I 

115TH CONGRESS 

1ST SESSION H. R. 1667 

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

resolution of an insolvent financial institution in bankruptcy. 

IN THE HOUSE OF REPRESENTATIVES 

MARCH 22, 2017 

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

CICILLINE) introduced the following bill; which was referred to the Committee on the Judiciary 

A BILL 

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

facilitate the resolution of an insolvent financial institution in bankruptcy. 

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

3 SECTION 1. SHORT TITLE. 

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

5 Bankruptcy Act of 2017’’. 


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1 SEC. 2. GENERAL PROVISIONS RELATING TO COVERED FI2 NANCIAL CORPORATIONS. 

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

4 States Code, is amended by inserting the following after 

5 paragraph (9): 

6 ‘‘(9A) The term ‘covered financial corporation’ 

7 means any corporation incorporated or organized 

8 under any Federal or State law, other than a stock9 broker, a commodity broker, or an entity of the kind 

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

11 that is— 

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

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

14 Act of 1956; or 

15 ‘‘(B) a corporation that exists for the pri16 mary purpose of owning, controlling and financ17 ing its subsidiaries, that has total consolidated 

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

19 which, in its most recently completed fiscal 

20 year— 

21 ‘‘(i) annual gross revenues derived by 

22 the corporation and all of its subsidiaries 

23 from activities that are financial in nature 

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

25 Holding Company Act of 1956) and, if ap26 plicable, from the ownership or control of 


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1 one or more insured depository institu2 tions, represents 85 percent or more of the 

3 consolidated annual gross revenues of the 

4 corporation; or 

5 ‘‘(ii) the consolidated assets of the 

6 corporation and all of its subsidiaries re7 lated to activities that are financial in na8 ture (as defined in section 4(k) of the 

9 Bank Holding Company Act of 1956) and, 

10 if applicable, related to the ownership or 

11 control of one or more insured depository 

12 institutions, represents 85 percent or more 

13 of the consolidated assets of the corpora14 tion.’’. 

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

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

17 end the following: 

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

19 only in a case under chapter 11 concerning a covered fi20 nancial corporation.’’. 

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

22 11, United States Code, is amended— 

23 (1) in subsection (b)— 

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

25 the end; 


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

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

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

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

5 (2) in subsection (d)— 

6 (A) by striking ‘‘and’’ before ‘‘an unin7 sured State member bank’’; 

8 (B) by striking ‘‘or’’ before ‘‘a corpora9 tion’’; and 

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

11 corporation’’ after ‘‘Federal Deposit Insurance 

12 Corporation Improvement Act of 1991’’. 

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

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

15 end the following: 

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

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

18 7 if— 

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

20 has been consummated; 

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

22 a special trustee under section 1186; and 

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

24 that conversion is in the best interest of the credi25 tors and the estate.’’. 


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

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

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

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

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

6 is amended by inserting after paragraph (16) the fol7 lowing: 

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

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

10 been paid or the plan provides for the payment of 

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

12 date of the plan. 

13 ‘‘(18) In a case under subchapter V, confirma14 tion of the plan is not likely to cause serious adverse 

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

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

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

18 under subchapter V, the United States trustee shall rec19 ommend to the court, and in all other cases, the’’. 

20 SEC. 3. LIQUIDATION, REORGANIZATION, OR RECAPITAL21 IZATION OF A COVERED FINANCIAL COR22 PORATION. 

23 Chapter 11 of title 11, United States Code, is amend24 ed by adding at the end the following: 


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1 ‘‘SUBCHAPTER V—LIQUIDATION, REORGANIZA2 TION, OR RECAPITALIZATION OF A COV3 ERED FINANCIAL CORPORATION 

4 ‘‘§ 1181. Inapplicability of other sections 

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

6 under this subchapter concerning a covered financial cor7 poration. Section 365 does not apply to a transfer under 

8 section 1185, 1187, or 1188. 

9 ‘‘§ 1182. Definitions for this subchapter 

10 ‘‘In this subchapter, the following definitions shall 

11 apply: 

12 ‘‘(1) The term ‘Board’ means the Board of 

13 Governors of the Federal Reserve System. 

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

15 formed corporation to which property of the estate 

16 may be transferred under section 1185(a) and the 

17 equity securities of which may be transferred to a 

18 special trustee under section 1186(a). 

