 3 years.

11 ‘‘(2) The plan may provide for payments over a pe12 riod that is longer than 3 years if—

13 ‘‘(A) the plan is for a case that was converted

14 to a case under this chapter from a case under chap15 ter 7, in which case the plan shall provide for pay16 ments over a period of 5 years; or

17 ‘‘(B) the plan is for a case that is not described

18 in subparagraph (A), and the court, for cause, ap19 proves a period longer than 3 years, but not to ex20 ceed 5 years.’’.

21 SEC. 319. SENSE OF THE CONGRESS REGARDING EXPAN22 SION OF RULE 9011 OF THE FEDERAL RULES

23 OF BANKRUPTCY PROCEDURE.

24 It is the sense of Congress that Rule 9011 of the Fed25 eral Rules of Bankruptcy Procedure (11 U.S.C. App.)
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1 should be modified to include a requirement that all docu2 ments (including schedules), signed and unsigned, sub3 mitted to the court or to a trustee by debtors who rep4 resent themselves and debtors who are represented by an

5 attorney be submitted only after the debtor or the debtor’s

6 attorney has made reasonable inquiry to verify that the

7 information contained in such documents is—

8 (1) well grounded in fact; and

9 (2) warranted by existing law or a good-faith

10 argument for the extension, modification, or reversal

11 of existing law.

12 SEC. 320. PROMPT RELIEF FROM STAY IN INDIVIDUAL

13 CASES.

14 Section 362(e) of title 11, United States Code, is

15 amended—

16 (1) by inserting ‘‘(1)’’ after ‘‘(e)’’; and

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

18 ‘‘(2) Notwithstanding paragraph (1), in the case of

19 an individual filing under chapter 7, 11, or 13, the stay

20 under subsection (a) shall terminate on the date that is

21 60 days after a request is made by a party in interest

22 under subsection (d), unless—

23 ‘‘(A) a final decision is rendered by the court

24 during the 60-day period beginning on the date of

25 the request; or
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1 ‘‘(B) that 60-day period is extended—

2 ‘‘(i) by agreement of all parties in interest;

3 or

4 ‘‘(ii) by the court for such specific period

5 of time as the court finds is required for good

6 cause, as described in findings made by the

7 court.’’.

8 TITLE IV—GENERAL AND SMALL

9 BUSINESS BANKRUPTCY PRO10 VISIONS

11 Subtitle A—General Business

12 Bankruptcy Provisions

13 SEC. 401. ROLLING STOCK EQUIPMENT.

14 (a) IN GENERAL.—Section 1168 of title 11, United

15 States Code, is amended to read as follows:

16 ‘‘§ 1168. Rolling stock equipment

17 ‘‘(a)(1) The right of a secured party with a security

18 interest in or of a lessor or conditional vendor of equip19 ment described in paragraph (2) to take possession of such

20 equipment in compliance with an equipment security

21 agreement, lease, or conditional sale contract, and to en22 force any of its other rights or remedies under such secu23 rity agreement, lease, or conditional sale contract, to sell,

24 lease, or otherwise retain or dispose of such equipment,

25 is not limited or otherwise affected by any other provision
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1 of this title or by any power of the court, except that the

2 right to take possession and enforce those other rights and

3 remedies shall be subject to section 362, if—

4 ‘‘(A) before the date that is 60 days after the

5 date of commencement of a case under this chapter,

6 the trustee, subject to the court’s approval, agrees to

7 perform all obligations of the debtor under such se8 curity agreement, lease, or conditional sale contract;

9 and

10 ‘‘(B) any default, other than a default of a kind

11 described in section 365(b)(2), under such security

12 agreement, lease, or conditional sale contract that—

13 ‘‘(i) occurs before the date of commence14 ment of the case and is an event of default

15 therewith is cured before the expiration of such

16 60-day period;

17 ‘‘(ii) occurs or becomes an event of default

18 after the date of commencement of the case and

19 before the expiration of such 60-day period is

20 cured before the later of—

21 ‘‘(I) the date that is 30 days after the

22 date of the default or event of the default;

23 or

24 ‘‘(II) the expiration of such 60-day

25 period; and
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1 ‘‘(iii) occurs on or after the expiration of

2 such 60-day period is cured in accordance with

3 the terms of such security agreement, lease, or

4 conditional sale contract, if cure is permitted

5 under that agreement, lease, or conditional sale

6 contract.

7 ‘‘(2) The equipment described in this paragraph—

8 ‘‘(A) is rolling stock equipment or accessories

9 used on rolling stock equipment, including super10 structures or racks, that is subject to a security in11 terest granted by, leased to, or conditionally sold to

12 a debtor; and

13 ‘‘(B) includes all records and documents relat14 ing to such equipment that are required, under the

15 terms of the security agreement, lease, or conditional

16 sale contract, to be surrendered or returned by the

17 debtor in connection with the surrender or return of

18 such equipment.

19 ‘‘(3) Paragraph (1) applies to a secured party, lessor,

20 or conditional vendor acting in its own behalf or acting

21 as trustee or otherwise in behalf of another party.

22 ‘‘(b) The trustee and the secured party, lessor, or

23 conditional vendor whose right to take possession is pro24 tected under subsection (a) may agree, subject to the
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1 court’s approval, to extend the 60-day period specified in

2 subsection (a)(1).

3 ‘‘(c)(1) In any case under this chapter, the trustee

4 shall immediately surrender and return to a secured party,

5 lessor, or conditional vendor, described in subsection

6 (a)(1), equipment described in subsection (a)(2), if at any

7 time after the date of commencement of the case under

8 this chapter such secured party, lessor, or conditional ven9 dor is entitled under subsection (a)(1) to take possession

10 of such equipment and makes a written demand for such

11 possession of the trustee.

12 ‘‘(2) At such time as the trustee is required under

13 paragraph (1) to surrender and return equipment de14 scribed in subsection (a)(2), any lease of such equipment,

15 and any security agreement or conditional sale contract

16 relating to such equipment, if such security agreement or

17 conditional sale contract is an executory contract, shall be

18 deemed rejected.

19 ‘‘(d) With respect to equipment first placed in service

20 on or before October 22, 1994, for purposes of this

21 section—

22 ‘‘(1) the term ‘lease’ includes any written agree23 ment with respect to which the lessor and the debt24 or, as lessee, have expressed in the agreement or in

25 a substantially contemporaneous writing that the
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1 agreement is to be treated as a lease for Federal in2 come tax purposes; and

3 ‘‘(2) the term ‘security interest’ means a pur4 chase-money equipment security interest.

5 ‘‘(e) With respect to equipment first placed in service

6 after October 22, 1994, for purposes of this section, the

7 term ‘rolling stock equipment’ includes rolling stock equip8 ment that is substantially rebuilt and accessories used on

9 such equipment.’’.

10 (b) AIRCRAFT EQUIPMENT AND VESSELS.—Section

11 1110 of title 11, United States Code, is amended to read

12 as follows:

13 ‘‘§ 1110. Aircraft equipment and vessels

14 ‘‘(a)(1) Except as provided in paragraph (2) and sub15 ject to subsection (b), the right of a secured party with

16 a security interest in equipment described in paragraph

17 (3), or of a lessor or conditional vendor of such equipment,

18 to take possession of such equipment in compliance with

19 a security agreement, lease, or conditional sale contract,

20 and to enforce any of its other rights or remedies, under

21 such security agreement, lease, or conditional sale con22 tract, to sell, lease, or otherwise retain or dispose of such

23 equipment, is not limited or otherwise affected by any

24 other provision of this title or by any power of the court.
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1 ‘‘(2) The right to take possession and to enforce the

2 other rights and remedies described in paragraph (1) shall

3 be subject to section 362 if—

4 ‘‘(A) before the date that is 60 days after the

5 date of the order for relief under this chapter, the

6 trustee, subject to the approval of the court, agrees

7 to perform all obligations of the debtor under such

8 security agreement, lease, or conditional sale con9 tract; and

10 ‘‘(B) any default, other than a default of a kind

11 specified in section 365(b)(2), under such security

12 agreement, lease, or conditional sale contract that

13 occurs—

14 ‘‘(i) before the date of the order is cured

15 before the expiration of such 60-day period;

16 ‘‘(ii) after the date of the order and before

17 the expiration of such 60-day period is cured

18 before the later of—

19 ‘‘(I) the date that is 30 days after the

20 date of the default; or

21 ‘‘(II) the expiration of such 60-day

22 period; and

23 ‘‘(iii) on or after the expiration of such 60-

24 day period is cured in compliance with the

25 terms of such security agreement, lease, or con-
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1 ditional sale contract, if a cure is permitted

2 under that agreement, lease, or contract.

3 ‘‘(3) The equipment described in this paragraph—

4 ‘‘(A) is—

5 ‘‘(i) an aircraft, aircraft engine, propeller,

6 appliance, or spare part (as defined in section

7 40102 of title 49) that is subject to a security

8 interest granted by, leased to, or conditionally

9 sold to a debtor that, at the time such trans10 action is entered into, holds an air carrier oper11 ating certificate issued under chapter 447 of

12 title 49 for aircraft capable of carrying 10 or

13 more individuals or 6,000 pounds or more of

14 cargo; or

15 ‘‘(ii) a documented vessel (as defined in

16 section 30101(1) of title 46) that is subject to

17 a security interest granted by, leased to, or con18 ditionally sold to a debtor that is a water car19 rier that, at the time such transaction is en20 tered into, holds a certificate of public conven21 ience and necessity or permit issued by the De22 partment of Transportation; and

23 ‘‘(B) includes all records and documents relat24 ing to such equipment that are required, under the

25 terms of the security agreement, lease, or conditional
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1 sale contract, to be surrendered or returned by the

2 debtor in connection with the surrender or return of

3 such equipment.

4 ‘‘(4) Paragraph (1) applies to a secured party, lessor,

5 or conditional vendor acting in its own behalf or acting

6 as trustee or otherwise in behalf of another party.

7 ‘‘(b) The trustee and the secured party, lessor, or

8 conditional vendor whose right to take possession is pro9 tected under subsection (a) may agree, subject to the ap10 proval of the court, to extend the 60-day period specified

11 in subsection (a)(1).

12 ‘‘(c)(1) In any case under this chapter, the trustee

13 shall immediately surrender and return to a secured party,

14 lessor, or conditional vendor, described in subsection

15 (a)(1), equipment described in subsection (a)(3), if at any

16 time after the date of the order for relief under this chap17 ter such secured party, lessor, or conditional vendor is en18 titled under subsection (a)(1) to take possession of such

19 equipment and makes a written demand for such posses20 sion to the trustee.

21 ‘‘(2) At such time as the trustee is required under

22 paragraph (1) to surrender and return equipment de23 scribed in subsection (a)(3), any lease of such equipment,

24 and any security agreement or conditional sale contract

25 relating to such equipment, if such security agreement or
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1 conditional sale contract is an executory contract, shall be

2 deemed rejected.

3 ‘‘(d) With respect to equipment first placed in service

4 on or before October 22, 1994, for purposes of this

5 section—

6 ‘‘(1) the term ‘lease’ includes any written agree7 ment with respect to which the lessor and the debt8 or, as lessee, have expressed in the agreement or in

9 a substantially contemporaneous writing that the

10 agreement is to be treated as a lease for Federal in11 come tax purposes; and

12 ‘‘(2) the term ‘security interest’ means a pur13 chase-money equipment security interest.’’.

14 SEC. 402. ADEQUATE PROTECTION FOR INVESTORS.

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

16 States Code, is amended by inserting after paragraph (48)

17 the following:

18 ‘‘(48A) ‘securities self regulatory organization’

19 means either a securities association registered with

20 the Securities and Exchange Commission under sec21 tion 15A of the Securities Exchange Act of 1934 (15

22 U.S.C. 78o–3) or a national securities exchange reg23 istered with the Securities and Exchange Commis24 sion under section 6 of the Securities Exchange Act

25 of 1934 (15 U.S.C. 78f);’’.
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1 (b) AUTOMATIC STAY.—Section 362(b) of title 11,

2 United States Code, as amended by section 311 of this

3 Act, is amended—

4 (1) in paragraph (24), by striking ‘‘or’’ at the

5 end;

6 (2) in paragraph (25), by striking the period at

7 the end and inserting ‘‘; or’’; and

8 (3) by inserting after paragraph (25) the fol9 lowing:

10 ‘‘(26) under subsection (a), of—

11 ‘‘(A) the commencement or continuation of

12 an investigation or action by a securities self

13 regulatory organization to enforce such organi14 zation’s regulatory power;

15 ‘‘(B) the enforcement of an order or deci16 sion, other than for monetary sanctions, ob17 tained in an action by the securities self regu18 latory organization to enforce such organiza19 tion’s regulatory power; or

20 ‘‘(C) any act taken by the securities self

21 regulatory organization to delist, delete, or

22 refuse to permit quotation of any stock that

23 does not meet applicable regulatory require24 ments.’’.
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1 SEC. 403. MEETINGS OF CREDITORS AND EQUITY SECURITY

2 HOLDERS.

3 Section 341 of title 11, United States Code, is

4 amended by adding at the end the following:

5 ‘‘(e) Notwithstanding subsections (a) and (b), the

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

7 and a hearing, for cause may order that the United States

8 trustee not convene a meeting of creditors or equity secu9 rity holders if the debtor has filed a plan as to which the

10 debtor solicited acceptances prior to the commencement

11 of the case.’’.

12 SEC. 404. PROTECTION OF REFINANCE OF SECURITY IN13 TEREST.

14 Subparagraphs (A), (B), and (C) of section 547(e)(2)

15 of title 11, United States Code, are each amended by strik16 ing ‘‘10’’ each place it appears and inserting ‘‘30’’.

17 SEC. 405. EXECUTORY CONTRACTS AND UNEXPIRED

18 LEASES.

19 Section 365(d)(4) of title 11, United States Code, is

20 amended to read as follows:

21 ‘‘(4)(A) Subject to subparagraph (B), in any case

22 under any chapter of this title, an unexpired lease of non23 residential real property under which the debtor is the les24 see shall be deemed rejected and the trustee shall imme25 diately surrender that nonresidential real property to the
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1 lessor if the trustee does not assume or reject the unex2 pired lease by the earlier of—

3 ‘‘(i) the date that is 120 days after the date of

4 the order for relief; or

5 ‘‘(ii) the date of the entry of an order con6 firming a plan.

7 ‘‘(B) The court may extend the period determined

8 under subparagraph (A) only upon a motion of the les9 sor.’’.

10 SEC. 406. CREDITORS AND EQUITY SECURITY HOLDERS

11 COMMITTEES.

12 Section 1102(a)(2) of title 11, United States Code,

13 is amended by inserting before the first sentence the fol14 lowing: ‘‘On its own motion or on request of a party in

15 interest, and after notice and hearing, the court may order

16 a change in the membership of a committee appointed

17 under this subsection, if the court determines that the

18 change is necessary to ensure adequate representation of

19 creditors or equity security holders.’’.

20 SEC. 407. AMENDMENT TO SECTION 546 OF TITLE 11,

21 UNITED STATES CODE.

22 Section 546 of title 11, United States Code, is

23 amended—

24 (1) by redesignating the second subsection des25 ignated as subsection (g) (as added by section
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1 222(a) of Public Law 103–394) as subsection (i);

2 and

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

4 ‘‘(j)(1) Notwithstanding section 545 (2) and (3), the

5 trustee may not avoid a warehouseman’s lien for storage,

6 transportation or other costs incidental to the storage and

7 handling of goods.

8 ‘‘(2) The prohibition under paragraph (1) shall be ap9 plied in a manner consistent with any applicable State

10 statute that is similar to section 7–209 of the Uniform

11 Commercial Code.’’.

12 SEC. 408. LIMITATION.

13 Section 546(c)(1)(B) of title 11, United States Code,

14 is amended by striking ‘‘20’’ and inserting ‘‘45’’.

15 SEC. 409. AMENDMENT TO SECTION 330(a) OF TITLE 11,

16 UNITED STATES CODE.

17 Section 330(a)(3) of title 11, United States Code, is

18 amended—

19 (1) by striking ‘‘(A) the; and inserting ‘‘(i)

20 the’’;

21 (2) by striking ‘‘(B)’’ and inserting ‘‘(ii)’’;

22 (3) by striking ‘‘(C)’’ and inserting ‘‘(iii)’’;

23 (4) by striking ‘‘(D)’’ and inserting ‘‘(iv)’’;

24 (5) by striking ‘‘(E)’’ and inserting ‘‘(v)’’;
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1 (6) in subparagraph (A), by inserting ‘‘to an

2 examiner, trustee under chapter 11, or professional

3 person’’ after ‘‘awarded’’; and

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

5 ‘‘(B) In determining the amount of reasonable com6 pensation to be awarded a trustee, the court shall treat

7 such compensation as a commission based on the results

8 achieved.’’.

9 SEC. 410. POSTPETITION DISCLOSURE AND SOLICITATION.

10 Section 1125 of title 11, United States Code, is

11 amended by adding at the end the following:

12 ‘‘(g) Notwithstanding subsection (b), an acceptance

13 or rejection of the plan may be solicited from a holder

14 of a claim or interest if such solicitation complies with ap15 plicable nonbankruptcy law and if such holder was solic16 ited before the commencement of the case in a manner

17 complying with applicable nonbankruptcy law.’’.

18 SEC. 411. PREFERENCES.

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

20 amended—

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

22 following:

23 ‘‘(2) to the extent that such transfer was in

24 payment of a debt incurred by the debtor in the or-
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1 dinary course of business or financial affairs of the

2 debtor and the transferee, and such transfer was—

3 ‘‘(A) made in the ordinary course of busi4 ness or financial affairs of the debtor and the

5 transferee; or

6 ‘‘(B) made according to ordinary business

7 terms;’’;

8 (2) in paragraph (7) by striking ‘‘or’’ at the

9 end;

10 (3) in paragraph (8) by striking the period at

11 the end and inserting ‘‘; or’’; and

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

13 ‘‘(9) if, in a case filed by a debtor whose debts

14 are not primarily consumer debts, the aggregate

15 value of all property that constitutes or is affected

16 by such transfer is less than $5,000.’’.

17 SEC. 412. VENUE OF CERTAIN PROCEEDINGS.

18 Section 1409(b) of title 28, United States Code, is

19 amended by inserting ‘‘, or a nonconsumer debt against

20 a noninsider of less than $10,000,’’ after ‘‘$5,000’’.

21 SEC. 413. PERIOD FOR FILING PLAN UNDER CHAPTER 11.

22 Section 1121(d) of title 11, United States Code, is

23 amended—

24 (1) by striking ‘‘On’’ and inserting ‘‘(1) Subject

25 to paragraph (1), on’’; and
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1 (2) by adding at the end the following:

2 ‘‘(2)(A) The 120-day period specified in paragraph

3 (1) may not be extended beyond a date that is 18 months

4 after the date of the order for relief under this chapter.

5 ‘‘(B) The 180-day period specified in paragraph (1)

6 may not be extended beyond a date that is 20 months after

7 the date of the order for relief under this chapter.’’.

8 SEC. 414. FEES ARISING FROM CERTAIN OWNERSHIP IN9 TERESTS.

10 Section 523(a)(16) of title 11, United States Code,

11 is amended—

12 (1) by striking ‘‘dwelling’’ the first place it ap13 pears;

14 (2) by striking ‘‘ownership or’’ and inserting

15 ‘‘ownership,’’;

16 (3) by striking ‘‘housing’’ the first place it ap17 pears; and

18 (4) by striking ‘‘but only’’ and all that follows

19 through ‘‘but nothing in this paragraph’’ and insert20 ing ‘‘or a lot in a homeowners association, for as

21 long as the debtor or the trustee has a legal, equi22 table, or possessory ownership interest in such unit,

23 such corporation, or such lot, and until such time as

24 the debtor or trustee has surrendered any legal, eq25 uitable or possessory interest in such unit, such cor-
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1 poration, or such lot, but nothing in this para2 graph’’.

3 SEC. 415. CREDITOR REPRESENTATION AT FIRST MEETING

4 OF CREDITORS.

5 Section 341(c) of title 11, United States Code, is

6 amended by inserting after the first sentence the fol7 lowing: ‘‘Notwithstanding any local court rule, provision

8 of a State constitution, any other Federal or State law

9 that is not a bankruptcy law, or other requirement that

10 representation at the meeting of creditors under sub11 section (a) be by an attorney, a creditor holding a con12 sumer debt or any representative of the creditor (which

13 may include an entity or an employee of an entity and

14 may be a representative for more than 1 creditor) shall

15 be permitted to appear at and participate in the meeting

16 of creditors in a case under chapter 7 or 13, either alone

17 or in conjunction with an attorney for the creditor. Noth18 ing in this subsection shall be construed to require any

19 creditor to be represented by an attorney at any meeting

20 of creditors.’’.

21 SEC. 416. ELIMINATION OF CERTAIN FEES PAYABLE IN

22 CHAPTER 11 BANKRUPTCY CASES.

23 (a) AMENDMENTS.—Section 1930(a)(6) of title 28,

24 United States Code, is amended—
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1 (1) in the first sentence by striking ‘‘until the

2 case is converted or dismissed, whichever occurs

3 first’’; and

4 (2) in the second sentence—

5 (A) by striking ‘‘The’’ and inserting ‘‘Until

6 the plan is confirmed or the case is converted

7 (whichever occurs first) the’’; and

8 (B) by striking ‘‘less than $300,000;’’ and

9 inserting ‘‘less than $300,000. Until the case is

10 converted, dismissed, or closed (whichever oc11 curs first and without regard to confirmation of

12 the plan) the fee shall be’’.

13 (b) DELAYED EFFECTIVE DATE.—The amendments

14 made by subsection (a) shall take effect on October 1,

15 1999.

16 SEC. 417. DEFINITION OF DISINTERESTED PERSON.

17 Section 101(14) of title 11, United States Code, is

18 amended to read as follows:

19 ‘‘(14) ‘disinterested person’ means a person

20 that—

21 ‘‘(A) is not a creditor, an equity security

22 holder, or an insider;

23 ‘‘(B) is not and was not, within 2 years be24 fore the date of the filing of the petition, a di25 rector, officer, or employee of the debtor; and
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1 ‘‘(C) does not have an interest materially

2 adverse to the interest of the estate or of any

3 class of creditors or equity security holders, by

4 reason of any direct or indirect relationship to,

5 connection with, or interest in, the debtor, or

6 for any other reason;’’.

7 SEC. 418. FACTORS FOR COMPENSATION OF PROFES8 SIONAL PERSONS.

9 Section 330(a)(3) of title 11, United States Code, is

10 amended—

11 (1) in subparagraph (D), by striking ‘‘and’’ at

12 the end;

13 (2) by redesignating subparagraph (E) as sub14 paragraph (F); and

15 (3) by inserting after subparagraph (D) the fol16 lowing:

17 ‘‘(E) with respect to a professional person,

18 whether the person is board certified or otherwise

19 has demonstrated skill and experience in the bank20 ruptcy field;’’.

