IB 

Union Calendar No. 46 

115TH CONGRESS 

1ST SESSION H. R. 1667 

[Report No. 115–80] 

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 

APRIL 5, 2017 

Additional sponsor: Mr. SCHNEIDER

APRIL 5, 2017 

Committed to the Committee of the Whole House on the State of the Union 

and ordered to be printed 


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A BILL 

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

facilitate the resolution of an insolvent financial institution in bankruptcy. 


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

3 SECTION 1. SHORT TITLE. 

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

5 Bankruptcy Act of 2017’’. 

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

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

9 States Code, is amended by inserting the following after 

10 paragraph (9): 

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

12 means any corporation incorporated or organized 

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

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

16 that is— 

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

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

19 Act of 1956; or 

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

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

24 which, in its most recently completed fiscal 

25 year— 


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1 ‘‘(i) annual gross revenues derived by 

2 the corporation and all of its subsidiaries 

3 from activities that are financial in nature 

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

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

7 one or more insured depository institu8 tions, represents 85 percent or more of the 

9 consolidated annual gross revenues of the 

10 corporation; or 

11 ‘‘(ii) the consolidated assets of the 

12 corporation and all of its subsidiaries re13 lated to activities that are financial in na14 ture (as defined in section 4(k) of the 

15 Bank Holding Company Act of 1956) and, 

16 if applicable, related to the ownership or 

17 control of one or more insured depository 

18 institutions, represents 85 percent or more 

19 of the consolidated assets of the corpora20 tion.’’. 

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

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

23 end the following: 


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

2 only in a case under chapter 11 concerning a covered fi3 nancial corporation.’’. 

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

5 11, United States Code, is amended— 

6 (1) in subsection (b)— 

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

8 the end; 

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

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

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

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

13 (2) in subsection (d)— 

14 (A) by striking ‘‘and’’ before ‘‘an unin15 sured State member bank’’; 

16 (B) by striking ‘‘or’’ before ‘‘a corpora17 tion’’; and 

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

19 corporation’’ after ‘‘Federal Deposit Insurance 

20 Corporation Improvement Act of 1991’’. 

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

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

23 end the following: 


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

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

3 7 if— 

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

5 has been consummated; 

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

7 a special trustee under section 1186; and 

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

9 that conversion is in the best interest of the credi10 tors and the estate.’’. 

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

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

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

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

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

16 is amended by inserting after paragraph (16) the fol17 lowing: 

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

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

20 been paid or the plan provides for the payment of 

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

22 date of the plan. 

23 ‘‘(18) In a case under subchapter V, confirma24 tion of the plan is not likely to cause serious adverse 

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


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

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

3 under subchapter V, the United States trustee shall rec4 ommend to the court, and in all other cases, the’’. 

5 SEC. 3. LIQUIDATION, REORGANIZATION, OR RECAPITAL6 IZATION OF A COVERED FINANCIAL COR7 PORATION. 

8 Chapter 11 of title 11, United States Code, is amend9 ed by adding at the end the following: 

10 ‘‘SUBCHAPTER V—LIQUIDATION, REORGANIZA11 TION, OR RECAPITALIZATION OF A COV12 ERED FINANCIAL CORPORATION 

13 ‘‘§ 1181. Inapplicability of other sections 

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

15 under this subchapter concerning a covered financial cor16 poration. Section 365 does not apply to a transfer under 

17 section 1185, 1187, or 1188. 

18 ‘‘§ 1182. Definitions for this subchapter 

19 ‘‘In this subchapter, the following definitions shall 

20 apply: 

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

22 Governors of the Federal Reserve System. 

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

24 formed corporation to which property of the estate 

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


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1 equity securities of which may be transferred to a 

2 special trustee under section 1186(a). 

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

4 unsecured debt of the debtor for borrowed money for 

5 which the debtor is the primary obligor, other than 

6 a qualified financial contract and other than debt se7 cured by a lien on property of the estate that is to 

8 be transferred to a bridge company pursuant to an 

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

10 ‘‘(4) The term ‘contractual right’ means a con11 tractual right of a kind defined in section 555, 556, 

12 559, 560, or 561. 

