II 

114TH CONGRESS 

1ST SESSION S. 1841 

To amend title 11, United States Code, to provide for the liquidation, reorganization, or recapitalization of a covered financial corporation, and for 

other purposes. 

IN THE SENATE OF THE UNITED STATES 

JULY 22, 2015 

Mr. CORNYN (for himself and Mr. TOOMEY) 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, to provide for the 

liquidation, reorganization, or recapitalization of a covered financial corporation, 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. 

4 This Act may be cited as the ‘‘Taxpayer Protection 

5 and Responsible Resolution Act’’. 


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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 (12 U.S.C. 1841(a)); or 

15 ‘‘(B) a corporation that exists for the pri16 mary purpose of owning, controlling, and fi17 nancing subsidiaries that are predominantly en18 gaged in activities that the Board of Governors 

19 of the Federal Reserve System has determined 

20 are financial in nature or incidental to such fi21 nancial activity for purposes of section 4(k) of 

22 the Bank Holding Company Act of 1956 (12 

23 U.S.C. 1843(k)).’’. 

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

25 title 11, United States Code, is amended— 

26 (1) in subsection (a)— 


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1 (A) by striking ‘‘section 1161’’ and insert2 ing ‘‘sections 1161 and 1401’’; and 

3 (B) by striking ‘‘or 13’’ and inserting ‘‘13, 

4 or 14’’; 

5 (2) in subsection (g), by inserting ‘‘subsection 

6 (m) and’’ before ‘‘section’’; and 

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

8 ‘‘(l) Chapter 14 of this title applies only in a case 

9 under such chapter. 

10 ‘‘(m) Except as otherwise provided in chapter 14 of 

11 this title, chapter 11 of this title applies in a case under 

12 chapter 14 of this title.’’. 

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

14 11, United States Code, is amended— 

15 (1) in subsection (d)— 

16 (A) by striking ‘‘and’’; 

17 (B) by striking ‘‘or a’’ and inserting ‘‘or’’; 

18 and 

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

20 corporation’’ after ‘‘Federal Deposit Insurance 

21 Corporation Improvement Act of 1991’’; and 

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

23 ‘‘(i) Only a covered financial corporation may be a 

24 debtor in a case under chapter 14.’’. 


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1 (d) DISTRIBUTION OF PROPERTY OF THE ESTATE.— 

2 Section 726(a)(1) of title 11, United States Code, is 

3 amended by inserting ‘‘in payment of any unpaid fees, 

4 costs, and expenses of a special trustee appointed under 

5 section 1406, and then’’ after ‘‘first,’’. 

6 (e) CONFIRMATION OF PLAN.—Section 1129(a) of 

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

8 end the following: 

9 ‘‘(17) In a case under chapter 14, all payable 

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

11 been paid or the plan provides for the payment of 

12 all such fees, costs, and expenses, as of the effective 

13 date of the plan. 

14 ‘‘(18) In a case under chapter 14, confirmation 

15 of the plan is not likely to cause serious adverse ef16 fects on financial stability in the United States.’’. 

17 (f) QUALIFICATION OF TRUSTEE.—Section 322(b)(2) 

18 of title 11, United States Code, is amended by striking 

19 ‘‘The’’ and inserting ‘‘In cases under chapter 14, the 

20 United States trustee shall recommend to the court, and 

21 in all other cases, the’’. 


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1 SEC. 3. LIQUIDATION, REORGANIZATION, OR RECAPITAL2 IZATION OF A COVERED FINANCIAL COR3 PORATION. 

4 (a) IN GENERAL.—Title 11, United States Code, is 

5 amended by inserting before chapter 15 the following: 

6 ‘‘CHAPTER 14—LIQUIDATION, REORGA7 NIZATION, OR RECAPITALIZATION OF 

8 A COVERED FINANCIAL CORPORATION 

‘‘Sec. 

‘‘1401. Inapplicability of other sections. 

‘‘1402. Definitions for this chapter. 

‘‘1403. Commencement of a case concerning a covered financial corporation. 

‘‘1404. Regulators. 

‘‘1405. Special transfer of property of the estate. 

‘‘1406. Special trustee. 

‘‘1407. Automatic stay; assumed debt. 

‘‘1408. Treatment of qualified financial contracts and affiliate contracts. 

‘‘1409. Licenses, permits, and registrations. 