21 SEC. 419. APPOINTMENT OF ELECTED TRUSTEE.

22 Section 1104(b) of title 11, United States Code, is

23 amended—

24 (1) by inserting ‘‘(1)’’ after ‘‘(b)’’; and

25 (2) by adding at the end the following:
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1 ‘‘(2)(A) If an eligible, disinterested trustee is elected

2 at a meeting of creditors under paragraph (1), the United

3 States trustee shall file a report certifying that election.

4 ‘‘(B) Upon the filing of a report under subparagraph

5 (A)—

6 ‘‘(i) the trustee elected under paragraph (1)

7 shall be considered to have been selected and ap8 pointed for purposes of this section; and

9 ‘‘(ii) the service of any trustee appointed under

10 subsection (d) shall terminate.

11 ‘‘(C) In the case of any dispute arising out of an elec12 tion described in subparagraph (A), the court shall resolve

13 the dispute.’’.

14 Subtitle B—Small Business

15 Bankruptcy Provisions

16 SEC. 421. FLEXIBLE RULES FOR DISCLOSURE STATEMENT

17 AND PLAN.

18 Section 1125 of title 11, United States Code, is

19 amended by striking subsection (f) and inserting the fol20 lowing:

21 ‘‘(f) Notwithstanding subsection (b), in a small busi22 ness case—

23 ‘‘(1) in determining whether a disclosure state24 ment provides adequate information, the court shall

25 consider the complexity of the case, the benefit of
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1 additional information to creditors and other parties

2 in interest, and the cost of providing additional in3 formation;

4 ‘‘(2) the court may determine that the plan

5 itself provides adequate information and that a sepa6 rate disclosure statement is not necessary;

7 ‘‘(3) the court may approve a disclosure state8 ment submitted on standard forms approved by the

9 court or adopted under section 2075 of title 28; and

10 ‘‘(4)(A) the court may conditionally approve a

11 disclosure statement subject to final approval after

12 notice and a hearing;

13 ‘‘(B) acceptances and rejections of a plan may

14 be solicited based on a conditionally approved disclo15 sure statement if the debtor provides adequate infor16 mation to each holder of a claim or interest that is

17 solicited, but a conditionally approved disclosure

18 statement shall be mailed not later than 20 days be19 fore the date of the hearing on confirmation of the

20 plan; and

21 ‘‘(C) the hearing on the disclosure statement

22 may be combined with the hearing on confirmation

23 of a plan.’’.
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1 SEC. 422. DEFINITIONS; EFFECT OF DISCHARGE.

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

3 States Code, is amended by striking paragraph (51C) and

4 inserting the following:

5 ‘‘(51C) ‘small business case’ means a case filed

6 under chapter 11 of this title in which the debtor is

7 a small business debtor;

8 ‘‘(51D) ‘small business debtor’—

9 ‘‘(A) subject to subparagraph (B), means a

10 person (including any affiliate of such person

11 that is also a debtor under this title) that has

12 aggregate noncontingent, liquidated secured

13 and unsecured debts as of the date of the peti14 tion or the order for relief in an amount not

15 more than $4,000,000 (excluding debts owed to

16 1 or more affiliates or insiders) for a case in

17 which the United States trustee has appointed

18 under section 1102(a)(1) a committee of unse19 cured creditors that the court has determined is

20 sufficiently active and representative to provide

21 effective oversight of the debtor; and

22 ‘‘(B) does not include any member of a

23 group of affiliated debtors that has aggregate

24 noncontingent liquidated secured and unsecured

25 debts in an amount greater than $4,000,000
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1 (excluding debt owed to 1 or more affiliates or

2 insiders);’’.

3 (b) EFFECT OF DISCHARGE.—Section 524 of title 11,

4 United States Code, as amended by section 204 of this

5 Act, is amended by adding at the end the following:

6 ‘‘(j)(1) An individual who is injured by the willful fail7 ure of a creditor to substantially comply with the require8 ments specified in subsections (c) and (d), or by any will9 ful violation of the injunction operating under subsection

10 (a)(2), shall be entitled to recover—

11 ‘‘(A) the greater of—

12 ‘‘(i) the amount of actual damages; or

13 ‘‘(ii) $1,000; and

14 ‘‘(B) costs and attorneys’ fees.

15 ‘‘(2) An action to recover for a violation specified in

16 paragraph (1) may not be brought as a class action.’’.

17 (c) CONFORMING AMENDMENT.—Section 1102(a)(3)

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

19 ‘‘debtor’’ after ‘‘small business’’.

20 SEC. 423. STANDARD FORM DISCLOSURE STATEMENT AND

21 PLAN.

22 Within a reasonable period of time after the date of

23 the enactment of this Act, the Advisory Committee on

24 Bankruptcy Rules of the Judicial Conference of the

25 United States shall propose for adoption standard form
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1 disclosure statements and plans of reorganization for

2 small business debtors (as defined in section 101 of title

3 11, United States Code, as amended by this Act), designed

4 to achieve a practical balance between—

5 (1) the reasonable needs of the courts, the

6 United States trustee, creditors, and other parties in

7 interest for reasonably complete information; and

8 (2) economy and simplicity for debtors.

9 SEC. 424. UNIFORM NATIONAL REPORTING REQUIRE10 MENTS.

11 (a) REPORTING REQUIRED.—

12 (1) IN GENERAL.—Chapter 3 of title 11, United

13 States Code, is amended by inserting after section

14 307 the following:

15 ‘‘§ 308. Debtor reporting requirements

16 ‘‘(1) For purposes of this section, the term ‘profit17 ability’ means, with respect to a debtor, the amount of

18 money that the debtor has earned or lost during current

19 and recent fiscal periods.

20 ‘‘(2) A small business debtor shall file periodic finan21 cial and other reports containing information including—

22 ‘‘(A) the debtor’s profitability;

23 ‘‘(B) reasonable approximations of the debtor’s

24 projected cash receipts and cash disbursements over

25 a reasonable period;
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1 ‘‘(C) comparisons of actual cash receipts and

2 disbursements with projections in prior reports;

3 ‘‘(D)(i) whether the debtor is—

4 ‘‘(I) in compliance in all material respects

5 with postpetition requirements imposed by this

6 title and the Federal Rules of Bankruptcy Pro7 cedure; and

8 ‘‘(II) timely filing tax returns and paying

9 taxes and other administrative claims when due;

10 and

11 ‘‘(ii) if the debtor is not in compliance with the

12 requirements referred to in clause (i)(I) or filing tax

13 returns and making the payments referred to in

14 clause (i)(II), what the failures are and how, at what

15 cost, and when the debtor intends to remedy such

16 failures; and

17 ‘‘(iii) such other matters as are in the best in18 terests of the debtor and creditors, and in the public

19 interest in fair and efficient procedures under chap20 ter 11 of this title.’’.

21 (2) CLERICAL AMENDMENT.—The table of sec22 tions for chapter 3 of title 11, United States Code,

23 is amended by inserting after the item relating to

24 section 307 the following:

‘‘308. Debtor reporting requirements.’’.
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1 (b) EFFECTIVE DATE.—The amendments made by

2 subsection (a) shall take effect 60 days after the date on

3 which rules are prescribed under section 2075 of title 28,

4 United States Code, to establish forms to be used to com5 ply with section 308 of title 11, United States Code, as

6 added by subsection (a).

7 SEC. 425. UNIFORM REPORTING RULES AND FORMS FOR

8 SMALL BUSINESS CASES.

9 (a) PROPOSAL OF RULES AND FORMS.—The Advi10 sory Committee on Bankruptcy Rules of the Judicial Con11 ference of the United States shall propose for adoption

12 amended Federal Rules of Bankruptcy Procedure and Of13 ficial Bankruptcy Forms to be used by small business

14 debtors to file periodic financial and other reports con15 taining information, including information relating to—

16 (1) the debtor’s profitability;

17 (2) the debtor’s cash receipts and disburse18 ments; and

19 (3) whether the debtor is timely filing tax re20 turns and paying taxes and other administrative

21 claims when due.

22 (b) PURPOSE.—The rules and forms proposed under

23 subsection (a) shall be designed to achieve a practical

24 balance among—
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1 (1) the reasonable needs of the bankruptcy

2 court, the United States trustee, creditors, and other

3 parties in interest for reasonably complete informa4 tion;

5 (2) the small business debtor’s interest that re6 quired reports be easy and inexpensive to complete;

7 and

8 (3) the interest of all parties that the required

9 reports help the small business debtor to understand

10 the small business debtor’s financial condition and

11 plan the small business debtor’s future.

12 SEC. 426. DUTIES IN SMALL BUSINESS CASES.

13 (a) DUTIES IN CHAPTER 11 CASES.—Title 11,

14 United States Code, is amended by inserting after section

15 1114 the following:

16 ‘‘§ 1115. Duties of trustee or debtor in possession in

17 small business cases

18 ‘‘In a small business case, a trustee or the debtor in

19 possession, in addition to the duties provided in this title

20 and as otherwise required by law, shall—

21 ‘‘(1) append to the voluntary petition or, in an

22 involuntary case, file within 3 days after the date of

23 the order for relief—
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1 ‘‘(A) its most recent balance sheet, state2 ment of operations, cash-flow statement, Fed3 eral income tax return; or

4 ‘‘(B) a statement made under penalty of

5 perjury that no balance sheet, statement of op6 erations, or cash-flow statement has been pre7 pared and no Federal tax return has been filed;

8 ‘‘(2) attend, through its senior management

9 personnel and counsel, meetings scheduled by the

10 court or the United States trustee, including initial

11 debtor interviews, scheduling conferences, and meet12 ings of creditors convened under section 341 unless

13 the court waives that requirement after notice and

14 hearing, upon a finding of extraordinary and com15 pelling circumstances;

16 ‘‘(3) timely file all schedules and statements of

17 financial affairs, unless the court, after notice and a

18 hearing, grants an extension, which shall not extend

19 such time period to a date later than 30 days after

20 the date of the order for relief, absent extraordinary

21 and compelling circumstances;

22 ‘‘(4) file all postpetition financial and other re23 ports required by the Federal Rules of Bankruptcy

24 Procedure or by local rule of the district court;
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1 ‘‘(5) subject to section 363(c)(2), maintain in2 surance customary and appropriate to the industry;

3 ‘‘(6)(A) timely file tax returns;

4 ‘‘(B) subject to section 363(c)(2), timely pay all

5 administrative expense tax claims, except those

6 being contested by appropriate proceedings being

7 diligently prosecuted; and

8 ‘‘(C) subject to section 363(c)(2), establish 1 or

9 more separate deposit accounts not later than 10

10 business days after the date of order for relief (or

11 as soon thereafter as possible if all banks contacted

12 decline the business) and deposit therein, not later

13 than 1 business day after receipt thereof, all taxes

14 payable for periods beginning after the date the case

15 is commenced that are collected or withheld by the

16 debtor for governmental units, unless the court

17 waives that requirement after notice and hearing,

18 upon a finding of extraordinary and compelling cir19 cumstances; and

20 ‘‘(7) allow the United States trustee, or a des21 ignated representative of the United States trustee,

22 to inspect the debtor’s business premises, books, and

23 records at reasonable times, after reasonable prior

24 written notice, unless notice is waived by the debt25 or.’’.
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1 (b) TECHNICAL AMENDMENT.—The table of sections

2 for chapter 11, United States Code, is amended by insert3 ing after the item relating to section 1114 the following:

‘‘1115. Duties of trustee or debtor in possession in small business cases.’’.

4 SEC. 427. PLAN FILING AND CONFIRMATION DEADLINES.

5 Section 1121 of title 11, United States Code, is

6 amended by striking subsection (e) and inserting the fol7 lowing:

8 ‘‘(e) In a small business case—

9 ‘‘(1) only the debtor may file a plan until after

10 90 days after the date of the order for relief, unless

11 that period is —

12 ‘‘(A) shortened on request of a party in in13 terest made during the 90-day period;

14 ‘‘(B) extended as provided by this sub15 section, after notice and hearing; or

16 ‘‘(C) the court, for cause, orders otherwise;

17 ‘‘(2) the plan, and any necessary disclosure

18 statement, shall be filed not later than 90 days after

19 the date of the order for relief; and

20 ‘‘(3) the time periods specified in paragraphs

21 (1) and (2), and the time fixed in section 1129(e),

22 within which the plan shall be confirmed, may be ex23 tended only if—

24 ‘‘(A) the debtor, after providing notice to

25 parties in interest (including the United States
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1 trustee), demonstrates by a preponderance of

2 the evidence that it is more likely than not that

3 the court will confirm a plan within a reason4 able period of time;

5 ‘‘(B) a new deadline is imposed at the time

6 the extension is granted; and

7 ‘‘(C) the order extending time is signed be8 fore the existing deadline has expired.’’.

9 SEC. 428. PLAN CONFIRMATION DEADLINE.

10 Section 1129 of title 11, United States Code, is

11 amended by adding at the end the following:

12 ‘‘(e) In a small business case, the plan shall be con13 firmed not later than 150 days after the date of the order

14 for relief, unless such 150-day period is extended as pro15 vided in section 1121(e)(3).’’.

16 SEC. 429. PROHIBITION AGAINST EXTENSION OF TIME.

17 Section 105(d) of title 11, United States Code, is

18 amended—

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

20 end;

21 (2) in paragraph (2)(B)(vi), by striking the pe22 riod at the end and inserting ‘‘; and’’; and

23 (3) by adding at the end the following:
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1 ‘‘(3) in a small business case, not extend the

2 time periods specified in sections 1121(e) and

3 1129(e), except as provided in section 1121(e)(3).’’.

4 SEC. 430. DUTIES OF THE UNITED STATES TRUSTEE.

5 Section 586(a) of title 28, United States Code, is

6 amended—

7 (1) in paragraph (3)—

8 (A) in subparagraph (G), by striking

9 ‘‘and’’ at the end;

10 (B) by redesignating subparagraph (H) as

11 subparagraph (I); and

12 (C) by inserting after subparagraph (G)

13 the following:

14 ‘‘(H) in small business cases (as defined in

15 section 101 of title 11), performing the addi16 tional duties specified in title 11 pertaining to

17 such cases;’’;

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

19 end;

20 (3) in paragraph (6), by striking the period at

21 the end and inserting ‘‘; and’’; and

22 (4) by inserting after paragraph (6) the fol23 lowing:

24 ‘‘(7) in each of such small business cases—
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1 ‘‘(A) conduct an initial debtor interview as

2 soon as practicable after the entry of order for

3 relief but before the first meeting scheduled

4 under section 341(a) of title 11, at which time

5 the United States trustee shall—

6 ‘‘(i) begin to investigate the debtor’s

7 viability;

8 ‘‘(ii) inquire about the debtor’s busi9 ness plan;

10 ‘‘(iii) explain the debtor’s obligations

11 to file monthly operating reports and other

12 required reports;

13 ‘‘(iv) attempt to develop an agreed

14 scheduling order; and

15 ‘‘(v) inform the debtor of other obliga16 tions;

17 ‘‘(B) if determined to be appropriate and

18 advisable, visit the appropriate business prem19 ises of the debtor and ascertain the state of the

20 debtor’s books and records and verify that the

21 debtor has filed its tax returns; and

22 ‘‘(C) review and monitor diligently the

23 debtor’s activities, to identify as promptly as

24 possible whether the debtor will be unable to

25 confirm a plan; and
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1 ‘‘(8) in any case in which the United States

2 trustee finds material grounds for any relief under

3 section 1112 of title 11, the United States trustee

4 shall apply promptly after making that finding to

5 the court for relief.’’.

6 SEC. 431. SCHEDULING CONFERENCES.

7 Section 105(d) of title 11, United States Code, as

8 amended by section 429 of this Act, is amended—

9 (1) in the matter preceding paragraph (1) by

10 striking ‘‘, may’’;

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

12 following:

13 ‘‘(1) shall hold such status conferences as are

14 necessary to further the expeditious and economical

15 resolution of the case; and’’; and

16 (3) in paragraph (2), by striking ‘‘unless incon17 sistent with another provision of this title or with

18 applicable Federal Rules of Bankruptcy Procedure,’’

19 and inserting ‘‘may’’.

20 SEC. 432. SERIAL FILER PROVISIONS.

21 Section 362 of title 11, United States Code, is

22 amended—

23 (1) in subsection (j), as redesignated by section

24 305(1) of this Act—
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1 (A) by striking ‘‘An’’ and inserting ‘‘(1)

2 Except as provided in paragraph (2), an’’; and

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

4 ‘‘(2) If such violation is based on an action taken by

5 an entity in the good faith belief that subsection (h) ap6 plies to the debtor, the recovery under paragraph (1)

7 against such entity shall be limited to actual damages.’’;

8 and

9 (2) by inserting after subsection (j), as added

10 by section 419 of this Act, the following:

11 ‘‘(k)(1) Except as provided in paragraph (2), the fil12 ing of a petition under chapter 11 of this title operates

13 as a stay of the acts described in subsection (a) only in

14 an involuntary case involving no collusion by the debtor

15 with creditors and in which the debtor—

16 ‘‘(A) is a debtor in a small business case pend17 ing at the time the petition is filed;

18 ‘‘(B) was a debtor in a small business case that

19 was dismissed for any reason by an order that be20 came final in the 2-year period ending on the date

21 of the order for relief entered with respect to the pe22 tition;

23 ‘‘(C) was a debtor in a small business case in

24 which a plan was confirmed in the 2-year period
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1 ending on the date of the order for relief entered

2 with respect to the petition; or

3 ‘‘(D) is an entity that has succeeded to sub4 stantially all of the assets or business of a small

5 business debtor described in subparagraph (A), (B),

6 or (C).

7 ‘‘(2) Paragraph (1) does not apply to the filing of

8 a petition if the debtor proves by a preponderance of the

9 evidence that—

10 ‘‘(A) the filing of that petition resulted from

11 circumstances beyond the control of the debtor not

12 foreseeable at the time the case then pending was

13 filed; and

14 ‘‘(B) it is more likely than not that the court

15 will confirm a feasible plan, but not a liquidating

16 plan, within a reasonable period of time.’’.

17 SEC. 433. EXPANDED GROUNDS FOR DISMISSAL OR CON18 VERSION AND APPOINTMENT OF TRUSTEE.

19 (a) EXPANDED GROUNDS FOR DISMISSAL OR CON20 VERSION.—Section 1112 of title 11, United States Code,

21 is amended by striking subsection (b) and inserting the

22 following:

23 ‘‘(b)(1) Except as provided in paragraph (2), in sub24 section (c), and section 1104(a)(3), on request of a party

25 in interest, and after notice and a hearing, the court shall
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1 convert a case under this chapter to a case under chapter

2 7 or dismiss a case under this chapter, whichever is in

3 the best interest of creditors and the estate, if the movant

4 establishes cause.

5 ‘‘(2) The relief provided in paragraph (1) shall not

6 be granted if the debtor or another party in interest ob7 jects and establishes by a preponderance of the evidence

8 that—

9 ‘‘(A) it is more likely than not that a plan will

10 be confirmed within—

11 ‘‘(i) a period of time fixed under this title

12 or by order of the court entered under section

13 1121(e)(3); or

14 ‘‘(ii) a reasonable period of time if no pe15 riod of time has been fixed; and

16 ‘‘(B) if the reason is an act or omission of the

17 debtor that—

18 ‘‘(i) there exists a reasonable justification

19 for the act or omission; and

20 ‘‘(ii)(I) the act or omission will be cured

21 within a reasonable period of time fixed by the

22 court, but not to exceed 30 days after the court

23 decides the motion, unless the movant expressly

24 consents to a continuance for a specific period

25 of time; or
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1 ‘‘(II) compelling circumstances beyond the

2 control of the debtor justify an extension.

3 ‘‘(3) The court shall commence the hearing on any

4 motion under this subsection not later than 30 days after

5 filing of the motion, and shall decide the motion within

6 15 days after commencement of the hearing, unless the

7 movant expressly consents to a continuance for a specific

8 period of time or compelling circumstances prevent the

9 court from meeting the time limits established by this

10 paragraph.

11 ‘‘(4) For purposes of this subsection, cause

12 includes—

13 ‘‘(A) substantial or continuing loss to or dimi14 nution of the estate;

15 ‘‘(B) gross mismanagement of the estate;

16 ‘‘(C) failure to maintain appropriate insurance;

17 ‘‘(D) unauthorized use of cash collateral harm18 ful to 1 or more creditors;

19 ‘‘(E) failure to comply with an order of the

20 court;

21 ‘‘(F) failure timely to satisfy any filing or re22 porting requirement established by this title or by

23 any rule applicable to a case under this chapter;

24 ‘‘(G) failure to attend the meeting of creditors

25 convened under section 341(a) or an examination or-
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1 dered under Rule 2004 of the Federal Rules of

2 Bankruptcy Procedure;

3 ‘‘(H) failure timely to provide information or

4 attend meetings reasonably requested by the United

5 States trustee;

6 ‘‘(I) failure timely to pay taxes due after the

7 date of the order for relief or to file tax returns due

8 after the order for relief;

9 ‘‘(J) failure to file a disclosure statement, or to

10 file or confirm a plan, within the time fixed by this

11 title or by order of the court;

12 ‘‘(K) failure to pay any fees or charges required

13 under chapter 123 of title 28;

14 ‘‘(L) revocation of an order of confirmation

15 under section 1144;

16 ‘‘(M) inability to effectuate substantial con17 summation of a confirmed plan;

18 ‘‘(N) material default by the debtor with re19 spect to a confirmed plan; and

20 ‘‘(O) termination of a plan by reason of the oc21 currence of a condition specified in the plan.

22 ‘‘(5) The court shall commence the hearing on any

23 motion under this subsection not later than 30 days after

24 filing of the motion, and shall decide the motion within

25 15 days after commencement of the hearing, unless the
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1 movant expressly consents to a continuance for a specific

2 period of time or compelling circumstances prevent the

3 court from meeting the time limits established by this

4 paragraph.’’.

5 (b) ADDITIONAL GROUNDS FOR APPOINTMENT OF

6 TRUSTEE.—Section 1104(a) of title 11, United States

7 Code, is amended—

8 (1) in paragraph (1) by striking ‘‘or’’ at the

9 end;

10 (2) in paragraph (2) by striking the period at

11 the end and inserting ‘‘; or’’; and

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

13 ‘‘(3) if grounds exist to convert or dismiss the

14 case under section 1112, but the court determines

15 that the appointment of a trustee is in the best in16 terests of creditors and the estate.’’.