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

20 unsecured debt of the debtor for borrowed money for 

21 which the debtor is the primary obligor, other than 

22 a qualified financial contract and other than debt se23 cured by a lien on property of the estate that is to 

24 be transferred to a bridge company pursuant to an 

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


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1 ‘‘(4) The term ‘contractual right’ means a con2 tractual right of a kind defined in section 555, 556, 

3 559, 560, or 561. 

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

5 means any contract of a kind defined in paragraph 

6 (25), (38A), (47), or (53B) of section 101, section 

7 741(7), or paragraph (4), (5), (11), or (13) of sec8 tion 761. 

9 ‘‘(6) The term ‘special trustee’ means the trust10 ee of a trust formed under section 1186(a)(1). 

11 ‘‘§ 1183. Commencement of a case concerning a cov12 ered financial corporation 

13 ‘‘(a) A case under this subchapter concerning a cov14 ered financial corporation may be commenced by the filing 

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

16 301 only if the debtor states to the best of its knowledge 

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

18 financial corporation. 

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

20 (a) constitutes an order for relief under this subchapter. 

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

22 performing similar functions) of a covered financial cor23 poration shall have no liability to shareholders, creditors, 

24 or other parties in interest for a good faith filing of a peti25 tion to commence a case under this subchapter, or for any 


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1 reasonable action taken in good faith in contemplation of 

2 such a petition or a transfer under section 1185 or section 

3 1186, whether prior to or after commencement of the case. 

4 ‘‘(d) Counsel to the debtor shall provide, to the great5 est extent practicable without disclosing the identity of the 

6 potential debtor, sufficient confidential notice to the chief 

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

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

9 commence a case under this subchapter regarding the po10 tential commencement of such case. The chief judge of 

11 such court shall randomly assign to preside over such case 

12 a bankruptcy judge selected from among the bankruptcy 

13 judges designated by the Chief Justice of the United 

14 States under section 298 of title 28. 

15 ‘‘§ 1184. Regulators 

16 ‘‘The Board, the Securities Exchange Commission, 

17 the Office of the Comptroller of the Currency of the De18 partment of the Treasury, the Commodity Futures Trad19 ing Commission, and the Federal Deposit Insurance Cor20 poration may raise and may appear and be heard on any 

21 issue in any case or proceeding under this subchapter. 

22 ‘‘§ 1185. Special transfer of property of the estate 

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

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

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


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

2 of executory contracts, unexpired leases, and qualified fi3 nancial contracts of the debtor, to a bridge company. 

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

5 property transferred, and any executory contracts, unex6 pired leases, and qualified financial contracts assigned 

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

8 Except as provided under this section, the provisions of 

9 section 363 shall apply to a transfer and assignment under 

10 this section. 

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

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

13 electronic or telephonic notice of not less than 24 hours 

14 to— 

15 ‘‘(1) the debtor; 

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

17 claims against the debtor; 

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

19 claims against the debtor; 

20 ‘‘(4) counterparties to any debt, executory con21 tract, unexpired lease, and qualified financial con22 tract requested to be transferred under this section; 

23 ‘‘(5) the Board; 

24 ‘‘(6) the Federal Deposit Insurance Corpora25 tion; 


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1 ‘‘(7) the Secretary of the Treasury and the Of2 fice of the Comptroller of the Currency of the Treas3 ury; 

4 ‘‘(8) the Commodity Futures Trading Commis5 sion; 

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

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

8 administrator; and 

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

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

11 Street Reform and Consumer Protection Act, with 

12 respect to any affiliate the equity securities of which 

13 are proposed to be transferred under this section. 