‘‘1410. Conversion to chapter 7. 

‘‘1411. Exemption from securities laws. 

‘‘1412. Inapplicability of certain avoiding powers. 

‘‘1413. Consideration of financial stability. 

9 ‘‘§ 1401. Inapplicability of other sections 

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

11 under this chapter. 

12 ‘‘§ 1402. Definitions for this chapter 

13 ‘‘In this chapter, the following definitions shall apply: 

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

15 Governors of the Federal Reserve System. 

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

17 formed corporation to which property of the estate 

18 may be transferred under section 1405(a) and the 


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1 equity securities of which may be transferred to a 

2 special trustee under section 1406(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 1405(a). 

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

12 556, 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 a trustee 

19 appointed under section 1406(a)(2)(A). 

20 ‘‘(7) The term ‘trustee’ means a person who 

21 is— 

22 ‘‘(A) appointed or elected under section 

23 1104; and 


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1 ‘‘(B) qualified under section 322 to serve 

2 as trustee in the case or, in the absence of such 

3 person, the debtor in possession. 

4 ‘‘§ 1403. Commencement of a case concerning a cov5 ered financial corporation 

6 ‘‘(a) IN GENERAL.—A case under this chapter may 

7 be commenced by the filing of a petition with the court 

8 by an entity that may be a debtor under section 301 if 

9 the entity states to the best of its knowledge, under pen10 alty of perjury, in the petition that the entity is a covered 

11 financial corporation. 

12 ‘‘(b) ORDER FOR RELIEF.—The commencement of a 

13 case under subsection (a) constitutes an order for relief 

14 under this chapter. 

15 ‘‘(c) LIABILITY.—The members of the board of direc16 tors (or body performing similar functions) of a covered 

17 financial corporation shall not be liable to shareholders, 

18 creditors or other parties in interest for— 

19 ‘‘(1) a good faith filing of a case under this 

20 chapter; or 

21 ‘‘(2) for any reasonable action taken, before or 

22 after the date on which a case is commenced under 

23 this chapter, in good faith in contemplation of or in 

24 connection with such a filing or a transfer under 

25 section 1405 or section 1406. 


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1 ‘‘(d) NOTICE TO COURT.—Counsel to the entity that 

2 may be a debtor shall provide, to the greatest extent prac3 ticable, sufficient confidential notice to the Director of the 

4 Administrative Office of the United States Courts and the 

5 chief judge of the court of appeals embracing the district 

6 in which the case is pending regarding the potential com7 mencement of a case under this chapter without disclosing 

8 the identity of the potential debtor to allow the Director 

9 and chief judge to designate and ensure the ready avail10 ability of 1 of the bankruptcy judges designated under sec11 tion 298(b)(1) of title 28 to be available to preside over 

12 the case. 

13 ‘‘§ 1404. Regulators 

14 ‘‘The Board, the Securities and Exchange Commis15 sion, the Comptroller of the Currency, and the Federal 

16 Deposit Insurance Corporation may raise and may appear 

17 and be heard on any issue in any case or proceeding under 

18 this chapter. 

19 ‘‘§ 1405. Special transfer of property of the estate 

20 ‘‘(a) IN GENERAL.— 

21 ‘‘(1) TRANSFER.—On request of the trustee, 

22 and after notice and hearing not less than 24 hours 

23 after the order for relief, the court may order a 

24 transfer under this section of property of the estate, 

25 and the assignment of debt, executory contracts, unVerDate Sep 11 2014 02:40 Jul 25, 2015 Jkt 049200 PO 00000 Frm 00008 Fmt 6652 Sfmt 6201 E:\BILLS\S1841.IS S1841

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1 expired leases, qualified financial contracts, and 

2 agreements of the debtor, to a bridge company. Ex3 cept as provided under this section, the provisions of 

4 sections 363 and 365 shall apply to a transfer and 

5 assignment under this section. 

6 ‘‘(2) PROPERTY OF ESTATE.—Upon the entry 

7 of an order approving a transfer under this section, 

8 any property transferred, and any debt, executory 

9 contract, unexpired leases, qualified financial con10 tract, or agreement assigned under such order shall 

11 no longer be property of the estate. 