17 SEC. 434. STUDY OF OPERATION OF TITLE 11, UNITED

18 STATES CODE, WITH RESPECT TO SMALL

19 BUSINESSES.

20 Not later than 2 years after the date of the enact21 ment of this Act, the Administrator of the Small Business

22 Administration, in consultation with the Attorney General

23 of the United States, the Director of the Administrative

24 Office of United States Trustees, and the Director of the

25 Administrative Office of the United States Courts, shall—
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1 (1) conduct a study to determine—

2 (A) the internal and external factors that

3 cause small businesses, especially sole propri4 etorships, to become debtors in cases under title

5 11, United States Code, and that cause certain

6 small businesses to successfully complete cases

7 under chapter 11 of such title; and

8 (B) how Federal laws relating to bank9 ruptcy may be made more effective and efficient

10 in assisting small businesses to remain viable;

11 and

12 (2) submit to the President pro tempore of the

13 Senate and the Speaker of the House of Representa14 tives a report summarizing that study.

15 SEC. 435. PAYMENT OF INTEREST.

16 Section 362(d)(3) of title 11, United States Code, is

17 amended—

18 (1) by inserting ‘‘or 30 days after the court de19 termines that the debtor is subject to this para20 graph, whichever is later’’ after ‘‘90-day period)’’;

21 and

22 (2) by striking subparagraph (B) and inserting

23 the following:

24 ‘‘(B) the debtor has commenced monthly

25 payments that—
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1 ‘‘(i) may, in the debtor’s sole discre2 tion, notwithstanding section 363(c)(2), be

3 made from rents or other income generated

4 before or after the commencement of the

5 case by or from the property to each cred6 itor whose claim is secured by such real es7 tate (other than a claim secured by a judg8 ment lien or by an unmatured statutory

9 lien); and

10 ‘‘(ii) are in an amount equal to inter11 est at the then applicable nondefault con12 tract rate of interest on the value of the

13 creditor’s interest in the real estate; or’’.

14 TITLE V—MUNICIPAL

15 BANKRUPTCY PROVISIONS

16 SEC. 501. PETITION AND PROCEEDINGS RELATED TO PETI17 TION.

18 (a) TECHNICAL AMENDMENT RELATING TO MUNICI19 PALITIES.—Section 921(d) of title 11, United States

20 Code, is amended by inserting ‘‘, notwithstanding section

21 301(b)’’ before the period at the end.

22 (b) CONFORMING AMENDMENT.—Section 301 of title

23 11, United States Code, is amended—

24 (1) by inserting ‘‘(a)’’ before ‘‘A voluntary’’;

25 and
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1 (2) by striking the last sentence and inserting

2 the following:

3 ‘‘(b) The commencement of a voluntary case under

4 a chapter of this title constitutes an order for relief under

5 such chapter.’’.

6 SEC. 502. APPLICABILITY OF OTHER SECTIONS TO CHAP7 TER 9.

8 Section 901 of title 11, United States Code, is

9 amended—

10 (1) by inserting ‘‘555, 556,’’ after ‘‘553,’’; and

11 (2) by inserting ‘‘559, 560,’’ after ‘‘557,’’.

12 TITLE VI—IMPROVED BANK13 RUPTCY STATISTICS AND

14 DATA

15 SEC. 601. AUDIT PROCEDURES.

16 (a) AMENDMENTS.—Section 586 of title 28, United

17 States Code, is amended—

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

19 and inserting the following:

20 ‘‘(6) make such reports as the Attorney General

21 directs, including the results of audits performed

22 under subsection (f); and’’; and

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

24 ‘‘(f)(1)(A) The Attorney General shall establish pro25 cedures to determine the accuracy, veracity, and complete-
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1 ness of petitions, schedules, and other information which

2 the debtor is required to provide under sections 521 and

3 1322 of title 11, and, if applicable, section 111 of title

4 11, in individual cases filed under chapter 7 or 13 of such

5 title.

6 ‘‘(B) Those procedures shall—

7 ‘‘(i) establish a method of selecting appropriate

8 qualified persons to contract to perform those au9 dits;

10 ‘‘(ii) establish a method of randomly selecting

11 cases to be audited, except that not less than 1 out

12 of every 250 cases in each Federal judicial district

13 shall be selected for audit;

14 ‘‘(iii) require audits for schedules of income and

15 expenses which reflect greater than average

16 variances from the statistical norm of the district in

17 which the schedules were filed if those variances

18 occur by reason of higher income or higher expenses

19 than the statistical norm of the disctrict in which

20 the schedules were filed; and

21 ‘‘(iv) include procedures for providing, not less

22 frequently than annually, public information con23 cerning the aggregate results of the audits referred

24 to in this subparagraph, including the percentage of
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1 cases, by district, in which a material misstatement

2 of income or expenditures is reported.

3 ‘‘(2) The United States trustee for each district may

4 contract with auditors to perform audits in cases des5 ignated by the United States trustee according to the pro6 cedures established under paragraph (1).

7 ‘‘(3)(A) The report of each audit conducted under

8 this subsection shall be filed with the court and trans9 mitted to the United States trustee. Each report shall

10 clearly and conspicuously specify any material

11 misstatement of income or expenditures or of assets iden12 tified by the person performing the audit. In any case

13 where a material misstatement of income or expenditures

14 or of assets has been reported, the clerk of the bankruptcy

15 court shall give notice of the misstatement to the creditors

16 in the case.

17 ‘‘(B) If a material misstatement of income or expend18 itures or of assets is reported, the United States trustee

19 shall—

20 ‘‘(i) report the material misstatement, if appro21 priate, to the United States Attorney under section

22 3057 of title 18; and

23 ‘‘(ii) if advisable, take appropriate action, in24 cluding commencing an adversary proceeding to re-
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1 voke the debtor’s discharge under section 727(d) of

2 title 11.’’.

3 (b) AMENDMENTS TO SECTION 521 OF TITLE 11,

4 UNITED STATES CODE.—Paragraphs (3) and (4) of sec5 tion 521(a) of title 11, United States Code, as amended

6 by section 315 of this Act, are each amended by inserting

7 ‘‘or an auditor appointed under section 586 of title 28’’

8 after ‘‘serving in the case’’ each place that term appears.

9 (c) AMENDMENTS TO SECTION 727 OF TITLE 11,

10 UNITED STATES CODE.—Section 727(d) of title 11,

11 United States Code, is amended—

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

13 end;

14 (2) in paragraph (3), by striking the period at

15 the end and inserting ‘‘; or’’; and

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

17 ‘‘(4) the debtor has failed to explain

18 satisfactorily—

19 ‘‘(A) a material misstatement in an audit

20 performed under section 586(f) of title 28; or

21 ‘‘(B) a failure to make available for inspec22 tion all necessary accounts, papers, documents,

23 financial records, files, and any other papers,

24 things, or property belonging to the debtor that
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1 are requested for an audit conducted under sec2 tion 586(f).’’.

3 (d) EFFECTIVE DATE.—The amendments made by

4 this section shall take effect 18 months after the date of

5 enactment of this Act.

6 SEC. 602. IMPROVED BANKRUPTCY STATISTICS.

7 (a) AMENDMENT.—Chapter 6 of title 28, United

8 States Code, is amended by adding at the end the fol9 lowing:

10 ‘‘§ 159. Bankruptcy statistics

11 ‘‘(a) The clerk of each district court shall compile sta12 tistics regarding individual debtors with primarily con13 sumer debts seeking relief under chapters 7, 11, and 13

14 of title 11. Those statistics shall be in a form prescribed

15 by the Director of the Administrative Office of the United

16 States Courts (referred to in this section as the ‘Office’).

17 ‘‘(b) The Director shall—

18 ‘‘(1) compile the statistics referred to in sub19 section (a);

20 ‘‘(2) make the statistics available to the public;

21 and

22 ‘‘(3) not later than October 31, 1999, and an23 nually thereafter, prepare, and submit to Congress a

24 report concerning the information collected under
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1 subsection (a) that contains an analysis of the infor2 mation.

3 ‘‘(c) The compilation required under subsection (b)

4 shall—

5 ‘‘(1) be itemized, by chapter, with respect to

6 title 11;

7 ‘‘(2) be presented in the aggregate and for each

8 district; and

9 ‘‘(3) include information concerning—

10 ‘‘(A) the total assets and total liabilities of

11 the debtors described in subsection (a), and in

12 each category of assets and liabilities, as re13 ported in the schedules prescribed under section

14 2075 and filed by those debtors;

15 ‘‘(B) the total current monthly income,

16 projected monthly net income, and average in17 come, and average expenses of those debtors as

18 reported on the schedules and statements that

19 each such debtor files under sections 111, 521,

20 and 1322 of title 11;

21 ‘‘(C) the aggregate amount of debt dis22 charged in the reporting period, determined as

23 the difference between the total amount of debt

24 and obligations of a debtor reported on the

25 schedules and the amount of such debt reported
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1 in categories which are predominantly non2 dischargeable;

3 ‘‘(D) the average period of time between

4 the filing of the petition and the closing of the

5 case;

6 ‘‘(E) for the reporting period—

7 ‘‘(i) the number of cases in which a

8 reaffirmation was filed; and

9 ‘‘(ii)(I) the total number of reaffirma10 tions filed;

11 ‘‘(II) of those cases in which a reaffir12 mation was filed, the number in which the

13 debtor was not represented by an attorney;

14 and

15 ‘‘(III) of the cases under each of sub16 clauses (I) and (II), the number of cases in

17 which the reaffirmation was approved by

18 the court;

19 ‘‘(F) with respect to cases filed under

20 chapter 13 of title 11, for the reporting

21 period—

22 ‘‘(i)(I) the number of cases in which a

23 final order was entered determining the

24 value of property securing a claim in an
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1 amount less than the amount of the claim;

2 and

3 ‘‘(II) the number of final orders deter4 mining the value of property securing a

5 claim issued;

6 ‘‘(ii) the number of cases dismissed

7 for failure to make payments under the

8 plan; and

9 ‘‘(iii) the number of cases in which

10 the debtor filed another case during the 6-

11 year period preceding the date of filing;

12 ‘‘(G) the number of cases in which credi13 tors were fined for misconduct and any amount

14 of punitive damages awarded by the court for

15 creditor misconduct; and

16 ‘‘(H) the number of cases in which sanc17 tions under Rule 9011 of the Federal Rules of

18 Bankruptcy Procedure were imposed against

19 debtor’s counsel and damages awarded under

20 such rule.’’.

21 (b) CLERICAL AMENDMENT.—The table of sections

22 for chapter 6 of title 28, United States Code, is amended

23 by adding at the end the following:

‘‘159. Bankruptcy statistics.’’.
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1 (c) EFFECTIVE DATE.—The amendments made by

2 this section shall take effect 18 months after the date of

3 enactment of this Act.

4 SEC. 603. UNIFORM RULES FOR THE COLLECTION OF BANK5 RUPTCY DATA.

6 (a) AMENDMENT.—Chapter 39 of title 28, United

7 States Code, is amended by inserting after section 589a

8 the following:

9 ‘‘§ 589b. Bankruptcy data

10 ‘‘(a) Within a reasonable period of time after the ef11 fective date of this section, the Attorney General of the

12 United States shall issue rules requiring uniform forms

13 for (and from time to time thereafter to appropriately

14 modify and approve)—

15 ‘‘(1) final reports by trustees in cases under

16 chapters 7, 12, and 13 of title 11; and

17 ‘‘(2) periodic reports by debtors in possession or

18 trustees, as the case may be, in cases under chapter

19 11 of title 11.

20 ‘‘(b) Each report referred to in subsection (a) shall

21 be designed (and the requirements as to place and manner

22 of filing shall be established) so as to facilitate compilation

23 of data and maximum practicable access of the public,

24 by—
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1 ‘‘(1) physical inspection at 1 or more central fil2 ing locations; and

3 ‘‘(2) electronic access through the Internet or

4 other appropriate media.

5 ‘‘(c)(1) The information required to be filed in the

6 reports referred to in subsection (b) shall be information

7 that is—

8 ‘‘(A) in the best interests of debtors and credi9 tors, and in the public interest; and

10 ‘‘(B) reasonable and adequate information to

11 evaluate the efficiency and practicality of the Fed12 eral bankruptcy system.

13 ‘‘(2) In issuing rules proposing the forms referred to

14 in subsection (a), the Attorney General shall strike the

15 best achievable practical balance between—

16 ‘‘(A) the reasonable needs of the public for in17 formation about the operational results of the Fed18 eral bankruptcy system; and

19 ‘‘(B) economy, simplicity, and lack of undue

20 burden on persons with a duty to file reports.

21 ‘‘(d)(1) Final reports proposed for adoption by trust22 ees under chapters 7, 12, and 13 of title 11 shall include

23 with respect to a case under such title, by appropriate

24 category—
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1 ‘‘(A) information about the length of time the

2 case was pending;

3 ‘‘(B) assets abandoned;

4 ‘‘(C) assets exempted;

5 ‘‘(D) receipts and disbursements of the estate;

6 ‘‘(E) expenses of administration;

7 ‘‘(F) claims asserted;

8 ‘‘(G) claims allowed; and

9 ‘‘(H) distributions to claimants and claims dis10 charged without payment.

11 ‘‘(2) In cases under chapters 12 and 13 of title 11,

12 final reports proposed for adoption by trustees shall

13 include—

14 ‘‘(A) the date of confirmation of the plan;

15 ‘‘(B) each modification to the plan; and

16 ‘‘(C) defaults by the debtor in performance

17 under the plan.

18 ‘‘(3) The information described in paragraphs (1)

19 and (2) shall be in addition to such other matters as are

20 required by law for a final report or as the Attorney Gen21 eral, in the discretion of the Attorney General, may pro22 pose for a final report.

23 ‘‘(e)(1) Periodic reports proposed for adoption by

24 trustees or debtors in possession under chapter 11 of title

25 11 shall include—
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1 ‘‘(A) information about the standard industry

2 classification, published by the Department of Com3 merce, for the businesses conducted by the debtor;

4 ‘‘(B) the length of time the case has been pend5 ing;

6 ‘‘(C) the number of full-time employees—

7 ‘‘(i) as of the date of the order for relief;

8 and

9 ‘‘(ii) at the end of each reporting period

10 since the case was filed;

11 ‘‘(D) cash receipts, cash disbursements, and

12 profitability of the debtor for the most recent period

13 and cumulatively since the date of the order for re14 lief;

15 ‘‘(E) compliance with title 11, whether or not

16 tax returns and tax payments since the date of the

17 order for relief have been timely filed and made;

18 ‘‘(F) all professional fees approved by the court

19 in the case for the most recent period and cumula20 tively since the date of the order for relief (sepa21 rately reported, for the professional fees incurred by

22 or on behalf of the debtor, between those that would

23 have been incurred absent a bankruptcy case and

24 those that would not have been so incurred); and
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1 ‘‘(G) plans of reorganization filed and con2 firmed and, with respect thereto, by class, the recov3 eries of the holders, expressed in aggregate dollar

4 values and, in the case of claims, as a percentage of

5 total claims of the class allowed.

6 ‘‘(2) The information described in paragraph (1)

7 shall be in addition to such other matters as are required

8 by law for a periodic report or as the Attorney General,

9 in the discretion of the Attorney General, may propose for

10 a periodic report.’’.

11 (b) TECHNICAL AMENDMENT.—The table of sections

12 for chapter 39 of title 28, United States Code, is amended

13 by adding at the end the following:

‘‘589b. Bankruptcy data.’’.

14 SEC. 604. SENSE OF CONGRESS REGARDING AVAILABILITY

15 OF BANKRUPTCY DATA.

16 It is the sense of Congress that—

17 (1) it should be the national policy of the

18 United States that all data held by bankruptcy

19 clerks in electronic form, to the extent such data re20 flects only public records (as defined in section 107

21 of title 11, United States Code), should be released

22 in a usable electronic form in bulk to the public sub23 ject to such appropriate privacy concerns and safe24 guards as the Judicial Conference of the United

25 States may determine; and
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1 (2) there should be established a bankruptcy

2 data system in which—

3 (A) a single set of data definitions and

4 forms are used to collect data nationwide; and

5 (B) data for any particular bankruptcy

6 case are aggregated in the same electronic

7 record.

8 TITLE VII—BANKRUPTCY TAX

9 PROVISIONS

10 SEC. 701. TREATMENT OF CERTAIN LIENS.

11 (a) TREATMENT OF CERTAIN LIENS.—Section 724

12 of title 11, United States Code, is amended—

13 (1) in subsection (b), in the matter preceding

14 paragraph (1), by inserting ‘‘(other than to the ex15 tent that there is a properly perfected unavoidable

16 tax lien arising in connection with an ad valorem tax

17 on real or personal property of the estate)’’ after

18 ‘‘under this title’’;

19 (2) in subsection (b)(2), by inserting ‘‘(except

20 that such expenses, other than claims for wages, sal21 aries, or commissions which arise after the filing of

22 a petition, shall be limited to expenses incurred

23 under chapter 7 of this title and shall not include ex24 penses incurred under chapter 11 of this title)’’ after

25 ‘‘507(a)(1)’’; and
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1 (3) by adding at the end the following:

2 ‘‘(e) Before subordinating a tax lien on real or per3 sonal property of the estate, the trustee shall—

4 ‘‘(1) exhaust the unencumbered assets of the

5 estate; and

6 ‘‘(2) in a manner consistent with section

7 506(c), recover from property securing an allowed

8 secured claim the reasonable, necessary costs, and

9 expenses of preserving or disposing of that property.

10 ‘‘(f) Notwithstanding the exclusion of ad valorem tax

11 liens under this section and subject to the requirements

12 of subsection (e), the following may be paid from property

13 of the estate which secures a tax lien, or the proceeds of

14 such property:

15 ‘‘(1) Claims for wages, salaries, and commis16 sions that are entitled to priority under section

17 507(a)(3).

18 ‘‘(2) Claims for contributions to an employee

19 benefit plan entitled to priority under section

20 507(a)(4).’’.

21 (b) DETERMINATION OF TAX LIABILITY.—Section

22 505(a)(2) of title 11, United States Code, is amended—

23 (1) in subparagraph (A), by striking ‘‘or’’ at

24 the end;
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1 (2) in subparagraph (B), by striking the period

2 at the end and inserting ‘‘; or’’; and

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

4 ‘‘(C) the amount or legality of any amount aris5 ing in connection with an ad valorem tax on real or

6 personal property of the estate, if the applicable pe7 riod for contesting or redetermining that amount

8 under any law (other than a bankruptcy law) has ex9 pired.’’.

10 SEC. 702. EFFECTIVE NOTICE TO GOVERNMENT.

11 (a) EFFECTIVE NOTICE TO GOVERNMENTAL

12 UNITS.—Section 342 of title 11, United States Code, as

13 amended by section 315(a) of this Act, is amended by add14 ing at the end the following:

15 ‘‘(g)(1) If a debtor lists a governmental unit as a

16 creditor in a list or schedule, any notice required to be

17 given by the debtor under this title, applicable rule, other

18 provision of law, or order of the court, shall identify the

19 department, agency, or instrumentality through which the

20 debtor is indebted.

21 ‘‘(2) The debtor shall identify (with information such

22 as a taxpayer identification number, loan, account or con23 tract number, or real estate parcel number, if applicable),

24 and describe the underlying basis for the claim of the gov25 ernmental unit.
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1 ‘‘(3) If the liability of the debtor to a governmental

2 unit arises from a debt or obligation owed or incurred by

3 another individual, entity, or organization, or under a dif4 ferent name, the debtor shall identify that individual, enti5 ty, organization, or name.

6 ‘‘(h) The clerk shall keep and update on a quarterly

7 basis, in such form and manner as the Director of the

8 Administrative Office of the United States Courts pre9 scribes, a register in which a governmental unit may des10 ignate or redesignate a mailing address for service of no11 tice in cases pending in the district. The clerk shall make

12 such register available to debtors.’’.

13 (b) ADOPTION OF RULES PROVIDING NOTICE.—

14 (1) IN GENERAL.—Within a reasonable period

15 of time after the date of enactment of this Act, the

16 Advisory Committee on Bankruptcy Rules of the Ju17 dicial Conference shall propose for adoption en18 hanced rules for providing notice to Federal, State,

19 and local government units that have regulatory au20 thority over the debtor or that may be creditors in

21 the debtor’s case.

22 (2) PERSONS NOTIFIED.—The rules proposed

23 under paragraph (1) shall be reasonably calculated

24 to ensure that notice will reach the representatives

25 of the governmental unit (or subdivision thereof)
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1 who will be the appropriate persons authorized to

2 act upon the notice.

3 (3) RULES REQUIRED.—At a minimum, the

4 rules under paragraph (1) should require that the

5 debtor—

6 (A) identify in the schedules and the no7 tice, the subdivision, agency, or entity with re8 spect to which such notice should be received;

9 (B) provide sufficient information (such as

10 case captions, permit numbers, taxpayer identi11 fication numbers, or similar identifying infor12 mation) to permit the governmental unit (or

13 subdivision thereof) entitled to receive such no14 tice to identify the debtor or the person or enti15 ty on behalf of which the debtor is providing

16 notice in any case in which—

17 (i) the debtor may be a successor in

18 interest; or

19 (ii) may not be the same entity as the

20 entity that incurred the debt or obligation;

21 and

22 (C) identify, in appropriate schedules,

23 served together with the notice—
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1 (i) the property with respect to which

2 the claim or regulatory obligation may

3 have arisen, if applicable;

4 (ii) the nature of such claim or regu5 latory obligation; and

6 (iii) the purpose for which notice is

7 being given.

8 (c) EFFECT OF FAILURE OF NOTICE.—Section 342

9 of title 11, United States Code, as amended by subsection

10 (a), is amended by adding at the end the following:

11 ‘‘(i) A notice that does not comply with subsections

12 (d) and (e) shall not be effective unless the debtor dem13 onstrates by clear and convincing evidence that—

14 ‘‘(1) timely notice was given in a manner rea15 sonably calculated to satisfy the requirements of this

16 section; and

17 ‘‘(2) either—

18 ‘‘(A) the notice was timely sent to the ad19 dress provided in the register maintained by the

20 clerk of the district in which the case was pend21 ing for such purposes; or

22 ‘‘(B) no address was provided in such list

23 for the governmental unit and that an officer of

24 the governmental unit who is responsible for the
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1 matter or claim had actual knowledge of the

2 case in sufficient time to act.’’.

3 SEC. 703. NOTICE OF REQUEST FOR A DETERMINATION OF

4 TAXES.

5 The second sentence of section 505(b) of title 11,

6 United States Code, is amended by striking ‘‘Unless’’ and

7 inserting ‘‘If the request is made substantially in the man8 ner designated by the governmental unit and unless’’.

9 SEC. 704. RATE OF INTEREST ON TAX CLAIMS.

10 (a) IN GENERAL.—Subchapter I of chapter 5 of title

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

12 the following:

13 ‘‘§ 511. Rate of interest on tax claims

14 ‘‘If any provision of this title requires the payment

15 of interest on a tax claim or the payment of interest to

16 enable a creditor to receive the present value of the al17 lowed amount of a tax claim, the rate of interest shall be

18 as follows:

19 ‘‘(1) In the case of secured tax claims, unse20 cured ad valorem tax claims, other unsecured tax

21 claims in which interest is required to be paid under

22 section 726(a)(5), and administrative tax claims

23 paid under section 503(b)(1), the rate shall be deter24 mined under applicable nonbankruptcy law.
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1 ‘‘(2)(A) In the case of any tax claim other than

2 a claim described in paragraph (1), the minimum

3 rate of interest shall be a percentage equal to the

4 sum of—

5 ‘‘(i) 3; plus

6 ‘‘(ii) the Federal short-term rate rounded

7 to the nearest full percent, determined under

8 section 1274(d) of the Internal Revenue Code

9 of 1986.

10 ‘‘(B) In the case of any claim for Federal in11 come taxes, the minimum rate of interest shall be

12 subject to any adjustment that may be required

13 under section 6621(d) of the Internal Revenue Code

14 of 1986.

