II

105TH CONGRESS

2D SESSION S. 1914

To amend title 11, United States Code, provide for business bankruptcy

reform, and for other purposes.

IN THE SENATE OF THE UNITED STATES

APRIL 2, 1998

Mr. GRASSLEY 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, provide for business

bankruptcy reform, and for other purposes.

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

3 SECTION 1. SHORT TITLE; TABLE OF CONTENTS.

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

5 ‘‘Business Bankruptcy Reform Act’’.

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

7 this Act is as follows:

Sec. 1. Short title; table of contents.

TITLE I—HEALTH CARE AND EMPLOYEE BENEFITS

Sec. 101. Definitions.

Sec. 102. Disposal of patient records.
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Sec. 103. Administrative expense claim for costs of closing a health care business.

Sec. 104. Appointment of ombudsman to act as patient advocate.

Sec. 105. Debtor in possession; duty of trustee to transfer patients.

Sec. 106. Clarification of treatment of pension plan contribution during pendency of a case.

Sec. 107. Pension plan contribution requirement.

Sec. 108. Exclusion of payroll deductions.

TITLE II—FINANCIAL INSTRUMENTS

Sec. 201. Definitions of certain contracts and agreements.

Sec. 202. Definitions of financial institution and forward contract merchant.

Sec. 203. Master netting agreement and master netting agreement participant

defined.

Sec. 204. Swap agreements, securities contracts, commodity contracts, forward

contracts, repurchase agreements and master netting agreements under an automatic stay.

Sec. 205. Limitation of avoidance powers under master netting agreement.

Sec. 206. Fraudulent transfers of master netting agreements.

Sec. 207. Liquidation, termination, or acceleration of certain instruments.

Sec. 208. Municipal bankruptcies.

Sec. 209. Securities contracts, commodity contracts, and forward contracts.

Sec. 210. Ancillary proceedings.

Sec. 211. Liquidations.

Sec. 212. Setoff.

Sec. 213. Recordkeeping requirements.

Sec. 214. Damage measure.

Sec. 215. Asset-backed securitizations.

Sec. 216. Applicability.

TITLE III—ANCILLARY AND OTHER CROSS-BORDER CASES

Sec. 301. Amendment to add a chapter 6 to title 11, United States Code.

Sec. 302. Amendments to other chapters in title 11, United States Code.

TITLE IV—SMALL BUSINESS BANKRUPTCY

Sec. 401. Small business defined.

Sec. 402. Flexible rules for disclosure statement and plan.

Sec. 403. Standard form disclosure statements and plans.

Sec. 404. Uniform national reporting requirements.

Sec. 405. Uniform reporting rules and forms.

Sec. 406. Duties in small business cases.

Sec. 407. Plan filing and confirmation deadlines.

Sec. 408. Plan confirmation deadline.

Sec. 409. Prohibition against extension of time.

Sec. 410. Duties of the United States trustee and bankruptcy administrator.

Sec. 411. Scheduling conferences.

Sec. 412. Serial filer provisions.

Sec. 413. Expanded grounds for dismissal or conversion and appointment of

trustee.

Sec. 414. Single asset real estate defined.

Sec. 415. Plan confirmation.

Sec. 416. Payment of interest.

TITLE V—BANKRUPTCY TAX ISSUES
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Sec. 501. Effective notice to government.

Sec. 502. Notice of request for a determination of taxes.

Sec. 503. Rate of interest on tax claims.

Sec. 504. Tolling of priority of tax claim time periods.

Sec. 505. Assessment defined.

Sec. 506. Chapter 11 discharge of fraudulent taxes.

Sec. 507. The stay of proceedings in tax court.

Sec. 508. Periodic payment of taxes in chapter 11 cases.

Sec. 509. The avoidance of statutory tax liens prohibited.

Sec. 510. Course of business payment of taxes.

Sec. 511. Tardily filed priority tax claims.

Sec. 512. Income tax returns prepared by tax authorities.

Sec. 513. The discharge of the estate’s liability for unpaid taxes.

Sec. 514. Standards for tax disclosure.

Sec. 515. Setoff of tax refunds.

TITLE VI—MISCELLANEOUS

Sec. 601. Executory contracts and unexpired leases.

Sec. 602. Allowance of claims or interests.

Sec. 603. Expedited appeals of bankruptcy cases to courts of appeals.

Sec. 604. Creditors and equity security holders committees.

Sec. 605. Repeal of sunset provision.

Sec. 606. Cases ancillary to foreign proceedings.

1 TITLE I—HEALTH CARE AND

2 EMPLOYEE BENEFITS

3 SEC. 101. DEFINITIONS.

4 (a) HEALTH CARE BUSINESS DEFINED.—Section

5 101 of title 11, United States Code, is amended by insert6 ing after paragraph (27) the following:

7 ‘‘(27A) ‘health care business’—

8 ‘‘(A) means any public or private entity

9 (without regard to whether that entity is orga10 nized for profit or not for profit) that is pri11 marily engaged in offering to the general public

12 facilities and services for—

13 ‘‘(i) the diagnosis or treatment of in14 jury, deformity, or disease;
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1 ‘‘(ii) surgical, drug treatment, psy2 chiatric or obstetric care; and

3 ‘‘(B) includes—

4 ‘‘(i) any—

5 ‘‘(I) general or specialized hos6 pital;

7 ‘‘(II) ancillary ambulatory, emer8 gency, or surgical treatment facility;

9 ‘‘(III) hospice;

10 ‘‘(IV) health maintenance organi11 zation;

12 ‘‘(V) home health agency; and

13 ‘‘(VI) other health care institu14 tion that is similar to an entity re15 ferred to in subclause (I), (II), (III),

16 (IV), or (V); and

17 ‘‘(ii) any long-term care facility, in18 cluding any—

19 ‘‘(I) skilled nursing facility;

20 ‘‘(II) intermediate care facility;

21 ‘‘(III) assisted living facility;

22 ‘‘(IV) home for the aged;

23 ‘‘(V) domicilary care facility; and

24 ‘‘(VI) health care institution that

25 is related to a facility referred to in
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1 subclause (I), (II), (III), (IV), or (V),

2 if that institution is primarily engaged

3 in offering room, board, laundry, or

4 personal assistance with activities of

5 daily living and incidentals to activi6 ties of daily living;’’.

7 (b) HEALTH MAINTENANCE ORGANIZATION DE8 FINED.—Section 101 of title 11, United States Code, as

9 amended by subsection (a), is amended by inserting after

10 paragraph (27A) the following:

11 ‘‘(27B) ‘health maintenance organization’

12 means any person that undertakes to provide or ar13 range for basic health care services through an orga14 nized system—

15 ‘‘(A) that—

16 ‘‘(i) combines the delivery and financ17 ing of health care to enrollees; and

18 ‘‘(ii)(I) provides—

19 ‘‘(aa) physician services directly

20 through physicians or 1 or more

21 groups of physicians; and

22 ‘‘(bb) basic health care services

23 directly or under a contractual ar24 rangement; and
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1 ‘‘(II) if reasonable and appropriate,

2 provides physician services and basic

3 health care services through arrangements

4 other than the arrangements referred to in

5 clause (i); and

6 ‘‘(B) includes any organization described

7 in subparagraph (A) that provides, or arranges

8 for, health care services on a prepayment or

9 other financial basis;’’.

10 (c) PATIENT.—Section 101 of title 11, United States

11 Code, as amended by subsection (b), is amended by insert12 ing after paragraph (40) the following:

13 ‘‘(40A) ‘patient’ means any person who obtains

14 or receives services from a health care business;’’.

15 (d) PATIENT RECORDS.—Section 101 of title 11,

16 United States Code, as amended by subsection (c), is

17 amended by inserting after paragraph (40A) the following:

18 ‘‘(40B) ‘patient records’ means any written doc19 ument relating to a patient or record recorded in a

20 magnetic, optical, or other form of electronic me21 dium;’’.

22 SEC. 102. DISPOSAL OF PATIENT RECORDS.

23 (a) IN GENERAL.—Subchapter III of chapter 3 of

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

25 end the following:
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1 ‘‘§ 351. Disposal of patient records

2 ‘‘If a health care business commences a case under

3 chapter 7, 9, or 11, and the trustee does not have a suffi4 cient amount of funds to pay for the storage of patient

5 records in the manner required under applicable Federal

6 or State law, the following requirements shall apply:

7 ‘‘(1) The trustee shall mail, by certified mail, a

8 written request to each appropriate Federal or State

9 agency to request permission from that agency to

10 deposit the patient records with that agency.

11 ‘‘(2) If no appropriate Federal or State agency

12 agrees to permit the deposit of patient records re13 ferred to in paragraph (1) by the date that is 60

14 days after the trustee mails a written request under

15 that paragraph, the trustee shall—

16 ‘‘(A) publish notice, in 1 or more appro17 priate newspapers, that if those patient records

18 are not claimed by the patient or an insurance

19 provider (if applicable law permits the insur20 ance provider to make that claim) by the date

21 that is 60 days after the date of that notifica22 tion, the trustee will destroy the patient

23 records; and

24 ‘‘(B) during the 60-day period described in

25 subparagraph (A), the trustee shall attempt to

26 notify directly each patient that is the subject
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1 of the patient records concerning the patient

2 records by mailing to the last known address of

3 that patient an appropriate notice regarding the

4 claiming or disposing of patient records.

5 ‘‘(3) If, after providing the notification under

6 paragraph (2), patient records are not claimed dur7 ing the 60-day period described in paragraph (2)(A)

8 or in any case in which a notice is mailed under

9 paragraph (2)(B), during the 90-day period begin10 ning on the date on which the notice is mailed, by

11 a patient or insurance provider in accordance with

12 that paragraph, the trustee shall destroy those

13 records by—

14 ‘‘(A) if the records are written, shredding

15 or burning the records; or

16 ‘‘(B) if the records are magnetic, optical,

17 or other electronic records, by otherwise de18 stroying those records so that those records

19 cannot be retrieved.’’.

20 (b) CLERICAL AMENDMENT.—The chapter analysis

21 for chapter 3 of title 11, United States Code, is amended

22 by inserting after the item relating to section 350 the fol23 lowing:

‘‘351. Disposal of patient records.’’.
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1 SEC. 103. ADMINISTRATIVE EXPENSE CLAIM FOR COSTS OF

2 CLOSING A HEALTH CARE BUSINESS.

3 Section 503(b) of title 11, United States Code, is

4 amended—

5 (1) in paragraph (5), by striking ‘‘and’’ at the

6 end;

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

8 the end and inserting ‘‘; and’’; and

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

10 ‘‘(7) the actual, necessary costs and expenses of

11 closing a health care business incurred by a trustee,

12 including any cost or expense incurred—

13 ‘‘(A) in disposing of patient records in ac14 cordance with section 351; or

15 ‘‘(B) in connection with transferring pa16 tients from the health care business that is in

17 the process of being closed to another health

18 care business.’’.

19 SEC. 104. APPOINTMENT OF OMBUDSMAN TO ACT AS

20 PATIENT ADVOCATE.

21 (a) IN GENERAL.—

22 (1) APPOINTMENT OF OMBUDSMAN.—Sub23 chapter II of chapter 3 of title 11, United States

24 Code, is amended by inserting after section 331 the

25 following:
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1 ‘‘§ 332. Appointment of ombudsman

2 ‘‘(a) Not later than 30 days after a case is com3 menced by a health care business under chapter 7, 9, or

4 11, the court shall appoint an ombudsman to represent

5 the interests of the patients of the health care business.

6 ‘‘(b) An ombudsman appointed under subsection (a)

7 shall—

8 ‘‘(1) monitor the quality of patient care, to the

9 extent necessary under the circumstances, including

10 reviewing records and interviewing patients and phy11 sicians;

12 ‘‘(2) report to the court, at a hearing or in writ13 ing, not later than 60 days after the date of appoint14 ment, and not less frequently than every 60 days

15 thereafter, regarding the quality of patient care at

16 the health care business involved; and

17 ‘‘(3) if the ombudsman determines that the

18 quality of patient care is declining significantly or is

19 otherwise being materially compromised, notify the

20 court by motion or written report, with notice to ap21 propriate parties in interest, immediately upon mak22 ing that determination.

23 ‘‘(c) An ombudsman shall maintain any information

24 obtained by the ombudsman under this section that relates

25 to patients (including information relating to patient

26 records) as confidential information.’’.
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1 (2) CLERICAL AMENDMENT.—The chapter anal2 ysis for chapter 3 of title 11, United States Code,

3 is amended by inserting after the item relating to

4 section 331 the following:

‘‘332. Appointment of ombudsman.’’.

5 (b) COMPENSATION OF OMBUDSMAN.—Section

6 330(a)(1) of title 11, United States Code, is amended—

7 (1) in the matter proceeding subparagraph (A),

8 by inserting ‘‘an ombudsman appointed under sec9 tion 331, or’’ before ‘‘a professional person’’; and

10 (2) in subparagraph (A), by inserting ‘‘ombuds11 man,’’ before ‘‘professional person’’.

12 SEC. 105. DEBTOR IN POSSESSION; DUTY OF TRUSTEE TO

13 TRANSFER PATIENTS.

14 (a) IN GENERAL.—Section 704 of title 11, United

15 States Code, is amended—

16 (1) in paragraph (8), by striking ‘‘and’’ at the

17 end;

18 (2) in paragraph (9), by striking the period and

19 inserting ‘‘; and’’; and

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

21 ‘‘(10) use all reasonable and best efforts to

22 transfer patients from a health care business that is

23 in the process of being closed to an appropriate

24 health care business that—
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1 ‘‘(A) is in the vicinity of the health care

2 business that is closing;

3 ‘‘(B) provides the patient with services

4 that are substantially similar to those provided

5 by the health care business that is in the proc6 ess of being closed; and

7 ‘‘(C) maintains a reasonable quality of

8 care.’’.

9 (b) CONFORMING AMENDMENT.—Section 1106(a)(1)

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

11 ‘‘and 704(9)’’ and inserting ‘‘704(9), and 704(10)’’.

12 SEC. 106. CLARIFICATION OF TREATMENT OF PENSION

13 PLAN CONTRIBUTION DURING PENDENCY OF

14 A CASE.

15 (a) TREATMENT OF PENSION BENEFITS AS ADMIN16 ISTRATIVE EXPENSES.—Section 503(b) of title 11, United

17 States Code, as amended by section 103, is amended—

18 (1) in paragraph (6), by striking ‘‘and’’ at the

19 end;

20 (2) in paragraph (7), by striking the period at

21 the end and inserting ‘‘; and’’; and

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

23 ‘‘(8) minimum funding contributions for which

24 the debtor is liable that—
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1 ‘‘(A) are made to an employee pension

2 benefit plan that is subject to the minimum

3 funding requirements under—

4 ‘‘(i) section 412 of the Internal Reve5 nue Code of 1986; or

6 ‘‘(ii) section 302 of the Employee Re7 tirement Income Security Act of 1974 (29

8 U.S.C. 1082); and

9 ‘‘(B) become due on or after the date of

10 filing of the petition commencing the case.’’.

11 (b) TIMELY PAYMENT REQUIRED IN CERTAIN CIR12 CUMSTANCES.—Section 503(b) of title 11, United States

13 Code is amended by adding at the end the following flush

14 sentence:

15 ‘‘If, as of a due date referred to in paragraph (8)(B), a

16 pension plan is required to make a contribution under sec17 tion 412(m)(5) of the Internal Revenue Code of 1986 or

18 section 302(e)(6) of the Employee Retirement Income Se19 curity Act of 1974 (29 U.S.C. 1082(e)(6)), the trustee

20 shall make that contribution under that section by the ap21 plicable date specified in that section.’’.

22 (c) APPLICABILITY.—The amendment made by sub23 section (b) shall apply to contributions made on or after

24 the date of enactment of this Act.
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1 SEC. 107. PENSION PLAN CONTRIBUTION REQUIREMENT.