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

15 section unless the court determines, based upon a prepon16 derance of the evidence, that— 

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

18 to prevent serious adverse effects on financial sta19 bility in the United States; 

20 ‘‘(2) the transfer does not provide for the as21 sumption of any capital structure debt by the bridge 

22 company; 

23 ‘‘(3) the transfer does not provide for the trans24 fer to the bridge company of any property of the es25 tate that is subject to a lien securing a debt, execuVerDate Sep 11 2014 23:09 Mar 24, 2017 Jkt 069200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\H1667.IH H1667

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1 tory contract, unexpired lease or agreement (includ2 ing a qualified financial contract) of the debtor un3 less— 

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

5 debt, executory contract, unexpired lease or 

6 agreement (including a qualified financial con7 tract), including any claims arising in respect 

8 thereof that would not be allowed secured 

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

10 effect to such transfer, such property remains 

11 subject to the lien securing such debt, executory 

12 contract, unexpired lease or agreement (includ13 ing a qualified financial contract); and 

14 ‘‘(ii) the court has determined that as15 sumption of such debt, executory contract, un16 expired lease or agreement (including a quali17 fied financial contract) by the bridge company 

18 is in the best interests of the estate; or 

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

20 the bridge company in accordance with the pro21 visions of section 363; 

22 ‘‘(4) the transfer does not provide for the as23 sumption by the bridge company of any debt, execu24 tory contract, unexpired lease or agreement (includ25 ing a qualified financial contract) of the debtor seVerDate Sep 11 2014 23:09 Mar 24, 2017 Jkt 069200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6201 E:\BILLS\H1667.IH H1667

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1 cured by a lien on property of the estate unless the 

2 transfer provides for such property to be transferred 

3 to the bridge company in accordance with paragraph 

4 (3)(A) of this subsection; 

5 ‘‘(5) the transfer does not provide for the trans6 fer of the equity of the debtor; 

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

8 bridge company is not likely to fail to meet the obli9 gations of any debt, executory contract, qualified fi10 nancial contract, or unexpired lease assumed and as11 signed to the bridge company; 

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

13 special trustee all of the equity securities in the 

14 bridge company and appointment of a special trustee 

15 in accordance with section 1186; 

16 ‘‘(8) after giving effect to the transfer, ade17 quate provision has been made for the fees, costs, 

18 and expenses of the estate and special trustee; and 

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

20 documents, and initial directors and senior officers, 

21 that are in the best interest of creditors and the es22 tate. 

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

24 the bridge company that is the recipient of the transfer 

25 shall— 


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1 ‘‘(1) not have any property, executory con2 tracts, unexpired leases, qualified financial contracts, 

3 or debts, other than any property acquired or execu4 tory contracts, unexpired leases, or debts assumed 

5 when acting as a transferee of a transfer under this 

6 section; and 

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

8 the estate, which may be sold or distributed in ac9 cordance with this title. 

10 ‘‘§ 1186. Special trustee 

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

12 1185 shall require the trustee to transfer to a qualified 

13 and independent special trustee, who is appointed by the 

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

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

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

17 satisfaction of the special trustee’s fees, costs, and ex18 penses. The trust of which the special trustee is the trust19 ee shall be a newly formed trust governed by a trust agree20 ment approved by the court as in the best interests of the 

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

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

23 equity securities of the bridge company in accordance with 

24 the trust agreement. 


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

2 transfer under section 1185, the trustee shall confirm to 

3 the court that the Board has been consulted regarding the 

4 identity of the proposed special trustee and advise the 

5 court of the results of such consultation. 

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

7 provide— 

8 ‘‘(1) for the payment of the fees, costs, ex9 penses, and indemnities of the special trustee from 

10 the assets of the debtor’s estate; 

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

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

13 which shall be filed with the court; and 

14 ‘‘(B) information about the bridge com15 pany reasonably requested by a party in inter16 est to prepare a disclosure statement for a plan 

17 providing for distribution of any securities of 

18 the bridge company if such information is nec19 essary to prepare such disclosure statement; 

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

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

22 trustee shall file a notice with the court in connec23 tion with— 

24 ‘‘(A) any change in a director or senior of25 ficer of the bridge company; 


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1 ‘‘(B) any modification to the governing 

2 documents of the bridge company; and 

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

4 bridge company, including— 

5 ‘‘(i) recapitalization; 

6 ‘‘(ii) a material borrowing; 

7 ‘‘(iii) termination of an intercompany 

8 debt or guarantee; 

9 ‘‘(iv) a transfer of a substantial por10 tion of the assets of the bridge company; 

11 or 

12 ‘‘(v) the issuance or sale of any secu13 rities of the bridge company; 

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

15 the bridge company shall not be consummated until 

16 the special trustee consults with the Federal Deposit 

17 Insurance Corporation and the Board regarding 

18 such sale and discloses the results of such consulta19 tion with the court; 

20 ‘‘(5) that, subject to reserves for payments per21 mitted under paragraph (1) provided for in the trust 

22 agreement, the proceeds of the sale of any equity se23 curities of the bridge company by the special trustee 

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

25 the estate; 


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1 ‘‘(6) the process and guidelines for the replace2 ment of the special trustee; and 

3 ‘‘(7) that the property held in trust by the spe4 cial trustee is subject to distribution in accordance 

5 with subsection (c). 