12 ‘‘(b) NOTICE.—Unless the court orders otherwise, no13 tice of a request for an order under subsection (a) shall 

14 consist of electronic or telephonic notice of not less than 

15 24 hours to— 

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

17 claims against the debtor; 

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

19 claims against the debtor; 

20 ‘‘(3) counterparties to any debt, executory con21 tract, unexpired lease, qualified financial contract, or 

22 agreement requested to be transferred under this 

23 section; 

24 ‘‘(4) the Board; 


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1 ‘‘(5) the Federal Deposit Insurance Corpora2 tion; 

3 ‘‘(6) the Secretary of the Treasury; 

4 ‘‘(7) the Comptroller of the Currency; 

5 ‘‘(8) the Securities and Exchange Commission; 

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

7 administrator; and 

8 ‘‘(10) each primary financial regulatory agency 

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

10 Street Reform and Consumer Protection Act (12 

11 U.S.C. 5301(12))) with respect to any affiliate the 

12 equity securities of which are proposed to be trans13 ferred under this section. 

14 ‘‘(c) DETERMINATION.—The court may not order a 

15 transfer under this section unless the court determines, 

16 based upon a preponderance 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 00:42 Jul 24, 2015 Jkt 049200 PO 00000 Frm 00010 Fmt 6652 Sfmt 6201 E:\BILLS\S1841.IS S1841

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1 tory contract, unexpired lease, or agreement of the 

2 debtor unless— 

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

4 debt, executory contract, unexpired lease, or 

5 agreement, including any claims arising in re6 spect thereof that would not be allowed secured 

7 claims under section 506(a)(1), and after giving 

8 effect to such transfer, such property remains 

9 subject to the lien securing such debt, executory 

10 contract, unexpired lease, or agreement; and 

11 ‘‘(ii) the court has determined that as12 sumption of such debt, executory contract, un13 expired lease, or agreement by the bridge com14 pany is in the best interest of the estate; or 

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

16 the bridge company in accordance with the pro17 visions of section 363; 

18 ‘‘(4) the transfer does not provide for the as19 sumption by the bridge company of any debt, execu20 tory contract, unexpired lease, or agreement of the 

21 debtor secured by a lien on property in which the es22 tate has an interest unless the transfer provides for 

23 such property to be transferred to the bridge com24 pany in accordance with paragraph (3)(A) of this 

25 subsection; 


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1 ‘‘(5) the transfer does not provide for the trans2 fer of the equity of the debtor; 

3 ‘‘(6) the debtor has demonstrated that the 

4 bridge company is not likely to fail to meet the obli5 gations of any debt, executory contract, qualified fi6 nancial contract, unexpired lease, or other agree7 ment assumed and assigned to the bridge company; 

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

9 special trustee all of the equity securities in the 

10 bridge company and appointment of a special trustee 

11 in accordance with section 1406; 

12 ‘‘(8) after giving effect to the transfer, ade13 quate provision has been made for the payment of 

14 the fees, costs, and expenses of the estate and spe15 cial trustee; and 

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

17 documents, and initial directors and senior officers, 

18 that are in the best interest of creditors and the es19 tate. 

20 ‘‘(d) REQUIREMENTS BEFORE TRANSFER.—Imme21 diately before a transfer under this section, the bridge 

22 company that is the recipient of the transfer shall— 

23 ‘‘(1) not have any property, debts, executory 

24 contracts, unexpired leases, qualified financial con25 tracts, or agreements, other than any property acVerDate Sep 11 2014 00:42 Jul 24, 2015 Jkt 049200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6201 E:\BILLS\S1841.IS S1841

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1 quired or debts, executory contracts, unexpired 

2 leases, qualified financial contracts, or agreements 

3 assumed when acting as a transferee of a transfer 

4 under this section; and 

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

6 the estate, which may be sold or distributed in ac7 cordance with this title. 

8 ‘‘§ 1406. Special trustee 

9 ‘‘(a) IN GENERAL.— 

10 ‘‘(1) TRANSFER TO SPECIAL TRUSTEE.—An 

11 order approving a transfer under section 1405 shall 

12 require the trustee to transfer to a special trustee all 

13 of the equity securities in the bridge company that 

14 is the recipient of a transfer under section 1405 to 

15 hold in trust for the sole benefit of the estate subject 

16 to satisfaction of the special trustee’s fees, costs, 

17 and expenses. The trust of which the special trustee 

18 is the trustee shall be a newly formed trust governed 

19 by a trust agreement approved by the court as in the 

20 best interests of the estate, and shall exist for the 

21 sole purpose of holding and administering, and shall 

22 be permitted to dispose of, the equity securities of 

23 the bridge company in accordance with the trust 

24 agreement. 