15 ‘‘(C) In the case of taxes paid under a con16 firmed plan or reorganization under this title, the

17 minimum rate of interest shall be determined as of

18 the calendar month in which the plan is confirmed.’’.

19 (b) CLERICAL AMENDMENT.—The table of sections

20 for chapter 5 of title 11, United States Code, is amended

21 by inserting after the item relating to section 510 the fol22 lowing:

‘‘511. Rate of interest on tax claims.’’.
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1 SEC. 705. TOLLING OF PRIORITY OF TAX CLAIM TIME PERI2 ODS.

3 Section 507(a)(8)(A) of title 11, United States Code,

4 as redesignated by section 221 of this Act, is amended—

5 (1) in clause (i), by inserting before the semi6 colon at the end, the following: ‘‘, plus any time dur7 ing which the stay of proceedings was in effect in a

8 prior case under this title, plus 6 months’’; and

9 (2) by striking clause (ii) and inserting the fol10 lowing:

11 ‘‘(ii) assessed within 240 days before

12 the date of the filing of the petition, exclu13 sive of—

14 ‘‘(I) any time during which an

15 offer in compromise with respect to

16 that tax, was pending or in effect dur17 ing that 240-day period, plus 30 days;

18 ‘‘(II) the lesser of—

19 ‘‘(aa) any time during which

20 an installment agreement with

21 respect to that tax was pending

22 or in effect during that 240-day

23 period, plus 30 days; or

24 ‘‘(bb) 1 year; and

25 ‘‘(III) any time during which a

26 stay of proceedings against collections
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1 was in effect in a prior case under

2 this title during that 240-day period;

3 plus 6 months.’’.

4 SEC. 706. PRIORITY PROPERTY TAXES INCURRED.

5 Section 507(a)(9)(B) of title 11, United States Code,

6 as redesignated by section 221 of this Act, is amended

7 by striking ‘‘assessed’’ and inserting ‘‘incurred’’.

8 SEC. 707. CHAPTER 13 DISCHARGE OF FRAUDULENT AND

9 OTHER TAXES.

10 Section 1328(a)(2) of title 11, United States Code,

11 as amended by section 228 of this Act, is amended by in12 serting ‘‘(1),’’ after ‘‘paragraph’’.

13 SEC. 708. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.

14 Section 1141(d) of title 11, United States Code, is

15 amended by adding at the end the following:

16 ‘‘(5) Notwithstanding paragraph (1), the confirma17 tion of a plan does not discharge a debtor that is a cor18 poration from any debt for a tax or customs duty with

19 respect to which the debtor—

20 ‘‘(A) made a fraudulent return; or

21 ‘‘(B) willfully attempted in any manner to

22 evade or defeat that tax or duty.’’.

23 SEC. 709. STAY OF TAX PROCEEDINGS.

24 (a) SECTION 362 STAY LIMITED TO PREPETITION

25 TAXES.—Section 362(a)(8) of title 11, United States
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1 Code, is amended by inserting before the semicolon at the

2 end the following: ‘‘, with respect to a tax liability for a

3 taxable period ending before the order for relief under sec4 tion 301, 302, or 303’’.

5 (b) APPEAL OF TAX COURT DECISIONS PER6 MITTED.—Section 362(b)(9) of title 11, United States

7 Code, is amended—

8 (1) in subparagraph (C), by striking ‘‘or’’ at

9 the end;

10 (2) in subparagraph (D), by striking the period

11 at the end and inserting ‘‘; or’’; and

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

13 ‘‘(E) the appeal of a decision by a court or

14 administrative tribunal which determines a tax

15 liability of the debtor (without regard to wheth16 er such determination was made prepetition or

17 postpetition).’’.

18 SEC. 710. PERIODIC PAYMENT OF TAXES IN CHAPTER 11

19 CASES.

20 Section 1129(a)(9) of title 11, United States Code,

21 is amended—

22 (1) in subparagraph (B), by striking ‘‘and’’ at

23 the end; and

24 (2) in subparagraph (C), by striking ‘‘deferred

25 cash payments, over a period not exceeding six years
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1 after the date of assessment of such claim,’’ and all

2 that follows through the end of the subparagraph,

3 and inserting ‘‘regular installment payments—

4 ‘‘(i) of a total value, as of the effective

5 date of the claim, equal to the allowed

6 amount of such claim in cash, but in no

7 case with a balloon payment; and

8 ‘‘(ii) beginning not later than the ef9 fective date of the plan and ending on the

10 earlier of—

11 ‘‘(I) the date that is 5 years after

12 the date of the filing of the petition;

13 or

14 ‘‘(II) the last date payments are

15 to be made under the plan to unse16 cured creditors; and’’; and

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

18 ‘‘(D) with respect to a secured claim which

19 would otherwise meet the description on an un20 secured claim of a governmental unit under sec21 tion 507(a)(8), but for the secured status of

22 that claim, the holder of that claim will receive

23 on account of that claim, cash payments, in the

24 same manner and over the same period, as pre25 scribed in subparagraph (C).’’.
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1 SEC. 711. AVOIDANCE OF STATUTORY TAX LIENS PROHIB2 ITED.

3 Section 545(2) of title 11, United States Code, is

4 amended by striking the semicolon at the end and insert5 ing ‘‘, except in any case in which a purchaser is a pur6 chaser described in section 6323 of the Internal Revenue

7 Code of 1986, or in any other similar provision of State

8 or local law;’’.

9 SEC. 712. PAYMENT OF TAXES IN THE CONDUCT OF BUSI10 NESS.

11 (a) PAYMENT OF TAXES REQUIRED.—Section 960 of

12 title 28, United States Code, is amended—

13 (1) by inserting ‘‘(a)’’ before ‘‘Any’’; and

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

15 ‘‘(b) A tax under subsection (a) shall be paid when

16 due in the conduct of business unless—

17 ‘‘(1) the tax is a property tax secured by a lien

18 against property that is abandoned within a reason19 able period of time after the lien attaches, by the

20 trustee of a bankruptcy estate, under section 554 of

21 title 11; or

22 ‘‘(2) payment of the tax is excused under a spe23 cific provision of title 11.

24 ‘‘(c) In a case pending under chapter 7 of title 11,

25 payment of a tax may be deferred until final distribution

26 is made under section 726 of title 11, if—
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1 ‘‘(1) the tax was not incurred by a trustee duly

2 appointed under chapter 7 of title 11; or

3 ‘‘(2) before the due date of the tax, the court

4 makes a finding of probable insufficiency of funds of

5 the estate to pay in full the administrative expenses

6 allowed under section 503(b) of title 11 that have

7 the same priority in distribution under section

8 726(b) of title 11 as the priority of that tax.’’.

9 (b) PAYMENT OF AD VALOREM TAXES REQUIRED.—

10 Section 503(b)(1)(B)(i) of title 11, United States Code,

11 is amended by inserting ‘‘whether secured or unsecured,

12 including property taxes for which liability is in rem, in

13 personam, or both,’’ before ‘‘except’’.

14 (c) REQUEST FOR PAYMENT OF ADMINISTRATIVE

15 EXPENSE TAXES ELIMINATED.—Section 503(b)(1) of

16 title 11, United States Code, is amended—

17 (1) in subparagraph (B), by striking ‘‘and’’ at

18 the end;

19 (2) in subparagraph (C), by adding ‘‘and’’ at

20 the end; and

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

22 ‘‘(D) notwithstanding the requirements of sub23 section (a), a governmental unit shall not be re24 quired to file a request for the payment of a claim

25 described in subparagraph (B) or (C);’’.
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1 (d) PAYMENT OF TAXES AND FEES AS SECURED

2 CLAIMS.—Section 506 of title 11, United States Code, is

3 amended—

4 (1) in subsection (b), by inserting ‘‘or State

5 statute’’ after ‘‘agreement’’; and

6 (2) in subsection (c), by inserting ‘‘, including

7 the payment of all ad valorem property taxes with

8 respect to the property’’ before the period at the

9 end.

10 SEC. 713. TARDILY FILED PRIORITY TAX CLAIMS.

11 Section 726(a)(1) of title 11, United States Code, is

12 amended by striking ‘‘before the date on which the trustee

13 commences distribution under this section;’’ and inserting

14 the following: ‘‘on or before the earlier of—

15 ‘‘(A) the date that is 10 days after the

16 mailing to creditors of the summary of the

17 trustee’s final report; or

18 ‘‘(B) the date on which the trustee com19 mences final distribution under this section;’’.

20 SEC. 714. INCOME TAX RETURNS PREPARED BY TAX AU21 THORITIES.

22 Section 523(a) of title 11, United States Code, is

23 amended—

24 (1) in paragraph (1)(B)—
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1 (A) by inserting ‘‘or equivalent report or

2 notice,’’ after ‘‘a return,’’;

3 (B) in clause (i)—

4 (i) by inserting ‘‘or given’’ after

5 ‘‘filed’’; and

6 (ii) by striking ‘‘or’’ at the end; and

7 (C) in clause (ii)—

8 (i) by inserting ‘‘or given’’ after

9 ‘‘filed’’; and

10 (ii) by inserting ‘‘, report, or notice’’

11 after ‘‘return’’; and

12 (2) by adding at the end the following flush

13 sentences:

14 ‘‘For purposes of this subsection, the term ‘return’ means

15 a return that satisfies the requirements of applicable non16 bankruptcy law (including applicable filing requirements).

17 Such term includes a return prepared pursuant to section

18 6020(a) of the Internal Revenue Code of 1986, or similar

19 State or local law, or a written stipulation to a judgment

20 entered by a nonbankruptcy tribunal, but does not include

21 a return made pursuant to section 6020(b) of the Internal

22 Revenue Code of 1986, or a similar State or local law.’’.
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1 SEC. 715. DISCHARGE OF THE ESTATE’S LIABILITY FOR UN2 PAID TAXES.

3 The second sentence of section 505(b) of title 11,

4 United States Code, as amended by section 703 of this

5 Act, is amended by inserting ‘‘the estate,’’ after ‘‘mis6 representation,’’.

7 SEC. 716. REQUIREMENT TO FILE TAX RETURNS TO CON8 FIRM CHAPTER 13 PLANS.

9 (a) FILING OF PREPETITION TAX RETURNS RE10 QUIRED FOR PLAN CONFIRMATION.—Section 1325(a) of

11 title 11, United States Code, as amended by section 212

12 of this Act, is amended—

13 (1) in paragraph (6), by striking ‘‘and’’ at the

14 end;

15 (2) in paragraph (7), by striking the period at

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

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

18 ‘‘(8) if the debtor has filed all applicable Fed19 eral, State, and local tax returns as required by sec20 tion 1309.’’.

21 (b) ADDITIONAL TIME PERMITTED FOR FILING TAX

22 RETURNS.—

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

24 United States Code, as amended by section 309(c)

25 of this Act, is amended by adding at the end the fol26 lowing:
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1 ‘‘§ 1309. Filing of prepetition tax returns

2 ‘‘(a) Not later than the day before the day on which

3 the first meeting of the creditors is convened under section

4 341(a), the debtor shall file with appropriate tax authori5 ties all tax returns for all taxable periods ending during

6 the 3-year period ending on the date of the filing of the

7 petition.

8 ‘‘(b)(1) Subject to paragraph (2), if the tax returns

9 required by subsection (a) have not been filed by the date

10 on which the first meeting of creditors is convened under

11 section 341(a), the trustee may continue that meeting for

12 a reasonable period of time to allow the debtor an addi13 tional period of time to file any unfiled returns, but such

14 additional period of time shall not extend beyond—

15 ‘‘(A) for any return that is past due as of the

16 date of the filing of the petition, the date that is 120

17 days after the date of that first meeting; or

18 ‘‘(B) for any return that is not past due as of

19 the date of the filing of the petition, the later of—

20 ‘‘(i) the date that is 120 days after the

21 date of that first meeting; or

22 ‘‘(ii) the date on which the return is due

23 under the last automatic extension of time for

24 filing that return to which the debtor is enti25 tled, and for which request has been timely
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1 made, according to applicable nonbankruptcy

2 law.

3 ‘‘(2) Upon notice and hearing, and order entered be4 fore the tolling of any applicable filing period determined

5 under this subsection, if the debtor demonstrates by clear

6 and convincing evidence that the failure to file a return

7 as required under this subsection is attributable to cir8 cumstances beyond the control of the debtor, the court

9 may extend the filing period established by the trustee

10 under this subsection for—

11 ‘‘(A) a period of not more than 30 days for re12 turns described in paragraph (1); and

13 ‘‘(B) a period not to extend after the applicable

14 extended due date for a return described in para15 graph (2).

16 ‘‘(c) For purposes of this section, the term ‘return’

17 includes a return prepared pursuant to section 6020 (a)

18 or (b) of the Internal Revenue Code of 1986, or a similar

19 State or local law, or written stipulation to a judgment

20 entered by a nonbankruptcy tribunal.’’.

21 (2) CONFORMING AMENDMENT.—The table of sec22 tions for chapter 13 of title 11, United States Code, is

23 amended by inserting after the item relating to section

24 1308 the following:

‘‘1309. Filing of prepetition tax returns.’’.
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1 (c) DISMISSAL OR CONVERSION ON FAILURE TO

2 COMPLY.—Section 1307 of title 11, United States Code,

3 is amended—

4 (1) by redesignating subsections (e) and (f) as

5 subsections (f) and (g), respectively; and

6 (2) by inserting after subsection (d), the fol7 lowing:

8 ‘‘(e) Upon the failure of the debtor to file a tax return

9 under section 1309, on request of a party in interest or

10 the United States trustee and after notice and a hearing,

11 the court shall dismiss the case.’’.

12 (d) TIMELY FILED CLAIMS.—Section 502(b)(9) of

13 title 11, United States Code, is amended by inserting be14 fore the period at the end the following ‘‘, and except that

15 in a case under chapter 13 of this title, a claim of a gov16 ernmental unit for a tax with respect to a return filed

17 under section 1309 shall be timely if the claim is filed on

18 or before the date that is 60 days after that return was

19 filed in accordance with applicable requirements’’.

20 (e) RULES FOR OBJECTIONS TO CLAIMS AND TO

21 CONFIRMATION.—It is the sense of Congress that the Ad22 visory Committee on Bankruptcy Rules of the Judicial

23 Conference should, within a reasonable period of time

24 after the date of enactment of this Act, propose for adop-
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1 tion amended Federal Rules of Bankruptcy Procedure

2 which provide that—

3 (1) notwithstanding the provisions of Rule

4 3015(f), in cases under chapter 13 of title 11,

5 United States Code, a governmental unit may object

6 to the confirmation of a plan on or before the date

7 that is 60 days after the date on which the debtor

8 files all tax returns required under sections 1309

9 and 1325(a)(7) of title 11, United States Code; and

10 (2) in addition to the provisions of Rule 3007,

11 in a case under chapter 13 of title 11, United States

12 Code, no objection to a tax with respect to which a

13 return is required to be filed under section 1309 of

14 title 11, United States Code, shall be filed until such

15 return has been filed as required.

16 SEC. 717. STANDARDS FOR TAX DISCLOSURE.

17 Section 1125(a)(1) of title 11, United States Code,

18 is amended—

19 (1) by inserting ‘‘including a full discussion of

20 the potential material, Federal, State, and local tax

21 consequences of the plan to the debtor, any suc22 cessor to the debtor, and a hypothetical investor

23 domiciled in the State in which the debtor resides or

24 has its principal place of business typical of the
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1 holders of claims or interests in the case,’’ after

2 ‘‘records’’; and

3 (2) by striking ‘‘a hypothetical reasonable inves4 tor typical of holders of claims or interests’’ and in5 serting ‘‘such a hypothetical investor’’.

6 SEC. 718. SETOFF OF TAX REFUNDS.

7 Section 362(b) of title 11, United States Code, as

8 amended by section 402 of this Act, is amended—

9 (1) in paragraph (25), by striking ‘‘or’’ at the

10 end;

11 (2) in paragraph (26), by striking the period at

12 the end and inserting ‘‘; or’’; and

13 (3) by inserting after paragraph (26) the fol14 lowing:

15 ‘‘(27) under subsection (a), of the setoff of an

16 income tax refund, by a governmental unit, with re17 spect to a taxable period that ended before the order

18 for relief against an income tax liability for a taxable

19 period that also ended before the order for relief,

20 unless—

21 ‘‘(A) before that setoff, an action to deter22 mine the amount or legality of that tax liability

23 under section 505(a) was commenced; or

24 ‘‘(B) in any case in which the setoff of an

25 income tax refund is not permitted because of
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1 a pending action to determine the amount or le2 gality of a tax liability, in which case the gov3 ernmental unit may hold the refund pending

4 the resolution of the action.’’.

5 TITLE VIII—ANCILLARY AND

6 OTHER CROSS-BORDER CASES

7 SEC. 801. AMENDMENT TO ADD CHAPTER 15 TO TITLE 11,

8 UNITED STATES CODE.

9 (a) IN GENERAL.—Title 11, United States Code, is

10 amended by inserting after chapter 13 the following:

11 ‘‘CHAPTER 15—ANCILLARY AND OTHER

12 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.
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‘‘1519. Relief that may be granted upon petition for recognition of a foreign

proceeding.

‘‘1520. Effects of recognition of a foreign main proceeding.

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

‘‘1522. Protection of creditors and other interested persons.

‘‘1523. Actions to avoid acts detrimental to creditors.

‘‘1524. Intervention by a foreign representative.

‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND

FOREIGN REPRESENTATIVES

‘‘1525. Cooperation and direct communication between the court and foreign

courts or foreign representatives.

‘‘1526. Cooperation and direct communication between the trustee and foreign

courts or foreign representatives.

‘‘1527. Forms of cooperation.

‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

‘‘1528. Commencement of a case under this title after recognition of a foreign

main proceeding.

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

‘‘1530. Coordination of more than 1 foreign proceeding.

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

‘‘1532. Rule of payment in concurrent proceedings.

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;
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1 ‘‘(3) fair and efficient administration of cross2 border insolvencies that protects the interests of all

3 creditors, and other interested entities, including the

4 debtor;

5 ‘‘(4) protection and maximization of the value

6 of the debtor’s assets; and

7 ‘‘(5) facilitation of the rescue of financially

8 troubled businesses, thereby protecting investment

9 and preserving employment.

10 ‘‘(b) This chapter applies if—

11 ‘‘(1) assistance is sought in the United States

12 by a foreign court or a foreign representative in con13 nection with a foreign proceeding;

14 ‘‘(2) assistance is sought in a foreign country in

15 connection with a case under this title;

16 ‘‘(3) a foreign proceeding and a case under this

17 title with respect to the same debtor are taking place

18 concurrently; or

19 ‘‘(4) creditors or other interested persons in a

20 foreign country have an interest in requesting the

21 commencement of, or participating in, a case or pro22 ceeding under this title.

23 ‘‘(c) This chapter does not apply to—

24 ‘‘(1) a proceeding concerning an entity identi25 fied by exclusion in subsection 109(b);
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1 ‘‘(2) an individual, or to an individual and such

2 individual’s spouse, who have debts within the limits

3 specified in section 109(e) and who are citizens of

4 the United States or aliens lawfully admitted for

5 permanent residence in the United States; or

6 ‘‘(3) an entity subject to a proceeding under the

7 Securities Investor Protection Act of 1970 (84 Stat.

8 1636 et seq.), a stockbroker subject to subchapter

9 III of chapter 7 of this title, or a commodity broker

10 subject to subchapter IV of chapter 7 of this title.

11 ‘‘SUBCHAPTER I—GENERAL PROVISIONS

12 ‘‘§ 1502. Definitions

13 ‘‘For the purposes of this chapter, the term—

14 ‘‘(1) ‘debtor’ means an entity that is the subject

15 of a foreign proceeding;

16 ‘‘(2) ‘establishment’ means any place of oper17 ations where the debtor carries out a nontransitory

18 economic activity;

19 ‘‘(3) ‘foreign court’ means a judicial or other

20 authority competent to control or supervise a foreign

21 proceeding;

22 ‘‘(4) ‘foreign main proceeding’ means a foreign

23 proceeding taking place in the country where the

24 debtor has the center of its main interests;
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1 ‘‘(5) ‘foreign nonmain proceeding’ means a for2 eign proceeding, other than a foreign main pro3 ceeding, taking place in a country where the debtor

4 has an establishment;

5 ‘‘(6) ‘trustee’ includes a trustee, a debtor in

6 possession in a case under any chapter of this title,

7 or a debtor under chapter 9 of this title; and

8 ‘‘(7) ‘within the territorial jurisdiction of the

9 United States’ when used with reference to property

10 of a debtor refers to tangible property located within

11 the territory of the United States and intangible

12 property deemed under applicable nonbankruptcy

13 law to be located within that territory, including any

14 property subject to attachment or garnishment that

15 may properly be seized or garnished by an action in

16 a Federal or State court in the United States.

17 ‘‘§ 1503. International obligations of the United States

18 ‘‘To the extent that this chapter conflicts with an ob19 ligation of the United States arising out of any treaty or

20 other form of agreement to which it is a party with 1 or

21 more other countries, the requirements of the treaty or

22 agreement prevail.
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1 ‘‘§ 1504. Commencement of ancillary case

2 ‘‘A case under this chapter is commenced by the filing

3 of a petition for recognition of a foreign proceeding under

4 section 1515.

5 ‘‘§ 1505. Authorization to act in a foreign country

6 ‘‘A trustee or another entity, including an examiner,

7 may be authorized by the court to act in a foreign country

8 on behalf of an estate created under section 541. An entity

9 authorized to act under this section may act in any way

10 permitted by the applicable foreign law.

11 ‘‘§ 1506. Public policy exception

12 ‘‘Nothing in this chapter prevents the court from re13 fusing to take an action governed by this chapter if the

14 action would be manifestly contrary to the public policy

15 of the United States.

16 ‘‘§ 1507. Additional assistance

17 ‘‘(a) Subject to the specific limitations under other

18 provisions of this chapter, the court, upon recognition of

19 a foreign proceeding, may provide additional assistance to

20 a foreign representative under this title or under other

21 laws of the United States.

22 ‘‘(b) In determining whether to provide additional as23 sistance under this title or under other laws of the United

24 States, the court shall consider whether such additional

25 assistance, consistent with the principles of comity, will

26 reasonably assure—
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1 ‘‘(1) just treatment of all holders of claims

2 against or interests in the debtor’s property;

3 ‘‘(2) protection of claim holders in the United

4 States against prejudice and inconvenience in the

5 processing of claims in such foreign proceeding;

6 ‘‘(3) prevention of preferential or fraudulent

7 dispositions of property of the debtor;

8 ‘‘(4) distribution of proceeds of the debtor’s

9 property substantially in accordance with the order

10 prescribed by this title; and

11 ‘‘(5) if appropriate, the provision of an oppor12 tunity for a fresh start for the individual that such

13 foreign proceeding concerns.

14 ‘‘§ 1508. Interpretation

15 ‘‘In interpreting this chapter, the court shall consider

16 its international origin, and the need to promote an appli17 cation of this chapter that is consistent with the applica18 tion of similar statutes adopted by foreign jurisdictions.