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

14 means any contract of a kind defined in paragraph 

15 (25), (38A), (47), or (53B) of section 101, section 

16 741(7), or paragraph (4), (5), (11), or (13) of sec17 tion 761. 

18 ‘‘(6) The term ‘special trustee’ means the trust19 ee of a trust formed under section 1186(a)(1). 

20 ‘‘§ 1183. Commencement of a case concerning a cov21 ered financial corporation 

22 ‘‘(a) A case under this subchapter concerning a cov23 ered financial corporation may be commenced by the filing 

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

25 301 only if the debtor states to the best of its knowledge 


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

2 financial corporation. 

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

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

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

6 performing similar functions) of a covered financial cor7 poration shall have no liability to shareholders, creditors, 

8 or other parties in interest for a good faith filing of a peti9 tion to commence a case under this subchapter, or for any 

10 reasonable action taken in good faith in contemplation of 

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

12 1186, whether prior to or after commencement of the case. 

13 ‘‘(d) Counsel to the debtor shall provide, to the great14 est extent practicable without disclosing the identity of the 

15 potential debtor, sufficient confidential notice to the chief 

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

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

18 commence a case under this subchapter regarding the po19 tential commencement of such case. The chief judge of 

20 such court shall randomly assign to preside over such case 

21 a bankruptcy judge selected from among the bankruptcy 

22 judges designated by the Chief Justice of the United 

23 States under section 298 of title 28. 


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1 ‘‘§ 1184. Regulators 

2 ‘‘The Board, the Securities Exchange Commission, 

3 the Office of the Comptroller of the Currency of the De4 partment of the Treasury, the Commodity Futures Trad5 ing Commission, and the Federal Deposit Insurance Cor6 poration may raise and may appear and be heard on any 

7 issue in any case or proceeding under this subchapter. 

8 ‘‘§ 1185. Special transfer of property of the estate 

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

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

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

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

13 of executory contracts, unexpired leases, and qualified fi14 nancial contracts of the debtor, to a bridge company. 

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

16 property transferred, and any executory contracts, unex17 pired leases, and qualified financial contracts assigned 

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

19 Except as provided under this section, the provisions of 

20 section 363 shall apply to a transfer and assignment under 

21 this section. 

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

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

24 electronic or telephonic notice of not less than 24 hours 

25 to— 

26 ‘‘(1) the debtor; 


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

2 claims against the debtor; 

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

4 claims against the debtor; 

5 ‘‘(4) counterparties to any debt, executory con6 tract, unexpired lease, and qualified financial con7 tract requested to be transferred under this section; 

8 ‘‘(5) the Board; 

9 ‘‘(6) the Federal Deposit Insurance Corpora10 tion; 

11 ‘‘(7) the Secretary of the Treasury and the Of12 fice of the Comptroller of the Currency of the Treas13 ury; 

14 ‘‘(8) the Commodity Futures Trading Commis15 sion; 

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

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

18 administrator; and 

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

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

21 Street Reform and Consumer Protection Act, with 

22 respect to any affiliate the equity securities of which 

23 are proposed to be transferred under this section. 


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

2 section unless the court determines, based upon a prepon3 derance of the evidence, that— 

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

5 to prevent serious adverse effects on financial sta6 bility in the United States; 

7 ‘‘(2) the transfer does not provide for the as8 sumption of any capital structure debt by the bridge 

9 company; 

10 ‘‘(3) the transfer does not provide for the trans11 fer to the bridge company of any property of the es12 tate that is subject to a lien securing a debt, execu13 tory contract, unexpired lease or agreement (includ14 ing a qualified financial contract) of the debtor un15 less— 

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

17 debt, executory contract, unexpired lease or 

18 agreement (including a qualified financial con19 tract), including any claims arising in respect 

20 thereof that would not be allowed secured 

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

22 effect to such transfer, such property remains 

23 subject to the lien securing such debt, executory 

24 contract, unexpired lease or agreement (includ25 ing a qualified financial contract); and 