25 ‘‘(2) APPOINTMENT OF SPECIAL TRUSTEE.— 


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1 ‘‘(A) IN GENERAL.—A special trustee shall 

2 be qualified and independent and shall be ap3 pointed by the court. 

4 ‘‘(B) PROPOSAL BY TRUSTEE.—In connec5 tion with the hearing to approve a transfer 

6 under section 1405, the trustee may propose to 

7 the court a person to serve as special trustee, 

8 if the trustee confirms to the court that the 

9 Board has been consulted regarding the identity 

10 of the proposed special trustee and advises the 

11 court of the results of such consultation. 

12 ‘‘(b) TRUST AGREEMENT.—The trust agreement gov13 erning a trust formed under subsection (a)(1) shall pro14 vide— 

15 ‘‘(1) for the payment of the fees, costs, ex16 penses, and indemnities of the special trustee from 

17 the assets of the debtor’s estate; 

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

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

20 which shall be filed with the court; and 

21 ‘‘(B) information about the bridge com22 pany reasonably requested by a party in inter23 est to prepare a disclosure statement for a plan 

24 providing for distribution of any securities of 


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1 the bridge company if such information is nec2 essary to prepare such disclosure statement; 

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

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

5 trustee shall file a notice with the court in connec6 tion with— 

7 ‘‘(A) any change in a director or senior of8 ficer of the bridge company; 

9 ‘‘(B) any modification to the governing 

10 documents of the bridge company; or 

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

12 bridge company, including— 

13 ‘‘(i) recapitalization; 

14 ‘‘(ii) a material borrowing; 

15 ‘‘(iii) termination of an intercompany 

16 debt or guarantee; 

17 ‘‘(iv) a transfer of a substantial por18 tion of the assets of the bridge company; 

19 or 

20 ‘‘(v) the issuance or sale of any secu21 rities of the bridge company; 

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

23 the bridge company shall not be consummated until 

24 the special trustee consults with the Federal Deposit 

25 Insurance Corporation and the Board regarding 


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1 such sale and discloses the results of such consulta2 tion with the court; 

3 ‘‘(5) that, subject to reserves for payments per4 mitted under paragraph (1) provided for in the trust 

5 agreement, the proceeds of the sale of any equity se6 curities of the bridge company by the special trustee 

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

8 the estate; 

9 ‘‘(6) the process and guidelines for the replace10 ment of the special trustee; and 

11 ‘‘(7) that the property held in trust by the spe12 cial trustee is subject to distribution in accordance 

13 with subsection (c). 

14 ‘‘(c) DISTRIBUTION OF ASSETS HELD IN TRUST.— 

15 ‘‘(1) IN GENERAL.—The special trustee shall 

16 distribute the assets held in trust— 

17 ‘‘(A) if the court confirms a plan in the 

18 case, in accordance with the plan on the effec19 tive date of the plan; or 

20 ‘‘(B) if the case is converted to a case 

21 under chapter 7 under section 1410. 

22 ‘‘(2) TERMINATION.—As soon as practicable 

23 after a final distribution under paragraph (1), the 

24 office of the special trustee shall terminate, except 


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1 as may be necessary to wind up and conclude the 

2 business and financial affairs of the trust. 

3 ‘‘(d) APPLICABILITY.—After a transfer to the special 

4 trustee under this section, the special trustee shall be sub5 ject only to applicable nonbankruptcy law, and the actions 

6 and conduct of the special trustee shall no longer be sub7 ject to approval by the court in the case under this chap8 ter. 