2 (a) FUNDING REQUIRED IF PLAN IS NOT TERMI3 NATED.—Subchapter IV of chapter 3 of title 11, United

4 States Code, is amended by adding at the end the follow5 ing:

6 ‘‘§ 367. Continuance of certain pension plans

7 ‘‘Notwithstanding sections 502(b)(2) and 503, in any

8 case under this title in which the debtor is the sponsor

9 of a pension plan covered under section 4021 of the Em10 ployee Retirement Income Security Act of 1974 (29

11 U.S.C. 1321), if the trustee does not terminate that pen12 sion plan in accordance with section 4041 of such Act (29

13 U.S.C. 1341) during the 180-day period beginning on the

14 date of issuance of an order for relief, the trustee shall—

15 ‘‘(1) pay any amount of contributions, including

16 any interest due on that amount, that—

17 ‘‘(A) is outstanding at the end of that 180-

18 day period; and

19 ‘‘(B) is required to be paid under that Act;

20 and

21 ‘‘(2) unless the pension plan is terminated in

22 accordance with the Employee Retirement Income

23 Security Act of 1974 (29 U.S.C. 1001 et seq.) after

24 the end of that 180-day period—
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1 ‘‘(A) pay any contributions that are re2 quired to be paid after that date as those con3 tributions become due; or

4 ‘‘(B) provide to the court adequate assur5 ances that the contributions referred to in sub6 paragraph (A) will be paid.’’.

7 (b) APPLICABILITY.—This section applies to cases

8 that are pending or commenced on or after the date of

9 enactment of this Act.

10 (c) CLERICAL AMENDMENT.—The chapter analysis

11 for chapter 3 of title 11, United States Code, is amended

12 by inserting after the item relating to section 366 the fol13 lowing:

‘‘367. Continuance of certain pension plans.’’.

14 SEC. 108. EXCLUSION OF PAYROLL DEDUCTIONS.

15 Section 541(b) of title 11, United States Code, is

16 amended—

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

18 end;

19 (2) in paragraph (5), by striking the period at

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

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

22 ‘‘(6) any funds deducted from paid wages, if

23 those deductions—
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1 ‘‘(A) were made during the 180-day period

2 immediately preceding the commencement of a

3 case under this title;

4 ‘‘(B) are held by an employer who is the

5 debtor in the case referred to in subparagraph

6 (A); and

7 ‘‘(C) were made for funds that are owed to

8 any entity other than to the United States.’’.

9 TITLE II—FINANCIAL

10 INSTRUMENTS

11 SEC. 201. DEFINITIONS OF CERTAIN CONTRACTS AND

12 AGREEMENTS.

13 (a) FORWARD CONTRACTS; REPURCHASE AGREE14 MENTS; SWAP AGREEMENTS.—

15 (1) AMENDMENTS TO TITLE 11.—Section 101

16 of title 11, United States Code, is amended—

17 (A) in paragraph (25)—

18 (i) by striking ‘‘means a contract’’

19 and inserting the following: ‘‘means—

20 ‘‘(A) a contract’’; and

21 (ii) by striking ‘‘, or any combination

22 thereof or option thereon;’’ and inserting

23 the following: ‘‘, or any other similar

24 agreement;
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1 ‘‘(B) any combination of agreements or

2 transactions referred to in subparagraph (A);

3 ‘‘(C) any option to enter into any agree4 ment or transaction referred to in subparagraph

5 (A);

6 ‘‘(D) a master agreement that provides for

7 an agreement or transaction referred to in sub8 paragraph (A), together with supplements

9 thereto, without regard to whether the master

10 agreement provides for an agreement or trans11 action that is not a forward contract under this

12 paragraph, except that the master agreement

13 shall be considered to be a forward contract

14 under this paragraph only with respect to each

15 agreement or transaction under the master

16 agreement that is referred to subparagraph (A);

17 and

18 ‘‘(E) a security agreement or arrangement

19 or other credit enhancement related to any con20 tract referred to in subparagraph (A);’’;

21 (B) by striking paragraph (47) and insert22 ing the following:

23 ‘‘(47) ‘repurchase agreement’—

24 ‘‘(A) means—
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1 ‘‘(i) an agreement, including related

2 terms, that provides for the transfer of 1

3 or more certificates of deposit, eligible

4 bankers’ acceptances, or securities, against

5 the transfer of funds by the transferee of

6 the certificates of deposit, acceptances, or

7 securities, with a simultaneous agreement

8 by such transferee to transfer to the trans9 feror thereof certificates, acceptances, or

10 securities as described in this subpara11 graph, at a date certain or on demand,

12 against the transfer of funds, and any

13 other similar agreement;

14 ‘‘(ii) a master agreement that pro15 vides for an agreement or transaction re16 ferred to in clause (i), together with all

17 supplements, without regard to whether

18 the master agreement provides for an

19 agreement or transaction that is not a re20 purchase agreement under this subpara21 graph, except that the master agreement

22 shall be considered to be a repurchase

23 agreement under this subparagraph only

24 with respect to each agreement or trans-
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1 action under the master agreement that is

2 referred to in clause (i);

3 ‘‘(iii) any combination of agreements

4 or transactions referred to in clause (i);

5 ‘‘(iv) any option to enter into any

6 agreement or transaction referred to in

7 clause (i); or

8 ‘‘(v) a security agreement or arrange9 ment or other credit enhancement related

10 to any agreement or transaction referred

11 to in clause (i); and

12 ‘‘(B) includes a reverse repurchase agree13 ment.’’; and

14 (C) by striking paragraph (53B) and in15 serting the following:

16 ‘‘(53B) ‘swap agreement’ means—

17 ‘‘(A) any agreement, including the terms

18 and conditions incorporated by reference in any

19 such agreement, that is—

20 ‘‘(i) an interest rate swap, option, fu21 ture, or forward agreement, including a

22 rate floor, rate cap, rate collar, cross-cur23 rency rate swap, or basis swap;
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1 ‘‘(ii) a spot, same day-tomorrow, to2 morrow-next, forward or other foreign ex3 change agreement;

4 ‘‘(iii) a currency swap, option, future,

5 or forward agreement;

6 ‘‘(iv) an equity index or equity swap,

7 option, future, or forward agreement;

8 ‘‘(v) a debt index or debt swap, op9 tion, future, or forward agreement;

10 ‘‘(vi) a credit spread or credit swap,

11 option, future, or forward agreement;

12 ‘‘(vii) a commodity index or commod13 ity swap, option, future, or forward agree14 ment;

15 ‘‘(viii) similar to any other agreement

16 referred to in this subparagraph that is

17 presently or in the future becomes regu18 larly entered into in the swap agreement

19 market (including terms and conditions in20 corporated by reference therein) and that

21 is a forward, swap, future, or option on 1

22 or more rates, currencies, commodities, eq23 uity securities or other equity instruments,

24 debt securities or other debt instruments,
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1 or economic indices or measures of eco2 nomic risk or value;

3 ‘‘(ix) a master agreement that pro4 vides for an agreement or transaction re5 ferred to in clause (i), (ii), (iii), (iv), (v),

6 (vi), (vii), or (viii), together with all sup7 plements thereto, without regard to wheth8 er the master agreement contains an

9 agreement or transaction that is described

10 in any of those clauses, except that the

11 master agreement shall be considered to be

12 a swap agreement only with respect to

13 each agreement or transaction under the

14 master agreement that is referred to in

15 clause (i), (ii), (iii), (iv), (vi), (vii), or (viii);

16 or

17 ‘‘(x) any combination of agreements

18 referred to in this subparagraph;

19 ‘‘(B) any option to enter into any agree20 ment referred to in subparagraph (A); and

21 ‘‘(C) any security agreement or arrange22 ment or other credit enhancement related to

23 any agreements or transactions referred to in

24 subparagraph (A);’’.
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1 (2) RULE OF CONSTRUCTION.—Nothing in

2 paragraph (53B) of section 101 of title 11, United

3 States Code, as amended by this section, shall be

4 construed or applied to challenge or affect the char5 acterization, definition, or treatment of any swap

6 agreement or any instrument defined as a swap

7 agreement in that paragraph under any other provi8 sion of law, except as expressly provided in that

9 other provision of law, including—

10 (A) the Securities Act of 1933 (15 U.S.C.

11 77a et seq.);

12 (B) the Securities Exchange Act of 1934

13 (15 U.S.C. 78a et seq.);

14 (C) the Public Utility Holding Company

15 Act of 1935 (15 U.S.C. 79a et seq.);

16 (D) the Trust Indenture Act of 1939 (15

17 U.S.C. 77aaa et seq.);

18 (E) the Investment Company Act of 1940

19 (15 U.S.C. 80a–1 et seq.);

20 (F) the Investment Advisers Act of 1940

21 (15 U.S.C. 80b et seq.);

22 (G) the Securities Investor Protection Act

23 of 1970 (15 U.S.C. 78aaa et seq.);

24 (H) the Commodity Exchange Act (7

25 U.S.C. 1 et seq.); and
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1 (I) any rule or regulation promulgated by

2 the Securities and Exchange Commission or the

3 Commodities Futures Trading Commission.

4 (b) SECURITIES CONTRACTS.—Section 741(7) of title

5 11, United States Code, is amended to read as follows:

6 ‘‘(7) ‘securities contract’ means—

7 ‘‘(A) a contract for the purchase, sale, or

8 loan of a security, including an option for the

9 purchase or sale of a security, certificate of de10 posit, or group or index of securities (including

11 any interest therein or based on the value

12 thereof);

13 ‘‘(B) any option entered into on a national

14 securities exchange relating to foreign cur15 rencies;

16 ‘‘(C) the guarantee of any settlement of

17 cash or securities by or to a securities clearing

18 agency;

19 ‘‘(D) any margin loan;

20 ‘‘(E) any other agreement or transaction

21 that is similar to any instrument referred to in

22 this paragraph;

23 ‘‘(F) a master agreement that provides for

24 an agreement or transaction referred to in sub25 paragraph (A), (B), (C), (D), or (E), together
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1 with supplements thereto, without regard to

2 whether the master agreement provides for an

3 agreement or transaction that is not a securi4 ties contract under this paragraph, except that

5 the master agreement shall be considered to be

6 a securities contract under this paragraph only

7 with respect to each agreement or transaction

8 under the master agreement that is referred to

9 in subparagraph (A), (B), (C), (D), or (E);

10 ‘‘(G) any combination of the agreements or

11 transactions referred to in this paragraph; or

12 ‘‘(H) any option to enter into any agree13 ment or transaction referred to in this para14 graph;’’.

15 (c) COMMODITY CONTRACTS.—Section 761(4) of title

16 11, United States Code, is amended—

17 (1) in subparagraph (D), by striking ‘‘or’’ at

18 the end; and

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

20 ‘‘(F) any other agreement or transaction

21 that is similar to any instrument referred to in

22 this paragraph;

23 ‘‘(G) a master agreement that provides for

24 an agreement or transaction referred to in sub25 paragraph (A), (B), (C), (D), (E), or (F), to-
25

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1 gether with supplements thereto, without regard

2 to whether the master agreement provides for

3 an agreement or transaction that is not a com4 modity contract under this paragraph, except

5 that the master agreement shall be considered

6 to be a commodity contract under this para7 graph only with respect to each agreement or

8 transaction under the master agreement that is

9 referred to in subparagraph (A), (B), (C), (D),

10 (E), or (F);

11 ‘‘(H) any combination of the agreements

12 or transactions referred to in this paragraph;

13 ‘‘(I) any option to enter into any agree14 ment or transaction referred to in this para15 graph; or

16 ‘‘(J) a security agreement or arrangement

17 or other credit enhancement related to 1 or

18 more instruments referred to in this para19 graph;’’.

20 SEC. 202. DEFINITIONS OF FINANCIAL INSTITUTION AND

21 FORWARD CONTRACT MERCHANT.

22 (a) FINANCIAL INSTITUTION DEFINED.—Section

23 101(22) of title 11, United States Code, is amended to

24 read as follows:

25 ‘‘(22) ‘financial institution’—
26

•S 1914 IS

1 ‘‘(A) means—

2 ‘‘(i) a depository institution, as that

3 term is defined in section 3 of the Federal

4 Deposit Insurance Act; and

5 ‘‘(ii) a credit union, as defined in sec6 tion 101 of the Federal Credit Union Act;

7 and

8 ‘‘(B) includes—

9 ‘‘(i) a Federal Reserve bank;

10 ‘‘(ii) a trust company;

11 ‘‘(iii) a savings bank and a savings as12 sociation, as those terms are defined in

13 section 3 of the Federal Deposit Insurance

14 Act;

15 ‘‘(iv) a receiver or conservator for any

16 institution referred to in this paragraph;

17 and

18 ‘‘(v) a customer of any institution re19 ferred to in this paragraph in any case in

20 which such institution acts as agent or

21 custodian for that customer in connection

22 with a securities contract, as defined in

23 section 741(7);’’.
27

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1 (b) FINANCIAL PARTICIPANT DEFINED.—Section

2 101 of title 11, United States Code, is amended by insert3 ing after paragraph (22) the following new paragraph:

4 ‘‘(22A) ‘financial participant’ means—

5 ‘‘(A) any commodity broker, forward con6 tract merchant, stockbroker, financial institu7 tion, or securities clearing agency; or

8 ‘‘(B) any entity that, at any time before

9 the filing of the petition, has an outstanding

10 commodity contract, forward contract, or secu11 rities contract with the debtor.’’.

12 (c) FORWARD CONTRACT MERCHANT DEFINED.—

13 Section 101(26) of title 11, United States Code, is amend14 ed to read as follows:

15 ‘‘(26) ‘forward contract merchant’ means a

16 Federal Reserve bank, or a person whose business

17 consists in whole or in part of entering into forward

18 contracts, as or with merchants, in a commodity (as

19 that term is defined in section 761(8)), or any simi20 lar good, article, service, right, or interest that is or

21 becomes the subject of dealing in the forward con22 tract trade;’’.
28

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1 SEC. 203. MASTER NETTING AGREEMENT AND MASTER

2 NETTING AGREEMENT PARTICIPANT DE3 FINED.

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

5 amended by inserting after paragraph (38) the following

6 new paragraphs:

7 ‘‘(38A) ‘master netting agreement’ means—

8 ‘‘(A) an agreement providing for the exer9 cise of rights, including rights of netting, setoff,

10 liquidation, termination, acceleration, or close11 out, under or in connection with 1 or more con12 tracts described in section 561(a)(2); and

13 ‘‘(B) any security agreement or arrange14 ment or other credit enhancement related to

15 any of the agreements referred to in subpara16 graph (A);

17 ‘‘(38B) ‘master netting agreement participant’

18 means an entity that, at any time before the filing,

19 of a petition, is a party to an outstanding master

20 netting agreement with the debtor;’’.
29

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1 SEC. 204. SWAP AGREEMENTS, SECURITIES CONTRACTS,

2 COMMODITY CONTRACTS, FORWARD CON3 TRACTS, REPURCHASE AGREEMENTS AND

4 MASTER NETTING AGREEMENTS UNDER AN

5 AUTOMATIC STAY.

6 (a) IN GENERAL.—Section 362(b) of title 11, United

7 States Code, is amended—

8 (1) in paragraph (6), by inserting ‘‘, pledged to,

9 and under the control of such entity,’’ after ‘‘held

10 by’’;

11 (2) in paragraph (7), by inserting ‘‘, pledged to,

12 and under the control of such repo participant,’’

13 after ‘‘held by’’;

14 (3) by striking paragraph (17) and inserting

15 the following:

16 ‘‘(17) under subsection (a), of the setoff by a

17 swap participant of any mutual debt and claim

18 under or in connection with 1 or more swap agree19 ments that constitutes the setoff of a claim against

20 the debtor for any payment or other transfer of

21 property due from the debtor under or in connection

22 with such swap agreements against—

23 ‘‘(A) any payment due to the debtor from

24 the swap participant under or in connection

25 with such swap agreements; or

26 ‘‘(B) cash, securities, or other property—
30

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1 ‘‘(i) held by, pledged to, and under

2 the control of that swap participant; and

3 ‘‘(ii) due from that swap participant

4 to margin, guarantee, secure, or settle such

5 swap agreement;’’;

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

7 the end and inserting ‘‘; or’’; and

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

9 ‘‘(19) under subsection (a), of the setoff by a

10 master netting agreement participant of a mutual

11 debt and claim under or in connection with 1 or

12 more master netting agreements that constitutes the

13 setoff of a claim against the debtor for any payment

14 or other transfer of property due from the debtor

15 under or in connection with such agreements

16 against—

17 ‘‘(A) any payment due to the debtor from

18 such participant under or in connection with

19 such agreements or any contract or agreement

20 subject to such agreements; or

21 ‘‘(B) cash, securities, or other property

22 held by, pledged to and under the control of, or

23 due from such participant to margin, guaran24 tee, secure, or settle such agreements or any
31

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1 contract or agreement subject to such agree2 ments.’’.