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1 ‘‘(ii) the court has determined that as2 sumption of such debt, executory contract, un3 expired lease or agreement (including a quali4 fied financial contract) by the bridge company 

5 is in the best interests of the estate; or 

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

7 the bridge company in accordance with the pro8 visions of section 363; 

9 ‘‘(4) the transfer does not provide for the as10 sumption by the bridge company of any debt, execu11 tory contract, unexpired lease or agreement (includ12 ing a qualified financial contract) of the debtor se13 cured by a lien on property of the estate unless the 

14 transfer provides for such property to be transferred 

15 to the bridge company in accordance with paragraph 

16 (3)(A) of this subsection; 

17 ‘‘(5) the transfer does not provide for the trans18 fer of the equity of the debtor; 

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

20 bridge company is not likely to fail to meet the obli21 gations of any debt, executory contract, qualified fi22 nancial contract, or unexpired lease assumed and as23 signed to the bridge company; 

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

25 special trustee all of the equity securities in the 


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1 bridge company and appointment of a special trustee 

2 in accordance with section 1186; 

3 ‘‘(8) after giving effect to the transfer, ade4 quate provision has been made for the fees, costs, 

5 and expenses of the estate and special trustee; and 

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

7 documents, and initial directors and senior officers, 

8 that are in the best interest of creditors and the es9 tate. 

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

11 the bridge company that is the recipient of the transfer 

12 shall— 

13 ‘‘(1) not have any property, executory con14 tracts, unexpired leases, qualified financial contracts, 

15 or debts, other than any property acquired or execu16 tory contracts, unexpired leases, or debts assumed 

17 when acting as a transferee of a transfer under this 

18 section; and 

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

20 the estate, which may be sold or distributed in ac21 cordance with this title. 

22 ‘‘§ 1186. Special trustee 

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

24 1185 shall require the trustee to transfer to a qualified 

25 and independent special trustee, who is appointed by the 


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

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

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

4 satisfaction of the special trustee’s fees, costs, and ex5 penses. The trust of which the special trustee is the trust6 ee shall be a newly formed trust governed by a trust agree7 ment approved by the court as in the best interests of the 

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

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

10 equity securities of the bridge company in accordance with 

11 the trust agreement. 

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

13 transfer under section 1185, the trustee shall confirm to 

14 the court that the Board has been consulted regarding the 

15 identity of the proposed special trustee and advise the 

16 court of the results of such consultation. 

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

18 provide— 

19 ‘‘(1) for the payment of the fees, costs, ex20 penses, and indemnities of the special trustee from 

21 the assets of the debtor’s estate; 

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

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

24 which shall be filed with the court; and 


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1 ‘‘(B) information about the bridge com2 pany reasonably requested by a party in inter3 est to prepare a disclosure statement for a plan 

4 providing for distribution of any securities of 

5 the bridge company if such information is nec6 essary to prepare such disclosure statement; 

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

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

9 trustee shall file a notice with the court in connec10 tion with— 

11 ‘‘(A) any change in a director or senior of12 ficer of the bridge company; 

13 ‘‘(B) any modification to the governing 

14 documents of the bridge company; and 

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

16 bridge company, including— 

17 ‘‘(i) recapitalization; 

18 ‘‘(ii) a material borrowing; 

19 ‘‘(iii) termination of an intercompany 

20 debt or guarantee; 

21 ‘‘(iv) a transfer of a substantial por22 tion of the assets of the bridge company; 

23 or 

24 ‘‘(v) the issuance or sale of any secu25 rities of the bridge company; 


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

2 the bridge company shall not be consummated until 

3 the special trustee consults with the Federal Deposit 

4 Insurance Corporation and the Board regarding 

5 such sale and discloses the results of such consulta6 tion with the court; 

7 ‘‘(5) that, subject to reserves for payments per8 mitted under paragraph (1) provided for in the trust 

9 agreement, the proceeds of the sale of any equity se10 curities of the bridge company by the special trustee 

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

12 the estate; 

13 ‘‘(6) the process and guidelines for the replace14 ment of the special trustee; and 

15 ‘‘(7) that the property held in trust by the spe16 cial trustee is subject to distribution in accordance 

17 with subsection (c). 