9 ‘‘§ 1407. Automatic stay; assumption 

10 ‘‘(a) AUTOMATIC STAY.— 

11 ‘‘(1) IN GENERAL.—A petition filed under sec12 tion 1403 operates as a stay, applicable to all enti13 ties, of the acceleration, termination, or modification 

14 of any debt, contract, lease, or agreement of the 

15 kind described in paragraph (2), or of any right or 

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

17 agreement, solely because of— 

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

19 such debt, contract, lease, or agreement; or 

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

21 lease, or agreement, or in applicable nonbank22 ruptcy law, that is conditioned on— 

23 ‘‘(i) the insolvency or financial condi24 tion of the debtor at any time before the 

25 closing of the case; 


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1 ‘‘(ii) the commencement of a case 

2 under this title concerning the debtor; 

3 ‘‘(iii) the appointment of or taking 

4 possession by a trustee in a case under this 

5 title concerning the debtor or by a custo6 dian before the commencement of the case; 

7 or 

8 ‘‘(iv) a credit rating agency rating, or 

9 absence or withdrawal of a credit rating 

10 agency rating of— 

11 ‘‘(I) the debtor at any time after 

12 the commencement of the case; 

13 ‘‘(II) an affiliate during the 48 

14 hours after the commencement of the 

15 case; 

16 ‘‘(III) the bridge company while 

17 the trustee or the special trustee is a 

18 direct or indirect beneficial holder of 

19 more than 50 percent of the equity se20 curities of— 

21 ‘‘(aa) the bridge company; 

22 or 

23 ‘‘(bb) an affiliate, if all of 

24 the direct or indirect interests in 

25 the affiliate that are property of 


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1 the estate are transferred under 

2 section 1406; or 

3 ‘‘(IV) an affiliate while the trust4 ee or the special trustee is a direct or 

5 indirect beneficial holder of more than 

6 50 percent of the equity securities 

7 of— 

8 ‘‘(aa) the bridge company; 

9 or 

10 ‘‘(bb) the affiliate, if all of 

11 the direct or indirect interests in 

12 the affiliate that are property of 

13 the estate are transferred under 

14 section 1405. 

15 ‘‘(2) DEBT, CONTRACT, LEASE, OR AGREE16 MENT.—A debt, contract, lease, or agreement de17 scribed in this paragraph— 

18 ‘‘(A) is— 

19 ‘‘(i) any debt, executory contract, or 

20 unexpired lease of the debtor; 

21 ‘‘(ii) any agreement under which the 

22 debtor issued or is obligated for debt; 

23 ‘‘(iii) any debt, executory contract, or 

24 unexpired lease of an affiliate; and 


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1 ‘‘(iv) any agreement under which an 

2 affiliate issued or is obligated for debt; and 

3 ‘‘(B) does not include capital structure 

4 debt or qualified financial contracts. 

5 ‘‘(3) TERMINATION OF STAY.—A stay under 

6 this subsection terminates— 

7 ‘‘(A) as to the debtor, upon the earliest 

8 of— 

9 ‘‘(i) 48 hours after the commencement 

10 of the case; 

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

12 lease, or agreement by the bridge company 

13 under an order authorizing a transfer 

14 under section 1405; 

15 ‘‘(iii) a final order of the court deny16 ing the request for a transfer of the debt, 

17 contract, lease, or agreement under section 

18 1405; or 

19 ‘‘(iv) the time the case is dismissed; 

20 and 

21 ‘‘(B) as to an affiliate, upon the earliest 

22 of— 

23 ‘‘(i) 48 hours after the commencement 

24 of the case, if the court has not ordered a 

25 transfer under section 1405; 


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1 ‘‘(ii) the entry of an order authorizing 

2 a transfer under section 1405 in which the 

3 direct or indirect interests in the affiliate 

4 that are property of the estate are not 

5 transferred under section 1405; 

6 ‘‘(iii) a final order of the court deny7 ing the request for a transfer under section 

8 1405; or 

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

10 ‘‘(4) APPLICABILITY.—Sections (d), (e), (f), 

11 and (g) of section 362 apply to a stay under this 

12 subsection. 

13 ‘‘(b) ASSUMPTION BY BRIDGE COMPANY.—A debt, 

14 executory contract, unexpired lease of the debtor, or any 

15 other agreement described in subsection (a)(2), may be as16 sumed by a bridge company in a transfer under section 

17 1405 notwithstanding any provision in an agreement or 

18 in applicable nonbankruptcy law that— 

19 ‘‘(1) prohibits, restricts, or conditions the as20 signment of the debt, contract, lease, or agreement; 

21 or 

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

23 permits a party other than the debtor to accelerate, 

24 terminate, or modify, the debt, contract, lease, or 

25 agreement on account of— 


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

2 lease, or agreement; or 

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

4 the debt, contract, lease, or agreement. 