3 (b) LIMITATION.—Section 362 of title 11, United

4 States Code, is amended by adding at the end the follow5 ing:

6 ‘‘(i) The exercise of rights not subject to the stay

7 arising under subsection (a) pursuant to paragraph (6),

8 (7), (17), or (19) of subsection (b) shall not be stayed,

9 avoided, or otherwise limited by operation of any provision

10 of this title or by any order of a court or administrative

11 agency in any proceeding under this title.’’.

12 SEC. 205. LIMITATION OF AVOIDANCE POWERS UNDER

13 MASTER NETTING AGREEMENT.

14 Section 546 of title 11, United States Code, is

15 amended—

16 (1) in the first subsection designated as sub17 section (g) (as added by section 103 of the Act enti18 tled ‘‘An Act to amend title 11 of the United States

19 Code regarding swap agreements and forward con20 tracts’’, approved June 25, 1990 (Public Law 101–

21 311; 104 Stat. 268))—

22 (A) by striking ‘‘under a swap agree23 ment,’’; and
32

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1 (B) by striking ‘‘, in connection with a

2 swap agreement’’ and inserting ‘‘under or in

3 connection with any swap agreement’’;

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

5 ‘‘(h) Notwithstanding sections 544, 545, 547,

6 548(a)(2), and 548(b), a trustee may not avoid a transfer

7 made by or to a master netting agreement participant

8 under or in connection with any master netting agreement

9 that is made before the commencement of the case, except

10 under section 548(a)(1).’’; and

11 (3) by redesignating the second subsection des12 ignated as subsection (g) (as added by section

13 222(a) of the Bankruptcy Reform Act of 1994 (108

14 Stat. 4129)) as subsection (i) and inserting that

15 subsection after subsection (h), as added by this sec16 tion.

17 SEC. 206. FRAUDULENT TRANSFERS OF MASTER NETTING

18 AGREEMENTS.

19 Section 548(d)(2) of title 11, United States Code, is

20 amended—

21 (1) in subparagraph (C), by striking ‘‘and’’ at

22 the end;

23 (2) in subparagraph (D), by striking the period

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

25 (3) by adding at the end the following:
33

•S 1914 IS

1 ‘‘(E) a master netting agreement partici2 pant that receives a transfer in connection with

3 a master netting agreement takes for value to

4 the extent of that transfer.’’.

5 SEC. 207. LIQUIDATION, TERMINATION, OR ACCELERATION

6 OF CERTAIN INSTRUMENTS.

7 (a) SECURITIES CONTRACTS.—Section 555 of title

8 11, United States Code, is amended—

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

11 ‘‘§ 555. Contractual right to liquidate, terminate, or

12 accelerate a securities contract’’;

13 and

14 (2) in the first sentence, by inserting ‘‘, termi15 nation, or acceleration’’ after ‘‘liquidation’’.

16 (b) COMMODITIES OR FORWARD CONTRACTS.—Sec17 tion 556 of title 11, United States Code, is amended—

18 (1) by striking the section heading and insert

19 the following:

20 ‘‘§ 556. Contractual right to liquidate, terminate, or

21 accelerate a commodities contract or for22 ward contract’’;

23 and

24 (2) in the first sentence, by inserting ‘‘, termi25 nation, or acceleration’’ after ‘‘liquidation’’.
34

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1 (c) REPURCHASE AGREEMENTS.—Section 559 of

2 title 11, United States Code, is amended—

3 (1) by striking the section heading and insert4 ing the following:

5 ‘‘§ 559. Contractual right to liquidate, terminate, or

6 accelerate a repurchase agreement’’;

7 and

8 (2) in the first sentence, by inserting ‘‘, termi9 nation, or acceleration’’ after ‘‘liquidation’’.

10 (d) SWAP AGREEMENTS.—Section 560 of title 11,

11 United States Code, is amended—

12 (1) by striking the section heading and insert13 ing the following:

14 ‘‘§ 560. Contractual right to liquidate, terminate, or

15 accelerate a swap agreement’’;

16 and

17 (2) in the first sentence—

18 (A) by striking ‘‘termination of a swap

19 agreement’’ and inserting ‘‘liquidation, termi20 nation, or acceleration of 1 or more swap agree21 ments’’; and

22 (B) by striking ‘‘in connection with any

23 swap agreement’’ and inserting ‘‘in connection

24 with 1 or more swap agreements’’.
35

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1 (e) MASTER NETTING AGREEMENTS.—Subchapter

2 III of chapter 5 of title 11, United States Code, is amend3 ed by adding at the end the following:

4 ‘‘§ 561. Contractual right to terminate, liquidate, ac5 celerate, or offset under a master netting

6 agreement and across contracts

7 ‘‘(a) PROHIBITION ON STAY, AVOIDANCE, OR OTHER

8 LIMITATION.—

9 ‘‘(1) IN GENERAL.—Subject to subsection (b),

10 the exercise of any contractual right, because of a

11 condition of the kind specified in section 365(e)(1),

12 to cause the termination, liquidation, or acceleration

13 of, or to offset or net termination values, payment

14 amounts, or other transfer obligations arising under

15 or in connection with 1 or more contracts or agree16 ments described in paragraph (2) shall not be

17 stayed, avoided, or otherwise limited—

18 ‘‘(A) by operation of any provision of this

19 title; or

20 ‘‘(B) by any order of a court or adminis21 trative agency in any proceeding under this

22 title.

23 ‘‘(2) DEFINITION.—A contract or agreement

24 described in this paragraph is—
36

•S 1914 IS

1 ‘‘(A) a securities contract, as defined in

2 section 741(7);

3 ‘‘(B) a commodity contract, as defined in

4 section 761(4);

5 ‘‘(C) a forward contract;

6 ‘‘(D) a repurchase agreement;

7 ‘‘(E) a swap agreement; or

8 ‘‘(F) a master netting agreement.

9 ‘‘(b) LIMITATIONS.—A party may exercise a contrac10 tual right described in subsection (a) to terminate, liq11 uidate, or accelerate only to the extent that the party could

12 exercise such a right under section 555, 556, 559, or 560

13 for each individual contract covered by the master netting

14 agreement in issue, notwithstanding whether or not each

15 individual contract contains such contractual rights.

16 ‘‘(c) DEFINITION.—In this section, the term ‘contrac17 tual right’ includes—

18 ‘‘(1) a right set forth in a rule or bylaw of a

19 national securities exchange, a national securities as20 sociation or a securities clearing agency;

21 ‘‘(2) a right set forth in a bylaw of a clearing

22 organization or contract market or in a resolution of

23 the governing board thereof; and

24 ‘‘(3) a right, without regard to whether that

25 right is evidenced in writing, arising—
37

•S 1914 IS

1 ‘‘(A) under common law;

2 ‘‘(B) under law merchant; or

3 ‘‘(C) by reason of normal business prac4 tice.’’.

5 (f) CLERICAL AMENDMENTS.—The chapter analysis

6 for chapter 5 of title 11, United States Code, is amend7 ed—

8 (1) by striking the items relating to sections

9 555 and 556 and inserting the following:

‘‘555. Contractual right to liquidate, terminate, or accelerate a securities contract.

‘‘556. Contractual right to liquidate, terminate, or accelerate a commodities contract or forward contract.’’;

10 and

11 (2) by striking the items relating to sections

12 559 and 560 and inserting the following:

‘‘559. Contractual right to liquidate, terminate, or accelerate a repurchase

agreement.

‘‘560. Contractual right to liquidate, terminate, or accelerate a swap agreement.

‘‘561. Contractual right to terminate, liquidate, accelerate, or offset under a

master netting agreement and across contracts.’’.

13 SEC. 208. MUNICIPAL BANKRUPTCIES.

14 Section 901(a) of title 11, United States Code, is

15 amended by striking ‘‘557’’ and inserting ‘‘555, 556, 557,

16 559, 560, 561, 562’’.

17 SEC. 209. SECURITIES CONTRACTS, COMMODITY CON18 TRACTS, AND FORWARD CONTRACTS.

19 Title 11, United States Code, is amended—

20 (1) in section 362(b)(6), by striking ‘‘commod21 ity broker, forward contract merchant, stockbroker,
38

•S 1914 IS

1 financial institutions, or securities clearing agency’’

2 each place it appears and inserting ‘‘financial partic3 ipant’’;

4 (2) in section 546(e), by striking ‘‘commodity

5 broker, forward contract merchant, stockbroker, fi6 nancial institution, or securities clearing agency’’

7 and inserting ‘‘financial participant’’;

8 (3) in section 548(d)(2)(B), by striking ‘‘com9 modity broker, forward contract merchant, stock10 broker, financial institution, or securities clearing

11 agency’’ and inserting ‘‘financial participant’’;

12 (4) in section 555—

13 (A) by striking ‘‘stockbroker, financial in14 stitution, or securities clearing agency’’ and in15 serting ‘‘financial participant’’; and

16 (B) by inserting before the period ‘‘, a

17 right set forth in a bylaw of a clearing organi18 zation or contract market or in a resolution of

19 the governing board thereof, and a right,

20 whether or not in writing, arising under com21 mon law, under law merchant, or by reason of

22 normal business practice’’; and

23 (5) in section 556, by striking ‘‘commodity

24 broker or forward contract merchant’’ and inserting

25 ‘‘financial participant’’.
39

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1 SEC. 210. ANCILLARY PROCEEDINGS.

2 Section 304 of title 11, United States Code, is

3 amended by adding at the end the following:

4 ‘‘(d) Any provision of this title relating to securities

5 contracts, commodity contracts, forward contracts, repur6 chase agreements, swap agreements, or master netting

7 agreements shall apply in a case ancillary to a foreign pro8 ceeding under this section so that enforcement of contrac9 tual provisions of such contracts and agreements in ac10 cordance with their terms will not be stayed or otherwise

11 limited by operation of any provision of this title or by

12 order of a court in any proceeding under this title, and

13 to limit avoidance powers to the same extent as a proceed14 ing under chapter 7 or 11 of this title (such enforcement

15 not to be limited based on the presence or absence of as16 sets of the debtor in the United States).’’.

17 SEC. 211. LIQUIDATIONS.

18 (a) COMMODITY BROKERS.—Subchapter IV of chap19 ter 7 of title 11, United States Code, is amended by add20 ing at the end the following:
40

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1 ‘‘§ 767. Commodity broker liquidation and forward

2 contract merchants, commodity brokers,

3 stockbrokers, financial institutions, secu4 rities clearing agencies, swap partici5 pants, financial participants, repo par6 ticipants, and master netting agreement

7 participants

8 ‘‘Notwithstanding any other provision of this title,

9 the exercise of rights by a forward contract merchant,

10 commodity broker, stockbroker, financial institution, secu11 rities clearing agency, swap participant, financial partici12 pant, repo participant, or master netting agreement par13 ticipant under this title shall not affect—

14 ‘‘(1) the priority of any unsecured claim that

15 such person may have after the exercise of those

16 rights; or

17 ‘‘(2) the applicability of this subchapter with re18 spect to customer property or distributions after the

19 exercise of such rights.’’.

20 (b) STOCKBROKERS.—Subchapter III of chapter 7 of

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

22 end the following:
41

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1 ‘‘§ 753. Stockbroker liquidation and forward contract

2 merchants, commodity brokers, stock3 brokers, financial institutions, securities

4 clearing agencies, swap participants, fi5 nancial participants, repo participants,

6 and master netting agreement partici7 pants

8 ‘‘Notwithstanding any other provision of this title,

9 the exercise of rights by a forward contract merchant,

10 commodity broker, stockbroker, financial institution, secu11 rities clearing agency, swap participant, financial partici12 pant, repo participant, or master netting agreement par13 ticipant under this title shall not affect—

14 ‘‘(1) the priority of any unsecured claim that

15 such person may have after the exercise of those

16 rights; or

17 ‘‘(2) the applicability of this subchapter with re18 spect to customer property or distributions after the

19 exercise of such rights.’’.

20 (c) CLERICAL AMENDMENTS.—The chapter analysis

21 for chapter 7 of title 11, United States Code, is amend22 ed—

23 (1) by inserting after the item relating to sec24 tion 766 the following:
42

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‘‘767. Commodity broker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, securities clearing agencies, swap participants, repo participants, and master

netting agreement participants.’’;

1 and

2 (2) by inserting after the item relating to sec3 tion 752 the following:

‘‘753. Stockbroker liquidation and forward contract merchants, commodity brokers, stockbrokers, financial institutions, securities clearing

agencies, swap participants, repo participants, and master netting agreement participants.’’.

4 SEC. 212. SETOFF.

5 Section 553 of title 11, United States Code, is

6 amended—

7 (1) in subsection (a)(3)(C), by inserting before

8 the period ‘‘(except for a setoff of a kind described

9 in section 362(b)(6), 362(b)(7), 362(b)(17),

10 362(b)(19), 555, 556, 559, 560, or 561)’’; and

11 (2) in subsection (b)(1), by striking

12 ‘‘362(b)(14), 365(h), 546(h), or 365(i)(2)’’ and in13 serting ‘‘362(b)(17), 362(b)(19), 365(h), 365(i)(2),

14 546(h), 555, 556, 559, 560, or 561’’.

15 SEC. 213. RECORDKEEPING REQUIREMENTS.

16 Section 11(e)(8) of the Federal Deposit Insurance

17 Act (12 U.S.C. 1821(e)(8)) is amended by adding at the

18 end the following:

19 ‘‘(F) RECORDKEEPING REQUIREMENTS.—

20 The Corporation, in consultation with the ap21 propriate Federal banking agencies, may pre-
43

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1 scribe regulations to require detailed record2 keeping by insured depository institutions with

3 respect to qualified financial contracts (includ4 ing market valuations).’’.

5 SEC. 214. DAMAGE MEASURE.

6 (a) DAMAGE MEASURE.—

7 (1) IN GENERAL.—Subchapter IV of chapter 5

8 of title 11, United States Code, as amended by this

9 Act, is amended by adding at the end the following:

10 ‘‘§ 562. Damage measure in connection with swap

11 agreements, securities contracts, forward

12 contracts, commodity contracts, repur13 chase agreements, or master netting

14 agreements

15 ‘‘If a trustee rejects a swap agreement, securities con16 tract (as that term is defined in section 741), forward con17 tract, repurchase agreement, commodity contract, or mas18 ter netting agreement pursuant to section 365(a), or if

19 a forward contract merchant, stockbroker, financial insti20 tution, securities clearing agency, repo participant, master

21 netting agreement participant, commodity contract, or

22 swap participant liquidates, terminates, or accelerates any

23 such contract or agreement, damages shall be measured

24 as of the earlier of—

25 ‘‘(1) the date of that rejection; or
44

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1 ‘‘(2) the date of that liquidation, termination,

2 or acceleration.’’.

3 (2) CLERICAL AMENDMENT.—The chapter anal4 ysis for chapter 5 of title 11, United States Code,

5 is amended by adding at the end the following:

‘‘562. Damage measure in connection with swap agreements, securities contracts, forward contracts, commodity contracts, repurchase

agreements, or master netting agreements.’’.

6 (b) CLAIMS ARISING FROM REJECTION.—Section

7 502(g) of title 11, United States Code, is amended—

8 (1) by striking ‘‘(g) A claim’’ and inserting the

9 following:

10 ‘‘(g) TREATMENT OF CLAIM UPON REJECTION.—

11 ‘‘(1) IN GENERAL.—’’; and

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

13 ‘‘(2) CLAIMS FOR DAMAGES.—A claim for dam14 ages calculated in accordance with section 562 shall

15 be allowed under subsection (a), (b), or (c), or shall

16 be disallowed under subsection (d) or (e), as if that

17 claim had arisen before the date of the filing of the

18 petition.’’.