19 ‘‘SUBCHAPTER II—ACCESS OF FOREIGN REP20 RESENTATIVES AND CREDITORS TO THE

21 COURT

22 ‘‘§ 1509. Right of direct access

23 ‘‘(a) A foreign representative is entitled to commence

24 a case under section 1504 by filing a petition for recogni25 tion under section 1515, and upon recognition, to apply
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1 directly to other Federal and State courts for appropriate

2 relief in those courts.

3 ‘‘(b) Upon recognition, and subject to section 1510,

4 a foreign representative shall have the capacity to sue and

5 be sued, and shall be subject to the laws of the United

6 States of general applicability.

7 ‘‘(c) Subject to section 1510, a foreign representative

8 is subject to laws of general application.

9 ‘‘(d) Recognition under this chapter is prerequisite to

10 the granting of comity or cooperation to a foreign rep11 resentative in any Federal or State court in the United

12 States. Any request for comity or cooperation by a foreign

13 representative in any court shall be accompanied by a

14 sworn statement setting forth whether recognition under

15 section 1515 has been sought and the status of any such

16 petition.

17 ‘‘(e) Upon denial of recognition under this chapter,

18 the court may issue appropriate orders necessary to pre19 vent an attempt to obtain comity or cooperation from

20 courts in the United States without such recognition.

21 ‘‘§ 1510. Limited jurisdiction

22 ‘‘The sole fact that a foreign representative files a

23 petition under section 1515 does not subject the foreign

24 representative to the jurisdiction of any court in the

25 United States for any other purpose.
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1 ‘‘§ 1511. Commencement of case under section 301 or

2 303

3 ‘‘(a) Upon recognition, a foreign representative may

4 commence—

5 ‘‘(1) an involuntary case under section 303; or

6 ‘‘(2) a voluntary case under section 301 or 302,

7 if the foreign proceeding is a foreign main pro8 ceeding.

9 ‘‘(b) The petition commencing a case under sub10 section (a) must be accompanied by a statement describ11 ing the petition for recognition and its current status. The

12 court where the petition for recognition has been filed

13 must be advised of the foreign representative’s intent to

14 commence a case under subsection (a) prior to such com15 mencement.

16 ‘‘§ 1512. Participation of a foreign representative in a

17 case under this title

18 ‘‘Upon recognition of a foreign proceeding, the for19 eign representative in that proceeding is entitled to par20 ticipate as a party in interest in a case regarding the debt21 or under this title.

22 ‘‘§ 1513. Access of foreign creditors to a case under

23 this title

24 ‘‘(a) Foreign creditors have the same rights regarding

25 the commencement of, and participation in, a case under

26 this title as domestic creditors.
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1 ‘‘(b)(1) Subsection (a) does not change or codify law

2 in effect on the date of enactment of this chapter as to

3 the priority of claims under section 507 or 726, except

4 that the claim of a foreign creditor under section 507 or

5 726 shall not be given a lower priority than that of general

6 unsecured claims without priority solely because the holder

7 of such claim is a foreign creditor.

8 ‘‘(2)(A) Subsection (a) and paragraph (1) do not

9 change or codify law in effect on the date of enactment

10 of this chapter as to the allowability of foreign revenue

11 claims or other foreign public law claims in a proceeding

12 under this title.

13 ‘‘(B) Allowance and priority as to a foreign tax claim

14 or other foreign public law claim shall be governed by any

15 applicable tax treaty of the United States, under the con16 ditions and circumstances specified therein.

17 ‘‘§ 1514. Notification to foreign creditors concerning a

18 case under this title

19 ‘‘(a) Whenever in a case under this title notice is to

20 be given to creditors generally or to any class or category

21 of creditors, such notice shall also be given to the known

22 creditors generally, or to creditors in the notified class or

23 category, that do not have addresses in the United States.

24 The court may order that appropriate steps be taken with
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1 a view to notifying any creditor whose address is not yet

2 known.

3 ‘‘(b) Such notification to creditors with foreign ad4 dresses described in subsection (a) shall be given individ5 ually, unless the court considers that, under the cir6 cumstances, some other form of notification would be

7 more appropriate. No letters rogatory or other similar for8 mality is required.

9 ‘‘(c) When a notification of commencement of a case

10 is to be given to foreign creditors, the notification shall—

11 ‘‘(1) indicate the time period for filing proofs of

12 claim and specify the place for their filing;

13 ‘‘(2) indicate whether secured creditors need to

14 file their proofs of claim; and

15 ‘‘(3) contain any other information required to

16 be included in such a notification to creditors pursu17 ant to this title and the orders of the court.

18 ‘‘(d) Any rule of procedure or order of the court as

19 to notice or the filing of a claim shall provide such addi20 tional time to creditors with foreign addresses as is rea21 sonable under the circumstances.
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1 ‘‘SUBCHAPTER III—RECOGNITION OF A

2 FOREIGN PROCEEDING AND RELIEF

3 ‘‘§ 1515. Application for recognition of a foreign pro4 ceeding

5 ‘‘(a) A foreign representative applies to the court for

6 recognition of the foreign proceeding in which the foreign

7 representative has been appointed by filing a petition for

8 recognition.

9 ‘‘(b) A petition for recognition shall be accompanied

10 by—

11 ‘‘(1) a certified copy of the decision com12 mencing the foreign proceeding and appointing the

13 foreign representative;

14 ‘‘(2) a certificate from the foreign court affirm15 ing the existence of the foreign proceeding and of

16 the appointment of the foreign representative; or

17 ‘‘(3) in the absence of evidence referred to in

18 paragraphs (1) and (2), any other evidence accept19 able to the court of the existence of the foreign pro20 ceeding and of the appointment of the foreign rep21 resentative.

22 ‘‘(c) A petition for recognition shall also be accom23 panied by a statement identifying all foreign proceedings

24 with respect to the debtor that are known to the foreign

25 representative.
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1 ‘‘(d) The documents referred to in paragraphs (1)

2 and (2) of subsection (b) must be translated into English.

3 The court may require a translation into English of addi4 tional documents.

5 ‘‘§ 1516. Presumptions concerning recognition

6 ‘‘(a) If the decision or certificate referred to in section

7 1515(b) indicates that the foreign proceeding is a foreign

8 proceeding as defined in section 101 and that the person

9 or body is a foreign representative as defined in section

10 101, the court is entitled to so presume.

11 ‘‘(b) The court is entitled to presume that documents

12 submitted in support of the petition for recognition are

13 authentic, whether or not they have been legalized.

14 ‘‘(c) In the absence of evidence to the contrary, the

15 debtor’s registered office, or habitual residence in the case

16 of an individual, is presumed to be the center of the debt17 or’s main interests.

18 ‘‘§ 1517. Order recognizing a foreign proceeding

19 ‘‘(a) Subject to section 1506, after notice and a hear20 ing an order recognizing a foreign proceeding shall be en21 tered if—

22 ‘‘(1) the foreign proceeding is a foreign main

23 proceeding or foreign nonmain proceeding within the

24 meaning of section 1502;
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1 ‘‘(2) the foreign representative applying for rec2 ognition is a person or body as defined in section

3 101; and

4 ‘‘(3) the petition meets the requirements of sec5 tion 1515.

6 ‘‘(b) The foreign proceeding shall be recognized—

7 ‘‘(1) as a foreign main proceeding if it is taking

8 place in the country where the debtor has the center

9 of its main interests; or

10 ‘‘(2) as a foreign nonmain proceeding if the

11 debtor has an establishment within the meaning of

12 section 1502 in the foreign country where the pro13 ceeding is pending.

14 ‘‘(c) A petition for recognition of a foreign proceeding

15 shall be decided upon at the earliest possible time. Entry

16 of an order recognizing a foreign proceeding shall con17 stitute recognition under this chapter.

18 ‘‘(d) The provisions of this subchapter do not prevent

19 modification or termination of recognition if it is shown

20 that the grounds for granting it were fully or partially

21 lacking or have ceased to exist, but in considering such

22 action the court shall give due weight to possible prejudice

23 to parties that have relied upon the granting of recogni24 tion. The case under this chapter may be closed in the

25 manner prescribed for a case under section 350.
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1 ‘‘§ 1518. Subsequent information

2 ‘‘After the the petition for recognition of the foreign

3 proceeding is filed, the foreign representative shall file

4 with the court promptly a notice of change of status

5 concerning—

6 ‘‘(1) any substantial change in the status of the

7 foreign proceeding or the status of the foreign rep8 resentative’s appointment; and

9 ‘‘(2) any other foreign proceeding regarding the

10 debtor that becomes known to the foreign represent11 ative.

12 ‘‘§ 1519. Relief that may be granted upon petition for

13 recognition of a foreign proceeding

14 ‘‘(a) Beginning on the date on which a petition for

15 recognition is filed and ending on the date on which the

16 petition is decided upon, the court may, at the request of

17 the foreign representative, where relief is urgently needed

18 to protect the assets of the debtor or the interests of the

19 creditors, grant relief of a provisional nature, including—

20 ‘‘(1) staying execution against the debtor’s as21 sets;

22 ‘‘(2) entrusting the administration or realiza23 tion of all or part of the debtor’s assets located in

24 the United States to the foreign representative or

25 another person authorized by the court, including an

26 examiner, in order to protect and preserve the value
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1 of assets that, by their nature or because of other

2 circumstances, are perishable, susceptible to devalu3 ation, or otherwise in jeopardy; and

4 ‘‘(3) any relief referred to in paragraph (3),

5 (4), or (7) of section 1521(a).

6 ‘‘(b) Unless extended under section 1521(a)(6), the

7 relief granted under this section terminates when the peti8 tion for recognition is decided upon.

9 ‘‘(c) It is a ground for denial of relief under this sec10 tion that such relief would interfere with the administra11 tion of a foreign main 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 this

17 section.

18 ‘‘§ 1520. Effects of recognition of a foreign main pro19 ceeding

20 ‘‘(a) Upon recognition of a foreign proceeding that

21 is a foreign main proceeding—

22 ‘‘(1) section 362 applies with respect to the

23 debtor and that property of the debtor that is within

24 the territorial jurisdiction of the United States;
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1 ‘‘(2) a transfer, an encumbrance, or any other

2 disposition of an interest of the debtor in property

3 within the territorial jurisdiction of the United

4 States is restrained as and to the extent that is pro5 vided for property of an estate under sections 363,

6 549, and 552; and

7 ‘‘(3) unless the court orders otherwise, the for8 eign representative may operate the debtor’s busi9 ness and may exercise the powers of a trustee under

10 section 549, subject to sections 363 and 552.

11 ‘‘(b) The scope, and the modification or termination,

12 of the stay and restraints referred to in subsection (a) are

13 subject to the exceptions and limitations provided in sub14 sections (b), (c), and (d) of section 362, subsections (b)

15 and (c) of section 363, and sections 552, 555 through 557,

16 559, and 560.

17 ‘‘(c) Subsection (a) does not affect the right to com18 mence individual actions or proceedings in a foreign coun19 try to the extent necessary to preserve a claim against the

20 debtor.

21 ‘‘(d) Subsection (a) does not affect the right of a for22 eign representative or an entity to file a petition com23 mencing a case under this title or the right of any party

24 to file claims or take other proper actions in such a case.
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1 ‘‘§ 1521. Relief that may be granted upon recognition

2 of a foreign proceeding

3 ‘‘(a) Upon recognition of a foreign proceeding, wheth4 er main or nonmain, where necessary to effectuate the

5 purpose of this chapter and to protect the assets of the

6 debtor or the interests of the creditors, the court may, at

7 the request of the foreign representative, grant any appro8 priate relief, including—

9 ‘‘(1) staying the commencement or continuation

10 of individual actions or individual proceedings con11 cerning the debtor’s assets, rights, obligations or li12 abilities to the extent the actions or proceedings

13 have not been stayed under section 1520(a);

14 ‘‘(2) staying execution against the debtor’s as15 sets to the extent the execution has not been stayed

16 under section 1520(a);

17 ‘‘(3) suspending the right to transfer, encumber

18 or otherwise dispose of any assets of the debtor to

19 the extent that right has not been suspended under

20 section 1520(a);

21 ‘‘(4) providing for the examination of witnesses,

22 the taking of evidence or the delivery of information

23 concerning the debtor’s assets, affairs, rights, obliga24 tions or liabilities;

25 ‘‘(5) entrusting the administration or realiza26 tion of all or part of the debtor’s assets within the
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1 territorial jurisdiction of the United States to the

2 foreign representative or another person, including

3 an examiner, authorized by the court;

4 ‘‘(6) extending relief granted under section

5 1519(a); and

6 ‘‘(7) granting any additional relief that may be

7 available to a trustee, except for relief available

8 under sections 522, 544, 545, 547, 548, 550, and

9 724(a).

10 ‘‘(b) Upon recognition of a foreign proceeding, wheth11 er main or nonmain, the court may, at the request of the

12 foreign representative, entrust the distribution of all or

13 part of the debtor’s assets located in the United States

14 to the foreign representative or another person, including

15 an examiner, authorized by the court, if the court is satis16 fied that the interests of creditors in the United States

17 are sufficiently protected.

18 ‘‘(c) In granting relief under this section to a rep19 resentative of a foreign nonmain proceeding, the court

20 must be satisfied that the relief relates to assets that,

21 under the law of the United States, should be adminis22 tered in the foreign nonmain proceeding or concerns infor23 mation required in that proceeding.
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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 para6 graphs (1), (2), (3), and (6) of subsection (a).

7 ‘‘§ 1522. Protection of creditors and other interested

8 persons

9 ‘‘(a) The court may grant relief under section 1519

10 or 1521, or may modify or terminate relief under sub11 section (c), only if the interests of the creditors and other

12 interested entities, including the debtor, are sufficiently

13 protected.

14 ‘‘(b) The court may subject relief granted under sec15 tion 1519 or 1521, or the operation of the debtor’s busi16 ness under section 1520(a)(2), to conditions that the court

17 considers to be appropriate, including the giving of secu18 rity or the filing of a bond.

19 ‘‘(c) The court may, at the request of the foreign rep20 resentative or an entity affected by relief granted under

21 section 1519 or 1521, or at its own motion, modify or

22 terminate the relief referred to in subsection (b).

23 ‘‘(d) Section 1104(d) shall apply to the appointment

24 of an examiner under this chapter. Any examiner shall
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1 comply with the qualification requirements imposed on a

2 trustee by section 322.

3 ‘‘§ 1523. Actions to avoid acts detrimental to creditors

4 ‘‘(a) Upon recognition of a foreign proceeding, the

5 foreign representative has standing in a case concerning

6 the debtor pending under another chapter of this title to

7 initiate actions under sections 522, 544, 545, 547, 548,

8 550, and 724(a).

9 ‘‘(b) In any case in which the foreign proceeding is

10 a foreign nonmain proceeding, the court must be satisfied

11 that an action under subsection (a) relates to assets that,

12 under United States law, should be administered in the

13 foreign nonmain proceeding.

14 ‘‘§ 1524. Intervention by a foreign representative

15 ‘‘Upon recognition of a foreign proceeding, the for16 eign representative may intervene in any proceedings in

17 a State or Federal court in the United States in which

18 the debtor is a party.
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1 ‘‘SUBCHAPTER IV—COOPERATION WITH FOR2 EIGN COURTS AND FOREIGN REPRESENTA3 TIVES

4 ‘‘§ 1525. Cooperation and direct communication be5 tween the court and foreign courts or for6 eign representatives

7 ‘‘(a) Consistent with section 1501, the court shall co8 operate to the maximum extent possible with foreign

9 courts or foreign representatives, either directly or

10 through the trustee.

11 ‘‘(b) The court is entitled to communicate directly

12 with, or to request information or assistance directly from,

13 foreign courts or foreign representatives, subject to the

14 rights of parties in interest to notice and participation.

15 ‘‘§ 1526. Cooperation and direct communication be16 tween the trustee and foreign courts or

17 foreign representatives

18 ‘‘(a) Consistent with section 1501, the trustee or

19 other person, including an examiner, authorized by the

20 court, shall, subject to the supervision of the court, cooper21 ate to the maximum extent possible with foreign courts

22 or foreign representatives.

23 ‘‘(b) The trustee or other person, including an exam24 iner, authorized by the court is entitled, subject to the su-
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1 pervision of the court, to communicate directly with for2 eign courts or foreign representatives.

3 ‘‘§ 1527. Forms of cooperation

4 ‘‘Cooperation referred to in sections 1525 and 1526

5 may be implemented by any appropriate means,

6 including—

7 ‘‘(1) appointment of a person or body, including

8 an examiner, to act at the direction of the court;

9 ‘‘(2) communication of information by any

10 means considered appropriate by the court;

11 ‘‘(3) coordination of the administration and su12 pervision of the debtor’s assets and affairs;

13 ‘‘(4) approval or implementation of agreements

14 concerning the coordination of proceedings; and

15 ‘‘(5) coordination of concurrent proceedings re16 garding the same debtor.

17 ‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

18 ‘‘§ 1528. Commencement of a case under this title

19 after recognition of a foreign main pro20 ceeding

21 ‘‘After recognition of a foreign main proceeding, a

22 case under another chapter of this title may be commenced

23 only if the debtor has assets in the United States. The

24 effects of such case shall be restricted to the assets of the

25 debtor that are within the territorial jurisdiction of the
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1 United States and, to the extent necessary to implement

2 cooperation and coordination under sections 1525, 1526,

3 and 1527, to other assets of the debtor that are within

4 the jurisdiction of the court under sections 541(a), and

5 1334(e) of title 28, to the extent that such other assets

6 are not subject to the jurisdiction and control of a foreign

7 proceeding that has been recognized under this chapter.

8 ‘‘§ 1529. Coordination of a case under this title and a

9 foreign proceeding

10 ‘‘In any case in which a foreign proceeding and a case

11 under another chapter of this title are taking place concur12 rently regarding the same debtor, the court shall seek co13 operation and coordination under sections 1525, 1526,

14 and 1527, and the following shall apply:

15 ‘‘(1) If the case in the United States is taking

16 place at the time the petition for recognition of the

17 foreign proceeding is filed—

18 ‘‘(A) any relief granted under sections

19 1519 or 1521 must be consistent with the relief

20 granted in the case in the United States; and

21 ‘‘(B) even if the foreign proceeding is rec22 ognized as a foreign main proceeding, section

23 1520 does not apply.

24 ‘‘(2) If a case in the United States under this

25 title commences after recognition, or after the filing
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1 of the petition for recognition, of the foreign

2 proceeding—

3 ‘‘(A) any relief in effect under sections

4 1519 or 1521 shall be reviewed by the court

5 and shall be modified or terminated if incon6 sistent with the case in the United States; and

7 ‘‘(B) if the foreign proceeding is a foreign

8 main proceeding, the stay and suspension re9 ferred to in section 1520(a) shall be modified or

10 terminated if inconsistent with the relief grant11 ed in the case in the United States.

12 ‘‘(3) In granting, extending, or modifying relief

13 granted to a representative of a foreign nonmain

14 proceeding, the court must be satisfied that the re15 lief relates to assets that, under the law of the

16 United States, should be administered in the foreign

17 nonmain proceeding or concerns information re18 quired in that proceeding.

19 ‘‘(4) In achieving cooperation and coordination

20 under sections 1528 and 1529, the court may grant

21 any of the relief authorized under section 305.

22 ‘‘§ 1530. Coordination of more than 1 foreign pro23 ceeding

24 ‘‘In matters referred to in section 1501, with respect

25 to more than 1 foreign proceeding regarding the debtor,
197

•S 625 IS

1 the court shall seek cooperation and coordination under

2 sections 1525, 1526, and 1527, and the following shall

3 apply:

4 ‘‘(1) Any relief granted under section 1519 or

5 1521 to a representative of a foreign nonmain pro6 ceeding after recognition of a foreign main pro7 ceeding must be consistent with the foreign main

8 proceeding.

9 ‘‘(2) If a foreign main proceeding is recognized

10 after recognition, or after the filing of a petition for

11 recognition, of a foreign nonmain proceeding, any

12 relief in effect under section 1519 or 1521 shall be

13 reviewed by the court and shall be modified or termi14 nated if inconsistent with the foreign main pro15 ceeding.

16 ‘‘(3) If, after recognition of a foreign nonmain

17 proceeding, another foreign nonmain proceeding is

18 recognized, the court shall grant, modify, or termi19 nate relief for the purpose of facilitating coordina20 tion of the proceedings.

21 ‘‘§ 1531. Presumption of insolvency based on recogni22 tion of a foreign main proceeding

23 ‘‘In the absence of evidence to the contrary, recogni24 tion of a foreign main proceeding is for the purpose of

25 commencing a proceeding under section 303, proof that
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•S 625 IS

1 the debtor is generally not paying its debts as such debts

2 become due.

3 ‘‘§ 1532. Rule of payment in concurrent proceedings

4 ‘‘Without prejudice to secured claims or rights in

5 rem, a creditor who has received payment with respect to

6 its claim in a foreign proceeding pursuant to a law relating

7 to insolvency may not receive a payment for the same

8 claim in a case under any other chapter of this title re9 garding the debtor, so long as the payment to other credi10 tors of the same class is proportionately less than the pay11 ment the creditor has already received.’’.

12 (b) CLERICAL AMENDMENT.—The table of chapters

13 for title 11, United States Code, is amended by inserting

14 after the item relating to chapter 13 the following:

‘‘15. Ancillary and Other Cross-Border Cases ........................ 1501’’.

15 SEC. 802. AMENDMENTS TO OTHER CHAPTERS IN TITLE 11,

16 UNITED STATES CODE.

17 (a) APPLICABILITY OF CHAPTERS.—Section 103 of

18 title 11, United States Code, is amended—

19 (1) in subsection (a), by inserting before the pe20 riod the following: ‘‘, and this chapter, sections 307,

21 304, 555 through 557, 559, and 560 apply in a case

22 under chapter 15’’; and

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

24 ‘‘(j) Chapter 15 applies only in a case under such

25 chapter, except that—
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•S 625 IS

1 ‘‘(1) sections 1513 and 1514 apply in all cases

2 under this title; and

3 ‘‘(2) section 1505 applies to trustees and to any

4 other entity (including an examiner) authorized by

5 the court under chapter 7, 11, or 12, to debtors in

6 possession under chapter 11 or 12, and to debtors

7 under chapter 9 who are authorized to act under

8 section 1505.’’.

9 (b) DEFINITIONS.—Paragraphs (23) and (24) of sec10 tion 101 of title 11, United States Code, are amended to

11 read as follows:

12 ‘‘(23) ‘foreign proceeding’ means a collective ju13 dicial or administrative proceeding in a foreign coun14 try, including an interim proceeding, pursuant to a

15 law relating to insolvency in which proceeding the

16 assets and affairs of the debtor are subject to con17 trol or supervision by a foreign court, for the pur18 pose of reorganization or liquidation;

19 ‘‘(24) ‘foreign representative’ means a person

20 or body, including a person or body appointed on an

21 interim basis, authorized in a foreign proceeding to

22 administer the reorganization or the liquidation of

23 the debtor’s assets or affairs or to act as a rep24 resentative of the foreign proceeding;’’.
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•S 625 IS

1 (c) AMENDMENTS TO TITLE 28, UNITED STATES

2 CODE.—

3 (1) PROCEDURES.—Section 157(b)(2) of title

4 28, United States Code, is amended—

5 (A) in subparagraph (N), by striking

6 ‘‘and’’ at the end;

7 (B) in subparagraph (O), by striking the

8 period at the end and inserting ‘‘; and’’; and

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

10 ‘‘(P) recognition of foreign proceedings and

11 other matters under chapter 15 of title 11.’’.