5 ‘‘(c) NO ACCELERATION, TERMINATION, OR MODI6 FICATION OF AGREEMENTS OF DEBTOR.— 

7 ‘‘(1) IN GENERAL.—A debt, contract, lease, or 

8 agreement of the kind described in subsection (a)(2) 

9 may not be accelerated, terminated, or modified, and 

10 any right or obligation under such debt, contract, 

11 lease, or agreement may not be accelerated, termi12 nated, or modified, as to the bridge company solely 

13 because of a provision in the debt, contract, lease, or 

14 agreement or 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 

18 the assignment of the debt, contract, lease, or 

19 agreement; or 

20 ‘‘(C) that accelerates, terminates, or modi21 fies, or permits a party other than the debtor 

22 to accelerate, terminate, or modify, the debt, 

23 contract, lease or agreement, on account of— 

24 ‘‘(i) the assignment of the debt, con25 tract, lease, or agreement; or 


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

2 to the debt, contract, lease, or agreement. 

3 ‘‘(2) DEFAULT.—If there has been a default by 

4 the debtor under a provision other than the kind de5 scribed in paragraph (1) in a debt, contract, lease, 

6 or agreement of the kind described in subsection 

7 (a)(2), the bridge company may assume such debt, 

8 contract, lease, or agreement only if the bridge com9 pany— 

10 ‘‘(A) cures, or provides adequate assurance 

11 in connection with a transfer under section 

12 1405 that the bridge company will promptly 

13 cure, the default; 

14 ‘‘(B) compensates, or provides adequate 

15 assurance in connection with a transfer under 

16 section 1405 that the bridge company will 

17 promptly compensate, a party other than the 

18 debtor to the debt, contract, lease, or agree19 ment, for any actual pecuniary loss to the party 

20 resulting from the default; and 

21 ‘‘(C) provides adequate assurance in con22 nection with a transfer under section 1405 of 

23 future performance under the debt, contract, 

24 lease, or agreement, as determined by the court 

25 under section 1405(c)(4). 


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1 ‘‘§ 1408. Treatment of qualified financial contracts 

2 and affiliate contracts 

3 ‘‘(a) IN GENERAL.—Notwithstanding sections 

4 362(b)(6), 362(b)(7), 362(b)(17), 362(b)(27), 362(o), 

5 555, 556, 559, 560, and 561, a petition filed under section 

6 1403 operates as a stay, during the period specified in 

7 section 1407(a)(3)(A), applicable to all entities, of the ex8 ercise of a contractual right— 

9 ‘‘(1) to cause the acceleration, termination, 

10 modification, or liquidation of a qualified financial 

11 contract of the debtor or an affiliate; 

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

13 payment amount, or other transfer obligation arising 

14 under or in connection with a qualified financial con15 tract of the debtor or an affiliate; or 

16 ‘‘(3) under any security agreement or arrange17 ment or other credit enhancement forming a part of 

18 or related to a qualified financial contract of the 

19 debtor or an affiliate. 

20 ‘‘(b) PAYMENT AND DELIVERY OBLIGATIONS.— 

21 ‘‘(1) IN GENERAL.—During the period specified 

22 in section 1407(a)(3)(A), the trustee or the affiliate 

23 shall perform all payment and delivery obligations 

24 under a qualified financial contract of the debtor or 

25 the affiliate, as the case may be, that become due 

26 after the commencement of the case. The stay proVerDate Sep 11 2014 00:42 Jul 24, 2015 Jkt 049200 PO 00000 Frm 00024 Fmt 6652 Sfmt 6201 E:\BILLS\S1841.IS S1841

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1 vided under subsection (a) terminates as to a quali2 fied financial contract of the debtor or an affiliate 

3 immediately upon the failure of the trustee or the 

4 affiliate, as the case may be, to perform any such 

5 obligation during such period. 

6 ‘‘(2) FAILURE TO PERFORM.—Any failure by a 

7 counterparty to any qualified financial contract of 

8 the debtor or any affiliate to perform any payment 

9 or delivery obligation under such qualified financial 

10 contract, including during the pendency of the stay 

11 provided under subsection (a), shall constitute a 

12 breach of such qualified financial contract by the 

13 counterparty. 