19 SEC. 215. ASSET-BACKED SECURITIZATIONS.

20 Section 541 of title 11, United States Code, is

21 amended—

22 (1) in subsection (b)—

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

24 the end;
45

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1 (B) by redesignating paragraph (5) as

2 paragraph (6); and

3 (C) by inserting after paragraph (4) the

4 following:

5 ‘‘(5) any eligible asset (or proceeds thereof), to

6 the extent that such eligible asset was transferred by

7 the debtor, before the date of commencement of the

8 action, to an eligible entity in connection with an

9 asset-backed securitization; or’’; and

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

11 ‘‘(e) For purposes of this section—

12 ‘‘(1) the term ‘asset-backed securitization’

13 means a transaction in which eligible assets trans14 ferred to an eligible entity are used as collateral for

15 securities, the most senior of which are rated invest16 ment grade by 1 or more nationally recognized secu17 rities rating organizations, issued by an issuer;

18 ‘‘(2) the term ‘eligible asset’ means—

19 ‘‘(A) financial assets (including interests

20 therein and proceeds thereof), either fixed or re21 volving, including residential and commercial

22 mortgage loans, consumer receivables, trade re23 ceivables, and lease receivables, that, by their

24 terms, convert into cash within a finite time pe25 riod, plus any rights or other assets designed to
46

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1 assure the servicing or timely distribution of

2 proceeds to security holders;

3 ‘‘(B) cash; and

4 ‘‘(C) securities;

5 ‘‘(3) the term ‘eligible entity’ means—

6 ‘‘(A) an issuer; or

7 ‘‘(B) a trust, corporation, partnership, or

8 other entity engaged exclusively in the business

9 of acquiring and transferring eligible assets di10 rectly or indirectly to an issuer and taking ac11 tions ancillary thereto;

12 ‘‘(4) the term ‘issuer’ means a trust, corpora13 tion, partnership, or other entity engaged exclusively

14 in the business of acquiring and holding eligible as15 sets, issuing securities backed by eligible assets, and

16 taking actions ancillary thereto; and

17 ‘‘(5) the term ‘transferred’ means the debtor,

18 pursuant to a written agreement, represented and

19 warranted that eligible assets were sold, contributed,

20 or otherwise conveyed with the intention of removing

21 them from the estate of the debtor pursuant to sub22 section (b)(5), irrespective of—

23 ‘‘(A) whether the debtor directly or indi24 rectly obtained or held an interest in the issuer

25 or in any securities issued by the issuer;
47

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1 ‘‘(B) whether the debtor had an obligation

2 to repurchase or to service or supervise the

3 servicing of all or any portion of such eligible

4 assets; or

5 ‘‘(C) the characterization of such sale, con6 tribution, or other conveyance for tax, account7 ing, regulatory reporting, or other purposes.’’.

8 SEC. 216. APPLICABILITY.

9 The amendments made by this title shall apply with

10 respect to cases commenced or appointments made under

11 any Federal or State law after the date of enactment of

12 this Act.

13 TITLE III—ANCILLARY AND

14 OTHER CROSS-BORDER CASES

15 SEC. 301. AMENDMENT TO ADD A CHAPTER 6 TO TITLE 11,

16 UNITED STATES CODE.

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

18 amended by inserting after chapter 5 the following:

19 ‘‘CHAPTER 6—ANCILLARY AND OTHER

20 CROSS-BORDER CASES

‘‘Sec.

‘‘601. Purpose and scope of application.

‘‘SUBCHAPTER I—GENERAL PROVISIONS

‘‘602. Definitions.

‘‘603. International obligations of the United States.

‘‘604. Commencement of ancillary case.

‘‘605. Authorization to act in a foreign country.

‘‘606. Public policy exception.

‘‘607. Additional assistance.

‘‘608. Interpretation.
48

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‘‘SUBCHAPTER II—ACCESS OF FOREIGN REPRESENTATIVES AND

CREDITORS TO THE COURT

‘‘609. Right of direct access.

‘‘610. Limited jurisdiction.

‘‘611. Commencement of bankruptcy case under section 301 or 303.

‘‘612. Participation of a foreign representative in a case under this title.

‘‘613. Access of foreign creditors to a case under this title.

‘‘614. Notification to foreign creditors concerning a case under this title.

‘‘SUBCHAPTER III—RECOGNITION OF A FOREIGN PROCEEDING

AND RELIEF

‘‘615. Application for recognition of a foreign proceeding.

‘‘616. Presumptions concerning recognition.

‘‘617. Order recognizing a foreign proceeding.

‘‘618. Subsequent information.

‘‘619. Relief that may be granted upon petition for recognition of a foreign proceeding.

‘‘620. Effects of recognition of a foreign main proceeding.

‘‘621. Relief that may be granted upon recognition of a foreign proceeding.

‘‘622. Protection of creditors and other interested persons.

‘‘623. Actions to avoid acts detrimental to creditors.

‘‘624. Intervention by a foreign representative.

‘‘SUBCHAPTER IV—COOPERATION WITH FOREIGN COURTS AND

FOREIGN REPRESENTATIVES

‘‘625. Cooperation and direct communication between the court and foreign

courts or foreign representatives.

‘‘626. Cooperation and direct communication between the trustee and foreign

courts or foreign representatives.

‘‘627. Forms of cooperation.

‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

‘‘628. Commencement of a case under this title after recognition of a foreign

main proceeding.

‘‘629. Coordination of a case under this title and a foreign proceeding.

‘‘630. Coordination of more than 1 foreign proceeding.

‘‘631. Presumption of insolvency based on recognition of a foreign main proceeding.

‘‘632. Rule of payment in concurrent proceedings.

1 ‘‘§ 601. Purpose and scope of application

2 ‘‘(a) The purpose of this chapter is to incorporate the

3 Model Law on Cross-Border Insolvency so as to provide

4 effective mechanisms for dealing with cases of cross-bor5 der insolvency with the objectives of—

6 ‘‘(1) cooperation between—
49

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1 ‘‘(A) United States courts, United States

2 Trustees, trustees, examiners, debtors, and

3 debtors in possession; and

4 ‘‘(B) the courts and other competent au5 thorities of foreign countries involved in cross6 border insolvency cases;

7 ‘‘(2) greater legal certainty for trade and in8 vestment;

9 ‘‘(3) fair and efficient administration of cross10 border insolvencies that protects the interests of all

11 creditors, and other interested entities, including the

12 debtor;

13 ‘‘(4) protection and maximization of the value

14 of the debtor’s assets; and

15 ‘‘(5) facilitation of the rescue of financially

16 troubled businesses, thereby protecting investment

17 and preserving employment.

18 ‘‘(b) This chapter applies where—

19 ‘‘(1) assistance is sought in the United States

20 by a foreign court or a foreign representative in con21 nection with a foreign proceeding;

22 ‘‘(2) assistance is sought in a foreign country in

23 connection with a case under this title;
50

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1 ‘‘(3) a foreign proceeding and a case under this

2 title with respect to the same debtor are taking place

3 concurrently; or

4 ‘‘(4) creditors or other interested persons in a

5 foreign country have an interest in requesting the

6 commencement of, or participating in, a case or pro7 ceeding under this title.

8 ‘‘(c) This chapter does not apply to—

9 ‘‘(1) a proceeding concerning an entity identi10 fied by exclusion in subsection 109(b); or

11 ‘‘(2) a natural person or a natural person and

12 that person’s spouse who have debts within the lim13 its specified in under section 109(e) and who are

14 citizens of the United States or aliens lawfully ad15 mitted for permanent residence in the United States.

16 ‘‘SUBCHAPTER I—GENERAL PROVISIONS

17 ‘‘§ 602. Definitions

18 ‘‘For the purposes of this chapter, the term—

19 ‘‘(1) ‘debtor’ means an entity that is the subject

20 of a foreign proceeding;

21 ‘‘(2) ‘establishment’ means any place of oper22 ations where the debtor carries out a nontransitory

23 economic activity;
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1 ‘‘(3) ‘foreign court’ means a judicial or other

2 authority competent to control or supervise a foreign

3 proceeding;

4 ‘‘(4) ‘foreign main proceeding’ means a foreign

5 proceeding taking place in the country where the

6 debtor has the center of its main interests;

7 ‘‘(5) ‘foreign nonmain proceeding’ means a for8 eign proceeding, other than a foreign main proceed9 ing, taking place in a country where the debtor has

10 an establishment;

11 ‘‘(6) ‘trustee’ includes a trustee, a debtor in

12 possession in a case under any chapter of this title,

13 or a debtor under chapters 9 or 13 of this title; and

14 ‘‘(7) ‘within the territorial jurisdiction of the

15 United States’ when used with reference to property

16 of a debtor refers to tangible property located within

17 the territory of the United States and intangible

18 property deemed to be located within that territory,

19 including any property that may properly be seized

20 or garnished by an action in a Federal or State

21 court in the United States.

22 ‘‘§ 603. International obligations of the United States

23 ‘‘To the extent that this chapter conflicts with an ob24 ligation of the United States arising out of any treaty or

25 other form of agreement to which it is a party with 1 or
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1 more other countries, the requirements of the treaty or

2 agreement prevail.

3 ‘‘§ 604. Commencement of ancillary case

4 ‘‘A case under this chapter is commenced by the filing

5 of a petition for recognition of a foreign proceeding under

6 section 615.

7 ‘‘§ 605. Authorization to act in a foreign country

8 ‘‘A trustee or another entity designated by the court

9 may be authorized by the court to act in a foreign country

10 on behalf of an estate created under section 541. An entity

11 authorized to act under this section may act in any way

12 permitted by the applicable foreign law.

13 ‘‘§ 606. Public policy exception

14 ‘‘Nothing in this chapter prevents the court from re15 fusing to take an action governed by this chapter if the

16 action would be manifestly contrary to the public policy

17 of the United States.

18 ‘‘§ 607. Additional assistance

19 ‘‘(a) Nothing in this chapter limits the power of the

20 court, upon recognition of a foreign proceeding, to provide

21 additional assistance to a foreign representative under this

22 title or under other laws of the United States.

23 ‘‘(b) In determining whether to provide additional as24 sistance under this title or under other laws of the United

25 States, the court shall consider whether such additional
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1 assistance, consistent with the principles of comity, will

2 reasonably assure—

3 ‘‘(1) just treatment of all holders of claims

4 against or interests in the debtor’s property;

5 ‘‘(2) protection of claim holders in the United

6 States against prejudice and inconvenience in the

7 processing of claims in such foreign proceeding;

8 ‘‘(3) prevention of preferential or fraudulent

9 dispositions of property of the debtor;

10 ‘‘(4) distribution of proceeds of the debtor’s

11 property substantially in accordance with the order

12 prescribed by this title; and

13 ‘‘(5) if appropriate, the provision of an oppor14 tunity for a fresh start for the individual that such

15 foreign proceeding concerns.

16 ‘‘§ 608. Interpretation

17 ‘‘In interpreting this chapter, the court shall consider

18 its international origin, and the need to promote an appli19 cation of this chapter that is consistent with the applica20 tion of similar statutes adopted by foreign jurisdictions.
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1 ‘‘SUBCHAPTER II—ACCESS OF FOREIGN REP2 RESENTATIVES AND CREDITORS TO THE

3 COURT

4 ‘‘§ 609. Right of direct access

5 ‘‘(a) A foreign representative is entitled to commence

6 a case under section 604 by filing a petition for recogni7 tion under section 615, and upon recognition, to apply di8 rectly to other Federal and State courts for appropriate

9 relief in those courts.

10 ‘‘(b) Upon recognition, and subject to section 610,

11 a foreign representative has the capacity to sue and be

12 sued.

13 ‘‘(c) Recognition under this chapter is prerequisite to

14 the granting of comity or cooperation to a foreign proceed15 ing in any State or Federal court in the United States.

16 Any request for comity or cooperation in any court shall

17 be accompanied by a sworn statement setting forth wheth18 er recognition under section 615 has been sought and the

19 status of any such petition.

20 ‘‘(d) Upon denial of recognition under this chapter,

21 the court may issue appropriate orders necessary to pre22 vent an attempt to obtain comity or cooperation from

23 courts in the United States without such recognition.
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1 ‘‘§ 610. Limited jurisdiction

2 ‘‘The sole fact that a foreign representative files a

3 petition under sections 604 and 615 does not subject the

4 foreign representative to the jurisdiction of any court in

5 the United States for any other purpose.

6 ‘‘§ 611. Commencement of bankruptcy case under sec7 tion 301 or 303

8 ‘‘(a) Upon filing a petition for recognition, a foreign

9 representative may commence—

10 ‘‘(1) an involuntary case under section 303; or

11 ‘‘(2) a voluntary case under section 301 or 302,

12 if the foreign proceeding is a foreign main proceed13 ing.

14 ‘‘(b) The petition commencing a case under sub15 section (a) of this section must be accompanied by a state16 ment describing the petition for recognition and its cur17 rent status. The court where the petition for recognition

18 has been filed must be advised of the foreign representa19 tive’s intent to commence a case under subsection (a) of

20 this section prior to such commencement.

21 ‘‘(c) A case under subsection (a) shall be dismissed

22 unless recognition is granted.

23 ‘‘§ 612. Participation of a foreign representative in a

24 case under this title

25 ‘‘Upon recognition of a foreign proceeding, the for26 eign representative in that proceeding is entitled to par-
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1 ticipate as a party in interest in a case regarding the debt2 or under this title.

3 ‘‘§ 613. Access of foreign creditors to a case under

4 this title

5 ‘‘(a) Foreign creditors have the same rights regarding

6 the commencement of, and participation in, a case under

7 this title as domestic creditors.

8 ‘‘(b)(1) Subsection (a) of this section does not change

9 or codify law in effect on the date of enactment of this

10 chapter as to the priority of claims under section 507 or

11 726, except that the claim of a foreign creditor under

12 those sections shall not be given a lower priority than the

13 class of general unsecured claims without priority solely

14 because the holder of such claim is a foreign creditor.

15 ‘‘(2)(A) Subsection (a) of this section and paragraph

16 (1) of this subsection do not change or codify law in effect

17 on the date of enactment of this chapter as to the allow18 ability of foreign revenue claims or other foreign public

19 law claims in a proceeding under this title.

20 ‘‘(B) Allowance and priority as to a foreign tax claim

21 or other foreign public law claim shall be governed by any

22 applicable tax treaty of the United States, under the con23 ditions and circumstances specified therein.
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1 ‘‘§ 614. Notification to foreign creditors concerning a

2 case under this title

3 ‘‘(a) Whenever in a case under this title, notice is to

4 be given to creditors generally or to any class or category

5 of creditors, such notice shall also be given to the known

6 creditors generally, or to creditors in the notified class or

7 category, that do not have addresses in the United States.

8 The court may order that appropriate steps be taken with

9 a view to notifying any creditor whose address is not yet

10 known.

11 ‘‘(b) The notification to creditors with foreign ad12 dresses described in subsection (a) shall be given individ13 ually, unless the court considers that, under the cir14 cumstances, some other form of notification would be

15 more appropriate. No letters rogatory or other similar for16 mality is required.

17 ‘‘(c) When a notification of commencement of a case

18 is to be given to foreign creditors, the notification shall—

19 ‘‘(1) indicate the time period for filing proofs of

20 claim and specify the place for their filing;

21 ‘‘(2) indicate whether secured creditors need to

22 file their proofs of claim; and

23 ‘‘(3) contain any other information required to

24 be included in such a notification to creditors pursu25 ant to this title and the orders of the court.
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1 ‘‘(d) Any rule of procedure or order of the court as

2 to notice or the filing of a claim shall provide such addi3 tional time to creditors with foreign addresses as is rea4 sonable under the circumstances.

5 ‘‘SUBCHAPTER III—RECOGNITION OF A

6 FOREIGN PROCEEDING AND RELIEF

7 ‘‘§ 615. Application for recognition of a foreign pro8 ceeding

9 ‘‘(a) A foreign representative applies to the court for

10 recognition of the foreign proceeding in which the foreign

11 representative has been appointed by filing a petition for

12 recognition.

13 ‘‘(b) A petition for recognition shall be accompanied

14 by—

15 ‘‘(1) a certified copy of the decision commenc16 ing the foreign proceeding and appointing the for17 eign representative;

18 ‘‘(2) a certificate from the foreign court affirm19 ing the existence of the foreign proceeding and of

20 the appointment of the foreign representative; or

21 ‘‘(3) in the absence of evidence referred to in

22 paragraphs (1) and (2), any other evidence accept23 able to the court of the existence of the foreign pro24 ceeding and of the appointment of the foreign rep25 resentative.
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1 ‘‘(c) A petition for recognition shall also be accom2 panied by a statement identifying all foreign proceedings

3 with respect to the debtor that are known to the foreign

4 representative.

5 ‘‘(d) The documents referred to in paragraphs (1)

6 and (2) of subsection (b) must be translated into English.

7 The court may require a translation into English of addi8 tional documents.

9 ‘‘§ 616. Presumptions concerning recognition

10 ‘‘(a) If the decision or certificate referred to in section

11 615(b) indicates that the foreign proceeding is a foreign

12 proceeding within the meaning of section 101(23) and that

13 the person or body is a foreign representative within the

14 meaning of section 101(24), the court is entitled to so pre15 sume.