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

19 held in trust— 

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

21 in accordance with the plan on the effective date of 

22 the plan; or 

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

24 chapter 7, as ordered by the court. 


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

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

3 terminate, except as may be necessary to wind up and con4 clude the business and financial affairs of the trust. 

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

6 section, the special trustee shall be subject only to applica7 ble nonbankruptcy law, and the actions and conduct of 

8 the special trustee shall no longer be subject to approval 

9 by the court in the case under this subchapter. 

10 ‘‘§ 1187. Temporary and supplemental automatic stay; 

11 assumed debt 

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

13 as a stay, applicable to all entities, of the termination, ac14 celeration, or modification of any debt, contract, lease, or 

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

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

17 lease, or agreement, solely because of— 

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

19 debt, contract, lease, or agreement; or 

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

21 or agreement, or in applicable nonbankruptcy law, 

22 that is conditioned on— 

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

24 the debtor at any time before the closing of the 

25 case; 


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

2 this title concerning the debtor; 

3 ‘‘(iii) the appointment of or taking posses4 sion by a trustee in a case under this title con5 cerning the debtor or by a custodian before the 

6 commencement of the case; or 

7 ‘‘(iv) a credit rating agency rating, or ab8 sence or withdrawal of a credit rating agency 

9 rating— 

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

11 the commencement of the case; 

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

13 from the commencement of the case until 

14 48 hours after such order is entered; 

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

16 trustee or the special trustee is a direct or 

17 indirect beneficial holder of more than 50 

18 percent of the equity securities of— 

19 ‘‘(aa) the bridge company; or 

20 ‘‘(bb) the affiliate, if all of the di21 rect or indirect interests in the affil22 iate that are property of the estate 

23 are transferred under section 1185; or 

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

25 or the special trustee is a direct or indirect 


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1 beneficial holder of more than 50 percent 

2 of the equity securities of— 

3 ‘‘(aa) the bridge company; or 

4 ‘‘(bb) the affiliate, if all of the di5 rect or indirect interests in the affil6 iate that are property of the estate 

7 are transferred under section 1185. 

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

9 in this paragraph is— 

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

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

12 debtor (other than a qualified financial contract); 

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

14 issued or is obligated for debt (other than capital 

15 structure debt); 

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

17 lease of an affiliate (other than a qualified financial 

18 contract); or 

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

20 issued or is obligated for debt. 

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

22 ‘‘(A) for the benefit of the debtor, upon the ear23 liest of— 

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

25 the case; 


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

2 lease, or agreement by the bridge company 

3 under an order authorizing a transfer under 

4 section 1185; 

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

6 request for a transfer under section 1185; or 

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

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

9 earliest of— 

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

11 transfer under section 1185 in which the direct 

12 or indirect interests in the affiliate that are 

13 property of the estate are not transferred under 

14 section 1185; 

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

16 request for a transfer under section 1185; 

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

18 the case if the court has not ordered a transfer 

19 under section 1185; or 

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

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

22 apply to a stay under this subsection. 

23 ‘‘(b) A debt, executory contract (other than a quali24 fied financial contract), or unexpired lease of the debtor, 

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


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1 obligated for any debt, may be assumed by a bridge com2 pany in a transfer under section 1185 notwithstanding 

3 any provision in an agreement or in applicable nonbank4 ruptcy law that— 

5 ‘‘(1) prohibits, restricts, or conditions the as6 signment of the debt, contract, lease, or agreement; 

7 or 

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

9 permits a party other than the debtor to terminate 

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

11 account of— 

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

13 lease, or agreement; or 

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

15 the debt, contract, lease, or agreement. 

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

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

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

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

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

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

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

23 in applicable nonbankruptcy law— 

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

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


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

2 assignment of the debt, contract, lease, or agree3 ment; or 

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

5 or permits a party other than the debtor to termi6 nate or modify, the debt, contract, lease or agree7 ment on account of— 

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

9 lease, or agreement; or 

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

11 the debt, contract, lease, or agreement. 