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

7 held in trust— 

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

9 in accordance with the plan on the effective date of 

10 the plan; or 

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

12 chapter 7, as ordered by the court. 

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

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

15 terminate, except as may be necessary to wind up and con16 clude the business and financial affairs of the trust. 

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

18 section, the special trustee shall be subject only to applica19 ble nonbankruptcy law, and the actions and conduct of 

20 the special trustee shall no longer be subject to approval 

21 by the court in the case under this subchapter. 

22 ‘‘§ 1187. Temporary and supplemental automatic stay; 

23 assumed debt 

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

25 as a stay, applicable to all entities, of the termination, acVerDate Sep 11 2014 23:09 Mar 24, 2017 Jkt 069200 PO 00000 Frm 00016 Fmt 6652 Sfmt 6201 E:\BILLS\H1667.IH H1667

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1 celeration, or modification of any debt, contract, lease, or 

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

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

4 lease, or agreement, solely because of— 

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

6 debt, contract, lease, or agreement; or 

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

8 or agreement, or in applicable nonbankruptcy law, 

9 that is conditioned on— 

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

11 the debtor at any time before the closing of the 

12 case; 

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

14 this title concerning the debtor; 

15 ‘‘(iii) the appointment of or taking posses16 sion by a trustee in a case under this title con17 cerning the debtor or by a custodian before the 

18 commencement of the case; or 

19 ‘‘(iv) a credit rating agency rating, or ab20 sence or withdrawal of a credit rating agency 

21 rating— 

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

23 the commencement of the case; 


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

2 from the commencement of the case until 

3 48 hours after such order is entered; 

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

5 trustee or the special trustee is a direct or 

6 indirect beneficial holder of more than 50 

7 percent of the equity securities of— 

8 ‘‘(aa) the bridge company; or 

9 ‘‘(bb) the affiliate, if all of the di10 rect or indirect interests in the affil11 iate that are property of the estate 

12 are transferred under section 1185; or 

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

14 or the special trustee is a direct or indirect 

15 beneficial holder of more than 50 percent 

16 of the equity securities of— 

17 ‘‘(aa) the bridge company; or 

18 ‘‘(bb) the affiliate, if all of the di19 rect or indirect interests in the affil20 iate that are property of the estate 

21 are transferred under section 1185. 

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

23 in this paragraph is— 


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

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

3 debtor (other than a qualified financial contract); 

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

5 issued or is obligated for debt (other than capital 

6 structure debt); 

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

8 lease of an affiliate (other than a qualified financial 

9 contract); or 

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

11 issued or is obligated for debt. 

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

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

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

16 the case; 

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

18 lease, or agreement by the bridge company 

19 under an order authorizing a transfer under 

20 section 1185; 

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

22 request for a transfer under section 1185; or 

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

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

25 earliest of— 


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

2 transfer under section 1185 in which the direct 

3 or indirect interests in the affiliate that are 

4 property of the estate are not transferred under 

5 section 1185; 

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

7 request for a transfer under section 1185; 

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

9 the case if the court has not ordered a transfer 

10 under section 1185; or 

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

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

13 apply to a stay under this subsection. 

14 ‘‘(b) A debt, executory contract (other than a quali15 fied financial contract), or unexpired lease of the debtor, 

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

17 obligated for any debt, may be assumed by a bridge com18 pany in a transfer under section 1185 notwithstanding 

19 any provision in an agreement or in applicable nonbank20 ruptcy law that— 

21 ‘‘(1) prohibits, restricts, or conditions the as22 signment of the debt, contract, lease, or agreement; 

23 or 

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

25 permits a party other than the debtor to terminate 


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

2 account of— 

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

4 lease, or agreement; or 

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

6 the debt, contract, lease, or agreement. 