16 ‘‘(b) The court is entitled to presume that documents

17 submitted in support of the petition for recognition are

18 authentic, whether the documents have been subjected to

19 legal processing under applicable law.

20 ‘‘(c) In the absence of evidence to the contrary, the

21 debtor’s registered office, or habitual residence in the case

22 of an individual, is presumed to be the center of the debt23 or’s main interests.
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1 ‘‘§ 617. Order recognizing a foreign proceeding

2 ‘‘(a) Subject to section 606, an order recognizing a

3 foreign proceeding shall be entered if—

4 ‘‘(1) the foreign proceeding is a foreign main

5 proceeding or foreign nonmain proceeding within the

6 meaning of section 602 and is a foreign proceeding

7 within the meaning of section 101(23);

8 ‘‘(2) the person or body applying for recognition

9 is a foreign representative within the meaning of

10 section 101(24); and

11 ‘‘(3) the petition meets the requirements of sec12 tion 615.

13 ‘‘(b) The foreign proceeding shall be recognized—

14 ‘‘(1) as a foreign main proceeding if it is taking

15 place in the country where the debtor has the center

16 of its main interests; or

17 ‘‘(2) as a foreign nonmain proceeding if the

18 debtor has an establishment within the meaning of

19 section 602 in the foreign country where the pro20 ceeding is pending.

21 ‘‘(c) A petition for recognition of a foreign proceeding

22 shall be decided upon at the earliest possible time. Entry

23 of an order recognizing a foreign proceeding shall con24 stitute recognition under this chapter.

25 ‘‘(d) The provisions of this subchapter do not prevent

26 modification or termination of recognition if it is shown
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1 that the grounds for granting it were fully or partially

2 lacking or have ceased to exist, but in considering such

3 action the court shall give due weight to possible prejudice

4 to parties that have relied upon the granting of recogni5 tion. The foreign proceeding may be closed in the manner

6 prescribed for a case under section 350.

7 ‘‘§ 618. Subsequent information

8 ‘‘From the time of filing the petition for recognition

9 of the foreign proceeding, the foreign representative shall

10 file with the court promptly a notice of change of status

11 concerning—

12 ‘‘(1) any substantial change in the status of the

13 foreign proceeding or the status of the foreign rep14 resentative’s appointment; and

15 ‘‘(2) any other foreign proceeding regarding the

16 debtor that becomes known to the foreign represent17 ative.

18 ‘‘§ 619. Relief that may be granted upon petition for

19 recognition of a foreign proceeding

20 ‘‘(a) From the time of filing a petition for recognition

21 until the petition is decided upon, the court may, at the

22 request of the foreign representative, where relief is ur23 gently needed to protect the assets of the debtor or the

24 interests of the creditors, grant relief of a provisional na25 ture, including—
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1 ‘‘(1) staying execution against the debtor’s as2 sets;

3 ‘‘(2) entrusting the administration or realiza4 tion of all or part of the debtor’s assets located in

5 the United States to the foreign representative or

6 another person designated by the court, including an

7 examiner, in order to protect and preserve the value

8 of assets that, by their nature or because of other

9 circumstances, are perishable, susceptible to devalu10 ation or otherwise in jeopardy; and

11 ‘‘(3) any relief referred to in paragraph (3),

12 (4), or (7) of section 621(a).

13 ‘‘(b) Unless extended under section 621(a)(6), the re14 lief granted under this section terminates when the peti15 tion for recognition is decided upon.

16 ‘‘(c) It is a ground for denial of relief under this sec17 tion that such relief would interfere with the administra18 tion of a foreign main proceeding.

19 ‘‘(d) The court may not enjoin a police or regulatory

20 act of a governmental unit, including a criminal action or

21 proceeding, under this section.

22 ‘‘(e) The standards, procedures, and limitations ap23 plicable to an injunction shall apply to relief under this

24 section.
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1 ‘‘§ 620. Effects of recognition of a foreign main pro2 ceeding

3 ‘‘(a) Upon recognition of a foreign proceeding that

4 is a foreign main proceeding—

5 ‘‘(1) section 362 applies with respect to the

6 debtor and that property of the debtor that is within

7 the territorial jurisdiction of the United States; and

8 ‘‘(2) transfer, encumbrance, or any other dis9 position of an interest of the debtor in property

10 within the territorial jurisdiction of the United

11 States is restrained as and to the extent that is pro12 vided for property of an estate under sections 363,

13 549, and 552.

14 Unless the court orders otherwise, the foreign representa15 tive may operate the debtor’s business and may exercise

16 the powers of a trustee under section 549, subject to sec17 tions 363 and 552.

18 ‘‘(b) The scope, and the modification or termination,

19 of the stay and restraints referred to in subsection (a) of

20 this section are subject to the exceptions and limitations

21 provided in subsections (b), (c), and (d) of section 362,

22 subsections (b) and (c) of section 363, and sections 552,

23 555 through 557, 559, and 560.

24 ‘‘(c) Subsection (a) of this section does not affect the

25 right to commence individual actions or proceedings in a
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1 foreign country to the extent necessary to preserve a claim

2 against the debtor.

3 ‘‘(d) Subsection (a) of this section does not affect the

4 right of a foreign representative or an entity to file a peti5 tion commencing a case under this title or the right of

6 any party to file claims or take other proper actions in

7 such a case.

8 ‘‘§ 621. Relief that may be granted upon recognition

9 of a foreign proceeding

10 ‘‘(a) Upon recognition of a foreign proceeding, wheth11 er main or nonmain, where necessary to effectuate the

12 purpose of this chapter and to protect the assets of the

13 debtor or the interests of the creditors, the court may, at

14 the request of the foreign representative, grant any appro15 priate relief, including—

16 ‘‘(1) staying the commencement or continuation

17 of individual actions or individual proceedings con18 cerning the debtor’s assets, rights, obligations or li19 abilities to the extent they have not been stayed

20 under section 620(a);

21 ‘‘(2) staying execution against the debtor’s as22 sets to the extent it has not been stayed under sec23 tion 620(a);

24 ‘‘(3) suspending the right to transfer, encumber

25 or otherwise dispose of any assets of the debtor to
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1 the extent this right has not been suspended under

2 section 620(a);

3 ‘‘(4) providing for the examination of witnesses,

4 the taking of evidence or the delivery of information

5 concerning the debtor’s assets, affairs, rights, obliga6 tions or liabilities;

7 ‘‘(5) entrusting the administration or realiza8 tion of all or part of the debtor’s assets within the

9 territorial jurisdiction of the United States to the

10 foreign representative or another person, including

11 an examiner, designated by the court;

12 ‘‘(6) extending relief granted under section

13 619(a); and

14 ‘‘(7) granting any additional relief that may be

15 available to a trustee, except for relief available

16 under sections 522, 544, 545, 547, 548, 550, and

17 724(a).

18 ‘‘(b) Upon recognition of a foreign proceeding, wheth19 er main or nonmain, the court may, at the request of the

20 foreign representative, entrust the distribution of all or

21 part of the debtor’s assets located in the United States

22 to the foreign representative or another person, including

23 an examiner, designated by the court, provided that the

24 court is satisfied that the interests of creditors in the

25 United States are sufficiently protected.
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1 ‘‘(c) In granting relief under this section to a rep2 resentative of a foreign nonmain proceeding, the court

3 must be satisfied that the relief relates to assets that,

4 under the law of the United States, should be adminis5 tered in the foreign nonmain proceeding or concerns infor6 mation required in that proceeding.

7 ‘‘(d) The court may not enjoin a police or regulatory

8 act of a governmental unit, including a criminal action or

9 proceeding, under this section.

10 ‘‘§ 622. Protection of creditors and other interested

11 persons

12 ‘‘(a) In granting or denying relief under section 619

13 or 621, or in modifying or terminating relief under sub14 section (c) of this section, the court must find that the

15 interests of the creditors and other interested persons or

16 entities, including the debtor, are sufficiently protected.

17 ‘‘(b) The court may subject relief granted under sec18 tion 619 or 621 to conditions it considers appropriate.

19 ‘‘(c) The court may, at the request of the foreign rep20 resentative or an entity affected by relief granted under

21 section 619 or 621, or at its own motion, modify or termi22 nate such relief.

23 ‘‘§ 623. Actions to avoid acts detrimental to creditors

24 ‘‘(a) Upon recognition of a foreign proceeding, the

25 foreign representative has standing in a pending case
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1 under another chapter of this title to initiate actions under

2 sections 522, 544, 545, 547, 548, 550, and 724(a).

3 ‘‘(b) When the foreign proceeding is a foreign

4 nonmain proceeding, the court must be satisfied that an

5 action under subsection (a) of this section relates to assets

6 that, under United States law, should be administered in

7 the foreign nonmain proceeding.

8 ‘‘§ 624. Intervention by a foreign representative

9 ‘‘Upon recognition of a foreign proceeding, the for10 eign representative may intervene in any proceedings in

11 a State or Federal court in the United States in which

12 the debtor is a party.

13 ‘‘SUBCHAPTER IV—COOPERATION WITH FOR14 EIGN COURTS AND FOREIGN REPRESENTA15 TIVES

16 ‘‘§ 625. Cooperation and direct communication be17 tween the court and foreign courts or for18 eign representatives

19 ‘‘(a) In all matters included within section 601, the

20 court shall cooperate to the maximum extent possible with

21 foreign courts or foreign representatives, either directly or

22 through the trustee.

23 ‘‘(b) The court is entitled to communicate directly

24 with, or to request information or assistance directly from,
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1 foreign courts or foreign representatives, subject to the

2 rights of parties in interest to notice and participation.

3 ‘‘§ 626. Cooperation and direct communication be4 tween the trustee and foreign courts or

5 foreign representatives

6 ‘‘(a) In all matters included in section 601, the trust7 ee or other person, including an examiner, designated by

8 the court, shall, subject to the supervision of the court,

9 cooperate to the maximum extent possible with foreign

10 courts or foreign representatives.

11 ‘‘(b) The trustee or other person, including an exam12 iner, designated by the court is entitled, subject to the su13 pervision of the court, to communicate directly with for14 eign courts or foreign representatives.

15 ‘‘(c) Section 1104(d) shall apply to the appointment

16 of an examiner under this chapter. Any examiner shall

17 comply with the qualification requirements imposed on a

18 trustee by section 322(a).

19 ‘‘§ 627. Forms of cooperation

20 ‘‘Cooperation referred to in sections 625 and 626

21 may be implemented by any appropriate means, includ22 ing—

23 ‘‘(1) appointment of a person or body, including

24 an examiner, to act at the direction of the court;
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1 ‘‘(2) communication of information by any

2 means considered appropriate by the court;

3 ‘‘(3) coordination of the administration and su4 pervision of the debtor’s assets and affairs;

5 ‘‘(4) approval or implementation of agreements

6 concerning the coordination of proceedings; and

7 ‘‘(5) coordination of concurrent proceedings re8 garding the same debtor.

9 ‘‘SUBCHAPTER V—CONCURRENT PROCEEDINGS

10 ‘‘§ 628. Commencement of a case under this title after

11 recognition of a foreign main proceeding

12 ‘‘After recognition of a foreign main proceeding, a

13 case under another chapter of this title may be commenced

14 only if the debtor has assets in the United States. The

15 effects of that case shall be restricted to the assets of the

16 debtor that are within the territorial jurisdiction of the

17 United States and, to the extent necessary to implement

18 cooperation and coordination under sections 625, 626, and

19 627, to other assets of the debtor that are within the juris20 diction of the court under sections 541(a) and 1334(e),

21 to the extent that such other assets are not subject to the

22 jurisdiction and control of a foreign proceeding that has

23 been recognized under this chapter.
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1 ‘‘§ 629. Coordination of a case under this title and a

2 foreign proceeding

3 ‘‘Where a foreign proceeding and a case under an4 other chapter of this title are taking place concurrently

5 regarding the same debtor, the court shall seek coopera6 tion and coordination under sections 625, 626, and 627,

7 and the following shall apply:

8 ‘‘(1) When the case in the United States is tak9 ing place at the time the petition for recognition of

10 the foreign proceeding is filed—

11 ‘‘(A) any relief granted under sections 619

12 or 621 must be consistent with the case in the

13 United States; and

14 ‘‘(B) even if the foreign proceeding is rec15 ognized as a foreign main proceeding, section

16 620 does not apply.

17 ‘‘(2) When a case in the United States under

18 this title commences after recognition, or after the

19 filing of the petition for recognition, of the foreign

20 proceeding—

21 ‘‘(A) any relief in effect under sections 619

22 or 621 shall be reviewed by the court and shall

23 be modified or terminated if inconsistent with

24 the case in the United States; and

25 ‘‘(B) if the foreign proceeding is a foreign

26 main proceeding, the stay and suspension re-
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1 ferred to in section 620(a) shall be modified or

2 terminated if inconsistent with the case in the

3 United States.

4 ‘‘(3) In granting, extending, or modifying relief

5 granted to a representative of a foreign nonmain

6 proceeding, the court must be satisfied that the re7 lief relates to assets that, under the law of the

8 United States, should be administered in the foreign

9 nonmain proceeding or concerns information re10 quired in that proceeding.

11 ‘‘(4) In achieving cooperation and coordination

12 under sections 628 and 629, the court may grant

13 any of the relief authorized under section 305.

14 ‘‘§ 630. Coordination of more than 1 foreign proceed15 ing

16 ‘‘In matters referred to in section 601, with respect

17 to more than one foreign proceeding regarding the debtor,

18 the court shall seek cooperation and coordination under

19 sections 625, 626, and 627, and the following shall apply:

20 ‘‘(1) Any relief granted under section 619 or

21 621 to a representative of a foreign nonmain pro22 ceeding after recognition of a foreign main proceed23 ing must be consistent with the foreign main pro24 ceeding.
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1 ‘‘(2) If a foreign main proceeding is recognized

2 after recognition, or after the filing of a petition for

3 recognition, of a foreign nonmain proceeding, any

4 relief in effect under section 619 or 621 shall be re5 viewed by the court and shall be modified or termi6 nated if inconsistent with the foreign main proceed7 ing.

8 ‘‘(3) If, after recognition of a foreign nonmain

9 proceeding, another foreign nonmain proceeding is

10 recognized, the court shall grant, modify, or termi11 nate relief for the purpose of facilitating coordina12 tion of the proceedings.

13 ‘‘§ 631. Presumption of insolvency based on recogni14 tion of a foreign main proceeding

15 ‘‘In the absence of evidence to the contrary, recogni16 tion of a foreign main proceeding is for the purpose of

17 commencing a proceeding under section 303, proof that

18 the debtor is generally not paying its debts.

19 ‘‘§ 632. Rule of payment in concurrent proceedings

20 ‘‘Without prejudice to secured claims or rights in

21 rem, a creditor who has received payment with respect to

22 its claim in a foreign proceeding pursuant to a law relating

23 to insolvency may not receive a payment for the same

24 claim in a case under any other chapter of this title re25 garding the debtor, so long as the payment to other credi-
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1 tors of the same class is proportionately less than the pay2 ment the creditor has already received.’’.

3 (b) CLERICAL AMENDMENT.—The table of chapters

4 for title 11, United States Code, is amended by inserting

5 after the item relating to chapter 5 the following:

‘‘6. Ancillary and Other Cross-Border Cases .......................... 601’’.

6 SEC. 302. AMENDMENTS TO OTHER CHAPTERS IN TITLE 11,

7 UNITED STATES CODE.

8 (a) APPLICABILITY OF CHAPTERS.—Section 103 of

9 title 11, United States Code, is amended—

10 (1) in subsection (a), by inserting before the pe11 riod the following: ‘‘and this chapter, sections 307,

12 555 through 557, 559, and 560 apply in a case

13 under chapter 6’’; and

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

15 ‘‘(j) Chapter 6 applies only in a case under that chap16 ter, except that section 605 applies to trustees and to any

17 other entity designated by the court, including an exam18 iner, under chapters 7, 11, and 12, to debtors in posses19 sion under chapters 11 and 12, and to debtors or trustees

20 under chapters 9 and 13 who are authorized to act under

21 section 605.’’.

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

23 States Code, is amended by striking paragraphs (23) and

24 (24) and inserting the following:
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1 ‘‘(23) ‘foreign proceeding’ means a collective ju2 dicial or administrative proceeding in a foreign state,

3 including an interim proceeding, pursuant to a law

4 relating to insolvency in which proceeding the assets

5 and affairs of the debtor are subject to control or

6 supervision by a foreign court, for the purpose of re7 organization or liquidation;

8 ‘‘(24) ‘foreign representative’ means a person

9 or body, including 1 appointed on an interim basis,

10 authorized in a foreign proceeding to administer the

11 reorganization or the liquidation of the debtor’s as12 sets or affairs or to act as a representative of the

13 foreign proceeding;’’.