12 (2) BANKRUPTCY CASES AND PROCEEDINGS.—

13 Section 1334(c)(1) of title 28, United States Code,

14 is amended by striking ‘‘Nothing in’’ and inserting

15 ‘‘Except with respect to a case under chapter 15 of

16 title 11, nothing in’’.

17 (3) DUTIES OF TRUSTEES.—Section 586(a)(3)

18 of title 28, United States Code, is amended by in19 serting ‘‘15,’’ after ‘‘chapter’’.

20 SEC. 803. CLAIMS RELATING TO INSURANCE DEPOSITS IN

21 CASES ANCILLARY TO FOREIGN PRO22 CEEDINGS.

23 Section 304 of title 11, United States Code, is

24 amended to read as follows:
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•S 625 IS

1 ‘‘§ 304. Cases ancillary to foreign proceedings

2 ‘‘(a) For purposes of this section—

3 ‘‘(1) the term ‘domestic insurance company’

4 means a domestic insurance company, as such term

5 is used in section 109(b)(2);

6 ‘‘(2) the term ‘foreign insurance company’

7 means a foreign insurance company, as such term is

8 used in section 109(b)(3);

9 ‘‘(3) the term ‘United States claimant’ means a

10 beneficiary of any deposit referred to in subsection

11 (b) or any multibeneficiary trust referred to in sub12 section (b);

13 ‘‘(4) the term ‘United States creditor’ means,

14 with respect to a foreign insurance company—

15 ‘‘(i) a United States claimant; or

16 ‘‘(ii) any business entity that operates in

17 the United States and that is a creditor; and

18 ‘‘(5) the term ‘United States policyholder’

19 means a holder of an insurance policy issued in the

20 United States.

21 ‘‘(b) The court may not grant relief under chapter

22 15 of this title with respect to any deposit, escrow, trust

23 fund, or other security required or permitted under any

24 applicable State insurance law or regulation for the benefit

25 of claim holders in the United States.’’.
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•S 625 IS

1 TITLE IX—FINANCIAL

2 CONTRACT PROVISIONS

3 SEC. 901. BANKRUPTCY CODE AMENDMENTS.

4 (a) DEFINITIONS OF FORWARD CONTRACT, REPUR5 CHASE AGREEMENT, SECURITIES CLEARING AGENCY,

6 SWAP AGREEMENT, COMMODITY CONTRACT, AND SECU7 RITIES CONTRACT.—Title 11, United States Code, is

8 amended—

9 (1) in section 101—

10 (A) in paragraph (25)—

11 (i) by striking ‘‘means a contract’’

12 and inserting ‘‘means—

13 ‘‘(A) a contract’’;

14 (ii) by striking ‘‘, or any combination

15 thereof or option thereon;’’ and inserting

16 ‘‘, or any other similar agreement;’’; and

17 (iii) by adding at the end the fol18 lowing:

19 ‘‘(B) a combination of agreements or

20 transactions referred to in subparagraphs (A)

21 and (C);

22 ‘‘(C) an option to enter into an agreement

23 or transaction referred to in subparagraph (A)

24 or (B);
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•S 625 IS

1 ‘‘(D) a master netting agreement that pro2 vides for an agreement or transaction referred

3 to in subparagraph (A), (B), or (C), together

4 with all supplements to such master netting

5 agreement, without regard to whether such

6 master netting agreement provides for an

7 agreement or transaction that is not a forward

8 contract under this paragraph, except that such

9 master netting agreement shall be considered to

10 be a forward contract under this paragraph

11 only with respect to each agreement or trans12 action under such master netting agreement

13 that is referred to in subparagraph (A), (B) or

14 (C); or

15 ‘‘(E) a security agreement or arrangement,

16 or other credit enhancement, directly pertaining

17 to a contract, option, agreement, or transaction

18 referred to in subparagraph (A), (B), (C), or

19 (D), but not to exceed the actual value of such

20 contract, option, agreement, or transaction on

21 the date of the filing of the petition;’’;

22 (B) by striking paragraph (47) and insert23 ing the following:

24 ‘‘(47) ‘repurchase agreement’ and ‘reverse re25 purchase agreement’—
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•S 625 IS

1 ‘‘(A) mean—

2 ‘‘(i) an agreement, including related

3 terms, which provides for the transfer of—

4 ‘‘(I) a certificate of deposit,

5 mortgage related security (as defined

6 in section 3 of the Securities Ex7 change Act of 1934), mortgage loan,

8 interest in a mortgage related security

9 or mortgage loan, eligible bankers’ ac10 ceptance, or qualified foreign govern11 ment security (defined for purposes of

12 this paragraph to mean a security

13 that is a direct obligation of, or that

14 is fully guaranteed by, the central

15 government of a member of the Orga16 nization for Economic Cooperation

17 and Development); or

18 ‘‘(II) a security that is a direct

19 obligation of, or that is fully guaran20 teed by, the United States or an agen21 cy of the United States against the

22 transfer of funds by the transferee of

23 such certificate of deposit, eligible

24 bankers’ acceptance, security, loan, or

25 interest;
205

•S 625 IS

1 with a simultaneous agreement by such

2 transferee to transfer to the transferor

3 thereof a certificate of deposit, eligible

4 bankers’ acceptance, security, loan, or in5 terest of the kind described in subclause

6 (I) or (II), at a date certain that is not

7 later than 1 year after the date of the

8 transferor’s transfer or on demand, against

9 the transfer of funds;

10 ‘‘(ii) a combination of agreements or

11 transactions referred to in clauses (i) and

12 (iii);

13 ‘‘(iii) an option to enter into an agree14 ment or transaction referred to in clause

15 (i) or (ii); or

16 ‘‘(iv) a master netting agreement that

17 provides for an agreement or transaction

18 referred to in clause (i), (ii), or (iii), to19 gether with all supplements to such master

20 netting agreement, without regard to

21 whether such master netting agreement

22 provides for an agreement or transaction

23 that is not a repurchase agreement under

24 this subparagraph, except that such master

25 netting agreement shall be considered to be
206

•S 625 IS

1 a repurchase agreement under this sub2 paragraph only with respect to each agree3 ment or transaction under such master

4 netting agreement that is referred to in

5 clause (i), (ii), or (iii); or

6 ‘‘(v) a security agreement or arrange7 ment, or other credit enhancement, directly

8 pertaining to a contract referred to in

9 clause (i), (ii), (iii), or (iv), but not to ex10 ceed the actual value of such contract on

11 the date of the filing of the petition; and

12 ‘‘(B) do not include a repurchase obliga13 tion under a participation in a commercial

14 mortgage loan;’’;

15 (C) in paragraph (48) by inserting ‘‘, or

16 exempt from such registration under such sec17 tion pursuant to an order of the Securities and

18 Exchange Commission’’ after ‘‘1934’’; and

19 (D) by striking paragraph (53B) and in20 serting the following:

21 ‘‘(53B) ‘swap agreement’—

22 ‘‘(A) means—

23 ‘‘(i) an agreement, including the

24 terms and conditions incorporated by ref25 erence in such agreement, that is—
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•S 625 IS

1 ‘‘(I) an interest rate swap, op2 tion, future, or forward agreement, in3 cluding a rate floor, rate cap, rate col4 lar, cross-currency rate swap, and

5 basis swap;

6 ‘‘(II) a spot, same day-tomorrow,

7 tomorrow-next, forward, or other for8 eign exchange or precious metals

9 agreement;

10 ‘‘(III) a currency swap, option,

11 future, or forward agreement;

12 ‘‘(IV) an equity index or an eq13 uity swap, option, future, or forward

14 agreement;

15 ‘‘(V) a debt index or a debt swap,

16 option, future, or forward agreement;

17 ‘‘(VI) a credit spread or a credit

18 swap, option, future, or forward

19 agreement; or

20 ‘‘(VII) a commodity index or a

21 commodity swap, option, future, or

22 forward agreement;

23 ‘‘(ii) an agreement or transaction that

24 is similar to an agreement or transaction

25 referred to in clause (i) that—
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•S 625 IS

1 ‘‘(I) is currently, or in the future

2 becomes, regularly entered into in the

3 swap market (including terms and

4 conditions incorporated by reference

5 therein); and

6 ‘‘(II) is a forward, swap, future,

7 or option on a rate, currency, com8 modity, equity security, or other eq9 uity instrument, on a debt security or

10 other debt instrument, or on an eco11 nomic index or measure of economic

12 risk or value;

13 ‘‘(iii) a combination of agreements or

14 transactions referred to in clauses (i) and

15 (ii);

16 ‘‘(iv) an option to enter into an agree17 ment or transaction referred to in this sub18 paragraph;

19 ‘‘(v) a master netting agreement that

20 provides for an agreement or transaction

21 referred to in clause (i), (ii), (iii), or (iv),

22 together with all supplements to such mas23 ter netting agreement and without regard

24 to whether such master netting agreement

25 contains an agreement or transaction de-
209

•S 625 IS

1 scribed in any such clause, but only with

2 respect to each agreement or transaction

3 referred to in any such clause that is under

4 such master netting agreement; except that

5 ‘‘(B) the definition under subparagraph

6 (A) is applicable for purposes of this title only,

7 and shall not be construed or applied so as to

8 challenge or affect the characterization, defini9 tion, or treatment of any swap agreement under

10 any other statute, regulation, or rule, including

11 the Securities Act of 1933, the Securities Ex12 change Act of 1934, the Public Utility Holding

13 Company Act of 1935, the Trust Indenture Act

14 of 1939, the Investment Company Act of 1940,

15 the Investment Advisers Act of 1940, the Secu16 rities Investor Protection Act of 1970, the Com17 modity Exchange Act, and the regulations pre18 scribed by the Securities and Exchange Com19 mission or the Commodity Futures Trading

20 Commission.’’;

21 (2) in section 741, by striking paragraph (7)

22 and inserting the following:

23 ‘‘(7) ‘securities contract’—

24 ‘‘(A) means—
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•S 625 IS

1 ‘‘(i) a contract for the purchase, sale,

2 or loan of a security, a mortgage loan or

3 an interest in a mortgage loan, a group or

4 index of securities, or mortgage loans or

5 interests therein (including an interest

6 therein or based on the value thereof), or

7 option on any of the foregoing, including

8 an option to purchase or sell any of the

9 foregoing;

10 ‘‘(ii) an option entered into on a na11 tional securities exchange relating to for12 eign currencies;

13 ‘‘(iii) the guarantee by or to a securi14 ties clearing agency of a settlement of

15 cash, securities, mortgage loans or inter16 ests therein, group or index of securities,

17 or mortgage loans or interests therein (in18 cluding any interest therein or based on

19 the value thereof), or option on any of the

20 foregoing, including an option to purchase

21 or sell any of the foregoing;

22 ‘‘(iv) a margin loan;

23 ‘‘(v) any other agreement or trans24 action that is similar to an agreement or
211

•S 625 IS

1 transaction referred to in this subpara2 graph;

3 ‘‘(vi) a combination of the agreements

4 or transactions referred to in this subpara5 graph;

6 ‘‘(vii) an option to enter into an

7 agreement or transaction referred to in

8 this subparagraph;

9 ‘‘(viii) a master netting agreement

10 that provides for an agreement or trans11 action referred to in clause (i), (ii), (iii),

12 (iv), (v), (vi), or (vii), together with all

13 supplements to such master netting agree14 ment, without regard to whether such mas15 ter netting agreement provides for an

16 agreement or transaction that is not a se17 curities contract under this subparagraph,

18 except that such master netting agreement

19 shall be considered to be a securities con20 tract under this subparagraph only with

21 respect to each agreement or transaction

22 under such master netting agreement that

23 is referred to in clause (i), (ii), (iii), (iv),

24 (v), (vi), or (vii); or
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•S 625 IS

1 ‘‘(ix) a security agreement or arrange2 ment, or other credit enhancement, directly

3 pertaining to a contract referred to in this

4 subparagraph, but not to exceed the actual

5 value of such contract on the date of the

6 filing of the petition; and

7 ‘‘(B) does not include a purchase, sale, or

8 repurchase obligation under a participation in a

9 commercial mortgage loan;’’; and

10 (3) in section 761(4)—

11 (A) by striking ‘‘or’’ at the end of subpara12 graph (D);

13 (B) in subparagraph (E), by striking the

14 period at the end and inserting ‘‘; and’’; and

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

16 ‘‘(F) any other agreement or transaction

17 that is similar to an agreement or transaction

18 referred to in this paragraph;

19 ‘‘(G) a combination of the agreements or

20 transactions referred to in this paragraph;

21 ‘‘(H) an option to enter into an agreement

22 or transaction referred to in this paragraph;

23 ‘‘(I) a master netting agreement that pro24 vides for an agreement or transaction referred

25 to in subparagraph (A), (B), (C), (D), (E), (F),
213

•S 625 IS

1 (G), or (H), together with all supplements to

2 such master netting agreement, without regard

3 to whether such master netting agreement pro4 vides for an agreement or transaction that is

5 not a commodity contract under this paragraph,

6 except that such master netting agreement shall

7 be considered to be a commodity contract under

8 this paragraph only with respect to each agree9 ment or transaction under such master netting

10 agreement that is referred to in subparagraph

11 (A), (B), (C), (D), (E), (F), (G), or (H); or

12 ‘‘(J) a security agreement or arrangement,

13 or other credit enhancement, directly pertaining

14 to a contract referred to in this paragraph, but

15 not to exceed the actual value of such contract

16 on the date of the filing of the petition.’’.

17 (b) DEFINITIONS OF FINANCIAL INSTITUTION, FI18 NANCIAL PARTICIPANT, AND FORWARD CONTRACT MER19 CHANT.—Section 101 of title 11, United States Code, is

20 amended—

21 (1) by striking paragraph (22) and inserting

22 the following:

23 ‘‘(22) ‘financial institution’ means—

24 ‘‘(A)(i) a Federal reserve bank, or an enti25 ty that is a commercial or savings bank, indus-
214

•S 625 IS

1 trial savings bank, savings and loan association,

2 trust company, or receiver or conservator for

3 such entity; and

4 ‘‘(ii) if such Federal reserve bank, receiver,

5 or conservator or entity is acting as agent or

6 custodian for a customer in connection with a

7 securities contract, as defined in section 741,

8 such customer; or

9 ‘‘(B) in connection with a securities con10 tract, as defined in section 741 of this title, an

11 investment company registered under the In12 vestment Company Act of 1940;’’;

13 (2) by inserting after paragraph (22) the fol14 lowing:

15 ‘‘(22A) ‘financial participant’ means an entity

16 that is a party to a securities contract, commodity

17 contract or forward contract, or on the date of the

18 filing of the petition, has a commodity contract (as

19 defined in section 761) with the debtor or any other

20 entity (other than an affiliate) of a total gross dollar

21 value of not less than $1,000,000,000 in notional or

22 actual principal amount outstanding on any day dur23 ing the previous 15-month period, or has gross

24 mark-to-market positions of not less than

25 $100,000,000 (aggregated across counterparties) in
215

•S 625 IS

1 any such agreement or transaction with the debtor

2 or any other entity (other than an affiliate) on any

3 day during the previous 15-month period;’’; and

4 (3) by striking paragraph (26) and inserting

5 the following:

6 ‘‘(26) ‘forward contract merchant’ means a

7 Federal reserve bank, or an entity, the business of

8 which consists in whole or in part of entering into

9 forward contracts as or with merchants or in a com10 modity, as defined or in section 761, or any similar

11 good, article, service, right, or interest that is pres12 ently or in the future becomes the subject of dealing

13 or in the forward contract trade;’’.

14 (c) DEFINITION OF MASTER NETTING AGREEMENT

15 AND MASTER NETTING AGREEMENT PARTICIPANT.—Sec16 tion 101 of title 11, United States Code, is amended by

17 inserting after paragraph (38) the following new para18 graphs:

19 ‘‘(38A) the term ‘master netting agreement’—

20 ‘‘(A) means an agreement providing for

21 the exercise of rights, including rights of net22 ting, setoff, liquidation, termination, accelera23 tion, or closeout, under or in connection with 1

24 or more contracts that are described in any 1

25 or more of paragraphs (1) through (5) of sec-
216

•S 625 IS

1 tion 561(a), or any security agreement or ar2 rangement or other credit enhancement related

3 to 1 or more of the foregoing; except that

4 ‘‘(B) if a master netting agreement con5 tains provisions relating to agreements or trans6 actions that are not contracts described in para7 graphs (1) through (5) of section 561(a), the

8 master netting agreement shall be deemed to be

9 a master netting agreement only with respect

10 to those agreements or transactions that are de11 scribed in any 1 or more of the paragraphs (1)

12 through (5) of section 561(a);

13 ‘‘(38B) the term ‘master netting agreement

14 participant’ means an entity that, at any time before

15 the filing of the petition, is a party to an out16 standing master netting agreement with the debt17 or;’’.

18 (d) SWAP AGREEMENTS, SECURITIES CONTRACTS,

19 COMMODITY CONTRACTS, FORWARD CONTRACTS, REPUR20 CHASE AGREEMENTS, AND MASTER NETTING AGREE21 MENTS UNDER THE AUTOMATIC STAY.—

22 (1) IN GENERAL.—Section 362(b) of title 11,

23 United States Code, as amended by section 718 of

24 this Act, is amended—
217

•S 625 IS

1 (A) in paragraph (6), by inserting ‘‘,

2 pledged to, and under the control of,’’ after

3 ‘‘held by’’;

4 (B) in paragraph (7), by inserting ‘‘,

5 pledged to, and under the control of,’’ after

6 ‘‘held by’’;

7 (C) by striking paragraph (17) and insert8 ing the following:

9 ‘‘(17) under subsection (a), of the setoff by a

10 swap participant of a mutual debt and claim under

11 or in connection with a swap agreement that con12 stitutes the setoff of a claim against the debtor for

13 a payment or transfer due from the debtor under or

14 in connection with a swap agreement against a pay15 ment due to the debtor from the swap participant

16 under or in connection with a swap agreement or

17 against cash, securities, or other property held by,

18 pledged to, and under the control of, or due from

19 such swap participant to guarantee, secure, or settle

20 a swap agreement;’’;

21 (D) in paragraph (26), by striking ‘‘or’’ at

22 the end;

23 (E) in paragraph (27), by striking the pe24 riod at the end and inserting ‘‘; or’’; and
218

•S 625 IS

1 (F) by inserting after paragraph (27) the

2 following:

3 ‘‘(28) under subsection (a), of the setoff by a

4 master netting agreement participant of a mutual

5 debt and claim under or in connection with 1 or

6 more master netting agreements or any contract or

7 agreement subject to such agreements that con8 stitutes the setoff of a claim against the debtor for

9 any payment or other transfer of property due from

10 the debtor under or in connection with such agree11 ments or any contract or agreement subject to such

12 agreements against any payment due to the debtor

13 from such master netting agreement participant

14 under or in connection with such agreements or any

15 contract or agreement subject to such agreements or

16 against cash, securities, or other property held by,

17 pledged or and under the control of, or due from

18 such master netting agreement participant to mar19 gin, guarantee, secure, or settle such agreements or

20 any contract or agreement subject to such agree21 ments, to the extent such participant is eligible to

22 exercise such offset rights under paragraph (6), (7),

23 or (17) for each individual contract covered by the

24 master netting agreement in issue.’’.
219

•S 625 IS

1 (2) LIMITATION.—Section 362 of title 11,

2 United States Code, as amended by section 432(2)

3 of this Act, is amended by adding at the end the fol4 lowing:

5 ‘‘(l) LIMITATION.—The exercise of rights not subject

6 to the stay arising under subsection (a) pursuant to para7 graph (6), (7), or (17) of subsection (b) shall not be stayed

8 by an order of a court or administrative agency in any

9 proceeding under this title.’’.

10 (e) LIMITATION OF AVOIDANCE POWERS UNDER

11 MASTER NETTING AGREEMENT.—Section 546 of title 11,

12 United States Code, is amended—

13 (1) in subsection (g) (as added by section 103

14 of Public Law 101–311 (104 Stat. 267 et seq.))—

15 (A) by striking ‘‘under a swap agreement’’;

16 and

17 (B) by striking ‘‘in connection with a swap

18 agreement’’ and inserting ‘‘under or in connec19 tion with any swap agreement’’; and

20 (2) by inserting before subsection (i) (as redes21 ignated by section 407 of this Act) the following new

22 subsection:

23 ‘‘(h) Notwithstanding sections 544, 545, 547,

24 548(a)(2)(B), and 548(b), the trustee may not avoid a

25 transfer made by or to a master netting agreement partici-
220

•S 625 IS

1 pant under or in connection with any master netting

2 agreement or any individual contract covered thereby that

3 is made before the commencement of the case, and except

4 to the extent that the trustee could otherwise avoid such

5 a transfer made under an individual contract covered by

6 such master netting agreement (except under section

7 548(a)(1)(A)).’’.

8 (f) FRAUDULENT TRANSFERS OF MASTER NETTING

9 AGREEMENTS.—Section 548(d)(2) of title 11, United

10 States Code, is amended—

11 (1) in subparagraph (C), by striking ‘‘and’’;

12 (2) in subparagraph (D), by striking the period

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

14 (3) by adding at the end the following new sub15 paragraph:

16 ‘‘(E) a master netting agreement partici17 pant that receives a transfer in connection with

18 a master netting agreement or any individual

19 contract covered thereby takes for value to the

20 extent of such transfer, except, with respect to

21 a transfer under any individual contract covered

22 thereby, to the extent that such master netting

23 agreement participant otherwise did not take

24 (or is otherwise not deemed to have taken) such

25 transfer for value.’’.
221

•S 625 IS

1 (g) TERMINATION OR ACCELERATION OF SECURITIES

2 CONTRACTS.—Section 555 of title 11, United States Code,

3 is amended—

4 (1) by striking the section heading and insert5 ing the following:

6 ‘‘§ 555. Contractual right to liquidate, terminate, or

7 accelerate a securities contract’’;

8 and

9 (2) in the first sentence, by striking ‘‘liquida10 tion’’ and inserting ‘‘liquidation, termination, or ac11 celeration’’.

12 (h) TERMINATION OR ACCELERATION OF COMMOD13 ITIES OR FORWARD CONTRACTS.—Section 556 of title 11,

14 United States Code, is amended—

15 (1) by striking the section heading and insert16 ing the following:

17 ‘‘§ 556. Contractual right to liquidate, terminate, or

18 accelerate a commodities contract or for19 ward contract’’;

20 and

21 (2) in the first sentence, by striking ‘‘liquida22 tion’’ and inserting ‘‘liquidation, termination, or ac23 celeration’’.
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1 (i) TERMINATION OR ACCELERATION OF REPUR2 CHASE AGREEMENTS.—Section 559 of title 11, United

3 States Code, is amended—

4 (1) by striking the section heading and insert5 ing the following:

6 ‘‘§ 559. Contractual right to liquidate, terminate, or

7 accelerate a repurchase agreement’’;

8 and

9 (2) in the first sentence, by striking ‘‘liquida10 tion’’ and inserting ‘‘liquidation, termination, or ac11 celeration’’.