14 ‘‘(c) ASSIGNMENT OR ASSUMPTION.—Notwith15 standing any provision of subsection 1407(b) or applicable 

16 nonbankruptcy law, subject to the court’s approval, a 

17 qualified financial contract between an entity and the 

18 debtor may be assigned to or assumed by the bridge com19 pany in a transfer under section 1405 only if— 

20 ‘‘(1) all qualified financial contracts between 

21 the entity and the debtor are assigned to and as22 sumed by the bridge company in the transfer under 

23 section 1405; 

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

25 under any qualified financial contract between the 


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

2 under the terms of the qualified financial contract, 

3 is subordinated to the claims of general unsecured 

4 creditors) are assigned to and assumed by the bridge 

5 company; 

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

7 under any qualified financial contract between the 

8 entity and the debtor are assigned to and assumed 

9 by the bridge company; and 

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

11 enhancement furnished by the debtor for any quali12 fied financial contract described in paragraph (1) or 

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

14 any qualified financial contract between the entity 

15 and the debtor is assigned to and assumed by the 

16 bridge company. 

17 ‘‘(d) NO ACCELERATION, TERMINATION, OR MODI18 FICATION OF QUALIFIED FINANCIAL CONTRACTS.—Not19 withstanding any provision of a qualified financial con20 tract or of applicable nonbankruptcy law, a qualified fi21 nancial contract of the debtor that is assumed by or as22 signed to the bridge company in a transfer under section 

23 1405 may not be accelerated, terminated, modified, or liq24 uidated after the entry of the order approving a transfer 

25 under section 1405, and any right or obligation under the 


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1 qualified financial contract may not be accelerated, termi2 nated, or modified, after the entry of the order approving 

3 a transfer under section 1405 solely because of a provision 

4 of the kind described in section 1407(c)(1), other than a 

5 provision of the kind described in section 1407(b) that oc6 curs after property of the estate no longer includes a direct 

7 beneficial interest or an indirect beneficial interest 

8 through the special trustee, in more than 50 percent of 

9 the equity securities of the bridge company. 

10 ‘‘(e) NO ACCELERATION, TERMINATION, MODIFICA11 TION, OR LIQUIDATION OF AGREEMENTS OF AFFILI12 ATES.—Notwithstanding any provision in any agreement 

13 or in applicable nonbankruptcy law, an agreement (includ14 ing an executory contract, unexpired lease, qualified finan15 cial contract, or an agreement under which the affiliate 

16 issued or is obligated for debt) of an affiliate that is as17 sumed by or assigned to the bridge company in a transfer 

18 under section 1405, and any right or obligation under 

19 such agreement, may not be accelerated, terminated, 

20 modified, or liquidated after the entry of the order approv21 ing a transfer under section 1405 solely because of a pro22 vision of the kind described in section 1407(c)(1), other 

23 than a provision of the kind described in section 1407(b) 

24 that occurs after the bridge company is no longer a direct 

25 or indirect beneficial holder of more than 50 percent of 


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1 the equity securities of the affiliate at any time after the 

2 commencement of the case if— 

3 ‘‘(1) all direct or indirect interests in the affil4 iate that are property of the estate are transferred 

5 under section 1405 to the bridge company within the 

6 period specified in subsection (a); 

7 ‘‘(2) the bridge company assumes— 

8 ‘‘(A) any guarantee or other credit en9 hancement issued by the debtor relating to the 

10 agreement of the affiliate; and 

11 ‘‘(B) any right of setoff, netting arrange12 ment, or debt of the debtor that directly arises 

13 out of or directly relates to the guarantee or 

14 credit enhancement; and 

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

16 serves as collateral for the guarantee or credit en17 hancement is transferred to the bridge company. 

18 ‘‘§ 1409. Licenses, permits, and registrations 

19 ‘‘(a) IN GENERAL.—Notwithstanding any otherwise 

20 applicable nonbankruptcy law, if a request is made under 

21 section 1405 for a transfer of property of the estate, any 

22 Federal, State, or local license, permit, or registration that 

23 the debtor or an affiliate had immediately before the com24 mencement of the case and that is proposed to be trans25 ferred under section 1405 may not be accelerated, termiVerDate Sep 11 2014 00:42 Jul 24, 2015 Jkt 049200 PO 00000 Frm 00028 Fmt 6652 Sfmt 6201 E:\BILLS\S1841.IS S1841

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1 nated, or modified at any time after the request solely on 

2 account of— 

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

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

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

6 title concerning the debtor; 

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

8 a trustee in a case under this title concerning the 

9 debtor or by a custodian before the commencement 

10 of the case; or 

11 ‘‘(4) a transfer under section 1405. 