14 (c) AMENDMENTS TO TITLE 28, UNITED STATES

15 CODE.—

16 (1) PROCEDURES.—Section 157(b)(2) of title

17 28, United States Code, is amended—

18 (A) in subparagraph (N), by striking

19 ‘‘and’’ at the end;

20 (B) in subparagraph (O), by striking the

21 period at the end and inserting ‘‘; and’’; and

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

23 ‘‘(P) recognition of foreign proceedings

24 and other matters under chapter 6.’’.
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1 (2) BANKRUPTCY CASES AND PROCEEDINGS.—

2 Section 1334(c) of title 28, United States Code, is

3 amended by striking ‘‘Nothing in’’ and inserting

4 ‘‘Except with respect to a case under chapter 6 of

5 title 11, nothing in’’.

6 (3) DUTIES OF TRUSTEES.—Section 586(a)(3)

7 of title 28, United States Code, is amended by in8 serting ‘‘6,’’ after ‘‘chapter’’.

9 TITLE IV—SMALL BUSINESS

10 BANKRUPTCY

11 SEC. 401. SMALL BUSINESS DEFINED.

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

13 amended by striking paragraph (51C) and inserting the

14 following:

15 ‘‘(51C) ‘small business case’ means any case

16 filed under chapter 11 of this title in which the debt17 or is a small business debtor;

18 ‘‘(51D) ‘small business debtor’ means—

19 ‘‘(A) any debtor in a case under chapter

20 11 (including any group of affiliated debtors)

21 that, as of the date of filing of the petition for

22 the case involved, has noncontingent, liquidated

23 secured and unsecured debts in an aggregate

24 amount not to exceed $5,000,000 (excluding
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1 any debt owed to 1 or more affiliates or insid2 ers); and

3 ‘‘(B) any single asset real estate debtor,

4 without regard to the amount of liabilities of

5 that debtor;’’.

6 SEC. 402. FLEXIBLE RULES FOR DISCLOSURE STATEMENT

7 AND PLAN.

8 Section 1125(f) of title 11, United States Code, is

9 amended to read as follows:

10 ‘‘(f) Notwithstanding subsection (b), in a small busi11 ness case—

12 ‘‘(1) in determining whether a disclosure state13 ment provides adequate information, the court shall

14 consider—

15 ‘‘(A) the size of the case;

16 ‘‘(B) the benefit of additional information

17 to creditors and other parties in interest; and

18 ‘‘(C) the cost of providing additional infor19 mation;

20 ‘‘(2) in an appropriate case the court may de21 termine that—

22 ‘‘(A) the plan provides adequate informa23 tion; and

24 ‘‘(B) a separate disclosure statement is not

25 necessary;
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1 ‘‘(3) the court may approve a disclosure state2 ment submitted on standard forms approved by the

3 court or adopted pursuant to section 2075 of title

4 28;

5 ‘‘(4)(A) the court may conditionally approve a

6 disclosure statement subject to final approval after

7 notice and a hearing;

8 ‘‘(B) acceptances and rejections of a plan may

9 be solicited based on a conditionally approved disclo10 sure statement as long as the debtor provides ade11 quate information to each holder of a claim or inter12 est that is solicited, but a conditionally approved dis13 closure statement shall be mailed at least 20 days

14 before the date of the hearing on confirmation of the

15 plan; and

16 ‘‘(C) the hearing on the disclosure statement

17 may be combined with the hearing on confirmation

18 of the plan.’’.

19 SEC. 403. STANDARD FORM DISCLOSURE STATEMENTS AND

20 PLANS.

21 (a) IN GENERAL.—The Advisory Committee on

22 Bankruptcy Rules of the Judicial Conference shall, within

23 a reasonable period of time after the date of enactment

24 of this Act, propose for adoption standard form disclosure

25 statements and plans of reorganization for small business
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1 debtors, as that term is defined in section 101(51C) of

2 title 11, United States Code, as added by section 401 of

3 this Act.

4 (b) CONTENTS.—The proposed standard form disclo5 sure statements and plans for reorganization referred to

6 in subsection (a) shall be designed to achieve a practical

7 balance between—

8 (1) the reasonable needs of the courts, the

9 United States trustee or bankruptcy administrator,

10 creditors, and other parties in interest for reason11 ably complete information; and

12 (2) economy and simplicity for debtors.

13 SEC. 404. UNIFORM NATIONAL REPORTING REQUIRE14 MENTS.

15 (a) SMALL BUSINESS DEBTOR REPORTING RE16 QUIREMENTS.—

17 (1) IN GENERAL.—Subchapter I of chapter 3 of

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

19 at the end the following:

20 ‘‘§ 308. Small business debtor reporting requirements

21 ‘‘Each small business debtor shall file with the court

22 periodic financial reports and other reports that the court

23 determines to be appropriate containing information relat24 ing to—
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1 ‘‘(1) the profitability of the debtor that contains

2 specific information concerning the amount of in3 come carried or losses incurred during the then cur4 rent financial period and any other fiscal period that

5 the court determines to be appropriate;

6 ‘‘(2) reasonable approximations of projected

7 cash receipts and cash disbursements over a reason8 able period of time (as determined by the court);

9 ‘‘(3) with respect to a report submitted under

10 this section after an initial report, a comparison of

11 actual cash receipts and disbursements for the pe12 riod covered by the report with the projection con13 tained in each preceding report submitted under this

14 subsection;

15 ‘‘(4) whether the debtor is—

16 ‘‘(A) in compliance in all material respects

17 with postpetition requirements under this title

18 and the Federal Rules of Bankruptcy Proce19 dure; and

20 ‘‘(B) in a timely manner, filing tax returns

21 and making payments of taxes and other ad22 ministrative claims;

23 ‘‘(5) if the debtor is not filing a tax return or

24 making a payment of a tax or administrative

25 claim—
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1 ‘‘(A) the nature of the failure by the debt2 or to file the return or make the claim; and

3 ‘‘(B) how the debtor intends to remedy the

4 failure, including—

5 ‘‘(i) the cost to the debtor of the rem6 edy; and

7 ‘‘(ii) when the debtor intends to carry

8 out the remedy;

9 ‘‘(6) such other matters as the court determines

10 to be—

11 ‘‘(A) in the best interests of small business

12 debtors and creditors; and

13 ‘‘(B) in the public interest, in promoting

14 fair and efficient procedures under chapter

15 11.’’.

16 (2) CLERICAL AMENDMENT.—The chapter anal17 ysis for chapter 3 of title 11, United States Code,

18 is amended by inserting after the item relating to

19 section 307 the following:

‘‘308. Small business debtor reporting requirements.’’.

20 (b) EFFECTIVE DATE.—The amendments made by

21 this section shall become effective 60 days after the date

22 on which the Supreme Court, under section 2075 of title

23 28, United States Code, prescribes rules to provide for ap24 propriate forms and reporting under section 308 of title

25 11, United States Code.
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1 SEC. 405. UNIFORM REPORTING RULES AND FORMS.

2 (a) IN GENERAL.—The Advisory Committee on

3 Bankruptcy Rules of the Judicial Conference shall, within

4 a reasonable period of time after the date of enactment

5 of this Act, propose for adoption revisions to the Federal

6 Rules of Bankruptcy Procedure and Official Bankruptcy

7 Forms that would enable small business debtors (as that

8 term is defined in section 101(51D) of title 11, United

9 States Code, as added by section 401 of this Act) to com10 ply with section 308 of title 11, United States Code.

11 (b) REQUIREMENTS FOR RULES.—The rules pre12 scribed under subsection (a) shall be designed to achieve

13 a practical balance between—

14 (1) the reasonable needs of the courts, the

15 United States trustee or bankruptcy administrator,

16 creditors, and other parties in interest for reason17 ably complete information; and

18 (2) economy and simplicity for debtors.

19 SEC. 406. DUTIES IN SMALL BUSINESS CASES.

20 (a) IN GENERAL.—Subchapter I of chapter 11 of title

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

22 the following:
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1 ‘‘§ 1115. Duties of a trustee or a debtor in possession

2 in small business cases

3 ‘‘In a small business case, a trustee or the debtor in

4 possession, in addition to the duties required under this

5 title and as otherwise required by law, shall—

6 ‘‘(1) append to the voluntary petition or, in an

7 involuntary case, file within 3 days after the order

8 for relief—

9 ‘‘(A) the most recent balance sheet of the

10 trustee or debtor, statement of operations and

11 cashflow statement and most recent Federal in12 come tax return filed by the trustee or the debt13 or; or

14 ‘‘(B) a statement made under penalty of

15 perjury that—

16 ‘‘(i) no financial statement referred to

17 in subparagraph (A) has been prepared; or

18 ‘‘(ii) no Federal income tax return re19 ferred to in subparagraph (A) has been

20 filed;

21 ‘‘(2) attend, through the senior management

22 personnel or counsel of the debtor or trustee, meet23 ings scheduled by the court or the United States

24 trustee including—

25 ‘‘(A) initial debtor interviews;

26 ‘‘(B) scheduling conferences; and
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1 ‘‘(C) meetings of creditors convened under

2 section 341;

3 ‘‘(3) timely file all schedules and statements of

4 financial affairs, unless the court, after notice and a

5 hearing, grants an extension, except that any such

6 extension shall terminate not later than 30 days

7 after the issuance by the court of the order for re8 lief, unless the court determines that extraordinary

9 and compelling circumstances merit an extension be10 yond that date;

11 ‘‘(4) file all postpetition financial and other re12 ports required by the Federal Rules of Bankruptcy

13 Procedure or by local rule;

14 ‘‘(5) maintain insurance customary and appro15 priate to the industry;

16 ‘‘(6)(A) timely file tax returns;

17 ‘‘(B) timely pay all administrative expense tax

18 claims, except for any such claim that the trustee or

19 debtor is contesting by appropriate proceedings and

20 with due diligence; and

21 ‘‘(C)(i) establish 1 or more separate deposit ac22 counts within 10 business days after the entry of

23 order for relief (or as soon thereafter as practicable

24 in any case in which, during that 10-day period, all
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1 banks contacted by the trustee or debtor decline to

2 establish those accounts); and

3 ‘‘(ii) deposit in the accounts, within 1 business

4 day after receipt thereof, all taxes collected or with5 held by the trustee or debtor for governmental units;

6 and

7 ‘‘(7) allow the United States trustee or bank8 ruptcy administrator or its designated representative

9 to inspect the debtor’s business premises, books, and

10 records at reasonable times, after reasonable prior

11 written notice, unless the inspection requirement is

12 waived.’’.

13 (b) CLERICAL AMENDMENT.—The chapter analysis

14 for chapter 11 of title 11, United States Code, is amended

15 by inserting after the item relating to section 1114 the

16 following:

‘‘1115. Duties of a trustee or a debtor in possession in small business cases.’’.

17 SEC. 407. PLAN FILING AND CONFIRMATION DEADLINES.

18 Section 1121(e) of title 11, United States Code, is

19 amended to read as follows:

20 ‘‘(e) In a small business case—

21 ‘‘(1) only the debtor may file a plan until after

22 90 days after the entry of the order for relief, un23 less—

24 ‘‘(A) that period is extended under this

25 subsection, after notice and hearing; or
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1 ‘‘(B) the court, for cause, orders otherwise;

2 ‘‘(2) the plan, and any necessary disclosure

3 statement, shall be filed on or before 90 days after

4 the entry of the order for relief; and

5 ‘‘(3) the period for filing of a plan specified in

6 paragraph (1) or (2) and the period specified in sec7 tion 1129(e) within which the plan is required to be

8 confirmed may be extended only if—

9 ‘‘(A) the debtor, after providing notice to

10 each party in interest, including the United

11 States trustee, demonstrates by clear and con12 vincing evidence that the trustee or debtor will

13 confirm a plan of reorganization within a rea14 sonable period of time;

15 ‘‘(B) the court imposes a termination date

16 by which the debtor shall be required to meet

17 the applicable requirement; and

18 ‘‘(C) the order that providers for the ex19 tension is issued before the applicable date

20 specified in paragraph (1) or (2).’’.

21 SEC. 408. PLAN CONFIRMATION DEADLINE.

22 Section 1129 of title 11, United States Code, is

23 amended by adding at the end the following:

24 ‘‘(e) In a small business case, the plan shall be con25 firmed on or before 150 days after the entry of the order
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1 for relief, unless such time period is extended under sec2 tion 1121(e)(3).’’.

3 SEC. 409. PROHIBITION AGAINST EXTENSION OF TIME.

4 Section 105(d)(2) of title 11, United States Code, is

5 amended—

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

7 the end;

8 (2) in subparagraph (B), by striking the period

9 and inserting ‘‘; or’’; and

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

11 ‘‘(C) except as provided in section

12 1121(e)(3), in a small business case, the court

13 may not extend a time period specified in sec14 tion 1121(e) or 1129(e).’’.

15 SEC. 410. DUTIES OF THE UNITED STATES TRUSTEE AND

16 BANKRUPTCY ADMINISTRATOR.

17 (a) DUTIES OF THE UNITED STATES TRUSTEE.—

18 Section 586(a)(3) of title 28, United States Code, is

19 amended—

20 (1) in subparagraph (G), by striking ‘‘and’’ at

21 the end;

22 (2) by redesignating subparagraph (H) as sub23 paragraph (I); and

24 (3) by inserting after subparagraph (G) the fol25 lowing:
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1 ‘‘(H) in small business cases, as defined in

2 section 101(51C) of title 11, performing the ad3 ditional duties specified in that title pertaining

4 to those cases, and in each such case the

5 United States trustee shall—

6 ‘‘(i) conduct an initial debtor inter7 view with the debtor as soon as practicable

8 after the entry of order for relief but be9 fore the first meeting scheduled under sec10 tion 341(a) of title 11, at which time the

11 United States trustee shall—

12 ‘‘(I) begin to investigate the debt13 or’s viability;

14 ‘‘(II) inquire about the debtor’s

15 business plan;

16 ‘‘(III) explain the debtor’s obliga17 tions to file monthly operating reports

18 and other required reports;

19 ‘‘(IV) attempt to develop an

20 agreed scheduling order; and

21 ‘‘(V) inform the debtor of other

22 obligations;

23 ‘‘(ii) if determined to be appropriate

24 and advisable, visit the appropriate busi25 ness premises of the debtor and ascertain
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1 the state of the debtor’s books and records

2 and verify that the debtor has filed the

3 debtor’s tax returns;

4 ‘‘(iii) review and monitor diligently

5 the debtor’s activities, to identify as

6 promptly as practicable after the entry of

7 order for relief whether the debtor will be

8 unable to confirm a plan; and

9 ‘‘(iv) in any case in which the United

10 States trustee finds material grounds for

11 any relief under section 1112 of title 11,

12 move the court promptly for relief; and’’.

13 (b) DUTIES OF THE BANKRUPTCY ADMINIS14 TRATOR.—

15 (1) IN GENERAL.—Subchapter I of chapter 11

16 of title 11, United States Code, is amended by add17 ing at the end the following:

18 ‘‘§ 1116. Duties of the bankruptcy administrator

19 ‘‘In small business cases the bankruptcy adminis20 trator shall perform the duties specified in section

21 586(a)(3)(H) of title 28, in addition to the duties of the

22 United States trustee specified in this title.’’.

23 (2) CLERICAL AMENDMENT.—The chapter anal24 ysis for chapter 11 of title 11, United States Code,
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1 is amended by inserting after the item relating to

2 section 1115 the following:

‘‘1116. Duties of the bankruptcy administrator.’’.

3 SEC. 411. SCHEDULING CONFERENCES.

4 Section 105(d) of title 11, United States Code, is

5 amended by striking ‘‘The court, on its own motion’’ and

6 all that follows through ‘‘issue an order’’ in paragraph (2)

7 and inserting the following:

8 ‘‘(d) The court, on its own motion or on the request

9 of a party in interest—

10 ‘‘(1) shall hold such status conferences as are

11 necessary to further the expeditious and economical

12 resolution of the case; and

13 ‘‘(2) may issue an order.’’.