12 (j) LIQUIDATION, TERMINATION, OR ACCELERATION

13 OF SWAP AGREEMENTS.—Section 560 of title 11, United

14 States Code, is amended—

15 (1) by striking the section heading and insert16 ing following:

17 ‘‘§ 560. Contractual right to liquidate, terminate, or

18 accelerate a swap agreement’’;

19 (2) in the first sentence, by striking ‘‘termi20 nation of a swap agreement’’ and inserting ‘‘liquida21 tion, termination, or acceleration of a swap agree22 ment’’; and

23 (3) by striking ‘‘in connection with any swap

24 agreement’’ and inserting ‘‘in connection with the
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1 termination, liquidation, or acceleration of a swap

2 agreement’’.

3 (k) LIQUIDATION, TERMINATION, ACCELERATION, OR

4 OFFSET UNDER A MASTER NETTING AGREEMENT AND

5 ACROSS CONTRACTS.—Title 11, United States Code, is

6 amended by inserting after section 560 the following new

7 section:

8 ‘‘§ 561. Contractual right to terminate, liquidate, ac9 celerate, or offset under a master netting

10 agreement and across contracts

11 ‘‘(a) Subject to subsection (b), the exercise of any

12 contractual right, because of a condition of the kind speci13 fied in section 365(e)(1), to cause the termination, liquida14 tion, or acceleration of or to offset or net termination val15 ues, payment amounts or other transfer obligations arising

16 under or in connection with 1 or more (or the termination,

17 liquidation, or acceleration of 1 or more)—

18 ‘‘(1) securities contracts, as defined in section

19 741(7);

20 ‘‘(2) commodity contracts, as defined in section

21 761(4);

22 ‘‘(3) forward contracts;

23 ‘‘(4) repurchase agreements;

24 ‘‘(5) swap agreements; or

25 ‘‘(6) master netting agreements,
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1 shall not be stayed, avoided, or otherwise limited by oper2 ation of any provision of this title or by any order of a

3 court or administrative agency in any proceeding under

4 this title.

5 ‘‘(b)(1) A party may exercise a contractual right de6 scribed in subsection (a) to terminate, liquidate, or accel7 erate only to the extent that such party could exercise such

8 a right under section 555, 556, 559, or 560 for each indi9 vidual contract covered by the master netting agreement

10 in issue.

11 ‘‘(2) If a debtor is a commodity broker subject to sub12 chapter IV of chapter 7 of this title—

13 ‘‘(A) a party may not net or offset an obligation

14 to the debtor arising under, or in connection with,

15 a commodity contract against any claim arising

16 under, or in connection with, other instruments, con17 tracts, or agreements listed in subsection (a), except

18 to the extent that the party has no positive net eq19 uity in the commodity accounts at the debtor, as cal20 culated under subchapter IV; and

21 ‘‘(B) another commodity broker may not net or

22 offset an obligation to the debtor arising under, or

23 in connection with, a commodity contract entered

24 into or held on behalf of a customer of the debtor

25 against any claim arising under, or in connection
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1 with, other instruments, contracts, or agreements re2 ferred to in subsection (a).

3 ‘‘(c) As used in this section, the term ‘contractual

4 right’ includes a right set forth in a rule or bylaw of a

5 national securities exchange, a national securities associa6 tion, or a securities clearing agency, a right set forth in

7 a bylaw of a clearing organization or contract market or

8 in a resolution of the governing board thereof, and a right,

9 whether or not evidenced in writing, arising under com10 mon law, under law merchant, or by reason of normal

11 business practice.’’.

12 (l) ANCILLARY PROCEEDINGS.—Section 304 of title

13 11, United States Code, is amended by adding at the end

14 the following:

15 ‘‘(d) Any provisions of this title relating to securities

16 contracts, commodity contracts, forward contracts, repur17 chase agreements, swap agreements, or master netting

18 agreements shall apply in a case ancillary to a foreign pro19 ceeding under this section or any other section of this title,

20 so that enforcement of contractual provisions of such con21 tracts and agreements in accordance with their terms—

22 ‘‘(1) shall not be stayed or otherwise limited

23 by—

24 ‘‘(A) operation of any provision of this

25 title; or
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1 ‘‘(B) order of a court in any case under

2 this title;

3 ‘‘(2) shall limit avoidance powers to the same

4 extent as in a proceeding under chapter 7 or 11; and

5 ‘‘(3) shall not be limited based on the presence

6 or absence of assets of the debtor in the United

7 States.’’.

8 (m) COMMODITY BROKER LIQUIDATIONS.—Title 11,

9 United States Code, is amended by inserting after section

10 766 the following:

11 ‘‘§ 767. Commodity broker liquidation and forward

12 contract merchants, commodity brokers,

13 stockbrokers, financial institutions, secu14 rities clearing agencies, swap partici15 pants, repo participants, and master net16 ting agreement participants

17 ‘‘Notwithstanding any other provision of this title,

18 the exercise of rights by a forward contract merchant,

19 commodity broker, stockbroker, financial institution, secu20 rities clearing agency, swap participant, repo participant,

21 or master netting agreement participant under this title

22 shall not affect the priority of any unsecured claim it may

23 have after the exercise of such rights.’’.
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1 (n) STOCKBROKER LIQUIDATIONS.—Title 11, United

2 States Code, is amended by inserting after section 752 the

3 following:

4 ‘‘§ 753. Stockbroker liquidation and forward contract

5 merchants, commodity brokers, stock6 brokers, financial institutions, securities

7 clearing agencies, swap participants,

8 repo participants, and master netting

9 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 financial participant, or master netting agreement partici15 pant under this title shall not affect the priority of any

16 unsecured claim it may have after the exercise of such

17 rights.’’.

18 (o) SETOFF.—Section 553 of title 11, United States

19 Code, is amended—

20 (1) in subsection (a)(3)(C), by inserting ‘‘(ex21 cept for a setoff of a kind described in section

22 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(19), 555,

23 556, 559, or 560)’’ before the period; and
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1 (2) in subsection (b)(1), by striking

2 ‘‘362(b)(14),’’ and inserting ‘‘362(b)(17),

3 362(b)(19), 555, 556, 559, 560,’’.

4 (p) SECURITIES CONTRACTS, COMMODITY CON5 TRACTS, AND FORWARD CONTRACTS.—Title 11, United

6 States Code, is amended—

7 (1) in section 362(b)(6), by striking ‘‘financial

8 institutions,’’ each place such term appears and in9 serting ‘‘financial institution, financial participant’’;

10 (2) in section 546(e), by inserting ‘‘financial

11 participant’’ after ‘‘financial institution,’’;

12 (3) in section 548(d)(2)(B), by inserting ‘‘fi13 nancial participant’’ after ‘‘financial institution,’’;

14 (4) in section 555—

15 (A) by inserting ‘‘financial participant’’

16 after ‘‘financial institution,’’; and

17 (B) by inserting before the period ‘‘, a

18 right set forth in a bylaw of a clearing organi19 zation or contract market or in a resolution of

20 the governing board thereof, and a right,

21 whether or not in writing, arising under com22 mon law, under law merchant, or by reason of

23 normal business practice’’; and

24 (5) in section 556, by inserting ‘‘, financial par25 ticipant’’ after ‘‘commodity broker’’.
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1 (q) CONFORMING AMENDMENTS.—Title 11 of the

2 United States Code is amended—

3 (1) in the table of sections for chapter 5—

4 (A) by striking the items relating to sec5 tions 555 and 556 and inserting the following:

‘‘555. Contractual right to liquidate, terminate, or accelerate a securities contract.

‘‘556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract.’’;

6 (B) by striking the items relating to sec7 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.’’;

8 and

9 (C) by adding after the item relating to

10 section 560 the following:

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a

master netting agreement and across contracts.’’;

11 and

12 (2) in the table of sections for chapter 7—

13 (A) by inserting after the item relating to

14 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.’’;

15 and

16 (B) by inserting after the item relating to

17 section 752 the following:
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‘‘753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, securities clearing

agencies, swap participants, repo participants, and master netting agreement participants.’’.

1 SEC. 902. DAMAGE MEASURE.

2 (a) IN GENERAL.—Title 11, United States Code, is

3 amended—

4 (1) by inserting after section 561 the following:

5 ‘‘§ 562. Damage measure in connection with swap

6 agreements, securities contracts, forward

7 contracts, commodity contracts, repur8 chase agreements, or master netting

9 agreements

10 ‘‘If the trustee rejects a swap agreement, securities

11 contract (as defined in section 741), forward contract,

12 commodity contract (as defined in section 761) repurchase

13 agreement, or master netting agreement under section

14 365(a), or if a forward contract merchant, stockbroker,

15 financial institution, securities clearing agency, repo par16 ticipant, financial participant, master netting agreement

17 participant, or swap participant liquidates, terminates, or

18 accelerates such contract or agreement, damages shall be

19 measured as of the earlier of—

20 ‘‘(1) the date of such rejection; or

21 ‘‘(2) the date of such liquidation, termination,

22 or acceleration.’’; and
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1 (2) in the table of sections for chapter 5 by in2 serting after the item relating to section 561 the fol3 lowing:

‘‘562. Damage measure in connection with swap agreements, securities contracts, forward contracts, commodity contracts, repurchase

agreements, or master netting agreements.’’.

4 (b) CLAIMS ARISING FROM REJECTION.—Section

5 502(g) of title 11, United States Code, is amended—

6 (1) by inserting ‘‘(1)’’ after ‘‘(g)’’; and

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

8 ‘‘(2) A claim for damages calculated in accordance

9 with section 561 shall be allowed under subsection (a), (b),

10 or (c) of this section, or disallowed under subsection (d)

11 or (e) of this section, as if such claim had arisen before

12 the date of the filing of the petition.’’.

13 SEC. 903. ASSET-BACKED SECURITIZATIONS.

14 Section 541 of title 11, United States Code, is

15 amended—

16 (1) in subsection (b), by striking ‘‘or’’ at the

17 end of paragraph (4);

18 (2) by redesignating paragraph (5) of sub19 section (b) as paragraph (6);

20 (3) by inserting after paragraph (4) of sub21 section (b) the following new paragraph:

22 ‘‘(5) any eligible asset (or proceeds thereof), to

23 the extent that such eligible asset was transferred by

24 the debtor, before the date of commencement of the
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1 case, to an eligible entity in connection with an

2 asset-backed securitization, except to the extent that

3 such asset (or proceeds or value thereof) may be re4 covered by the trustee under section 550 by virtue

5 of avoidance under section 548(a); or’’; and

6 (4) by adding at the end the following new sub7 section:

8 ‘‘(e) For purposes of this section, the following defini9 tions shall apply:

10 ‘‘(1) The term ‘asset-backed securitization’

11 means a transaction in which eligible assets trans12 ferred to an eligible entity are used as the source of

13 payment on securities, the most senior of which are

14 rated investment grade by 1 or more nationally rec15 ognized securities rating organizations, issued by an

16 issuer.

17 ‘‘(2) The term ‘eligible asset’ means—

18 ‘‘(A) financial assets (including interests

19 therein and proceeds thereof), either fixed or re20 volving, including residential and commercial

21 mortgage loans, consumer receivables, trade re22 ceivables, and lease receivables, that, by their

23 terms, convert into cash within a finite time pe24 riod, plus any rights or other assets designed to
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1 assure the servicing or timely distribution of

2 proceeds to security holders;

3 ‘‘(B) cash; and

4 ‘‘(C) securities.

5 ‘‘(3) The term ‘eligible entity’ means—

6 ‘‘(A) an issuer; or

7 ‘‘(B) a trust, corporation, partnership, or

8 other entity engaged exclusively in the business

9 of acquiring and transferring eligible assets di10 rectly or indirectly to an issuer and taking ac11 tions ancillary thereto.

12 ‘‘(4) The term ‘issuer’ means a trust, corpora13 tion, partnership, or other entity engaged exclusively

14 in the business of acquiring and holding eligible as15 sets, issuing securities backed by eligible assets, and

16 taking actions ancillary thereto.

17 ‘‘(5) The term ‘transferred’ means the debtor,

18 under a written agreement, represented and war19 ranted that eligible assets were sold, contributed, or

20 otherwise conveyed with the intention of removing

21 them from the estate of the debtor pursuant to sub22 section (b)(5), irrespective, without limitation of—

23 ‘‘(A) whether the debtor directly or indi24 rectly obtained or held an interest in the issuer

25 or in any securities issued by the issuer;
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1 ‘‘(B) whether the debtor had an obligation

2 to repurchase or to service or supervise the

3 servicing of all or any portion of such eligible

4 assets; or

5 ‘‘(C) the characterization of such sale, con6 tribution, or other conveyance for tax, account7 ing, regulatory reporting, or other purposes.’’.

8 SEC. 904. EFFECTIVE DATE; APPLICATION OF AMEND9 MENTS.

10 (a) EFFECTIVE DATE.—This title shall take effect on

11 the date of enactment of this Act.

12 (b) APPLICATION OF AMENDMENTS.—The amend13 ments made by this title shall apply with respect to cases

14 commenced or appointments made under any Federal or

15 State law after the date of enactment of this Act, but shall

16 not apply with respect to cases commenced or appoint17 ments made under any Federal or State law before the

18 date of enactment of this Act.

19 TITLE X—PROTECTION OF

20 FAMILY FARMERS

21 SEC. 1001. REENACTMENT OF CHAPTER 12.

22 (a) REENACTMENT.—

23 (1) IN GENERAL.—Chapter 12 of title 11,

24 United States Code, as reenacted by section 149 of

25 division C of the Omnibus Consolidated and Emer-
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1 gency Supplemental Appropriations Act, 1999 (Pub2 lic Law 105–277), and amended by this Act, is reen3 acted.

4 (2) EFFECTIVE DATE.—Subsection (a) shall

5 take effect on April 1, 1999.

6 (b) CONFORMING AMENDMENT.—Section 302 of the

7 Bankruptcy, Judges, United States Trustees, and Family

8 Farmer Bankruptcy Act of 1986 (28 U.S.C. 581 note) is

9 amended by striking subsection (f).

10 SEC. 1002. DEBT LIMIT INCREASE.

11 Section 104(b) of title 11, United States Code, is

12 amended by adding at the end the following:

13 ‘‘(4) The dollar amount in section 101(18) shall be

14 adjusted at the same times and in the same manner as

15 the dollar amounts in paragraph (1) of this subsection,

16 beginning with the adjustment to be made on April 1,

17 2001.’’.

18 SEC. 1003. ELIMINATION OF REQUIREMENT THAT FAMILY

19 FARMER AND SPOUSE RECEIVE OVER 50 PER20 CENT OF INCOME FROM FARMING OPER21 ATION IN YEAR PRIOR TO BANKRUPTCY.

22 Section 101(18)(A) of title 11, United States Code,

23 is amended by striking ‘‘the taxable year preceding the

24 taxable year’’ and inserting ‘‘at least 1 of the 3 calendar

25 years preceding the year’’.
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1 SEC. 1004. CERTAIN CLAIMS OWED TO GOVERNMENTAL

2 UNITS.

3 (a) CONTENTS OF PLAN.—Section 1222(a)(2)

4 of title 11, United States Code, is amended to read

5 as follows:

6 ‘‘(2) provide for the full payment, in deferred

7 cash payments, of all claims entitled to priority

8 under section 507, unless—

9 ‘‘(A) the claim is a claim owed to a govern10 mental unit that arises as a result of the sale,

11 transfer, exchange, or other disposition of any

12 farm asset used in the debtor’s farming oper13 ation, in which case the claim shall be treated

14 as an unsecured claim that is not entitled to

15 priority under section 507, but the debt shall be

16 treated in such manner only if the debtor re17 ceives a discharge; or

18 ‘‘(B) the holder of a particular claim

19 agrees to a different treatment of that claim;

20 and’’.

21 (b) SPECIAL NOTICE PROVISIONS.—Section

22 1231(d) of title 11, United States Code, is amended

23 by striking ‘‘a State or local governmental unit’’ and

24 inserting ‘‘any governmental unit’’.
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1 TITLE XI—HEALTH CARE AND

2 EMPLOYEE BENEFITS

3 SEC. 1101. DEFINITIONS.

4 (a) HEALTH CARE BUSINESS DEFINED.—Section

5 101 of title 11, United States Code, as amended by section

6 1004(a) of this Act, is amended—

7 (1) by redesignating paragraph (27A) as para8 graph (27C); and

9 (2) inserting after paragraph (27) the following:

10 ‘‘(27A) ‘health care business’—

11 ‘‘(A) means any public or private entity

12 (without regard to whether that entity is orga13 nized for profit or not for profit) that is pri14 marily engaged in offering to the general public

15 facilities and services for—

16 ‘‘(i) the diagnosis or treatment of in17 jury, deformity, or disease; and

18 ‘‘(ii) surgical, drug treatment, psy19 chiatric or obstetric care; and

20 ‘‘(B) includes—

21 ‘‘(i) any—

22 ‘‘(I) general or specialized hos23 pital;

24 ‘‘(II) ancillary ambulatory, emer25 gency, or surgical treatment facility;
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1 ‘‘(III) hospice;

2 ‘‘(IV) health maintenance organi3 zation;

4 ‘‘(V) home health agency; and

5 ‘‘(VI) other health care institu6 tion that is similar to an entity re7 ferred to in subclause (I), (II), (III),

8 (IV), or (V); and

9 ‘‘(ii) any long-term care facility, in10 cluding any—

11 ‘‘(I) skilled nursing facility;

12 ‘‘(II) intermediate care facility;

13 ‘‘(III) assisted living facility;

14 ‘‘(IV) home for the aged;

15 ‘‘(V) domicilary care facility; and

16 ‘‘(VI) health care institution that

17 is related to a facility referred to in

18 subclause (I), (II), (III), (IV), or (V),

19 if that institution is primarily engaged

20 in offering room, board, laundry, or

21 personal assistance with activities of

22 daily living and incidentals to activi23 ties of daily living;’’.

24 (b) HEALTH MAINTENANCE ORGANIZATION DE25 FINED.—Section 101 of title 11, United States Code, as
239

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1 amended by subsection (a), is amended by inserting after

2 paragraph (27A) the following:

3 ‘‘(27B) ‘health maintenance organization’

4 means any person that undertakes to provide or ar5 range for basic health care services through an orga6 nized system that—

7 ‘‘(A)(i) combines the delivery and financing

8 of health care to enrollees; and

9 ‘‘(ii)(I) provides—

10 ‘‘(aa) physician services directly

11 through physicians or 1 or more groups of

12 physicians; and

13 ‘‘(bb) basic health care services di14 rectly or under a contractual arrangement;

15 and

16 ‘‘(II) if reasonable and appropriate, pro17 vides physician services and basic health care

18 services through arrangements other than the

19 arrangements referred to in clause (i); and

20 ‘‘(B) includes any organization described

21 in subparagraph (A) that provides, or arranges

22 for, health care services on a prepayment or

23 other financial basis;’’.
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1 (c) PATIENT.—Section 101 of title 11, United States

2 Code, as amended by subsection (b), is amended by insert3 ing after paragraph (40) the following:

4 ‘‘(40A) ‘patient’ means any person who obtains

5 or receives services from a health care business;’’.

6 (d) PATIENT RECORDS.—Section 101 of title 11,

7 United States Code, as amended by subsection (c), is

8 amended by inserting after paragraph (40A) the following:

9 ‘‘(40B) ‘patient records’ means any written doc10 ument relating to a patient or record recorded in a

11 magnetic, optical, or other form of electronic me12 dium;’’.

13 SEC. 1102. DISPOSAL OF PATIENT RECORDS.

14 (a) IN GENERAL.—Subchapter III of chapter 3 of

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

16 end the following:

17 ‘‘§ 351. Disposal of patient records

18 ‘‘If a health care business commences a case under

19 chapter 7, 9, or 11, and the trustee does not have a suffi20 cient amount of funds to pay for the storage of patient

21 records in the manner required under applicable Federal

22 or State law, the following requirements shall apply:

23 ‘‘(1) The trustee shall mail, by certified mail, a

24 written request to each appropriate Federal or State
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1 agency to request permission from that agency to

2 deposit the patient records with that agency.

3 ‘‘(2) If no appropriate Federal or State agency

4 agrees to permit the deposit of patient records re5 ferred to in paragraph (1) by the date that is 60

6 days after the trustee mails a written request under

7 that paragraph, the trustee shall—

8 ‘‘(A) publish notice, in 1 or more appro9 priate newspapers, that if those patient records

10 are not claimed by the patient or an insurance

11 provider (if applicable law permits the insur12 ance provider to make that claim) by the date

13 that is 60 days after the date of that notifica14 tion, the trustee will destroy the patient

15 records; and

16 ‘‘(B) during the 60-day period described in

17 subparagraph (A), the trustee shall attempt to

18 notify directly each patient that is the subject

19 of the patient records concerning the patient

20 records by mailing to the last known address of

21 that patient an appropriate notice regarding the

22 claiming or disposing of patient records.

23 ‘‘(3) If, after providing the notification under

24 paragraph (2), patient records are not claimed dur25 ing the 60-day period described in paragraph (2)(A)
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1 or in any case in which a notice is mailed under

2 paragraph (2)(B), during the 90-day period begin3 ning on the date on which the notice is mailed, by

4 a patient or insurance provider in accordance with

5 that paragraph, the trustee shall destroy those

6 records by—

7 ‘‘(A) if the records are written, shredding

8 or burning the records; or

9 ‘‘(B) if the records are magnetic, optical,

10 or other electronic records, by otherwise de11 stroying those records so that those records

12 cannot be retrieved.’’.

13 (b) CLERICAL AMENDMENT.—The chapter analysis

14 for chapter 3 of title 11, United States Code, is amended

15 by inserting after the item relating to section 350 the fol16 lowing:

‘‘351. Disposal of patient records.’’.

17 SEC. 1103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS

18 OF CLOSING A HEALTH CARE BUSINESS.

19 Section 503(b) of title 11, United States Code, is

20 amended—

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

22 end;

23 (2) in paragraph (6), by striking the period at

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

25 (3) by adding at the end the following:
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1 ‘‘(7) the actual, necessary costs and expenses of

2 closing a health care business incurred by a trustee,

3 including any cost or expense incurred—

4 ‘‘(A) in disposing of patient records in ac5 cordance with section 351; or

6 ‘‘(B) in connection with transferring pa7 tients from the health care business that is in

8 the process of being closed to another health

9 care business.’’.

10 SEC. 1104. APPOINTMENT OF OMBUDSMAN TO ACT AS PA11 TIENT ADVOCATE.

12 (a) IN GENERAL.—

13 (1) APPOINTMENT OF OMBUDSMAN.—Sub14 chapter II of chapter 3 of title 11, United States

15 Code, is amended by inserting after section 331 the

16 following:

17 ‘‘§ 332. Appointment of ombudsman

18 ‘‘(a) Not later than 30 days after a case is com19 menced by a health care business under chapter 7, 9, or

20 11, the court shall appoint an ombudsman to represent

21 the interests of the patients of the health care business.