12 ‘‘(2) If there is a default by the debtor under a provi13 sion other than the kind described in paragraph (1) in 

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

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

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

17 or agreement only if the bridge company— 

18 ‘‘(A) shall cure the default; 

19 ‘‘(B) compensates, or provides adequate assur20 ance in connection with a transfer under section 

21 1185 that the bridge company will promptly com22 pensate, a party other than the debtor to the debt, 

23 contract, lease, or agreement, for any actual pecu24 niary loss to the party resulting from the default; 

25 and 


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1 ‘‘(C) provides adequate assurance in connection 

2 with a transfer under section 1185 of future per3 formance under the debt, contract, lease, or agree4 ment, as determined by the court under section 

5 1185(c)(4). 

6 ‘‘§ 1188. Treatment of qualified financial contracts 

7 and affiliate contracts 

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

9 362(b)(17), 362(b)(27), 362(o), 555, 556, 559, 560, and 

10 561, a petition filed under section 1183 operates as a stay, 

11 during the period specified in section 1187(a)(3)(A), ap12 plicable to all entities, of the exercise of a contractual 

13 right— 

14 ‘‘(1) to cause the modification, liquidation, ter15 mination, or acceleration of a qualified financial con16 tract of the debtor or an affiliate; 

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

18 payment amount, or other transfer obligation arising 

19 under or in connection with a qualified financial con20 tract of the debtor or an affiliate; or 

21 ‘‘(3) under any security agreement or arrange22 ment or other credit enhancement forming a part of 

23 or related to a qualified financial contract of the 

24 debtor or an affiliate. 


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

2 1187(a)(3)(A), the trustee or the affiliate shall perform 

3 all payment and delivery obligations under such qualified 

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

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

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

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

8 affiliate immediately upon the failure of the trustee or the 

9 affiliate, as the case may be, to perform any such obliga10 tion during such period. 

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

12 financial contract of the debtor or any affiliate to perform 

13 any payment or delivery obligation under such qualified 

14 financial contract, including during the pendency of the 

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

16 breach of such qualified financial contract by the 

17 counterparty. 

18 ‘‘(c) Subject to the court’s approval, a qualified finan19 cial contract between an entity and the debtor may be as20 signed to or assumed by the bridge company in a transfer 

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

22 if— 

23 ‘‘(1) all qualified financial contracts between 

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1 sumed by the bridge company in the transfer under 

2 section 1185; 

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

4 in respect of any qualified financial contract between 

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

6 under the terms of the qualified financial contract, 

7 is subordinated to the claims of general unsecured 

8 creditors) are assigned to and assumed by the bridge 

9 company; 

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

11 under any qualified financial contract between the 

12 entity and the debtor are assigned to and assumed 

13 by the bridge company; and 

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

15 enhancement furnished by the debtor for any quali16 fied financial contract described in paragraph (1) or 

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

18 any qualified financial contract between the entity 

19 and the debtor is assigned to and assumed by the 

20 bridge company. 

21 ‘‘(d) Notwithstanding any provision of a qualified fi22 nancial contract or of applicable nonbankruptcy law, a 

23 qualified financial contract of the debtor that is assumed 

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

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


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1 order approving a transfer under section 1185, and any 

2 right or obligation under the qualified financial contract 

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

4 entry of the order approving a transfer under section 1185 

5 solely because of a condition described in section 

6 1187(c)(1), other than a condition of the kind specified 

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

8 no longer includes a direct beneficial interest or an indi9 rect beneficial interest through the special trustee, in more 

10 than 50 percent of the equity securities of the bridge com11 pany. 