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

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

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

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

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

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

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

14 in applicable nonbankruptcy law— 

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

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

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

18 assignment of the debt, contract, lease, or agree19 ment; or 

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

21 or permits a party other than the debtor to termi22 nate or modify, the debt, contract, lease or agree23 ment on account of— 

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

25 lease, or agreement; or 


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

2 the debt, contract, lease, or agreement. 

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

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

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

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

8 or agreement only if the bridge company— 

9 ‘‘(A) shall cure the default; 

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

12 1185 that the bridge company will promptly com13 pensate, a party other than the debtor to the debt, 

14 contract, lease, or agreement, for any actual pecu15 niary loss to the party resulting from the default; 

16 and 

17 ‘‘(C) provides adequate assurance in connection 

18 with a transfer under section 1185 of future per19 formance under the debt, contract, lease, or agree20 ment, as determined by the court under section 

21 1185(c)(4). 

22 ‘‘§ 1188. Treatment of qualified financial contracts 

23 and affiliate contracts 

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

25 362(b)(17), 362(b)(27), 362(o), 555, 556, 559, 560, and 


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1 561, a petition filed under section 1183 operates as a stay, 

2 during the period specified in section 1187(a)(3)(A), ap3 plicable to all entities, of the exercise of a contractual 

4 right— 

5 ‘‘(1) to cause the modification, liquidation, ter6 mination, or acceleration of a qualified financial con7 tract of the debtor or an affiliate; 

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

9 payment amount, or other transfer obligation arising 

10 under or in connection with a qualified financial con11 tract of the debtor or an affiliate; or 

12 ‘‘(3) under any security agreement or arrange13 ment or other credit enhancement forming a part of 

14 or related to a qualified financial contract of the 

15 debtor or an affiliate. 

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

17 1187(a)(3)(A), the trustee or the affiliate shall perform 

18 all payment and delivery obligations under such qualified 

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

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

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

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

23 affiliate immediately upon the failure of the trustee or the 

24 affiliate, as the case may be, to perform any such obliga25 tion during such period. 


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

2 financial contract of the debtor or any affiliate to perform 

3 any payment or delivery obligation under such qualified 

4 financial contract, including during the pendency of the 

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

6 breach of such qualified financial contract by the 

7 counterparty. 

8 ‘‘(c) Subject to the court’s approval, a qualified finan9 cial contract between an entity and the debtor may be as10 signed to or assumed by the bridge company in a transfer 

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

12 if— 

13 ‘‘(1) all qualified financial contracts between 

14 the entity and the debtor are assigned to and as15 sumed by the bridge company in the transfer under 

16 section 1185; 

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

18 in respect of any qualified financial contract between 

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

20 under the terms of the qualified financial contract, 

21 is subordinated to the claims of general unsecured 

22 creditors) are assigned to and assumed by the bridge 

23 company; 

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

25 under any qualified financial contract between the 


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1 entity and the debtor are assigned to and assumed 

2 by the bridge company; and 

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

4 enhancement furnished by the debtor for any quali5 fied financial contract described in paragraph (1) or 

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

7 any qualified financial contract between the entity 

8 and the debtor is assigned to and assumed by the 

9 bridge company. 

10 ‘‘(d) Notwithstanding any provision of a qualified fi11 nancial contract or of applicable nonbankruptcy law, a 

12 qualified financial contract of the debtor that is assumed 

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

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

15 order approving a transfer under section 1185, and any 

16 right or obligation under the qualified financial contract 

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

18 entry of the order approving a transfer under section 1185 

19 solely because of a condition described in section 

20 1187(c)(1), other than a condition of the kind specified 

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

22 no longer includes a direct beneficial interest or an indi23 rect beneficial interest through the special trustee, in more 

24 than 50 percent of the equity securities of the bridge com25 pany. 