22 ‘‘(b) An ombudsman appointed under subsection (a)

23 shall—

24 ‘‘(1) monitor the quality of patient care, to the

25 extent necessary under the circumstances, including
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1 reviewing records and interviewing patients and phy2 sicians;

3 ‘‘(2) not later than 60 days after the date of

4 appointment, and not less frequently than every 60

5 days thereafter, report to the court, at a hearing or

6 in writing, regarding the quality of patient care at

7 the health care business involved; and

8 ‘‘(3) if the ombudsman determines that the

9 quality of patient care is declining significantly or is

10 otherwise being materially compromised, notify the

11 court by motion or written report, with notice to ap12 propriate parties in interest, immediately upon mak13 ing that determination.

14 ‘‘(c) An ombudsman shall maintain any information

15 obtained by the ombudsman under this section that relates

16 to patients (including information relating to patient

17 records) as confidential information.’’.

18 (2) CLERICAL AMENDMENT.—The chapter anal19 ysis for chapter 3 of title 11, United States Code,

20 is amended by inserting after the item relating to

21 section 331 the following:

‘‘332. Appointment of ombudsman.’’.

22 (b) COMPENSATION OF OMBUDSMAN.—Section

23 330(a)(1) of title 11, United States Code, is amended—
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1 (1) in the matter proceeding subparagraph (A),

2 by inserting ‘‘an ombudsman appointed under sec3 tion 331, or’’ before ‘‘a professional person’’; and

4 (2) in subparagraph (A), by inserting ‘‘ombuds5 man,’’ before ‘‘professional person’’.

6 SEC. 1105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO

7 TRANSFER PATIENTS.

8 (a) IN GENERAL.—Section 704(a) of title 11, United

9 States Code, as amended by section 219 of this Act, is

10 amended—

11 (1) in paragraph (9), by striking ‘‘and’’ at the

12 end;

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

14 and inserting ‘‘; and’’; and

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

16 ‘‘(11) use all reasonable and best efforts to

17 transfer patients from a health care business that is

18 in the process of being closed to an appropriate

19 health care business that—

20 ‘‘(A) is in the vicinity of the health care

21 business that is closing;

22 ‘‘(B) provides the patient with services

23 that are substantially similar to those provided

24 by the health care business that is in the proc25 ess of being closed; and
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1 ‘‘(C) maintains a reasonable quality of

2 care.’’.

3 (b) CONFORMING AMENDMENT.—Section 1106(a)(1)

4 of title 11, United States Code, is amended by striking

5 ‘‘and 704(9)’’ and inserting ‘‘704(9), and 704(10)’’.

6 TITLE XII—TECHNICAL

7 AMENDMENTS

8 SEC. 1201. DEFINITIONS.

9 Section 101 of title 11, United States Code, as

10 amended by section 1101 of this Act, is amended—

11 (1) by striking ‘‘In this title—’’ and inserting

12 ‘‘In this title:’’;

13 (2) in each paragraph, by inserting ‘‘The term’’

14 after the paragraph designation;

15 (3) in paragraph (35)(B), by striking ‘‘para16 graphs (21B) and (33)(A)’’ and inserting ‘‘para17 graphs (23) and (35)’’;

18 (4) in each of paragraphs (35A) and (38), by

19 striking ‘‘; and’’ at the end and inserting a period;

20 (5) in paragraph (51B)—

21 (A) by inserting ‘‘who is not a family farm22 er’’ after ‘‘debtor’’ the first place it appears;

23 and
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1 (B) by striking ‘‘thereto having aggregate’’

2 and all that follows through the end of the

3 paragraph;

4 (6) by striking paragraph (54) and inserting

5 the following:

6 ‘‘(54) The term ‘transfer’ means—

7 ‘‘(A) the creation of a lien;

8 ‘‘(B) the retention of title as a security in9 terest;

10 ‘‘(C) the foreclosure of a debtor’s equity of

11 redemption; or

12 ‘‘(D) each mode, direct or indirect, abso13 lute or conditional, voluntary or involuntary, of

14 disposing of or parting with—

15 ‘‘(i) property; or

16 ‘‘(ii) an interest in property;’’;

17 (7) in each of paragraphs (1) through (35), in

18 each of paragraphs (36) and (37), and in each of

19 paragraphs (40) through (55) (including paragraph

20 (54), as amended by paragraph (6) of this section),

21 by striking the semicolon at the end and inserting a

22 period; and

23 (8) by redesignating paragraphs (4) through

24 (55), including paragraph (54), as amended by para-
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1 graph (6) of this section, in entirely numerical se2 quence.

3 SEC. 1202. ADJUSTMENT OF DOLLAR AMOUNTS.

4 Section 104 of title 11, United States Code, is

5 amended by inserting ‘‘522(f)(3), 707(b)(5),’’ after

6 ‘‘522(d),’’ each place it appears.

7 SEC. 1203. EXTENSION OF TIME.

8 Section 108(c)(2) of title 11, United States Code, is

9 amended by striking ‘‘922’’ and all that follows through

10 ‘‘or’’, and inserting ‘‘922, 1201, or’’.

11 SEC. 1204. TECHNICAL AMENDMENTS.

12 Title 11 of the United States Code is amended—

13 (1) in section 109(b)(2), by striking ‘‘subsection

14 (c) or (d) of’’;

15 (2) in section 541(b)(4), by adding ‘‘or’’ at the

16 end; and

17 (3) in section 552(b)(1), by striking ‘‘product’’

18 each place it appears and inserting ‘‘products’’.

19 SEC. 1205. PENALTY FOR PERSONS WHO NEGLIGENTLY OR

20 FRAUDULENTLY PREPARE BANKRUPTCY PE21 TITIONS.

22 Section 110(j)(3) of title 11, United States Code, is

23 amended by striking ‘‘attorney’s’’ and inserting ‘‘attor24 neys’ ’’.
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1 SEC. 1206. LIMITATION ON COMPENSATION OF PROFES2 SIONAL PERSONS.

3 Section 328(a) of title 11, United States Code, is

4 amended by inserting ‘‘on a fixed or percentage fee basis,’’

5 after ‘‘hourly basis,’’.

6 SEC. 1207. SPECIAL TAX PROVISIONS.

7 Section 346(g)(1)(C) of title 11, United States Code,

8 is amended by striking ‘‘, except’’ and all that follows

9 through ‘‘1986’’.

10 SEC. 1208. EFFECT OF CONVERSION.

11 Section 348(f)(2) of title 11, United States Code, is

12 amended by inserting ‘‘of the estate’’ after ‘‘property’’ the

13 first place it appears.

14 SEC. 1209. ALLOWANCE OF ADMINISTRATIVE EXPENSES.

15 Section 503(b)(4) of title 11, United States Code, is

16 amended by inserting ‘‘subparagraph (A), (B), (C), (D),

17 or (E) of’’ before ‘‘paragraph (3)’’.

18 SEC. 1210. PRIORITIES.

19 Section 507(a) of title 11, United States Code, as

20 amended by sections 211 and 229 of this Act, is

21 amended—

22 (1) in paragraph (4)(B), by striking the semi23 colon at the end and inserting a period; and

24 (2) in paragraph (8), by inserting ‘‘unsecured’’

25 after ‘‘allowed’’.
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1 SEC. 1211. EXEMPTIONS.

2 Section 522(g)(2) of title 11, United States Code, as

3 amended by section 311 of this Act, is amended by strik4 ing ‘‘subsection (f)(2)’’ and inserting ‘‘subsection

5 (f)(1)(B)’’.

6 SEC. 1212. EXCEPTIONS TO DISCHARGE.

7 Section 523 of title 11, United States Code, as

8 amended by section 229 of this Act, is amended—

9 (1) as amended by section 304(e) of Public Law

10 103–394 (108 Stat. 4133), in paragraph (15), by

11 transferring such paragraph so as to insert it after

12 paragraph (14) of subsection (a);

13 (2) in subsection (a)—

14 (A) in paragraph (3), by striking ‘‘or (6)’’

15 each place it appears and inserting ‘‘(6), or

16 (15)’’;

17 (B) in paragraph (9), by striking ‘‘motor

18 vehicle or vessel’’ and inserting ‘‘motor vehicle,

19 vessel, or aircraft’’; and

20 (C) in paragraph (15), as so redesignated

21 by paragraph (1) of this subsection, by insert22 ing ‘‘to a spouse, former spouse, or child of the

23 debtor and’’ after ‘‘(15)’’; and

24 (3) in subsection (e), by striking ‘‘a insured’’

25 and inserting ‘‘an insured’’.
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1 SEC. 1213. EFFECT OF DISCHARGE.

2 Section 524(a)(3) of title 11, United States Code, is

3 amended by striking ‘‘section 523’’ and all that follows

4 through ‘‘or that’’ and inserting ‘‘section 523, 1228(a)(1),

5 or 1328(a)(1), or that’’.

6 SEC. 1214. PROTECTION AGAINST DISCRIMINATORY TREAT7 MENT.

8 Section 525(c) of title 11, United States Code, is

9 amended—

10 (1) in paragraph (1), by inserting ‘‘student’’ be11 fore ‘‘grant’’ the second place it appears; and

12 (2) in paragraph (2), by striking ‘‘the program

13 operated under part B, D, or E of’’ and inserting

14 ‘‘any program operated under’’.

15 SEC. 1215. PROPERTY OF THE ESTATE.

16 Section 541(b)(4)(B)(ii) of title 11, United States

17 Code, is amended by inserting ‘‘365 or’’ before ‘‘542’’.

18 SEC. 1216. PREFERENCES.

19 (a) IN GENERAL.—Section 547 of title 11, United

20 States Code, is amended—

21 (1) in subsection (b), by striking ‘‘subsection

22 (c)’’ and inserting ‘‘subsections (c) and (i)’’; and

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

24 ‘‘(i) If the trustee avoids under subsection (b) a secu25 rity interest given between 90 days and 1 year before the

26 date of the filing of the petition, by the debtor to an entity
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1 that is not an insider for the benefit of a creditor that

2 is an insider, such security interest shall be considered to

3 be avoided under this section only with respect to the cred4 itor that is an insider.’’.

5 (b) APPLICABILITY.—The amendments made by this

6 section shall apply to any case that pending or commenced

7 on or after the date of enactment of this Act.

8 SEC. 1217. POSTPETITION TRANSACTIONS.

9 Section 549(c) of title 11, United States Code, is

10 amended—

11 (1) by inserting ‘‘an interest in’’ after ‘‘transfer

12 of’’;

13 (2) by striking ‘‘such property’’ and inserting

14 ‘‘such real property’’; and

15 (3) by striking ‘‘the interest’’ and inserting

16 ‘‘such interest’’.

17 SEC. 1218. DISPOSITION OF PROPERTY OF THE ESTATE.

18 Section 726(b) of title 11, United States Code, is

19 amended by striking ‘‘1009,’’.

20 SEC. 1219. GENERAL PROVISIONS.

21 Section 901(a) of title 11, United States Code, as

22 amended by section 901(k) of this Act, is amended by in23 serting ‘‘1123(d),’’ after ‘‘1123(b),’’.
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1 SEC. 1220. ABANDONMENT OF RAILROAD LINE.

2 Section 1170(e)(1) of title 11, United States Code,

3 is amended by striking ‘‘section 11347’’ and inserting

4 ‘‘section 11326(a)’’.

5 SEC. 1221. CONTENTS OF PLAN.

6 Section 1172(c)(1) of title 11, United States Code,

7 is amended by striking ‘‘section 11347’’ and inserting

8 ‘‘section 11326(a)’’.

9 SEC. 1222. DISCHARGE UNDER CHAPTER 12.

10 Subsections (a) and (c) of section 1228 of title 11,

11 United States Code, are amended by striking

12 ‘‘1222(b)(10)’’ each place it appears and inserting

13 ‘‘1222(b)(9)’’.

14 SEC. 1223. BANKRUPTCY CASES AND PROCEEDINGS.

15 Section 1334(d) of title 28, United States Code, is

16 amended—

17 (1) by striking ‘‘made under this subsection’’

18 and inserting ‘‘made under subsection (c)’’; and

19 (2) by striking ‘‘This subsection’’ and inserting

20 ‘‘Subsection (c) and this subsection’’.

21 SEC. 1224. KNOWING DISREGARD OF BANKRUPTCY LAW OR

22 RULE.

23 Section 156(a) of title 18, United States Code, is

24 amended—

25 (1) in the first undesignated paragraph—
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1 (A) by inserting ‘‘(1) the term’’ before

2 ‘‘ ‘bankruptcy’’; and

3 (B) by striking the period at the end and

4 inserting ‘‘; and’’; and

5 (2) in the second undesignated paragraph—

6 (A) by inserting ‘‘(2) the term’’ before

7 ‘‘ ‘document’’; and

8 (B) by striking ‘‘this title’’ and inserting

9 ‘‘title 11’’.

10 SEC. 1225. TRANSFERS MADE BY NONPROFIT CHARITABLE

11 CORPORATIONS.

12 (a) SALE OF PROPERTY OF ESTATE.—Section 363(d)

13 of title 11, United States Code, is amended by striking

14 ‘‘only’’ and all that follows through the end of the sub15 section and inserting ‘‘only—

16 ‘‘(1) in accordance with applicable nonbank17 ruptcy law that governs the transfer of property by

18 a corporation or trust that is not a moneyed, busi19 ness, or commercial corporation or trust; and

20 ‘‘(2) to the extent not inconsistent with any re21 lief granted under subsection (c), (d), (e), or (f) of

22 section 362.’’.

23 (b) CONFIRMATION OF PLAN FOR REORGANIZA24 TION.—Section 1129(a) of title 11, United States Code,
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1 as amended by section 212 of this Act, is amended by add2 ing at the end the following:

3 ‘‘(15) All transfers of property of the plan shall

4 be made in accordance with any applicable provi5 sions of nonbankruptcy law that govern the transfer

6 of property by a corporation or trust that is not a

7 moneyed, business, or commercial corporation or

8 trust.’’.

9 (c) TRANSFER OF PROPERTY.—Section 541 of title

10 11, United States Code, is amended by adding at the end

11 the following:

12 ‘‘(f) Notwithstanding any other provision of this title,

13 property that is held by a debtor that is a corporation de14 scribed in section 501(c)(3) of the Internal Revenue Code

15 of 1986 and exempt from tax under section 501(a) of such

16 Code may be transferred to an entity that is not such a

17 corporation, but only under the same conditions as would

18 apply if the debtor had not filed a case under this title.’’.

19 (d) APPLICABILITY.—The amendments made by this

20 section shall apply to a case pending under title 11, United

21 States Code, on the date of enactment of this Act, except

22 that the court shall not confirm a plan under chapter 11

23 of this title without considering whether this section would

24 substantially affect the rights of a party in interest who

25 first acquired rights with respect to the debtor after the
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1 date of the petition. The parties who may appear and be

2 heard in a proceeding under this section include the attor3 ney general of the State in which the debtor is incor4 porated, was formed, or does business.

5 (e) RULE OF CONSTRUCTION.—Nothing in this sec6 tion shall be construed to require the court in which a

7 case under chapter 11 is pending to remand or refer any

8 proceeding, issue, or controversy to any other court or to

9 require the approval of any other court for the transfer

10 of property.

11 SEC. 1226. PROTECTION OF VALID PURCHASE MONEY SE12 CURITY INTERESTS.

13 Section 547(c)(3)(B) of title 11, United States Code,

14 is amended by striking ‘‘20’’ and inserting ‘‘30’’.

15 SEC. 1227. EXTENSIONS.

16 Section 302(d)(3) of the Bankruptcy, Judges, United

17 States Trustees, and Family Farmer Bankruptcy Act of

18 1986 (28 U.S.C. 581 note) is amended—

19 (1) in subparagraph (A), in the matter fol20 lowing clause (ii), by striking ‘‘or October 1, 2002,

21 whichever occurs first’’; and

22 (2) in subparagraph (F)—

23 (A) in clause (i)—
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1 (i) in subclause (II), by striking ‘‘or

2 October 1, 2002, whichever occurs first’’;

3 and

4 (ii) in the matter following subclause

5 (II), by striking ‘‘October 1, 2003, or’’;

6 and

7 (B) in clause (ii), in the matter following

8 subclause (II)—

9 (i) by striking ‘‘before October 1,

10 2003, or’’; and

11 (ii) by striking ‘‘, whichever occurs

12 first’’.

13 SEC. 1228. BANKRUPTCY JUDGESHIPS.

14 (a) SHORT TITLE.—This section may be cited as the

15 ‘‘Bankruptcy Judgeship Act of 1999’’.

16 (b) TEMPORARY JUDGESHIPS.—

17 (1) APPOINTMENTS.—The following judgeship

18 positions shall be filled in the manner prescribed in

19 section 152(a)(1) of title 28, United States Code, for

20 the appointment of bankruptcy judges provided for

21 in section 152(a)(2) of such title:

22 (A) One additional bankruptcy judgeship

23 for the eastern district of California.

24 (B) Four additional bankruptcy judgeships

25 for the central district of California.
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1 (C) One additional bankruptcy judgeship

2 for the southern district of Florida.

3 (D) Two additional bankruptcy judgeships

4 for the district of Maryland.

5 (E) One additional bankruptcy judgeship

6 for the eastern district of Michigan.

7 (F) One additional bankruptcy judgeship

8 for the southern district of Mississippi.

9 (G) One additional bankruptcy judgeship

10 for the district of New Jersey.

11 (H) One additional bankruptcy judgeship

12 for the eastern district of New York.

13 (I) One additional bankruptcy judgeship

14 for the northern district of New York.

15 (J) One additional bankruptcy judgeship

16 for the southern district of New York.

17 (K) One additional bankruptcy judgeship

18 for the eastern district of Pennsylvania.

19 (L) One additional bankruptcy judgeship

20 for the middle district of Pennsylvania.

21 (M) One additional bankruptcy judgeship

22 for the western district of Tennessee.

23 (N) One additional bankruptcy judgeship

24 for the eastern district of Virginia.
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1 (2) VACANCIES.—The first vacancy occurring in

2 the office of a bankruptcy judge in each of the judi3 cial districts set forth in paragraph (1) that—

4 (A) results from the death, retirement, res5 ignation, or removal of a bankruptcy judge; and

6 (B) occurs 5 years or more after the ap7 pointment date of a bankruptcy judge ap8 pointed under paragraph (1);

9 shall not be filled.

10 (c) EXTENSIONS.—

11 (1) IN GENERAL.—The temporary bankruptcy

12 judgeship positions authorized for the northern dis13 trict of Alabama, the district of Delaware, the dis14 trict of Puerto Rico, the district of South Carolina,

15 and the eastern district of Tennessee under section

16 3(a) (1), (3), (7), (8), and (9) of the Bankruptcy

17 Judgeship Act of 1992 (28 U.S.C. 152 note) are ex18 tended until the first vacancy occurring in the office

19 of a bankruptcy judge in the applicable district re20 sulting from the death, retirement, resignation, or

21 removal of a bankruptcy judge and occurring—

22 (A) 8 years or more after November 8,

23 1993, with respect to the northern district of

24 Alabama;
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1 (B) 10 years or more after October 28,

2 1993, with respect to the district of Delaware;

3 (C) 8 years or more after August 29,

4 1994, with respect to the district of Puerto

5 Rico;

6 (D) 8 years or more after June 27, 1994,

7 with respect to the district of South Carolina;

8 and

9 (E) 8 years or more after November 23,

10 1993, with respect to the eastern district of

11 Tennessee.

12 (2) APPLICABILITY OF OTHER PROVISIONS.—

13 All other provisions of section 3 of the Bankruptcy

14 Judgeship Act of 1992 remain applicable to such

15 temporary judgeship positions.

16 (d) TECHNICAL AMENDMENT.—The first sentence of

17 section 152(a)(1) of title 28, United States Code, is

18 amended to read as follows: ‘‘Each bankruptcy judge to

19 be appointed for a judicial district as provided in para20 graph (2) shall be appointed by the United States court

21 of appeals for the circuit in which such district is lo22 cated.’’.

23 (e) TRAVEL EXPENSES OF BANKRUPTCY JUDGES.—

24 Section 156 of title 28, United States Code, is amended

25 by adding at the end the following:
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1 ‘‘(g)(1) In this subsection, the term ‘travel

2 expenses’—

3 ‘‘(A) means the expenses incurred by a bank4 ruptcy judge for travel that is not directly related to

5 any case assigned to such bankruptcy judge; and

6 ‘‘(B) shall not include the travel expenses of a

7 bankruptcy judge if—

8 ‘‘(i) the payment for the travel expenses is

9 paid by such bankruptcy judge from the per10 sonal funds of such bankruptcy judge; and

11 ‘‘(ii) such bankruptcy judge does not re12 ceive funds (including reimbursement) from the

13 United States or any other person or entity for

14 the payment of such travel expenses.

15 ‘‘(2) Each bankruptcy judge shall annually submit

16 the information required under paragraph (3) to the chief

17 bankruptcy judge for the district in which the bankruptcy

18 judge is assigned.

19 ‘‘(3)(A) Each chief bankruptcy judge shall submit an

20 annual report to the Director of the Administrative Office

21 of the United States Courts on the travel expenses of each

22 bankruptcy judge assigned to the applicable district (in23 cluding the travel expenses of the chief bankruptcy judge

24 of such district).
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1 ‘‘(B) The annual report under this paragraph shall

2 include—

3 ‘‘(i) the travel expenses of each bankruptcy

4 judge, with the name of the bankruptcy judge to

5 whom the travel expenses apply;

6 ‘‘(ii) a description of the subject matter and

7 purpose of the travel relating to each travel expense

8 identified under clause (i), with the name of the

9 bankruptcy judge to whom the travel applies; and

10 ‘‘(iii) the number of days of each travel de11 scribed under clause (ii), with the name of the bank12 ruptcy judge to whom the travel applies.

13 ‘‘(4)(A) The Director of the Administrative Office of

14 the United States Courts shall—

15 ‘‘(i) consolidate the reports submitted under

16 paragraph (3) into a single report; and

17 ‘‘(ii) annually submit such consolidated report

18 to Congress.

19 ‘‘(B) The consolidated report submitted under this

20 paragraph shall include the specific information required

21 under paragraph (3)(B), including the name of each bank22 ruptcy judge with respect to clauses (i), (ii), and (iii) of

23 paragraph (3)(B).’’.
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1 TITLE XIII—GENERAL EFFEC2 TIVE DATE; APPLICATION OF

3 AMENDMENTS

4 SEC. 1301. EFFECTIVE DATE; APPLICATION OF AMEND5 MENTS.

6 (a) EFFECTIVE DATE.—Except as provided otherwise

7 in this Act, this Act and the amendments made by this

8 Act shall take effect 180 days after the date of enactment

9 of this Act.

10 (b) APPLICATION OF AMENDMENTS.—The amend11 ments made by this Act shall not apply with respect to

12 cases commenced under title 11, United States Code, be13 fore the effective date of this Act.

Æ