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

13 or in applicable nonbankruptcy law, an agreement of an 

14 affiliate (including an executory contract, an unexpired 

15 lease, qualified financial contract, or an agreement under 

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

17 right or obligation under such agreement may not be ac18 celerated, terminated, or modified, solely because of a con19 dition described in section 1187(c)(1), other than a condi20 tion of the kind specified in section 1187(b) that occurs 

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

22 beneficial holder of more than 50 percent of the equity 

23 securities of the affiliate, at any time after the commence24 ment of the case if— 


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1 ‘‘(1) all direct or indirect interests in the affil2 iate that are property of the estate are transferred 

3 under section 1185 to the bridge company within the 

4 period specified in subsection (a); 

5 ‘‘(2) the bridge company assumes— 

6 ‘‘(A) any guarantee or other credit en7 hancement issued by the debtor relating to the 

8 agreement of the affiliate; and 

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

10 setoff, netting arrangement, or debt of the debt11 or that directly arises out of or directly relates 

12 to the guarantee or credit enhancement; and 

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

14 serves as collateral for the guarantee or credit en15 hancement is transferred to the bridge company. 

16 ‘‘§ 1189. Licenses, permits, and registrations 

17 ‘‘(a) Notwithstanding any otherwise applicable non18 bankruptcy law, if a request is made under section 1185 

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

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

21 an affiliate had immediately before the commencement of 

22 the case and that is proposed to be transferred under sec23 tion 1185 may not be accelerated, terminated, or modified 

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


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

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

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

4 title concerning the debtor; 

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

6 a trustee in a case under this title concerning the 

7 debtor or by a custodian before the commencement 

8 of the case; or 

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

10 ‘‘(b) Notwithstanding any otherwise applicable non11 bankruptcy law, any Federal, State, or local license, per12 mit, or registration that the debtor had immediately before 

13 the commencement of the case that is included in a trans14 fer under section 1185 shall be valid and all rights and 

15 obligations thereunder shall vest in the bridge company. 

16 ‘‘§ 1190. Exemption from securities laws 

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

18 bridge company shall be deemed to be a security of a suc19 cessor to the debtor under a plan if the court approves 

20 the disclosure statement for the plan as providing ade21 quate information (as defined in section 1125(a)) about 

22 the bridge company and the security. 

23 ‘‘§ 1191. Inapplicability of certain avoiding powers 

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

25 debtor to an affiliate prior to or after the commencement 


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

2 or the estate to or for the benefit of an affiliate, in con3 templation of or in connection with a transfer under sec4 tion 1185 is not avoidable under section 544, 547, 

5 548(a)(1)(B), or 549, or under any similar nonbankruptcy 

6 law. 

7 ‘‘§ 1192. Consideration of financial stability 

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

9 in connection with this subchapter may have on financial 

10 stability in the United States.’’. 

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

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

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

14 end the following: 

15 ‘‘§ 298. Judge for a case under subchapter V of chap16 ter 11 of title 11 

17 ‘‘(a)(1) Notwithstanding section 295, the Chief Jus18 tice of the United States shall designate not fewer than 

19 10 bankruptcy judges to be available to hear a case under 

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

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

22 United States for such designation. 

23 ‘‘(2) Notwithstanding section 155, a case under sub24 chapter V of chapter 11 of title 11 shall be heard under 

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1 graph (1), who shall be randomly assigned to hear such 

2 case by the chief judge of the court of appeals for the cir3 cuit embracing the district in which the case is pending. 

4 To the greatest extent practicable, the approvals required 

5 under section 155 should be obtained. 

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

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

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

9 temporarily assigned to the district. 

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

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

12 the district in which the case is pending. 

13 ‘‘(c) In this section, the term ‘covered financial cor14 poration’ has the meaning given that term in section 

15 101(9A) of title 11.’’. 

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

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

18 by adding at the end the following: 

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

20 district court after a transfer pursuant to an order under 

21 section 1185 of title 11 of any proceeding related to a spe22 cial trustee appointed, or to a bridge company formed, in 

23 connection with a case under subchapter V of chapter 11 

24 of title 11.’’. 


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1 (c) TECHNICAL AND CONFORMING AMENDMENT.— 

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

3 States Code, is amended by adding at the end the fol4 lowing: 

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


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Union Calendar No. 46 

115TH CONGRESS 

1ST SESSION H. R. 1667 

[Report No. 115–80] 

A BILL 

To amend title 11 of the United States Code in 

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

APRIL 5, 2017 

Committed to the Committee of the Whole House on the 

State of the Union and ordered to be printed 


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