12 ‘‘(b) VALIDITY OF CERTAIN LICENSES, PERMITS, 

13 AND REGISTRATIONS.—Notwithstanding any otherwise 

14 applicable nonbankruptcy law, any Federal, State, or local 

15 license, permit, or registration that the debtor had imme16 diately before the commencement of the case that is in17 cluded in a transfer under section 1405 shall be valid and 

18 all rights and obligations thereunder shall vest in the 

19 bridge company. 

20 ‘‘§ 1410. Conversion to chapter 7 

21 ‘‘Notwithstanding section 109(b), a court may con22 vert a case under this chapter to a case under chapter 

23 7 if— 

24 ‘‘(1) a transfer described in section 1405 has 

25 taken place; 


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

2 a special trustee under section 1406; and 

3 ‘‘(3) the court finds, after providing notice and 

4 conducting a hearing, that the conversion of the case 

5 is in the best interests of the creditors and the es6 tate. 

7 ‘‘§ 1411. Exemption from securities laws 

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

9 bridge company shall be deemed to be a security of a suc10 cessor to the debtor under a plan if the court approves 

11 the disclosure statement for the plan as providing ade12 quate information (as defined in section 1125(a)) about 

13 the bridge company and the security. 

14 ‘‘§ 1412. Inapplicability of certain avoiding powers 

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

16 debtor to an affiliate prior to or after the commencement 

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

18 or the estate to or for the benefit of an affiliate, in con19 templation of or in connection with a transfer under sec20 tion 1405, is not avoidable under section 544, 547, 

21 548(a)(1)(B), or 549, or under any similar nonbankruptcy 

22 law. 


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1 ‘‘§ 1413. Consideration of financial stability 

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

3 in connection with this chapter may have on financial sta4 bility in the United States.’’. 

5 (b) TECHNICAL AND CONFORMING AMENDMENT.— 

6 The table of chapters for title 11, United States Code, 

7 is amended by inserting after the item relating to chapter 

8 13 the following: 

‘‘14. Liquidation, reorganization, or recapitalization of a 

covered financial corporation .......................... 1401’’. 

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

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

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

12 end the following: 

13 ‘‘§ 298. Judge for a case under chapter 14 of title 11 

14 ‘‘(a) Notwithstanding section 295, the Chief Justice 

15 of the United States shall designate not fewer than 10 

16 bankruptcy judges to be available to hear a case under 

17 chapter 14 of title 11. Bankruptcy judges may request to 

18 be considered by the Chief Justice of the United States 

19 for such designation. 

20 ‘‘(b)(1) Notwithstanding section 155, a case under 

21 chapter 14 of title 11 shall be heard under section 157 

22 by a bankruptcy judge designated under subsection (a), 

23 who shall be assigned to hear such case by the chief judge 


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1 of the court of appeals for the circuit embracing the dis2 trict in which the case is pending. 

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

4 under paragraph (1) is not assigned to the district in 

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

6 temporarily assigned to the district. To the greatest extent 

7 practicable, the approvals required under section 155(a) 

8 shall be obtained. 

9 ‘‘(c) A case under chapter 14 of title 11, and all pro10 ceedings in the case, shall take place in the district in 

11 which the case is pending.’’. 

12 (b) AMENDMENT TO SECTION 1334.—Section 1334 

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

14 the end the following: 

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

16 district court after a transfer pursuant to an order under 

17 section 1405 of title 11 of any proceeding related to a spe18 cial trustee appointed, or to a bridge company formed to 

19 accomplish a transfer, under section 1405 of title 11.’’. 

20 (c) TECHNICAL AND CONFORMING AMENDMENT.— 

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

22 States Code, is amended by adding at the end the fol23 lowing: 

‘‘298. Judge for a case under chapter 14 of title 11.’’. 


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1 SEC. 5. LIMITATION ON USE OF FEDERAL FUNDS. 

2 Notwithstanding any other provision of law, no funds 

3 appropriated to the Federal Government may be paid to 

4 a covered financial corporation (as defined in section 

5 101(9A) of title 11, United States Code, as amended by 

6 section 2(a) of this Act), or to a creditor of any covered 

7 financial corporation, to satisfy a claim in a case under 

8 chapter 14 of title 11, United States Code. 

Æ 


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