14 SEC. 412. SERIAL FILER PROVISIONS.

15 Section 362 of title 11, United States Code, as

16 amended by section 204(b), is amended by adding at the

17 end the following:

18 ‘‘(j)(1) Except as provided in paragraphs (2) and (3),

19 the filing of a petition under chapter 11 does not operate

20 as a stay of any act described in subsection (a) in any

21 case in which the debtor—

22 ‘‘(A) is or was a debtor in a small business case

23 pending at the time of the petition in the subject

24 case;
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1 ‘‘(B) was a debtor in a small business case that

2 was dismissed for any reason by an order that be3 came final within 2 years after the issuance of the

4 order for relief in the subject case;

5 ‘‘(C) was a debtor in a small business case in

6 which a plan was confirmed within 2 years after the

7 issuance of the order for relief in the subject case;

8 or

9 ‘‘(D) is an entity that has succeeded to sub10 stantially all of the assets or business of a small

11 business debtor described in subparagraph (A), (B),

12 or (C).

13 ‘‘(2) Paragraph (1) does not apply to a debtor if the

14 debtor proves, by a preponderance of the evidence, that—

15 ‘‘(A) the subject case has resulted from cir16 cumstances beyond the control of the debtor not

17 foreseeable at the time the first case was filed; and

18 ‘‘(B) it is more likely than not that the debtor

19 will confirm a feasible plan, other than a liquidating

20 plan, within a reasonable period of time.

21 ‘‘(3)(A) Except as provided in subparagraph (B), in

22 any case in which a debtor has transferred its business

23 or former business to a new legal entity that is not a debt24 or in a case under any chapter of this title, the filing of
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1 the petition operates as a stay of the acts described in

2 subsection (a) of this section.

3 ‘‘(B) In any case in which the United States trustee

4 files a verified, ex parte motion seeking relief from the

5 stay, the court shall grant relief from the stay under sub6 section (a), by terminating or annulling that stay.

7 ‘‘(C) With respect to a stay terminated or annulled

8 under paragraph (2), if, after notice and hearing, the debt9 or satisfies the requirements of paragraph (2) and shows

10 that immediate and irreparable injury, loss, or damage will

11 result to the debtor, the court may order that the stay

12 shall be reimposed.’’.

13 SEC. 413. EXPANDED GROUNDS FOR DISMISSAL OR CON14 VERSION AND APPOINTMENT OF TRUSTEE.

15 (a) EXPANDED GROUNDS FOR DISMISSAL OR CON16 VERSION.—Section 1112(b) of title 11, United States

17 Code, is amended to read as follows:

18 ‘‘(b)(1) Except as provided in paragraph (2), sub19 section (c), or section 1104(a)(3), on request of a party

20 in interest, and after notice and a hearing, if the movant

21 establishes cause—

22 ‘‘(A) the court shall convert a case under this

23 chapter to a case under chapter 7; or

24 ‘‘(B) dismiss a case under this chapter,
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1 whichever is in the best interest of creditors and the es2 tate.

3 ‘‘(2) The relief provided in paragraph (1) shall not

4 be granted if the debtor or another party in interest ob5 jects and establishes, by a preponderance of the evi6 dence—

7 ‘‘(A) that it is more likely than not that a plan

8 will be confirmed—

9 ‘‘(i) within an applicable period of time

10 specified in this title;

11 ‘‘(ii) by order of the court entered pursu12 ant to the provisions of section 1121(e)(3); or

13 ‘‘(iii) within a reasonable period of time if

14 there is no applicable period specified in this

15 title; and

16 ‘‘(B) if the cause of action is an act or omission

17 of the debtor—

18 ‘‘(i) that there exists a reasonable justifica19 tion for the act or omission; and

20 ‘‘(ii) that the act or omission will be cured

21 within a reasonable period of time but not to

22 exceed 30 days after the court decides the mo23 tion specified by the court, unless—
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1 ‘‘(I) the movant expressly consents to

2 a continuance for a specific period of time;

3 or

4 ‘‘(II) compelling circumstances beyond

5 the control of the debtor justify an exten6 sion.

7 ‘‘(3) For purposes of this subsection, the term ‘cause’

8 includes—

9 ‘‘(A) substantial or continuing loss to or dimi10 nution of the estate;

11 ‘‘(B) gross mismanagement of the estate;

12 ‘‘(C) failure to maintain appropriate insurance;

13 ‘‘(D) unauthorized use of cash collateral harm14 ful to 1 or more creditors;

15 ‘‘(E) failure to comply with an order of the

16 court;

17 ‘‘(F) failure to timely satisfy any filing or re18 porting requirement established by this title or by

19 applicable rule;

20 ‘‘(G) failure to attend the meeting of creditors

21 convened under section 341(a) of this title or an ex22 amination ordered under Rule 2004;

23 ‘‘(H) failure to timely provide information or

24 attend meetings reasonably requested by the United

25 States trustee;
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1 ‘‘(I) failure to timely pay taxes due after the

2 order for relief or to file tax returns due after the

3 order for relief;

4 ‘‘(J) failure to file or confirm a plan—

5 ‘‘(i) within the applicable period under this

6 title; or

7 ‘‘(ii) by order of the court; and

8 ‘‘(K) failure to pay any fee or charge required

9 under chapter 123 of title 28.

10 ‘‘(4)(A) Subject to subparagraph (B), the court

11 shall—

12 ‘‘(i) commence a hearing on any motion under

13 this subsection within 30 days after the filing of the

14 motion; and

15 ‘‘(ii) decide the motion within 15 days after

16 commencement of the hearing.

17 ‘‘(B) The court may extend a period described in

18 clause (i) or (ii) of subparagraph (A) with respect to a

19 movant if—

20 ‘‘(i) the movant expressly consents to a continu21 ance for a specific period of time; or

22 ‘‘(ii) compelling circumstances prevent the court

23 from meeting a time limit established under clause

24 (i) or (ii) of subparagraph (A).’’.
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1 (b) ADDITIONAL GROUNDS FOR APPOINTMENT OF

2 TRUSTEE.—Section 1104(a) of title 11, United States

3 Code, is amended—

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

5 end;

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

7 the end and inserting ‘‘; or’’; and

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

9 ‘‘(3) in any case in which grounds exist to con10 vert or dismiss the case under section 1112, but the

11 court determines that the appointment of a trustee

12 is in the best interests of creditors and the estate.’’.

13 SEC. 414. SINGLE ASSET REAL ESTATE DEFINED.

14 Section 101(51B) of title 11, United States Code, is

15 amended to read as follows:

16 ‘‘(51B) ‘single asset real estate’ means undevel17 oped real property or other real property constitut18 ing a single property or project, other than residen19 tial real property with fewer than 4 residential units,

20 on which—

21 ‘‘(A) is located a single development or

22 project that generates substantially all of the

23 gross income of a debtor; and

24 ‘‘(B) no substantial business is being con25 ducted by—
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1 ‘‘(i) a debtor; or

2 ‘‘(ii) a commonly controlled group of

3 entities all of which are concurrently debt4 ors in a case under chapter 11 of this title,

5 other than the business of operating the

6 real property and activities incidental

7 thereto;’’.

8 SEC. 415. PLAN CONFIRMATION.

9 Section 1129(b)(2)(A) of title 11, United States

10 Code, is amended—

11 (1) by striking ‘‘or’’ at the end of clause (ii);

12 and

13 (2) by striking the period at the end of clause

14 (iii) and inserting ‘‘; or’’; and

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

16 ‘‘(iv)(I) the court may find the plan to be

17 fair and equitable in any case in which—

18 ‘‘(aa) a class of secured claims invoke

19 the applicability of this subparagraph;

20 ‘‘(bb) that class of secured claims has

21 not made the election provided for under

22 section 1111(b)(1)(A)(i);

23 ‘‘(cc) the plan proponent seeks to con24 firm a plan over the rejection by the class

25 of unsecured claims that includes the defi-
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1 ciency claim (that would not be paid in full

2 under the plan) held by the class of se3 cured claims; and

4 ‘‘(dd) the plan is for a debtor that

5 owns, leases, or otherwise holds single

6 asset real estate; except that

7 ‘‘(II) the court may find the plan for the

8 debtor to be fair and equitable under this clause

9 only if, in addition to the fulfillment of all other

10 requirements of this section—

11 ‘‘(aa) the value determined in accord12 ance with this subparagraph (referred to in

13 this subclause as the ‘new value’) is con14 tributed in cash on or before the effective

15 date of the plan, and in a manner in which

16 the only permissible accounting treatment

17 is for the new value to be accounted for as

18 equity capital that is not convertible for or

19 exchangeable into any other form of capital

20 including debt capital;

21 ‘‘(bb) the new value is required to be

22 applied on the effective date of the plan

23 under the plan to pay down in cash the al24 lowed secured claims of that class of se25 cured claims in such amount that, after
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1 that payment is made, the principal

2 amount of debt secured by the single asset

3 real estate does not exceed 75 percent of

4 the value of the single asset real estate;

5 and

6 ‘‘(cc) the payment and other terms for

7 the debt remaining after the mandatory

8 application of new value as provided in

9 item (bb) satisfy, in all material particu10 lars, all relevant, then-prevailing market

11 terms in the locality for new loans secured

12 by liens on comparable real estate with re13 spect to—

14 ‘‘(AA) maturity date;

15 ‘‘(BB) amortization;

16 ‘‘(CC) interest rate;

17 ‘‘(DD) fixed-charge coverage; and

18 ‘‘(EE) loan documentation.’’.

19 SEC. 416. PAYMENT OF INTEREST.

20 Section 362(d)(3) of title 11, United States Code, is

21 amended—

22 (1) in the matter preceding subparagraph (A),

23 by inserting ‘‘, or not later than 30 days after the

24 court determines that the debtor is subject to this
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1 paragraph, whichever is later’’ after ‘‘90-day pe2 riod)’’; and

3 (2) by striking subparagraph (B) and inserting

4 the following:

5 ‘‘(B) the debtor has commenced monthly

6 payments (that notwithstanding section

7 363(c)(2) may, in the debtor’s sole discretion,

8 be made from rents or other income generated

9 before or after the commencement of the case

10 by or from the property) to each creditor whose

11 claim is secured by that real estate (other than

12 a claim secured by a judgment lien or an

13 unmatured statutory lien), in an amount equal

14 to the interest on the value of the creditor’s in15 terest in the real estate, determined at the

16 then-applicable contract rate of interest.’’.

17 TITLE V—BANKRUPTCY TAX

18 ISSUES

19 SEC. 501. EFFECTIVE NOTICE TO GOVERNMENT.

20 (a) CLARIFICATION OF DEFINITION OF GOVERN21 MENTAL UNIT.—Section 101(27) of title 11, United

22 States Code, is amended by striking ‘‘State;’’ and insert23 ing ‘‘State or subdivision thereof;’’.

24 (b) SAFE HARBOR ADDRESS; PENALTIES FOR FAIL25 URE OF NOTICE.—
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1 (1) IN GENERAL.—Section 342 of title 11,

2 United States Code, is amended by adding at the

3 end the following:

4 ‘‘(d) If a debtor lists a governmental unit as a credi5 tor in a list or schedule, any notice required to be given

6 by the debtor under this title, any rule, applicable law,

7 or order of the court, shall identify the department, agen8 cy, or instrumentality through which the debtor is in9 debted. The debtor shall also identify (with information

10 such as a taxpayer identification number, loan, account

11 or contract number, or real estate parcel number, if appli12 cable) and describe the underlying basis for the claim of

13 the governmental unit. If the liability of the debtor to a

14 governmental unit arises from a debt or obligation owed

15 or incurred by another individual, entity, or organization,

16 or under a different name, the debtor shall identify that

17 individual, entity, organization, or name.

18 ‘‘(e) The clerk shall keep and update quarterly, in

19 the form and manner as the appropriate Federal official

20 prescribes, and make available to debtors, a register in

21 which a governmental unit shall designate a safe harbor

22 mailing address for service of notice in cases pending in

23 the district. A governmental unit shall file a statement

24 with the clerk designating a safe harbor address to which

25 notices are to be sent.’’.
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1 (2) PENALTIES.—Section 342 of title 11,

2 United States Code, as amended by paragraph (1),

3 is amended by adding at the end the following:

4 ‘‘(f)(1) Subject to paragraph (2), if, after notice and

5 hearing, a governmental unit demonstrates, by a prepon6 derance of the evidence, that the governmental unit did

7 not receive timely actual notice as required under this sec8 tion—

9 ‘‘(A) any claim, right, or obligation in favor of

10 that governmental unit shall not be discharged; and

11 ‘‘(B) any order entered by the court barring the

12 enforcement of, or inhibiting any right, duty, or obli13 gation of that governmental unit shall be void.

14 ‘‘(2) The debtor shall have the burden of proof in re15 futing an assertion by a governmental unit under para16 graph (1) that the governmental unit did not receive the

17 timely actual notice referred to in that paragraph.

18 ‘‘(3) Notwithstanding paragraph (1), the relief

19 sought by a governmental unit under this subsection shall

20 not be granted, if, in a hearing under this title, a debtor

21 demonstrates that—

22 ‘‘(A) the debtor provided timely actual notice to

23 the governmental unit in a manner reasonably cal24 culated to satisfy the requirements of this sub25 section; and
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1 ‘‘(B) if the register referred to in subsection

2 (e), at the time of the notification, included a safe

3 harbor address for the governmental unit involved,

4 the debtor provided the timely actual notice to the

5 governmental unit through the use of such safe har6 bor address.

7 ‘‘(4) No sanction under section 362(h) or any other

8 provision of law that provides for the imposition by a court

9 of a sanction for a violation of a stay under section 362(h)

10 or a sanction for failing to meet the applicable require11 ments of section 542 or 543 may be imposed, unless that

12 violation occurs after a notice of commencement of a case

13 made in accordance with this section is received by the

14 entity.’’.

15 (c) PROPOSED REVISION OF RULES FOR PROVIDING

16 NOTICE.—

17 (1) IN GENERAL.—The Advisory Committee on

18 Bankruptcy Rules of the Judicial Conference shall,

19 within a reasonable period of time after the date of

20 enactment of this Act, propose for adoption revised

21 rules for the provision by a debtor (or an entity on

22 behalf of which the debtor is required to provide no23 tice) of notice to each Federal, State, or local gov24 ernmental unit (as that term is defined in section

25 101(27) of title 11, United States Code) that has
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1 regulatory authority with respect to the debtor or is

2 a creditor or potential creditor of that debtor.

3 (2) REVISED RULES.—The proposed rules de4 scribed in paragraph (1) shall provide for notice rea5 sonably calculated to ensure that the notice will be

6 received by a representative of each governmental

7 unit that is authorized to act on the notice. At a

8 minimum, the proposed rules shall—

9 (A) require that the debtor—

10 (i) identify in the schedules for the

11 case and the notice, the subdivision, agen12 cy, or entity of the governmental unit with

13 respect to which the notice should be re14 ceived; and

15 (ii) provide sufficient information (in16 cluding case captions, permit numbers,

17 taxpayer identification numbers, or similar

18 identifying information) to permit the gov19 ernmental unit entitled to receive that no20 tice to identify—

21 (I) the debtor, or the entity on

22 behalf of which the debtor is obligated

23 to provide that notice, in the event the

24 debtor is a successor in interest or is
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1 not the same as the entity that in2 curred the debt or obligation;

3 (II) any property that is the sub4 ject of the claim or obligation speci5 fied in the notice;

6 (III) the nature of the claim or

7 obligation referred to in subclause

8 (II); and

9 (IV) the purpose of the notice;

10 and

11 (B) provide sufficient information to per12 mit a debtor to identify the appropriate Fed13 eral, State, or local governmental unit through

14 the use of a safe harbor list established under

15 section 342(e) of title 11, United States Code,

16 as added by subsection (b) of this section.

17 SEC. 502. NOTICE OF REQUEST FOR A DETERMINATION OF

18 TAXES.

19 (a) ADOPTION OF REVISED RULES FOR PROVIDING

20 NOTICE.—The Advisory Committee on Bankruptcy Rules

21 of the Judicial Conference shall, within a reasonable pe22 riod of time after the date of enactment of this Act, pro23 pose for adoption rules under which the Federal, State,

24 and local governmental units may designate the manner

25 in which a trustee may make a request for the determina-
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1 tion of any unpaid liability of the estate for any tax in2 curred during the administration of the case, as provided

3 under section 505(b) of title 11, United States Code.

4 (b) NOTICE REQUIRED.—The second sentence of sec5 tion 505(b) of title 11, United States Code, is amended

6 by striking ‘‘Unless’’ and inserting ‘‘If the request is made

7 in the manner designated by that governmental unit and

8 unless’’.