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

2 or in applicable nonbankruptcy law, an agreement of an 

3 affiliate (including an executory contract, an unexpired 

4 lease, qualified financial contract, or an agreement under 

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

6 right or obligation under such agreement may not be ac7 celerated, terminated, or modified, solely because of a con8 dition described in section 1187(c)(1), other than a condi9 tion of the kind specified in section 1187(b) that occurs 

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

11 beneficial holder of more than 50 percent of the equity 

12 securities of the affiliate, at any time after the commence13 ment of the case if— 

14 ‘‘(1) all direct or indirect interests in the affil15 iate that are property of the estate are transferred 

16 under section 1185 to the bridge company within the 

17 period specified in subsection (a); 

18 ‘‘(2) the bridge company assumes— 

19 ‘‘(A) any guarantee or other credit en20 hancement issued by the debtor relating to the 

21 agreement of the affiliate; and 

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

23 setoff, netting arrangement, or debt of the debt24 or that directly arises out of or directly relates 

25 to the guarantee or credit enhancement; and 


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

2 serves as collateral for the guarantee or credit en3 hancement is transferred to the bridge company. 

4 ‘‘§ 1189. Licenses, permits, and registrations 

5 ‘‘(a) Notwithstanding any otherwise applicable non6 bankruptcy law, if a request is made under section 1185 

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

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

9 an affiliate had immediately before the commencement of 

10 the case and that is proposed to be transferred under sec11 tion 1185 may not be accelerated, terminated, or modified 

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

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

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

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

16 title concerning the debtor; 

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

18 a trustee in a case under this title concerning the 

19 debtor or by a custodian before the commencement 

20 of the case; or 

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

22 ‘‘(b) Notwithstanding any otherwise applicable non23 bankruptcy law, any Federal, State, or local license, per24 mit, or registration that the debtor had immediately before 

25 the commencement of the case that is included in a transVerDate Sep 11 2014 23:09 Mar 24, 2017 Jkt 069200 PO 00000 Frm 00027 Fmt 6652 Sfmt 6201 E:\BILLS\H1667.IH H1667

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1 fer under section 1185 shall be valid and all rights and 

2 obligations thereunder shall vest in the bridge company. 

3 ‘‘§ 1190. Exemption from securities laws 

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

5 bridge company shall be deemed to be a security of a suc6 cessor to the debtor under a plan if the court approves 

7 the disclosure statement for the plan as providing ade8 quate information (as defined in section 1125(a)) about 

9 the bridge company and the security. 

10 ‘‘§ 1191. Inapplicability of certain avoiding powers 

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

12 debtor to an affiliate prior to or after the commencement 

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

14 or the estate to or for the benefit of an affiliate, in con15 templation of or in connection with a transfer under sec16 tion 1185 is not avoidable under section 544, 547, 

17 548(a)(1)(B), or 549, or under any similar nonbankruptcy 

18 law. 

19 ‘‘§ 1192. Consideration of financial stability 

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

21 in connection with this subchapter may have on financial 

22 stability in the United States.’’. 


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

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

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

4 end the following: 

5 ‘‘§ 298. Judge for a case under subchapter V of chap6 ter 11 of title 11 

7 ‘‘(a)(1) Notwithstanding section 295, the Chief Jus8 tice of the United States shall designate not fewer than 

9 10 bankruptcy judges to be available to hear a case under 

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

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

12 United States for such designation. 

13 ‘‘(2) Notwithstanding section 155, a case under sub14 chapter V of chapter 11 of title 11 shall be heard under 

15 section 157 by a bankruptcy judge designated under para16 graph (1), who shall be randomly assigned to hear such 

17 case by the chief judge of the court of appeals for the cir18 cuit embracing the district in which the case is pending. 

19 To the greatest extent practicable, the approvals required 

20 under section 155 should be obtained. 

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

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

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

24 temporarily assigned to the district. 


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

2 11, and all proceedings in the case, shall take place in 

3 the district in which the case is pending. 

4 ‘‘(c) In this section, the term ‘covered financial cor5 poration’ has the meaning given that term in section 

6 101(9A) of title 11.’’. 

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

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

9 by adding at the end the following: 

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

11 district court after a transfer pursuant to an order under 

12 section 1185 of title 11 of any proceeding related to a spe13 cial trustee appointed, or to a bridge company formed, in 

14 connection with a case under subchapter V of chapter 11 

15 of title 11.’’. 

16 (c) TECHNICAL AND CONFORMING AMENDMENT.— 

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

18 States Code, is amended by adding at the end the fol19 lowing: 

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

Æ 


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