9 SEC. 503. RATE OF INTEREST ON TAX CLAIMS.

10 (a) IN GENERAL.—Subchapter I of chapter 5 of title

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

12 the following:

13 ‘‘§ 511. Rate of interest on tax claims

14 ‘‘In any case in which the holder of a claim for taxes

15 arising before the date of the order for relief is entitled

16 to receive interest on that claim, the rate of interest to

17 be applied shall be at least the rate provided in section

18 6621(a)(2) of the Internal Revenue Code of 1986.’’.

19 (b) CLERICAL AMENDMENT.—The chapter analysis

20 for chapter 5 of title 11, United States Code, is amended

21 by inserting after the item relating to section 510 the fol22 lowing:

‘‘511. Rate of interest on tax claims.’’.
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1 SEC. 504. TOLLING OF PRIORITY OF TAX CLAIM TIME PERI2 ODS.

3 Section 507(a)(8)(A) of title 11, United States Code,

4 is amended—

5 (1) in clause (i), by inserting before the semi6 colon at the end the following: ‘‘, plus any time plus

7 6 months, during which a stay of proceedings

8 against collections was in effect with respect to that

9 tax in a prior case under this title; and

10 (2) by striking clause (ii) and inserting the fol11 lowing:

12 ‘‘(ii) assessed within 240 days before

13 the date of the filing of the petition, exclu14 sive of—

15 ‘‘(I) any time plus 30 days dur16 ing which an offer in compromise or

17 installment agreement with respect to

18 that tax, was pending or in effect dur19 ing that 240-day period; and

20 ‘‘(II) any time plus 6 months

21 during which a stay of proceedings

22 against collections was in effect with

23 respect to that tax in a prior case

24 under this title during that 240-day

25 period;’’.
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1 SEC. 505. ASSESSMENT DEFINED.

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

3 amended by inserting after paragraph (2) the following:

4 ‘‘(3)(A) ‘assessment’—

5 ‘‘(i) for purposes of State and local taxes,

6 means that action which is sufficiently final so

7 that thereafter a taxing authority may com8 mence an action to collect the tax; and

9 ‘‘(ii) for Federal tax purposes has the

10 meaning given such term in the Internal Reve11 nue Code of 1986; and

12 ‘‘(B) ‘assessed’ and ‘assessable’ shall be inter13 preted in a manner consistent with the definition of

14 the term ‘assessment’ in this paragraph;’’.

15 SEC. 506. CHAPTER 11 DISCHARGE OF FRAUDULENT TAXES.

16 Section 1141(d) of title 11, United States Code, is

17 amended by adding at the end the following:

18 ‘‘(5) Notwithstanding paragraph (1), the con19 firmation of a plan does not discharge a debtor that

20 is a corporation from any debt for a tax or customs

21 duty if, with respect to that tax or duty, the debtor

22 filed a fraudulent return or willfully attempted in

23 any manner to evade or defeat the tax or duty.’’.

24 SEC. 507. THE STAY OF PROCEEDINGS IN TAX COURT.

25 (a) SECTION 362 STAY LIMITED TO PREPETITION

26 TAXES.—Section 362(a)(8) of title 11, United States
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1 Code, is amended by striking the period at the end and

2 inserting ‘‘, with respect to a tax liability for a taxable

3 period ending before the order for relief under section 301,

4 302, or 303.’’.

5 (b) APPEAL OF TAX COURT DECISIONS PER6 MITTED.—Section 362(b)(9) of title 11, United States

7 Code, is amended—

8 (1) in subparagraph (C), by striking ‘‘or’’ at

9 the end;

10 (2) in subparagraph (D), by striking the period

11 at the end and inserting ‘‘; or’’; and

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

13 ‘‘(E) the appeal of a decision by a court or

14 administrative tribunal which determines a tax

15 liability of the debtor.’’.

16 SEC. 508. PERIODIC PAYMENT OF TAXES IN CHAPTER 11

17 CASES.

18 Section 1129(a)(9) of title 11, United States Code,

19 is amended—

20 (1) in subparagraph (B), by striking ‘‘and’’ at

21 the end;

22 (2) in subparagraph (C)—

23 (A) by inserting ‘‘in quarterly installments

24 or more frequent installments that shall be paid

25 in full not later than 6 years after the date on
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1 which the order for relief is issued under this

2 title,’’ after ‘‘payments,’’; and

3 (B) by striking the period at the end and

4 inserting ‘‘; and’’; and

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

6 ‘‘(D) with respect to a secured claim that

7 would otherwise meet the description of an un8 secured claim of a governmental unit under sec9 tion 507(a)(8), but for the secured status of

10 that claim, the holder of that claim will receive,

11 on account of that claim, cash payments, in the

12 same manner and over the same period, as pre13 scribed in subparagraph (C).’’.

14 SEC. 509. THE AVOIDANCE OF STATUTORY TAX LIENS PRO15 HIBITED.

16 Section 545(2) of title 11, United States Code, is

17 amended by striking the semicolon at the end and insert18 ing ‘‘, except in any case in which a purchaser is a pur19 chaser described in section 6123 of the Internal Revenue

20 Code of 1986, or in any other similar provision of State

21 or local law;’’.

22 SEC. 510. COURSE OF BUSINESS PAYMENT OF TAXES.

23 (a) PAYMENT OF TAXES REQUIRED.—Section 960 of

24 title 28, United States Code, is amended by striking the

25 period at the end and inserting the following: ‘‘, and ex-
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1 cept with respect to a property tax secured by a lien

2 against property of the estate that is abandoned by the

3 trustee of a bankruptcy estate pursuant to section 554 of

4 title 11, shall pay each such tax when due in the course

5 of that business. An officer or agent described in the pre6 ceding sentence shall pay any property tax secured by a

7 lien described in the preceding sentence within a reason8 able period of time after the lien attaches.’’.

9 (b) PAYMENT OF AD VALOREM TAXES REQUIRED.—

10 Section 503(b)(1)(B)(i) of title 11, United States Code,

11 is amended by inserting ‘‘whether secured or unsecured,

12 including property taxes for which liability is in rem, in

13 personam, or both,’’, after ‘‘estate,’’.

14 (c) REQUEST FOR PAYMENT OF ADMINISTRATIVE

15 EXPENSE TAXES ELIMINATED.—Section 503(b)(1) of

16 title 11, United States Code, is amended—

17 (1) in subparagraph (B), by striking ‘‘and’’ at

18 the end;

19 (2) in subparagraph (C), by inserting ‘‘and’’ at

20 the end; and

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

22 ‘‘(D) notwithstanding subsection (a), a

23 governmental unit shall not be required to file

24 a request for the payment of a claim described

25 in subparagraph (B) or (C);’’.
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1 SEC. 511. TARDILY FILED PRIORITY TAX CLAIMS.

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

3 amended by striking ‘‘the trustee commences distribution

4 under this section;’’ and inserting ‘‘the court approves the

5 final report and accounting of the trustee;’’.

6 SEC. 512. INCOME TAX RETURNS PREPARED BY TAX AU7 THORITIES.

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

9 amended—

10 (1) in paragraph (1)(B)—

11 (A) in clause (i), by striking ‘‘or’’ at the

12 end; and

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

14 ‘‘(iii) did not satisfy the requirements

15 of applicable nonbankruptcy law or was

16 not filed in the manner prescribed by ap17 plicable nonbankruptcy law; or’’; and

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

19 sentence:

20 ‘‘For purposes of this subsection, the term ‘return’ does

21 not include a return made pursuant to section 6020(b)

22 of the Internal Revenue Code of 1986, or similar State

23 or local law.’’.
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1 SEC. 513. THE DISCHARGE OF THE ESTATE’S LIABILITY FOR

2 UNPAID TAXES.

3 The second sentence of section 505(b) of title 11,

4 United States Code, is amended by inserting ‘‘the estate,’’

5 after ‘‘misrepresentation,’’.

6 SEC. 514. STANDARDS FOR TAX DISCLOSURE.

7 Section 1125(a)(1) of title 11, United States Code,

8 is amended—

9 (1) by inserting ‘‘including, with respect to a

10 plan, a full discussion of the potential material Fed11 eral and State tax consequences of the plan with re12 spect to the debtor, any successor to the debtor, and

13 a hypothetical investor representative of the holders

14 of claims or interests in the case,’’ after ‘‘records,’’;

15 (2) by inserting ‘‘such’’ after ‘‘enable’’; and

16 (3) by striking ‘‘hypothetical reasonable inves17 tor typical of holders of claims or interests’’ and in18 serting ‘‘hypothetical investor’’.

19 SEC. 515. SETOFF OF TAX REFUNDS.

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

21 amended by section 204, is amended—

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

23 end;

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

25 the end and inserting ‘‘, or’’;
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1 (3) by inserting after paragraph (19) the fol2 lowing:

3 ‘‘(20) under subsection (a), of the setoff of an

4 income tax refund by a governmental unit, with re5 spect to a taxable period that ends before the order

6 for relief against an income tax liability for a taxable

7 period that ends before the order for relief, unless

8 before that setoff, an action is commenced under

9 section 505(a) to determine the amount or legality

10 of that tax liability.’’; and

11 (4) in the flush material following paragraph

12 (19), by adding at the end the following: ‘‘In any

13 case referred to in paragraph (19) in which the

14 setoff of an income tax refund is not permitted by

15 reason of a pending action to determine the amount

16 or legality of a tax liability, the governmental unit

17 involved may hold the refund pending the resolution

18 of the action.’’.

19 TITLE VI—MISCELLANEOUS

20 SEC. 601. EXECUTORY CONTRACTS AND UNEXPIRED

21 LEASES.

22 Section 365(d)(4) of title 11, United States Code, is

23 amended to read as follows:

24 ‘‘(4)(A) Subject to subparagraph (B), in any case

25 under any chapter of this title, an unexpired lease of non-
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1 residential real property under which the debtor is the les2 see shall be deemed rejected and the trustee shall imme3 diately surrender that nonresidential real property to the

4 lessor if the trustee does not assume or reject the unex5 pired lease by the earlier of—

6 ‘‘(i) the date that is 120 days after the date of

7 the order for relief; or

8 ‘‘(ii) the date of the entry of an order confirm9 ing a plan.

10 ‘‘(B) The court may extend the period determined

11 under subparagraph (A) only upon a motion of the les12 sor.’’.

13 SEC. 602. ALLOWANCE OF CLAIMS OR INTERESTS.

14 Section 502(b)(6) of title 11, United States Code, is

15 amended to read as follows:

16 ‘‘(6)(A) if that claim is the claim of a lessor for

17 damages resulting from the termination of a lease of

18 real property, that claim exceeds an amount equal to

19 the sum of—

20 ‘‘(i) monetary obligations under the lease

21 (including rent, percentage rent, additional

22 rent, common area maintenance charges, taxes,

23 utilities, reasonable attorneys’ fees, and other

24 costs), without acceleration, for the period be-
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1 ginning immediately after that termination of

2 the lease and ending on the later of—

3 ‘‘(I) 1 year after the date of that ter4 mination; or

5 ‘‘(II) the date on which 15 percent of

6 the remaining term of the lease would have

7 tolled, but for the termination of the lease,

8 but not later than 3 years after the date

9 of that termination;

10 ‘‘(ii) any unpaid monetary obligations due

11 under the lease, without acceleration, as of the

12 date of filing of the petition; and

13 ‘‘(iii) all costs (including tenant improve14 ments and brokers’ fees or commissions) that

15 are reasonably incurred (or will, as of the date

16 of the determination of the sum under this sub17 paragraph, be reasonably incurred) during the

18 1-year period beginning on the date of the ter19 mination of the lease; except that

20 ‘‘(B) any mitigation that is required by law re21 sulting from the termination of the lease shall be ap22 plied against the claim of the lessor without regard

23 to the limitations imposed under clauses (i) through

24 (iii) of subparagraph (A);’’.
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1 SEC. 603. EXPEDITED APPEALS OF BANKRUPTCY CASES TO

2 COURTS OF APPEALS.

3 (a) IN GENERAL.—Section 158 of title 28, United

4 States Code, is amended—

5 (1) by redesignating subsection (d) as sub6 section (e);

7 (2) by inserting after subsection (c) the follow8 ing new subsection:

9 ‘‘(d)(1) Any final judgment, decision, order, or decree

10 of a bankruptcy judge entered for a case in accordance

11 with section 157 may be appealed by any party in such

12 case to the appropriate court of appeals if—

13 ‘‘(A) an appeal from such judgment, decision,

14 order, or decree is first filed with the appropriate

15 district court of the United States; and

16 ‘‘(B) the decision on the appeal described under

17 subparagraph (A) is not filed by a district court

18 judge within 30 days after the date such appeal is

19 filed with the district court.

20 ‘‘(2) On the date that an appeal is filed with a court

21 of appeals under paragraph (1), the chief judge for such

22 court of appeals shall issue an order to the clerk for the

23 district court from which the appeal is filed. Such order

24 shall direct the clerk to enter the final judgment, decision,

25 order, or decree of the bankruptcy judge as the final judg26 ment, decision, order, or decree of the district court.’’; and
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1 (3) in subsection (e) (as redesignated by para2 graph (1) of this section) by striking ‘‘subsections

3 (a) and (b)’’ and inserting ‘‘subsections (a), (b), and

4 (d)’’.

5 (b) TECHNICAL AND CONFORMING AMENDMENTS.—

6 (1) Section 305(c) of title 11, United States

7 Code, is amended by striking ‘‘section 158(d)’’ and

8 inserting ‘‘section 158(e)’’.

9 (2) Section 1334(d) of title 28, United States

10 Code, is amended by striking ‘‘section 158(d)’’ and

11 inserting ‘‘section 158(e)’’.

12 (3) Section 1452(b) of title 28, United States

13 Code, is amended by striking ‘‘section 158(d)’’ and

14 inserting ‘‘section 158(e)’’.

15 SEC. 604. CREDITORS AND EQUITY SECURITY HOLDERS

16 COMMITTEES.

17 Section 1102(a)(2) of title 11, United States Code,

18 is amended by inserting before the first sentence the fol19 lowing: ‘‘On its own motion or on request of a party in

20 interest, and after notice and hearing, the court may order

21 a change in the membership of a committee appointed

22 under this subsection, if the court determines that the

23 change is necessary to ensure adequate representation of

24 creditors or equity security holders.’’.
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1 SEC. 605. REPEAL OF SUNSET PROVISION.

2 Section 302 of the Bankruptcy Judges, United States

3 Trustees, and Family Farmer Bankruptcy Act of 1986

4 (28 U.S.C. 581 note) is amended by striking subsection

5 (f).

6 SEC. 606. CASES ANCILLARY TO FOREIGN PROCEEDINGS.

7 Section 304 of title 11, United States Code, as

8 amended by section 210, is amended by adding at the end

9 the following:

10 ‘‘(e)(1) In this subsection—

11 ‘‘(A) the term ‘domestic insurance company’

12 means a domestic insurance company, as that term

13 is used in section 109(b)(2);

14 ‘‘(B) the term ‘foreign insurance company’

15 means a foreign insurance company, as that term is

16 used in section 109(b)(3);

17 ‘‘(C) the term ‘United States claimant’ means

18 a beneficiary of any deposit referred to in paragraph

19 (2)(A) or any multibeneficiary trust referred to in

20 subparagraph (B) or (C) of paragraph (2);

21 ‘‘(D) the term ‘United States creditor’ means,

22 with respect to a foreign insurance company—

23 ‘‘(i) a United States claimant; or

24 ‘‘(ii) any business entity that operates in

25 the United States and that is a creditor; and
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1 ‘‘(E) the term ‘United States policyholder’

2 means a holder of an insurance policy issued in the

3 United States.

4 ‘‘(2) Notwithstanding subsections (b) and (c), the

5 court may not grant relief under subsection (b) to a for6 eign insurance company that is not engaged in the busi7 ness of insurance or reinsurance in the United States with

8 respect to any claim made by a United States creditor

9 against—

10 ‘‘(A) a deposit required by an applicable State

11 insurance law;

12 ‘‘(B) a multibeneficiary trust required by an ap13 plicable State insurance law to protect United States

14 policyholders or claimants against a foreign insur15 ance company; or

16 ‘‘(C) a multibeneficiary trust authorized under

17 an applicable State insurance law to allow a domes18 tic insurance company that cedes reinsurance to the

19 debtor to reflect the reinsurance as an asset or de20 duction from liability in the ceding insurer’s finan21 cial statements.’’.

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